Improving Econ 101

In a recent BloombergView article Noah Smith argues that the reason introductory economics classes are so bad is that they have few empirical demonstrations of their basic insights.  He draws a contrast between Econ 101 and introductory Physics classes.  While the physics classes actively demonstrated that their theories had merit, in Econ 101 and 102, 

… there were no demonstrations. There was basically nothing but theory — all the pretty little theories of comparative advantage and monopoly pricing and loanable funds, and not a whiff of evidence to back them up.

This observation leads Noah to conclude that introductory economics classes need a greater emphasis on empirics — much the way that the profession has shifted emphasis towards empirics recently.  

There might be some truth to Noah’s argument and his recommendation but I have some doubts all the same.  

Introductory economics – particularly introductory microeconomics – introduces students to, as Greg Mankiw summarizes it, “comparative advantage, supply and demand, market efficiency and market failure.”  That sounds about right but I would say that supply and demand reasoning is the most important tool the students are exposed to. Supply and demand models have a huge number of applications: labor markets, rental markets, the market for illicit drugs, the market for video rentals, the market for foreign currency, the market for short term lending, etc.  Moreover, there are many compelling empirical examples of supply and demand analysis in action. Obviously there is a huge literature on the effects of minimum wages which requires nothing more than supply and demand. There is a literature on rent control. There is the famous empirical study of labor markets (and capital markets) during the Black Death. There are empirical results on tax subsidies, tariffs, farm subsidies, … There are empirical studies of the market for banking reserves. Empirical studies of the effects of entry on prices (think jetBlue) and so on.  Instructors should definitely expose the students to these results — none of which are really new.  

I’m a bit surprised that Noah didn’t mention the increasing prevalence of in-class experiments. (I’m surprised because Noah’s Ph.D thesis focused on experimental analysis of asset pricing games). There are tons of fun in-class demonstrations that can be run.  In-class auctions, bank-run experiments, prisoner’s dilemma experiments, price ceiling experiments, and so forth. Students often really appreciate these demonstrations and they have a way of bringing to the material to life in the way that a review of empirical studies cannot.  

However, if I were to guess, the most important problem holding back many introductory classes is inadequate preparation on the part of the instructors. The textbooks (conspicuously the principles texts) are actually pretty good but if the instructor doesn’t take the time to draw in his or her knowledge about real-world applications, or to introduce interactive demonstrations of the material, then the class will be a typical example of a “chalk and talk” class. I should mention that professors at most universities are not encouraged to be particularly good teachers.  Most universities pay lip service to the idea that teaching is valued but tenure, promotions, salaries etc. are not based on teaching – they are based on research. Assistant professors in particular are well advised to spend a minimal amount of time on preparing classes. Even faculty who want to teach well often have limited training in *how* to teach well. In the typical Ph.D. sequence, virtually no time is spent developing teaching skills even though many grad students go on to work in academia.  

Noah is right to point out that introductory classes are often bad. Fixing them however will require more than just importing empirical results though.  It’s going to require real work.  It might even require a change in the attitude toward good teaching that prevails in academia. 

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8 thoughts on “Improving Econ 101

    • Hi Brian,

      I agree with essentially everything in your post. The example of the shirt-experiment you mention suggests similar variations. Imagine giving hats (or swag) for Big ten teams (or whatever) randomly. You might be able to show via exchange that the hats end up with the “right” owners (i.e., the students who are fans of those teams).

      You mention teaching your TA sessions in your own experience. This made me think of the following curiosity in university education: Many students are taught by graduate students during their undergraduate careers. Often they prefer (or say they prefer) to be taught by actual professors rather than the graduate students. This might be a type of blindness on the part of the students however. My own guess is that many of the grad students are better teachers than the professors they work for. They bring a fresh approach and have a more accessible style and so forth. In fact, when these same students get hired as professors a few years later they will be the *most* highly demanded teachers.

  1. There are economics departments that are already doing the real-world applications that you and Noah discuss. I graduated from Denison in 1998 and many of my classes had a computer lab with them and I had an intermediate macro class in which we tracked data and simulated being on the Council of Economic Advisers. There are some uncanny similarities to the work I do now, and it was a lot of fun at the time. I think the incentives for faculty you mention are important. Notice that the first thing Denison highlights on its department webpage is its innovative teaching: http://denison.edu/academics/economics/about while the first thing Michigan highlights is its research: http://www.lsa.umich.edu/econ/ … both add value, so maybe comparative advantage applies to economists too?

    • Hi Claudia,

      I definitely agree that there are many instructors at colleges and universities who provide their students with excellent in-class experiences. I’m glad to hear that you had such instructors at Denison. In terms of UM, while it’s true that they really do emphasize research much much more than teaching, in comparison with other “research universities” UM is actually pretty good when it comes to teaching.

  2. I feel economics in general has a “take it or leave it” approach to empirical / hard data, from the classroom to published research. A shift towards an observational / inductive approach could do the science some good. Although it’s true that more recent work on game theory and exploration of asymmetric information has begun to shift economics from neoliberalism thinly veiled as science, we’ve got quite a bit of ground to cover. Many ideas have been deeply embedded in our academic environment, regardless of the emergence of contrary empirical data.

    Thanks my economic fix for the day! Great post.

  3. Actually, I don’t think they’re bad – Bloomberg came up with that headline.

    I think they’re good, but could use a required “lab” class, at least for econ majors.

  4. As a student going through these introductory classes to economics, my main contention would be that instructors are insufficiently experienced in terms of knowing students’ needs. They will typically spend a lot of time on the “counter-intuitive” concept orf comparative advantage or on derivatives in supply/demand functions which are easily understandable concepts but pass on the more complex ( for students) theories.
    Also, the classic concepts are either so basic they are trivial( basic supply and demand, for example) or are said to be useless! It is frustrating to study a concept said to be useless then another and another…

    My impression, albeit biased and probably wrong, is that introductory economics is in fine pretty useless, both for professional and further academic work. The few useful points are the math and very trivial concepts which need very little explaining…
    In my opinion, instructors must not only teach better but especially collaborate with the students to provide useful and interesting content and focus on the needs of students.

  5. Pingback: links encontrados por aí [13] | virei professora, e agora?

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