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Wednesday, December 31, 2008

New Year's Resolution: Stop trying to be perfect

The other day I described the image I have in my head of the perfect professor. Realistically, I know that such a person doesn't really exist, at least not all in one body. But somewhere, deep down, I think I believe that such a person could be real; more disturbingly, I've realized that some part of me believes I should be able to become such a professor.

I began thinking about this when I found myself getting all worked up about a series of emails I got from a particular student at the end of the semester. There was nothing particularly surprising about these emails - the student was upset to have received a B+ when he felt he 'deserved' an A. Of course he had to tell me that this is the ONLY class in which he got less than an A, and pointed out that based on his performance on exams, he clearly knows the material (he did have very high scores on his exams). But he was missing a couple of assignments and had missed enough classes (i.e., had clicker scores of zero) that his overall score for the semester was an 89%. The student insisted that he actually did those missing assignments, they just weren't recorded by the computer (one was a Blackboard survey from the beginning of the semester and one was an Aplia experiment). To be honest, if the student's attitude were not so entitled and demanding, I would probably have been happy to make an exception and be done with it. Instead, every time an email from him showed up in my inbox, I found myself getting very anxious and annoyed.

How does all this tie into my belief in the Perfect Professor? Well, I began to wonder why I was letting this student - and others like him - get to me. I mean, sure, his attitude is immature, but he's also 19 and used to getting straight A's without working very hard, so what do I expect? But I couldn't just shrug it off, and something about my reaction felt personal, like I was taking this all as a personal affront. And the more I thought about it, the more I kept coming back to one thought, "This would never happen to B." B. is a professor who is known for being an amazing teacher, the kind that gets the highest ratings in the department while students tell other students that his class is the hardest they've ever taken but they learned a ton. I'm not saying he's the perfect professor I described before but I realized that every time I encounter difficult students, some part of me thinks that if I were as good a teacher as B., I wouldn't have these problems. And so every time I encounter difficult students, I do take it personally - I take it as an indication that I am not the teacher I want to be.

Now, is this realistic or logical? Of course not, on many levels. But it's there nonetheless, and I've realized that this may be one source of my high levels of stress this fall. However, now that I'm more aware that this is part of what's been driving my stress, maybe I'll be able to do something about it. At least that's the plan - we'll see if it lasts past the first week of classes...

Happy New Year!

Tuesday, December 30, 2008

Pre-ASSA Roundtable Discussion/Workshop

In addition to all the sessions during the conference itself, there is a pre-conference roundtable discussion/workshop on Adapting Pedagogical Innovations Across Disciplines. It's on Friday, January 2, from 3:00-5:00 pm in the San Francisco Hilton. I'm not sure if it is still possible to sign up but here is all the info:


Pre-ASSA Roundtable Discussion/Workshop
Adapting Pedagogical Innovations Across Disciplines

At this year's ASSA meeting in San Francisco (Januray 3-5,2009) we will be hosting a pre-meeting Roundtable Discussion/Workshop exploring pedagogical innovations developed in science, technology, engineering, and math (STEM) disciplines and their adaptability in economics. In particular, we will focus on pedagogical innovations developed from physics education research such as context-rich problems, just-in-time teaching, interactive lecture demonstrations, and concept tests/peer instruction.

Our objectives for this Roundtable Discussion/Workshop are to: (1) introduce economists to pedagogical and assessment-related innovations from other disciplines and to encourage more economists to experiment with these techniques in their own classes; (2) encourage more economists to initiate research exploring the adaptability of these innovations in economics (we
believe that there is significant potential in this area, especially with respect to the NSF); and (3) develop a network of economists interested in interdisciplinary pedagogical connections.

To meet these objectives we plan to share insights from recent research on these topics, develop working groups interested in pursuing funded research opportunities, introduce a significant new NSF-funded Economics Pedagogic Portal project, and promote an economics pedagogy blog focused on interdisciplinary pedagogy research and teaching innovations.

The ASSA pre-meeting Roundtable Discussion/Workshop will take place at the San Francisco Hilton on Friday, January 2, 2009, from 3:00-5:00 pm in Room Mason A. ASSA sessions begin the morning of January 3. We scheduled this meeting so even those from the east coast attending the ASSA meeting should be able to attend.

If you can't attend but are interested in this initiative, please contact Scott Simkins (simkinss@ncat.edu) or Mark Maier (mmaier@glendale.edu).

We hope that you will join us for this roundtable discussion/workshop. If you plan to join us, please register at:
[Click on Academy for Teaching and Learning, then click on "Sign Up" for the relevant event and complete the registration information. You will receive a confirmation of your registration and a reminder one day before the event.]


Below are links to some useful background readings related to our meeting.

Why Not Try a Scientific Approach to Science Education?
By Carl Wieman
Change, September/October 2007 Volume 39, Number 5
In this article, Carl Wieman, Nobel-prize-winning physicist, discusses how using the practices of science - gathering objective data, building on demonstrated effectiveness, and fully utilizing modern technology - can significantly increase students' learning. Our interest is in how these
principles can be applied to economic education research and the teaching of economics.

See also:

Learning from Physics Education Research: Lessons for Economics Education
By Scott P. Simkins and Mark H. Maier
June 27, 2008
Download from one of the following repositories:

We believe that economists have much to learn from educational research practices and related pedagogical innovations in other disciplines, in particular physics education. In this paper we identify three key features of physics education research that distinguish it from economics education research - (1) the intentional grounding of physics education research in learning science principles, (2) a shared conceptual research framework focused on how students learn physics concepts, and (3) a cumulative process of knowledge-building in the discipline - and describe their influence on new teaching pedagogies, instructional activities, and curricular design in physics education. In addition, we highlight four specific examples of successful pedagogical innovations drawn from physics education - context-rich problems, concept tests, just-in-time teaching, and interactive lecture demonstrations - and illustrate how these practices
can be adapted for economic education.

Developing an Economics Pedagogic Portal (grant project)
National Science Foundation
Award Number: DUE 0817382 (2008-2011)
Investigators: Scott Simkins, Mark Maier, KimMarie McGoldrick, Cathryn
Abstract available at:


We look forward to seeing many of you in San Francisco.

Scott Simkins
Mark Maier
Bill Goffe
Steve Greenlaw
KimMarie McGoldrick

Teaching Economics sessions at ASSA

For anyone going to the ASSA meetings in San Francisco: I've been going through the program, looking for the teaching-related sessions. All of these sessions are in the Hilton San Francisco but the online program doesn't have room locations so these are just the times and papers.

Saturday, 8:00AM: Training and Assessing the Effectiveness of Teaching Assistants in Economics
Presiding: KENNETH G. ELZINGA, University of Virginia

WILLIAM WALSTAD, University of Nebraska-Lincoln, and WILLIAM E. BECKER, Indiana University--Preparing Graduate Students in Economics for Teaching: Survey Findings and Recommendations
ADA JANSEN and PETRONELLA HORN, Stellenbosch University, Matieland--Are Female and Postgraduate Teaching Assistants More Effective? An Investigation of How the Gender and Experience of Teaching Assistants Affect Students' Performance
JAMES MCCOY and MARTIN MILKMAN, Murray State University--Do Recent Ph.D. Economists Feel Prepared to Teach Economics?
SARAH HASTEDT, University of Virginia--Group Differences in Performance: The Effects of Teaching Assistants on Collegiate Grades

Discussants: JAMES GWARTNEY, Florida State University
GAIL M. HOYT, University of Kentucky
DIRK MATEER, Penn State University
SARAH TURNER, University of Virginia

Saturday, 10:15AM: The Economics Major as Part of a Liberal Education
Presiding: DAVID COLANDER, Middlebury College

DAVID COLANDER, Middlebury College, and KIMMARIE MCGOLDRICK, University of Richmond--The Economics Major and a Liberal Education: The Teagle Foundation Report

Comments: CATHERINE HILL, Vassar College
DAVID W. BRENEMAN, University of Virginia
GEORGE DALY, Georgetown University

Saturday, 2:30PM: Research in Economic Education
Presiding: SAM ALLGOOD, University of Nebraska-Lincoln

WILLIAM E. BECKER, Indiana University, WILLIAM GREENE, New York University, and JOHN J. SIEGFRIED, Vanderbilt University--Does Graduate or Undergraduate Teaching Load Affect Faculty Size?
TISHA L. N. EMERSON, Baylor University--In-Class vs. Out-of-Class Experiments in Microeconomic Principles: Is there a Difference in Student Learning?
JEFFREY PARKER, Reed College-- Does Living Near Classmates Help Introductory Students Get Better Grades?
WAYNE GROVE, LeMoyne College, ANDREW GRODNER, East Carolina University, and STEPHEN WU, Hamilton College—The Economics Ph.D. Pipeline: Different Predictors of Success for U.S. versus Foreign Applicants

Discussants: WILLIAM BOSSHARDT, Florida Atlantic University
MYRA MOORE, University of Georgia
JULIE HOTCHKISS, Federal Reserve Bank of Atlanta

Sunday, 8:00AM: Performance and Incentives in Economics Courses
Presiding: WILLIAM BOSSHARDT, Florida Atlantic University

LESTER HADSELL, State University of New York, College at Oneonta, and RAYMOND MACDERMOTT, Virginia Military Institute--Faculty Perceptions of Grades: Results from a National Survey
ANN L. OWEN, Hamilton College--Letter Grades, Gender, and the Economic Major
MARIANNE JOHNSON and DENISE ROBSON, University of Wisconsin-Oshkosh--It’s Neither Who nor How, But What is Taught: An Apologia for Poor Female Performance in Economics
TIMOTHY DIETTE, Washington and Lee University, and SARA HELMS, University of Alabama-Birmingham--Carrots, Sticks, and Service-Learning in a Quasi-Experimental Environment

Discussants: JANE LOPUS, California State University-East Bay
GAIL HOYT, University of Kentucky
MARK MCBRIDE, Miami University
BRIAN PETERSON, Central College

Sunday, 10:15AM: Interactive Strategies in Economic Education
Presiding: KIMMARIE MCGOLDRICK, University of Richmond

TOM WHITE, Assumption College--Base Groups vs. Formal Groups in Cooperative Learning
ROBBIE MOORE, Occidental College--The Effect of Group Composition on Individual Student Performance in an Introductory Economics Course
RÓISÍN O’SULLIVAN, Smith College--Classroom Discussion in Intermediate Macroeconomics: Does the Use of Interpretative Question Clusters Impact Student Learning?
NEIL SHEFLIN, Rutgers University-New Brunswick--Pseudo-Socratic Dialogues In The Teaching Of Economics: Does It Work? And How?

Discussants: BRIAN PETERSON, Central College
LORI D. BELL, Blackburn College
DENISE ROBSON, University of Wisconsin-Oshkosh
DIRK MATEER, Pennsylvania State University

Sunday, 2:30PM: Poster Session on Teaching Ideas and Projects
Presiding: WENDY A. STOCK, Montana State University

ROJHAT B. AVSAR, University of Utah--Active Learning and the Socratic Method: An Application for “Theory of Value”
STEVEN J. BALASSI, St. Mary's College of California-- Making Classroom Time in Principle Courses Engaging, Collaborative, Relevant, and Enjoyable
KEVIN BECKWITH, Salem State College-- Practice Makes Permanent: Adapting Coaching Techniques to the Teaching of Economics
CHRISTOPHER R. BELL, University of North Carolina-Asheville--Jelly Bean Economics
CATHERINE BOULATOFF, Saint Lawrence University--Applied Research with Undergraduates: Using Contingent Valuation Analysis in the Classroom
MARILYN COTTRELL, Brock University-- Let’s Shift Again – An Animation
PAUL DALZIE, Lincoln University, New Zealand--Schumpeter’s “Vision” and the Teaching of Principles of Economics
AJU FENN, DANIEL K.N. JOHNSON, MARK SMITH, and LARRY STIMPERT, Colorado College--Doing Publishable Research with Undergraduate Students
AJU FENN, DANIEL K.N. JOHNSON, MARK SMITH, and LARRY STIMPERT, Colorado College--Turning Field Work and Guest Speakers into Golden Opportunities
JOSHUA C. HALL, Beloit College, and MARK T. GILLIS, Duquesne University-- Homer Economicus:The Simpsons in the Economics Classroom
CHRISTIANA HILMER, San Diego State University--An Analysis of Students’ Ability to Assess Their Own Knowledge of the Subject Matter
ERIC JAMISON and JOHN Z. SMITH, United States Military Academy--Promoting Financial Literacy in the Principles of Economics Course
VALERIE KEPNER, King’s College--Using the Great Depression in Teaching Economics
A. WAHHAB KHANDKER, University of Wisconsin-La Crosse--Incorporating Active Learning Strategies in an Introductory Economics Class
ROBERT LAWSON, Auburn University--Teaching Economic Principles with Comics
G. DIRK MATEER, Pennsylvania State University--Deal or No Deal: Leveraging the Large-Class Experience
ROD D. RAEHSLER, Clarion University --The Use of Popular Music to Teach Introductory Economics
GEETHA RAJARAM, Whittier College-- Preconceptions versus Reality about Welfare Recipients
JULIA SAMPSON FRANKLAND, Malone College-- Using the Game of Bocce to Teach Market Structures
MICHAEL C. SEEBORG, Illinois Wesleyan University--Encouraging Active Learning through a Capstone Undergraduate Research Experience
OLGA N. SHEMYAKINA, Georgia Institute of Technology--Game and Media in the Economics Classroom
JOHN A. SPRY, University of St. Thomas—Diversity Increases Gaines from Trade
SUE K. STOCKLY, Eastern New Mexico University--A Macro Data Scavenger Hunt—Helping Students Find and Use State Data in Macroeconomics

Monday, 8:00AM: Topics in Economic Education
Presiding: PAUL GRIMES, Mississippi State University

TRIEN T. NGUYEN and ANGELA TRIMACHI, University of Waterloo--Active Learning in Introductory Economics: How Much Difference Do MyEconLab and Aplia Make?
MARK E. MCBRIDE, Miami University--Integrated Agent-Based Computational Economic in the Teaching of Principles of Microeconomics
PAT GANNON-LEARY, Northumbria University, and ELSA FONTAINHA, ISEG Technical University of Lisbon--Network Analysis of Virtual Communities of Learning of Economic Educators
BARBARA PHIPPS, NADIA KARDASH, and SVETLANA DEPLAZES, University of Kansas--Assessment of the Level of Economic Literacy among School Students in Kansas

Discussants: DANIEL TALLEY, Dakota State University
LESTER HADSELL, State University of New York, College at Oneonta
E. B. GENDEL, Woodbury University
DENISE ROBSON, University of Wisconsin-Oshkosh

Monday, 10:15AM: What Makes a Great Economics Teacher? A Panel Discussion
Presiding: DAVID COLANDER, Middlebury College
KIMMARIE MCGOLDRICK, University of Richmond
WILLIAM DARITY, Duke University
RONALD G. EHRENBERG, Cornell University
ROBERT H. FRANK, Cornell University
KEN ELZINGA, University of Virginia
MARTHA OLNEY, University of California-Berkeley

Monday, December 29, 2008

The perfect professor

I've been thinking about an image I have in my head of the "perfect professor". This perfect professor inspires all her students, leading them to think critically and become lifelong learners. Her lectures are always so clear and interesting that students never fall asleep, read newspapers, surf the web or text their friends in class (except to comment on something class-related, of course). The perfect professor's students are never grade-grubbers because she has inspired them to want to learn for learning's sake. She manages to convey how much she cares about her students without giving them the impression that she is a pushover. The perfect professor never gets emails from students complaining that her grading is unfair because her students never get confused about deadlines and/or they understand the exact repercussions of missed assignments. Her classes are challenging, but not impossible, in that way that even the B and C students feel like they are learning a lot. She makes her field of study seem so fascinating that her students all want to change their majors. On ratemyprofessors.com, she gets 1s and 2s for Easiness, 4s and 5s for Helpfulness, Clarity and Rater Interest. In short, she is some amalgamation of all the teachers in Ken Bain's What the Best College Teachers Do, with some Randy Pausch thrown in for good measure.

Is it possible that such a creature exists? What do you envision as a 'perfect professor'?

Saturday, December 27, 2008

Advice on Learning Economics from Mankiw

Good stuff. My favorite bit:
The best scholars maintain an open-mindedness and humility about even their own core beliefs. Excessive conviction is often a sign of insufficient thought, which in turn may be derived from a certain pig-headedness. Intellectual maturity comes when you can maintain the right balance between informed belief and honest skepticism.

Friday, December 26, 2008

Holiday round-up

One of my New Year's resolutions is to post here on a more regular schedule (which will probably last until the spring semester starts!) so I'm working on a bunch of topics for January. But in the meantime, I wanted to wish everyone happy holidays and point you to two holiday round-up posts from Economix:
And this one has nothing to do with economics but is too funny (at least to anyone who is on Twitter) not to share:
Merry Christmas, Happy Hanukkah, Joyous Kwanzaa and Festivus Maximus to all!

Thursday, December 18, 2008

Enabling students

Lisa of Lisa's (Online) Teaching Blog has put her finger on something that has been bugging me for the last several weeks:
After years of being accommodating to students, and providing flexibility to deal with their hectic schedules, and alternative assignments to cater to learning styles, we’ve done it. We’ve helped create an entire generation of students who assume alternatives for everything, and expect us to accommodate everything. They also comfortably assume that every instruction, limitation, restriction applied to their coursework will be repeated to them many times in a variety of formats, and are, at any rate, negotiable if they didn’t get it the first four times...

Enabling, that’s what they call it. I really don’t like to be harsh, but I can’t imagine them negotiating every deadline (most don’t even bother to negotiate it — they just skip it and hand it to me later) and requiring instructions be repeated four times in the working world. I hope they grow up to be highly successful professional surfers, fashion designers or movie producers with a secretarial staff and personal assistants to take care of them, but some won’t. It sure keeps things friendly but, even setting aside my own mild annoyance at all this, I don’t think we’re doing them a service.
I highly recommend reading the whole post - Lisa's story about literally repeating something 4 times (in a row!) is depressingly familiar. I often find myself simply incredulous that after I've repeated something upteen times AND posted it on the website in multiple places, I STILL get students who email me because they missed it. And then I struggle with how to handle that - do I give them partial credit? Any credit? A lecture on how they need to pay closer attention? If I don't make accommodations, will they hate me and think I'm an unfair bitch? But if I do make accommodations, am I just encouraging them to continue being clueless? And is that fair to the students that paid attention and did everything right the first time?

This has been a particular struggle with the 500-seater because I know that with a class this size, there are going to be more students who miss stuff. On the one hand, I try harder to make information as clear and as available for students as I can so I know they have no excuses; on the other hand, they still miss stuff and then email me to ask for accommodation. I've come up with a couple ways of dealing that I think are marginally creative; I'll come back and post about them as soon as I'm done with the stack of 400 one-pagers that need to be graded...

Sunday, December 14, 2008

Consistency is everything

One of the first lessons I learned as a teacher was the importance of setting student expectations early, making it clear from day one what students can expect from your class in terms of workload, schedule, learning outcomes, etc., and then being consistent. Students may not be happy about everything but my experience is that they will accept a lot as long as it isn't unexpected.

Unfortunately, I didn't do so well with that this semester. For various reasons, I found myself making changes mid-semester and I know that many of the emails I'm dealing with now are because of that inconsistency. There are certain changes I think are justified and I don't think there's anything wrong with making mid-semester adjustments when something I'm doing isn't working for a majority of students (like adding the online quizzes). But what's bumming me out is that some of the changes I've needed to make are things I should have anticipated. For example, at the beginning of the semester, I counted up the number of days when we would be having lectures where the students would be using clickers, coming up with a total of 31. I make each day worth 5 points so I figured I would drop the 6 lowest scores and they would have a total of 125 points from clickers. My mistake was putting it on the syllabus that I would drop 6 scores, rather than saying I would keep the top 25 scores because as you can probably guess, stuff happens and we ended up with only 29 scores, 2 fewer days than I anticipated. So I could a) still drop 6 and have clickers worth 115 points instead of 125 (which would make their performance on clickers worth slightly less in the final grade and mean a different point total than is in the syllabus), or b) drop 4 scores instead of 6. With either option, I'm going to have students who want to know why I'm doing something different than what's in the syllabus, though I suppose the former will get fewer complaints than the latter, simply because it won't be as obvious to students if/how it hurts them.

What annoys me is that I should have known to leave room in the syllabus for stuff to happen. Just as I should have known that there's no way to have 500 students on a rotating schedule for weekly posts without a huge number of students being confused about when it was their turn to post. Or that I would never have the time to give students sufficient feedback on those posts.

Fortunately, semesters do end eventually!

Sunday, December 7, 2008

Exam time

I've spent a lot of time this week writing exams. I give my Principles students three midterms, with the third one falling on the next-to-last class (which would be this coming Wednesday). Then I use the last class meeting to review everything from the semester in preparation for the cumulative final; in other words, I try to remind them of everything they've learned, which I hate to say, usually ends up being sort of a laundry list of concepts. I'm still working on a better way to review "everything"...

I know that many of my students hate my exams - I suppose that they would say I try to "trick" them. That's because for many questions, I purposely try to make one of the wrong answers something that will seem right to students who only have a superficial understanding of the material. I talk to a lot of students who do worse on my exams than they thought and when they see the correct answers, they say, "Oh, that's the other answer I was thinking of. I was trying to decide if it was that one or the answer I choose - they both seem right." I'm constantly telling students that as they go over their past exams to prepare for the final, it isn't enough to understand why the right answer is right, they need to understand why the wrong answers are wrong.

This is one reason why I give a cumulative final exam. I know students don't like cumulative finals - it seems like an awful lot of material. I try to alleviate some of their concerns by pointing out how everything we did for the last two-thirds of the semester is really just various applications of the core principles we discussed in the first four weeks but there really is no way to get around the fact that yes, it IS a lot to think about. But I've read two things recently that have convinced me more than ever that cumulative exams are important, so much so that I am considering making all of my exams cumulative next semester. One is a post from the Teaching Professor about cramming. It highlights some interesting research that suggests that a) cramming does work in the short-term (i.e., students who cram do just as well on exams) and b) students don't retain what they 'learn' when they cram (surprise, surprise). This suggests to me that if I can't differentiate between who has crammed and who has really learned for the long-term by performance on a test, then I might as well give cumulative tests that at least give students some incentive not to cram.

I've also been reading Terry Doyle's Helping Students Learn in a Learner-Centered Environment, which I want to write about a lot more once the semester is over. For now, let me just quote Doyle on the benefit of cumulative exams:
"The rationale for using cumulative exams is that they force students to review and relearn much of their course material by continually retesting the important information that was to be learned in each section of the course. In addition, cumulative testing helps students to see the connections between the information they learned in the first part of the course and the material that comes later." (page 45)
Basically, by 'forcing' students to engage with the material multiple times, you are giving them a better shot at getting that material into their long-term memory. Students may hate it but chances are better that ten years from now, they will at least remember the concepts that made them so miserable.

Tuesday, December 2, 2008

Christmas inflation

As a microeconomist, I don't spend much time talking to my students about price indices but once a year, I wish I did. That's because I always get such a geeky kick out of the Christmas Price Index, PNC's annual update of the cost to actually buy all the items in the song 12 Days of Christmas. The "cost of Christmas" is up 8.1% this year, to over $21,000 (driven again by the cost of swans-a-swimming). What I hadn't realized is that PNC's website also has some cool tools for teachers, including a Pin the Price Tag on the Gift game and and an Economics Trivia quiz. Definitely worth checking out...

Sunday, November 30, 2008

I is smart

I hate the word 'smart'. To most economists, it is probably considered the highest compliment you can give/get, but whenever I hear an economist say that someone is really 'smart', I have to stop myself from rolling my eyes. This is because, in many cases, the person being admired is considered smart because they are great at doing complicated math or abstract theory. However, that same person may may be completely devoid of common sense, social skills, or any ability to communicate with 'regular' (i.e., non-economist) people.

As an academic, it's simply ridiculous how often I hear the word 'smart' used in this one-dimensional way. It is used to describe students, other academics, politicians, random people one happened to meet at a party, you name it, and it's always intended in a highly complimentary way. But for reasons I have never understood, it almost always means only one kind of smart - the kind of smart that gets good grades and can talk in a high-brow way about complicated abstract stuff. It rarely means creative-smart or verbally-smart or can-talk-articulately-about-traveling-the-world-smart. And it NEVER means can-figure-out-how-a-computer-works-smart or can-explain-complicated-concepts-in-simple-ways-smart.

A perfect example of this one-dimensional version of 'smartness' is David Broder's column this weekend about how good it is for the country that Obama is super-smart. Of course, I don't disagree with that sentiment at all but what bugged me was this paragraph:
So for several years, I have been arguing that there are traits much more important to the success of a president than brainpower. Self-confidence, curiosity, an eye for talent, the ability to communicate, a temperament that invites collaboration -- all these and more rank higher on the list of desirable presidential traits.
Broder seems to be suggesting that being 'smart' is something to be contrasted with 'self-confidence, curiosity, an eye for talent, the ability to communicate, a temperament that invites collaboration'. But can one really have these traits and NOT be 'smart'? Aren't most people these days at least familiar with the idea of multiple intelligences? Why is the idea that smart only means one thing so persistent?

Thursday, November 13, 2008

Fidelity Fiduciary Bank

In Economics for Teachers, I finally got around to teaching some macro. As a microeconomist through and through, I must admit I haven't exactly been looking forward to this part of the semester - it's not that I don't find macro kind of interesting (especially these days), but I haven't taught it in a very long time. I'm pretty sure I bored the heck out of my class for most of Monday and Wednesday but the one bright spot was using a clip from Mary Poppins to motivate our discussion of the banking system. I used the scene that includes the song "Fidelity Fiduciary Bank" in which the Chairman of the Bank, and Mr. Banks, try to explain to the children that by investing Michael's tuppence, he can be part of "railways through Africa; dams across the Nile; fleets of ocean greyhounds; majestic, self-amortizing canals; plantations of ripening tea". In the end, Michael causes a run on the bank when he starts yelling 'give me back my money' to the old Chairman. So this led well into our discussion of how banks take people's savings and lend that money out to other people, and why it's a problem if everyone suddenly wanted to take their money out of their bank accounts.

One thing I love about using this clip was that most students have seen the movie but either had no idea, or had not thought about, what the heck the Chairman and Mr. Banks were talking about in the song.

Thursday, November 6, 2008

Reflections on the election

[The following is an email I received yesterday from a dear friend from college. Adam lives in Los Angeles with his family and I asked if I could post his email because he expresses so well what is in my own heart but does it far more eloquently than I could.]

Dear Friends and Family,

Aman and I awoke this morning with unfortunately heavy hearts. We found ourselves unable to fully enjoy or celebrate Barack Obama's historic win, because of the heartbreaking passage of Proposition 8, which enshrined discrimination against gays and lesbians into our California constitution. We found ourselves thinking of our two beautiful children and of our own marriage, which 45 years ago would not have been possible in much of the country because of very similar ignorance and fear.

Proponents of Proposition 8 do not like it when parallels are drawn between same-sex marriage and interracial marriage. But the similarities are too overwhelmingly obvious to be ignored. Forty-five years ago, in much of the country, Aman and I would not have been allowed to marry and have a family. We would have been denied these rights because so many folks felt that interracial marriages were unnatural, contrary to tradition, contrary to how marriage has always been, and against God's will. Sound familiar? These same arguments were all heard from Proposition 8 supporters. The Yes on 8 campaign advertisements focused on allegations that children would be taught about same-sex marriage in the schools and that free speech rights would be limited because individuals and churches would be forced to officiate and accept marriages that they believed were ungodly. These were also arguments that were regularly voiced with respect to interracial marriages.

As we sat with our two kids early this morning - they got us up at 5:00 a.m. again - we found ourselves wanting to fully celebrate what President Obama's incredible victory represents for this country. But we found ourselves unable to fully do so because of the heartache of knowing that yesterday Californians enshrined discrimination into our Constitution by denying certain Californians the right to marry the person of their choosing.

For those who think that the same-sex marriage issue was pushed too fast and too soon, I would point you to the poetic words of Langston Hughes who said:

I tire so of hearing people say,
Let things take their course.
Tomorrow is another day.
I do not need my freedom when I'm dead.
I cannot live on tomorrow's bread.

Our hearts ache this morning for all our gay and lesbian friends and family members who last night were told by the people of California that they can not marry the person that they loved -- that they can not fulfill their dreams in the same way that the rest of us can.

Our hearts ache for the gay and lesbian boys and girls who are struggling, as all young people do, with who they are and what their place is in the world. Last night, the people of California once again told these young people that they were unnatural and deviant, and that they are not entitled to the same rights as the rest of us.

Our hearts ache for our two children, whom we love more than anything. Last night the American people helped to make the world a better place for our children by electing Barack Obama. But last night, the people of California said not so fast, there is still much work to be done.

Just like the struggle to allow interracial marriage, the struggle for full marriage equality for all will not be won overnight. These fights began with individual couples who refused to give up on their love and their dreams just because others said that such love was unnatural and wrong. They spread to friends and family who become allies in the cause. As they picked up strength, political leaders began to speak out, the courts came around, and eventually the general public did as well we are obviously still working on this last step with respect to same-sex marriages.

What we learned from last night is that we still have a lot of work to do especially in low-income communities and communities of color. At root, I believe that opposition to same-sex marriage is rooted in fear and ignorance. Fear of something that for generations we have been describing as icky and unnatural. Ignorance of the love and commitment that infuses so many same-sex unions. We can change these things. We will change these things.

There is hope in the exit polls from Proposition 8, which found a massive generation gap: the under-30s voted for marriage equality by 67 to 31 percent; the over-65s voted for discrimination by 57 to 43 percent. I have no doubt that there will be many other struggles that we will bequeath to our children. But this will not be one of them. It will take longer than we had hoped, and that makes us sad. But, make no mistake about it -- this is a fight that we will win.

Although we feel much anger and sadness, Aman and I are still hopeful. Barack Obama is correct when he says that much of America's genius lies in its ability to change. In his speech last night -- which was as inspiring as he so often is -- Obama used many lines that were used by Martin Luther King. At one point Obama referred to "the arc of history." After the famous march to Selma, King was asked how long it would take to achieve justice. His answer is well worth remembering at times like this:

How long? Not long. Because the arc of history is long, but it bends toward justice.

In solidarity and love,

Adam Murray
Executive Director
Inner City Law Center

Tuesday, November 4, 2008

Election Day!

Please vote! If you aren't sure where to go, Google makes it easy: go to http://maps.google.com/vote and enter your address. I'm actually a permanent mail-in voter but I'm taking my ballot to a polling place today so I can get an "I voted" sticker to put on my Obama pin!

Monday, November 3, 2008

Daily points

[This is the email I sent to my students today, with my solution to the attendance problem I wrote about last week. Coincidentally, InsideHigherEd has an article today on clickers that summarizes some of the issues with using them.]

Dear students,

As I mentioned on Friday, I have been considering how to re-structure the points for the clicker questions. The failure of the clickers this past Wednesday, the number of people who left at that point, and the relative quiet of the ensuing class, made me realize that by attaching points to clicker questions, I may have been doing you all a disservice. I don't want anyone to feel that they "have" to come to class just to get points. Obviously, I would hope that my lectures are sufficiently engaging and useful that you would see the benefit of attendance but I have always believed in treating my students as adults and as we discussed at length at the beginning of the semester, everything in life is a choice, including coming to class. If you don't feel that the intrinsic benefits of class attendance exceed the costs, then I would certainly expect you to do the rational thing and not come.

In a smaller class, I would not be so concerned about "forcing" people to come to class who do not want to be there. In a smaller class, the effect of such people on others, who do want to be there, is negligible. But in a class this size, disinterested students create an externality, and that external cost is borne by the students sitting around them. This is partly my fault - I have not been as diligent as I should be about asking people to stop talking, and I intend to be stricter about this. But I also am going to change the way points are assigned. Beginning on Monday, there will be quizzes posted on Blackboard that are similar (not exactly the same, but quite close) to the clicker questions asked in class. The set-up will be the same as with the clickers in that there will be one or two questions where half the credit depends on getting the answer right, and two or three questions where you simply have to answer in order to get the points. Thus, you can either get the 5 daily points by answering clicker questions in class or by answering the questions on Blackboard (you can do both but only one score will count). The Blackboard quizzes will also replace the open-ended Do-It-Yourself questions and they will be available until just before the next class meeting (e.g., Monday's quiz will be available until 11:45AM on Wednesday). Please note that in order to avoid double-counting in the Blackboard gradebook, I will be consolidating the CPS grades and the BB quiz grades but that won't always happen immediately.

My primary concern is that you learn economics, and how to be productive workers after you graduate, but I recognize that everyone learns in different ways and I do not want to insist that you must learn by sitting in class and listening to me. I hope that this approach will lead to a better learning experience for everyone.

As always, if you are struggling with any of the material, I encourage you to come see me, either in office hours or email me to set up another time to meet. My TAs also have office hours (posted on Blackboard), and the econ department has free tutoring (you just need to sign up in Nasatir 305).

Sunday, November 2, 2008

Economics as a 'real science'

Freakonomics has a Q&A with Sean Masaki Flynn, author of Economics for Dummies. The whole thing is interesting but I thought his response to a question about "why is economics considered more of a real science than psychology?" was one of the best explanations of this issue that I've seen. It's a long quote but I think worth repeating:
The most important philosopher of science of the 20th century, Karl Popper, argued that economics was the only social science that had turned into a real science. To him, economics was the queen of the social sciences just as physics was the king of the physical sciences.

But why did he think this? Because economics was, to him, the only social science that engaged in systematically testing hypotheses about how the world works. Doing so is actually much easier if you engage in a lot of mathematical modeling. Why? Because in a math model it is crystal clear what your assumptions are, and also what implications follow from those assumptions.

Thus, you can say: “under assumptions X, Y, and Z, we get outcome B but not outcome A.” That sort of very clear statement allows for experimental science.

You simply go out into the real world and find a situation where X, Y, and Z are happening and see if indeed the outcome associated with them is B rather than A. If it is, then this actual phenomenon is consistent with your hypothesis. That doesn’t mean your hypothesis is right, just that it hasn’t been overturned yet by the facts. And if people go out year after year after year constantly trying to overturn the hypothesis and they can’t, then it gains more credence. It never becomes truth; but it gains credibility and may pass into becoming referred to as a theory or even a law.

On the other hand, if you observe outcome A — the outcome that the model said wouldn’t happen — then you know the model is wrong and that you have to start over trying to find some other model of how things work.

Economics was the social science that most early on embraced math modeling and therefore was the social science that led the way in terms of making very precise, testable predictions that could be compared with the real world to see if they held up. That is why economics got the reputation of being more of a real science than psychology.

To see what I mean, think about any of the Sigmund Freud’s writings. Is it at all clear what his assumptions are? What are his X, Y, and Z? And then, is the logic that he uses to get from his vague assumptions to his often-vague conclusions totally air tight? Not really. And then, are his predictions about human behavior in a given situation very precise? No. So, if we went out to test his “model” against what happens in an actual situation would we be able to? Not at all.

But before I get slammed by sociologists, anthropologists, psychologists, and others, let me say that much has changed. All the social sciences are now very much more mathematical and precise and thus very much more able to produce models that make precise, testable predictions. So these days, I can’t really say that economics is more of a real science than many of the others. But I would say that we were first, and that we led the way, and that that was a very good thing.

Friday, October 31, 2008

Political bias

I know there have been some debates in the edublogosphere lately about political statements in/around the classroom. Personally, I don't think schools should tell teachers (whether K-12 or higher ed) that they can't wear political pins or have campaign bumper stickers or whatever. At the same time, I take my Obama pin off my bookbag when I'm at school, not because I think faculty shouldn't be allowed to wear such things, but because I don't want it to affect how my students perceive what I'm saying in the classroom. I talk about public policy a lot in all my classes but since I try to hew closely to positive (vs. normative) analysis of any issue, my students usually cannot tell what political party I belong to. I consider this A Good Thing.

Perhaps my students are not as cynical as I am but as soon as I know what a person's political beliefs are, it affects how I perceive what they say about policy issues, particularly if I do not agree with them. That is, I believe it's human nature for us to more readily accept information that is consistent with the world view we already hold, and to distrust information that is inconsistent with that world view. Dismissing information we don't like is easier when it comes from someone we can label as 'biased' (though it is also human nature to believe that people we disagree with are 'biased' while those we agree with are 'neutral').

In an economics class, even positive analysis can be perceived as normative if the conclusions are at odds with a student's worldview. A good example is tax incidence: every (neoclassical) economist in the world will tell you that it doesn't matter who the government collects the tax from (statutory incidence), both the seller and the consumer will pay the tax in the form of changed prices, relative to the price without the tax (economic incidence). But when I tell students that removing the gas tax does not mean the price of gas will fall by the full amount of the tax, they have a hard time believing it - even if they can follow the theory, they simply don't believe it. I worry that if they thought I was a "tax-loving liberal", they would probably be even less inclined to believe the theory itself. You can imagine how this problem would be compounded when we get into topics that are even less clear-cut.

So I bend over backwards to make sure that I am staying as objective as possible. When there are normative judgments to be made, I tend to talk in 'if-then' statements: "If you believe in the ability-to-pay principle, you would be more likely to support a progressive tax system" or "if you believe that the value of the benefit externality is large, then you might feel government intervention is appropriate", etc.

All of which is lead-in to the point of this post: I am considering using this McCain clip as part of a discussion of why we have a progressive income tax system. On the one hand, I think it sums up the basic issue pretty well (i.e., lots of people think it's unfair to tax rich people more, lots of other people think it's OK to ask people to pay more once they reach a 'certain level of comfort'), and I think that the fact that it's coming from John McCain could potentially give it more credibility with students who are Republicans. On the other hand, deep down, there's a part of me that gets some joy from showing those Republican students that the man is saying the exact opposite thing today from what he was saying 7 years ago. Because of that, I probably won't use it. But if it were anyone but McCain, I would, and that's bugging me too.

Wednesday, October 29, 2008

"Making" students come to class

For some reason, I wasn't able to use the clickers yesterday. CPS for PowerPoint seemed to be working but when I started the slideshow, I got an error I'd never seen before. Since it didn't go away when I closed and re-started the application, I decided to just get on with the lecture. But I did announce that the clickers weren't working and if anyone wanted to leave (since I knew that some students would), to please leave now so as not to disturb everyone else later. Well, quite a few more students left than I expected (seriously, about one quarter to one third). There were still probably about 250 students who stayed but it's amazing how empty a 500-seat classroom feels when it's only half full!

But what was really striking was how wonderfully quiet the rest of the class was! With over 400 students, there is always a lot of chatter around the room - I try not to let it get too bad but there's only so much I can do so there's always a low-level buzz in the room. I know that this is distracting to other students (I even asked a clicker question about it a couple weeks ago and over 80% of the students answered that yes, they had been 'bothered' by people around them talking). With the room half empty, I couldn't believe how much quieter it was. I still had the clicker questions embedded in my slides so I asked students to respond by just raising their hands. That doesn't work quite as well but in general, I felt like I was connecting better with students. There were a couple students who asked questions who have never spoken up in class before - that could just be that they've never had anything to say but I did wonder if it was partly due to the class feeling smaller somehow.

The thing is, yesterday's experience just reinforces something I've been thinking about for a while, and that is whether I should be "making" my students come to class with extrinsic incentives. Actually, one reason I agreed to pilot the lecture capture was that I wanted to make it as easy as possible for students to NOT come to class but still get the benefit of lectures. But because they get points for answering clicker questions, I still get really good attendance. They do have an option to answer an open-ended question if they miss class, but most students recognize that the easiest way to get the points is to just be in class (and I don't really want to grade open-ended questions for half the class).

I'm not saying that I don't want students to come to class. But what I really want is for students to want to come to class, not just to get points but because they want to learn. The thing is, I've never really kept track of attendence before; I've always told students that if they choose to skip class, that's their choice, though I want them to understand the benefits and costs of that choice. And I've always tried to teach my classes in such a way that they see the benefits of coming on their own. But the clickers create an incentive incompatibility problem: if I don't make the clicker questions 'worth' something, I'm afraid students won't buy/use them, but if I make clicker questions worth points, I'll get students coming who don't really want to be there to learn, and that actually imposes a negative externality on other students. If students are there, I do want them to have and use the clickers because I think they are a valuable teaching tool, and seeing their responses gives me important feedback about their progress (so I want them to take their responses seriously).

So my conundrum is how do I design an incentive structure that a) does not give students an extrinsic incentive to come to class, but b) gives students who do attend class an incentive to bring and use their clickers? I suppose that I could just do away with all clicker-related points entirely (e.g., if I'm going to rely on their intrinsic desire to learn to get them to class, maybe I should rely on that to get them to bring their clickers), but I don't quite trust their intrinsic desire to learn that much. I'm kicking around some ideas in my head but if anyone out there has thoughts, I'd certainly love to hear them!

Losing perspective

Here's my problem with having students do evaluations: I tend to put more weight than I probably should on the negative comments students make. Over 300 students responded to my online evaluation; of those, 120 made comments; of those, about 70 were critical (while the others said they think the class is going well), and of those, probably only 40 were truly critical (with the others more along the lines of "I'd prefer X but I do like Y"). So I've got less than 10% of the class actively being critical (about the same as being actively complimentary), and a not-small proportion of the critical comments overall are the sorts of things you would expect from relatively immature freshmen and sophomores - my favorites are the "you try to trick us with questions where there's more than one right answer" and "you should do X" where X is something I already do (provide study guides, give them questions from last year's exam, etc.) but for whatever reason, they haven't noticed. On top of that, about half of the students who believe I'm going too fast said that they do not consistently listen to the podcast before class or use the lecture slides provided on Blackboard.

I know that it's impossible to please all of the students, all of the time, especially with a class of 500. And I know that in any class, there are going to be some students in the bottom part of the distribution who don't want to take responsibility for being there, and if I try too hard to appease students at the bottom, I risk boring the heck out of the good students. The vast majority of the students seem to feel that the class is going at least OK, so why am I worrying about this unhappy minority?

It's partly that I don't know if this is a representative sample. Among the 200 students who did not respond to the survey at all, are they more likely to be better-than-average or worse-than-average students? My guess is worse-than-average, so my guess is they are more likely to agree with the negative comments than the positive ones. And I know it's partly my personality - I want every student to think this is the best class they've ever taken and to be as fascinated by economics as I am. I don't want them to be there just to get a grade, and to care more about what will be on the test than about learning.

Sigh. Maybe I just need to go back to teaching upper-division Econ majors...

Friday, October 24, 2008

Fraud and the financial crisis

In a post a few weeks ago, about some of the assumptions around the financial crisis, I wondered what proportion of foreclosures and mortgage defaults are homeowners who honestly got screwed by greedy brokers and bankers, versus informed buyers who knowingly took risks and simply lost that gamble. I wasn't even really thinking about outright fraud but a recent post on Citizen Economists certainly has me thinking about it now. It's a fascinating post about the increase in mortgage and foreclosure fraud, including a very nice explanation of exactly how such fraud can be perpetrated. In the comments, SteveP claims to have reviewed hundreds of foreclosures in Florida and Georgia and found that over 70% were fraud scenarios. I'd like to see more rigorous and comprehensive analysis but thought this anecdotal data was certainly interesting.

Thursday, October 23, 2008

Mid-semester evaluation

It's Week 8 of our 15-week semester (yes, I keep track, though that's largely because my syllabus is laid out by week), so we're halfway through and this is usually around the time when I ask my students to do a mid-semester evaluation. This year, I'm a bit hesitant because honestly, I don't have the time or energy to make any real changes and my patience has already been stretched so thin by student demands that I'm loath to invite them to tell me what they think is wrong with the class. But I do think it's worth taking some time to reflect on how the semester is going.

In my Principles class, my main concern is that the pace of the class is too slow, that we are not "covering" as much material as we should. I'm sort of having a hard time assessing this because I switched around the order in which I'm presenting topics so things are a bit jumbled up. Judging from the responses to clicker questions, students seem to be grasping the material well, which should be a good sign but then it also makes me wonder if I am going "too slow". On the one hand, I am hoping that the better performance on the clicker questions is at least in part because students are actually listening to the podcasts I post before class and thus come to class more prepared; on the other hand, perhaps I have not appropriately compensated for the fact that they are coming to class more prepared so the material I discuss in class is just repetitive and they are bored to death.

Outside of class meetings, the discussion board assignments have bigger-than-expected costs for me, in terms of dealing with confused students, but seem to have big benefits for the students as well. A number of students have left comments along the lines of "I never would have thought about this as being connected to economics," which is exactly the point. Unfortunately, the activity that I think is probably the most useful for students, volunteering with Junior Achievement, has been a bit of a nightmare. I'm not sure if the JA folks were unprepared for the number of students or what, but a number of students were not able to participate because school placements just never happened. I'll have to think carefully about how to handle this in the future.

The Economics for Teachers class has had its ups and downs as well. The class is a mix of teaching economics and talking about teaching. I'm not at all sure that I've got the mix right (and at least one of my students has noted on her blog that I've got it wrong) so I'm already thinking about how to do things differently the next time. But for now, I'm consoling myself with the thought that at least my students are more interested than they would be in a regular economics class so anything they do learn about economics is likely to be a marginal addition to their understanding of the subject (and if any of those students are reading this, feel free to correct me in the comments, or on your own blogs!).

With both classes, I'm constantly reminding myself that teaching is an iterative process and if things don't go exactly as I'd like, I can always make improvements the next time. Of course, the Type A side of my personality still worries that I am shortchanging my current students but the economist in me tries to remember that there are always trade-offs and I can't do everything. Fortunately, there are also plenty of truly bright spots, like the students who come to ask me about switching their major to economics because they are finding my class so interesting. I hate to sound so cliche but in the end, it really is those students who make it all worth it.

Friday, October 17, 2008

DonorsChoose: Start 'em young

I think that for many people, the idea of teaching young children about money feels a bit odd. I can understand that, because at first glance, I think that's how I would feel and I'm an economist saying this! Unfortunately, a lot of people associate money with greed, selfishness and other "bad" values that we generally don't want to pass on to our children. But money itself, and the role it plays in the world, carries none of those values inherently; all of those negative associations arise from people spending money in particular ways. One thing I find interesting is that there are also plenty of values that most people consider "good" that could also be associated with spending money in other ways (such as 'frugal', 'generous', 'good provider') but I don't think that's the first thing that comes to most people's minds.

At any rate, however you feel about money, I think most people would agree that those who have a better understanding of economics are probably more likely to spend their money wisely. Understanding trade-offs and incentives, that there is no such thing as a free lunch, and how to compare costs and benefits are crucial for making good decisions (and not just about money). I'd also argue that understanding markets, both when they work and when they don't, is crucial for being an informed citizen. So I am excited that some teachers, like Mrs. S. at C. Wayne Collier Elementary School in Hope Mills, North Carolina, are trying to expose students to these concepts as early as possible. Ms. S. wants to give her first graders the experience of being producers and consumers in a simulated market where they will make and 'sell' crafts. However, she needs some help with buying the materials. You can help her out by donating on the DonorsChoose website. You can also check out the other economics projects I'm promoting, or search for other worthy projects.

Friday Fun, econ-style

Awhile back, Freakonomics posted a bleg from an econ grad student looking for jokes to impress his professor. Although I had heard many of them before, this one had me laughing out loud (which either tells you something about me, about economists, or about how punchy I can be after teaching):
A therapist, a priest and an economist go golfing. The group ahead of them is extremely slow, leading to some frustration among the three. Their complaints are overheard, and a man from the group ahead walks over to them. He introduces himself as an aide because the group of golfers he is with is blind! The aide thanks the three in appreciation for their patience for the blind golfers. The priest goes, “Oh no, all my life I’ve preached for all to be better to my fellow man and here I am complaining about the blind!”. The therapist says, “I’ve been trained my whole life to help others and here I am complaining about the blind, shame on me!” The economist says, “Oh no! They should be playing at night.”

Wednesday, October 15, 2008

Is 'rich' a normative concept?

The way that most intro classes present the concepts of positive and normative is to say that normative statements are about the way the world "should" be while positive statements are about the way the world "is". I don't really like this because it's too narrow and students aren't able to see the bigger picture - if a sentence doesn't happen to contain the words "should" or "is", they get confused. So instead, I talk about normative statements as being based on values and opinion while positive statements can be empirically proven or disproven (they don't have to be true, you just have to be able to prove that they are true or not). I find that this gets them thinking beyond just whether a sentence is descriptive or prescriptive, and into actual analysis.

So on the first midterm for my Principles class, I gave my students several sentences that they were supposed to identify as being either positive or normative. The one that tripped up the most students was:

"There is a huge income gap between rich and poor households in the U.S."

The correct answer is that this is normative because although one could empirically measure the difference in income between households of different incomes, it is still a matter of opinion whether that difference is 'huge'. The Presidential campaign has also given me some good examples of how the words 'rich' and 'poor' might also be normative - to Barack Obama, 'rich' is anyone making over $250,000 and to John McCain, it's anyone making over $5 million. Could you really use empirical data to convince either one that they are wrong?

Along similar lines, a recent post on Get Rich Slowly asks what does it mean to be rich? J.D. ponders:

Kris and Rhonda tried to decide: Does being rich mean having a large income? Does it mean having a certain net worth? Are the rich selfish? Is being rich only a state of mind? Or is it something else entirely?

Are two people with equal $100,000/year incomes rich? What if one has $100,000 in credit card debt? Is he still rich? What if one has higher expenses because she has four children? Is she still rich?

I think most of us would agree that a person with a $20,000 income and three kids is poor. But what if somebody earns $20,000 a year, lives a frugal lifestyle, and is able to save $5,000 each year in a Roth IRA? If you have a small income but you’re a good saver, does that make you rich? Is this a bad thing?

“All this makes me think that money isn’t the answer,” I said after Kris told me her story. “It makes me think that being ‘rich’ doesn’t have anything to do with how much money you have. But what then does it mean to be rich?

Given the fuss that politicans make over "the rich" and "the poor", I think it's an excellent question to ponder.

Tuesday, October 14, 2008

Because this is an economics blog...

I have to serve up the requisite post about Paul Krugman being awarded the Prize in Economic Sciences in Memory of Alfred Nobel (note that there isn't technically a 'Nobel Prize' in economics - it was established after the others). The award might surprise many non-economists who only know Krugman for his somewhat liberal op-ed column in the New York Times but politics aside, Krugman is widely known in the profession for his work on 'new trade theory'. I'm not a macro person so my grasp on his work is somewhat dim but The Financial Times sums it up nicely:
Earlier trade theories suggested that a country would trade with partners that were different – rich would trade with poor, and capital-intensive would trade with labour-intensive. In practice, rich countries tend to trade with other rich countries. Mr Krugman’s analysis showed why this was to be expected: many products were most efficiently produced by large companies, but consumers wanted variety and would buy products from foreign giants as well as the dominant domestic corporations.
There's been so much written about him in the last 24 hours, by people far better qualified than I, that I really don't have much to add but here are a few of my favorite bits:

Sunday, October 5, 2008

Murder, mayhem and economics

I can't remember when I first found Marshall Jevons' (a.k.a. William Breit and Kenneth Elzinga) detective stories but as a budding economist, I got a huge kick out of the very thought of using economic analysis to solve a murder mystery. For those not familiar with these books, the protagonist is Henry Spearman, a professor of economics at Harvard who solves murder cases by applying economic reasoning. Even if you don't have the slightest interest in economics, they are fun and easy to read, which is part of what makes them such great tools for exposing students to economic thinking. They really make the point that thinking like an economist is about so much more than just money and markets.

Which is why I was excited to see that Ms.Y at Osborne High School in Marietta, Georgia wants to have her AP Econ students read Jevons' first book, Murder at the Margin. This is one of the projects I'm promoting for the DonorsChoose Blogger Challenge and Ms. Y seems like the kind of econ teacher that I wish I'd had in high school. Osborne is a high-poverty, high-minority school but as Ms. Y points out:
...our students are committed to learning. Every year our advanced placement classes grow in numbers with new students who want to go to college and see these classes as a way to challenge themselves and increase their chances of acceptance to college/university. Unfortunately funding for materials in these classes has a much greater demand than supply so some classes often find themselves going without the academic materials that would greatly assist their students.

For students learning economics, especially advanced placement level classes, real world application can be a struggle as they attempt to process new concepts and theories. To combat this problem, many teachers use non textbook readings to supplement these ideas and give students the opportunity to view economics in a non academic light...

Your help will ensure that my students get the opportunity to further develop their reasoning skills, understanding of economics and the economy and their application abilities which will serve them well in college or the work force.
You can help Ms. Y get these books for her students by donating on the DonorsChoose website. You can also check out the other economics projects I'm promoting, or search for other worthy projects.

Friday, October 3, 2008

Challenging assumptions about the financial crisis

This started out as a quick response to Jim's comment on a previous post but it started getting long and I decided I'd just make it a full post (and to give fair warning, it's quite a big longer than usual).

First, a mini-econ lesson for anyone who hasn't taken econ in a while: "moral hazard" arises when people do not face the full costs or benefits of their actions and end up acting in disagreeable ways (that is, disagreeable to the people who DO face the full costs). The most common example is when people do not face the full costs of risky action (like because of insurance) and thus take more risks than they otherwise would. As I stress to my students, the name notwithstanding, moral hazard does not necessarily mean people are acting unethically (though it may) - it does mean they are responding to the incentives they face. The other important thing to know is that economists typically do not attach judgment when they see people acting in self-interested ways (and as I also stress to my students, self-interested is not the same thing as selfish). That doesn't mean that, as a human being, I don't frown on people acting like jerks, and I'm not talking about fraud or other illegal activity, but I generally fully expect people to act in their own self interest.

Let me also say loud and clear that my understanding of the whole financial situation is pretty tenuous and this is not my area of expertise at all. But the way I see it is that there are a lot of layers - you've got commercial banks making loans (mortgages) to homebuyers, and then selling those mortgage contracts to investment banks, who bought them with money from various investors, who bought insurance for those purchases from companies like AIG. So moral hazard problem #1 is that the people making the loans (commercial banks) were never going to be on the hook if the homebuyers defaulted. This presumably led them to make riskier loans than they otherwise would have. Moral hazard problem #2 is that since investors were insured, they had less incentive to monitor what the investment banks were doing with their money and the investment banks had less to worry about if the mortgage-backed investments ended up being crap. This presumably led them to hold more of these risky assets than they otherwise would have. Then throw in that when the mortgages were sold to the investment banks, they were packaged in such a way that it wasn't easy to assess their true value (since some 'good' loans were grouped with some 'not so good' loans in order to mitigate risk), and especially hard once the housing market started to tank. And as I understand it, the big problem now (and the main focus of the bailout) is that we've gotten to a point where no one knows which mortgage-backed securities are OK and which are crap so they don't want to buy any of them, even the good ones. That means their value to the banks holding them is essentially zero (i.e., if you can't sell an asset when you want to, it basically becomes worthless to you).

OK, so that's all preamble. Jim's comment was: While I agree that the average home buyer shares some culpability, I find it disingenuous to imply that a banker, presumably educated, experienced, and well paid, whose life's work it is to know how to assess and manage risk, should be compared to the average home buyer, who trusts his broker and the system to provide reliable information and recommendations.

I don't necessarily disagree with Jim but there are some assumptions embedded in what he wrote that I think are important to point out - namely, the assumption that the "average banker" should have known better than to take such risks but that the "average homeowner" didn't understand the risks he/she was taking. This seems to be a pretty common assumption, and it may even be accurate, but my guess is that those making this assumption don't actually know if it's right or not. That is, many people seem to assume that the majority of the risky mortgages were issued to 'deserving' homebuyers - their credit might have been terrible or their income shaky or they simply were in over their heads but since the bank/broker told them they could afford it, who were they to disagree? At the same time, many people seem to assume that the majority of the bankers were greedily buying up too many of these crap mortgage-backed securities, knowing that they were crap.

But what about the homebuyers who knew they were accepting a risky mortgage (for example, people who fully planned to re-finance or flip the house)? Are they any less to blame than the greedy bankers? And what about the 'honest' bankers who saw these mortgages as risky assets but believed they were fairly valued (i.e., the price and return reflected the risk)? Or the ones who are holding securities that are probably OK (i.e., not backed by crap mortgages) but no one will buy them simply because everyone is panicked? Are these bankers any more to blame than the deserving homebuyers?

I think most people are willing to believe that there are some greedy
folks among the homeowners and some honest folks among the bankers but I'd wager that no one knows for sure what the proportions are in either group. To be honest, as a fairly liberal idealist, I'm certainly inclined to believe there are many homeowners honestly got screwed. But I'm also hesitant to assume that there was a lot of overt fraud going on, and an economist, I've been trained to be super-conscious of what assumptions or biases might be underlying any analysis. So my point is that I simply wonder why so many people believe that among homebuyers with bad mortgages, the deserving homebuyers dominate the informed homebuyers, but we believe that among bankers, the greedy bankers dominate the honest bankers? If anyone has data on the actual numbers, I would love to see them. And if I'm over-simplifying this to the point of being totally inaccurate, feel free to tell me!

UPDATE: In case this wasn't long enough, the San Jose Mercury News has a nice little article about the risk-taking that was going on at each of the levels, starting with the homebuyers and on up to the investors.

Friday Fun

One upside to the financial crisis is that it's generating some very funny bits. A few of my favorites:

- Japanese Banking: In the last 7 hours Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song, while today shares in Kamikaze Bank were suspended after they nose-dived. Samurai Bank is soldiering on following sharp cutbacks and Ninja Bank is reported to have taken a hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal. Shinto bank doesn’t have a prayer and it’s probably goodbye to Sayonara Banking too.

- PhD Comics Economics Meltdown

- Investment tips for 2008 (via email): With all the turmoil in the market today and the collapse of Lehman Bros and acquisition of Merrill Lynch by Bank of America, this might be some good advice. For those of you with any money left, be aware of the next expected mergers so that you can get in on the ground floor and make some BIG bucks. Watch for these consolidations later this year:

1.) Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W R. Grace Co. will merge and become: Hale, Mary, Fuller, Grace.

2.) Polygram Records, Warner Bros., and Zesta Crackers join forces and become: Poly, Warner, Cracker.

3.) 3M will merge with Goodyear and become: MMMGood.

4. Zippo Manufacturing, Audi Motors, Dofasco, and Dakota Mining will merge and become: ZipAudiDoDa .

5. FedEx is expected to join its competitor, UPS, and become: FedUP.

6. Fairchild Electronics and Honeywell Computers will become: Fairwell Honeychild.

7. Grey Poupon and Docker Pants are expected to become: Poupon Pants.

8. Knotts Berry Farm and the National Organization of Women will become: Knott NOW!

And finally...

9. Victoria 's Secret and Smith &Wesson will merge under the new name: TittyTittyBangBang

Thursday, October 2, 2008

Cool website: EconomPic Data

This is a great site for teachers. The author, Jake, creates charts and graphs of various economic data - or as the tagline says, "Darn nice economic eye candy". There's always the usual economic indicators but also random data related to current events. The amount of commentary or explanation varies a lot but there is a post this week that I thought was a really excellent, very simple explanation of how the Bailout Can Work and At No Cost to Taxpayers.

Wednesday, October 1, 2008

DonorsChoose.org Blogger Challenge

As someone who does research on school finance, particularly in California, I am all too aware that many of our public schools are seriously under-funded (I say 'many', not all, because there are also quite a few that are just fine, thanks to inequities in the way schools are financed, but that's a whole other discussion). While my research focuses on the systemic funding, I've always been most heart-broken by the stories about the impact on individual classrooms. We've all heard horror stories about teachers buying school supplies with their own money simply to make sure their students have basic items like paper and pencils. But even in situations where the school and students are relatively well-off, teachers will often reach into their own pockets in order to buy little things that can vastly improve their teaching - to use a simple example of my own, just last week I bought a bunch of candy to use for a classroom exercise on gains from trade and allocation of resources. This was not a huge expense for me but for public school teachers, such little things add up.

This is why organizations like DonorsChoose.org are so great. They create a way for people to donate to specific teachers for specific projects. You can donate any amount, you can search for schools in your local area or for classes in a particular subject. I am participating in their Blogger Challenge this month and encourage you to get involved as well! You can visit the Economics for Teachers giving page to donate to econ-specific projects, or search through hundreds of other projects. This is a great cause and a neat way to help teachers directly. Please check it out!

p.s. If any teachers (whether economics or anything else) want me to add your project to my giving page, just let me know! I'll be highlighting different projects in this over the coming weeks.

Monday, September 29, 2008

Riding the roller coaster

No, I'm not talking about the bailout debacle (though this might be the only remotely-econ-related blog that isn't talking about that today; if you're looking for info on the financial crisis, I highly recommend Mark Thoma's Economist's View). No, I'm just talking about teaching. I've been feeling sort of burned out and seriously in need of a vacation but today, in particular, was one of those days where I really didn't feel like getting out of bed, let alone getting in front of a classroom. I was crabby from the moment I got to campus and had to wait for my plain ol' coffee at the Starbucks in the student union (why do they even bother having an extra carafe set up if they wait until BOTH are empty before brewing more?). I was even crabbier after my principles class where, while going over the exam they took on Friday, I realized that I had once again given them a bad question (at least this time, the question itself made sense; I just had inadvertently written a 'wrong' answer that justifiably could be considered right). Fortunately, a colleague explained that this is not that difficult to rectify with the software we use to score our scantrons but until I found that out, I was tearing my hair out trying to figure out how to make this right in a class of 500.

So you get the point - I was not having a great day. But then I went to my Economics for Teachers class. My plan for the day was to talk about the competing goals of economic policy as an example of positive and normative analysis and as a vehicle for thinking about how our personal values affect our perceptions of costs and benefits, which ultimately affect whether we support or oppose various policies (side note: by 'goals of economic policy', I'm talking about broad goals like efficiency, growth, stability, etc.). We got a little side-tracked talking about the bailout and the financial crisis but then we got into our discussion of policy goals and I have to say, it was one of those classes that reminds me why I love economics and why I love teaching. I'm always a little worried when I have students work on exercises where there isn't necessarily a 'right' answer because it can be hard to get them to say what they really think, versus what they think they are 'supposed' to say/think. But we had a fairly lively discussion and maybe I'm just punchy, but the students seemed geniunely interested and some of them had really thoughtful things to say. At one point, I asked them to give some examples from history where there was a trade-off among the various goals we were discussing. Not surprisingly, since these are social science majors who have taken more history classes than I ever did in college, they came up with some great examples, not all of which were purely economic in nature. Hopefully, thinking about these historical events in the context of our discussion today will also give them some additional insights about how those events were shaped by the trade-offs faced by the leaders at that time.

I'm still really looking forward to getting away to the Bay Area this coming weekend (hooray for Aplia and being able to run their experiments from anywhere with an internet connection!) but tonight's class gave me a much-needed boost of teaching energy. Here's hoping it lasts longer than the bailout bill did...

Sunday, September 28, 2008

Speaking of unintended consequences

Alex Tabarrok highlights this story about a Nebraska 'safe haven' law. Such laws are generally intended to protect babies from being abandoned but apparently, Nebraska's law does not specify an age limit. The headline says it all: Father leaves nine children at Nebraska hospital.

Thursday, September 25, 2008

Constantly learning

Monday's Principles class was one of those 'growing' experiences that I know make me a better teacher but aren't all that fun when you're in them. I asked what I thought was a fairly straightforward review clicker question about unintended consequences. Here's the question:

Which of the following is an example of the unintended consequences of people responding to incentives?
A.Feeling sick after over-eating.
B.Sleeping through an exam because you were up all night studying.
C.Using a bigger font because your teacher says your paper must be at least ten pages long.
D.Paying taxes when you win the lottery.

For any non-economist readers, let me explain that when economists refer to the 'unintended consequences of people responding to incentives', we are referring to the idea that people always respond to incentives (changes in costs or benefits) but their response may not be what was intended by the person setting the incentives. So the correct answer here is C since playing with the formatting on a paper is clearly not what a teacher wants you to do to get your paper up to a certain length.

Well, among my students, 12% answered A, 45% answered B, 20% answered C and 23% answered D. Given that distribution, I asked the students to confer with a neighbor and then I re-asked the question. The second time around, 3% answered A, 67% answered B, 14% answered C and 17% answered D! In the ensuing discussion, a couple things became clear:

1) The answers are not well-formed. Many students did not understand the incentives involved in a teacher saying your paper must be a certain length. I am not sure if it would have mattered if I had phrased it differently (e.g., 'your teacher will dock points if your paper is under ten pages') because the problem seemed to be that students did not understand that when a teacher sets a target length for a paper, the intention is for students to include a certain amount of information - that is, they didn't see changing the font as an unintended consequence (I was too scared to ask what they think it means when a teacher says a paper should be ten pages long...). It may also be that all teachers now specify that papers must be in a particular font with particular margins so today's students are less familiar with the whole idea of gaming the format.

2) I had not taught the idea of 'unintended consequences' well. For answer B, students were caught up with the idea that studying hard for an exam is responding to the incentives of wanting to get a good grade, and sleeping through the exam is an unintended consequence of studying so hard. So in a very indirect way, I can understand why they would want to say that this was an unintended consequence of responding to incentives. But it took quite a while to get them to see the difference between the *response* being unintended (i.e., doing something specifically because the costs or benefits changed) and something unintended just happening.

Now, this was a question I just came up with for this class, partly because of a question a student had emailed me about this topic over the weekend, so this was the first time it was being 'vetted' by a class. It was a painful reminder of how hard it can be to come up with good multiple choice questions! But I'm sort of used to students complaining about not understanding questions (this has always been a struggle for me). What was more striking/disturbing to me was when I realized that I had made a newbie mistake in teaching the material - the concept is so familiar to me that I forgot to think about how it could be seen differently by my students. To give myself some slack, I'll say that I've never actually taught this concept so explicitly before (I've mentioned it and maybe given a few fun examples but I haven't spent any real time on it, this specifically, in the past). But it made me think hard about how I will need to change the way I explain it next time...

Related posts:
Dumping content
It's hard to get incentives right

Tuesday, September 23, 2008

Food for thought about the financial crisis

I'm still letting classes swamp my time but wanted to share a couple quotes I found thought-provoking:

From Free Exchange, economist.com: "I find it condescending to presume that when a banker over-leverages himself he is being greedy and reckless, but when the average person buys a house they can not afford, they were misled and are the victim."

From Don Pedro, Economists for Obama: "[Treasury Secretary Paulson is] the former CEO of Goldman Sachs, and as Yglesias points out, he'll be unemployed in just 4 months time and presumably looking for a new job with a Wall Street company. How could Congress possibly give him $700,000,000,000 to buy bad debt of his choice from companies that will include his former and probably also his very-soon-in-the-future employers?"

And this is unrelated to the crisis but I just thought it was really cool: Project Implicit assesses whether your sub-conscious mind is in agreement with your conscious mind.