SURPRISE SIDE ECONOMICS

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SURPRISE SIDE ECONOMICS Ideas for
Introductory Economics Lectures
Marcelo Clerici-Arias and John B. Taylor Stanford
University Prepared for Presentation at the
American Economic Association Annual
Meetings Boston, Massachusetts January 9, 2000
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Standing on the shoulders of giants

• If Adam Smith can inspire us as economists he can
  also inspire us as teachers of economics.
• Heres what an inspired Woodrow Wilson said of
  Smith
• He constantly refreshed and rewarded his
  hearers...by bringing them to those clear streams
  of practical wisdom and happy illustration which
  everywhere irrigate his expositions.

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What is surprise side economics?

• Lecture ideas to make economics
• Less abstract
• More intuitive
• More relevant
• More memorable
• Combines entertainment with education
• Element of surprise gives advantage to live
  lecture
• Multimedia animated slides, audio, video,
  on-line
• Active learning component
• Small group work-outs in class
• Live experiments participate or watch live demo
• Not for everybody!

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Ideas for teachingNo single way is best for
allOLD NEW
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03_08A
PRICE
Supply curve
300
280
260
240
New intersection
220
Equilibrium
price rises
200
New
180
demand
curve
160
Equilibrium
quantity rises
140
Demand curve
0
5
10
15
20
QUANTITY
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I bet you wonder how I knewabout your plans to
make me bluewith some other guy you knew
before.Between the two of us guysyou know I
love you more.It took me by surprise(drive me
crazy),when I found out yesterday.Dont you
know that ...
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Could you sketch the supply and demand diagram by
hand?
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AT C
08_05
Dollars
QUANTITY
9

08_05
Dollars
AL
QUANTITY
10

08_05
Dollars
BE
QUANTITY
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AT C
0
Dollars
BE
AL
QUANTITY
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Economies of Scale
10 workers together 48,000 pins or 4,800 pins
in a day
a worker alone 20 or 1 pin in a day
1/240th or 1/4800th as much
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ITS MACROPut on your Big Picture Glasses
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We will answer their demands for a gold standard
by saying to themYou shall not press down upon
the brow of labor this crown of thorns.You
shall not crucify mankind upon across of gold.
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WELCOME TOA school for central
bankers.Dedicated to teaching the science and
art of monetary policy.
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A case where macroeconomic principles were given
low weight in the economic policy decisions
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To get a gut-feeling for the idea of comparative
advantage, lets imagine 2 people with 2 skills
lawyer economist
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Survey QuestionDo you learn more going to a live
lecture or watching online?

• I learn more online 15
• I learn the same online versus in lecture 42
• I learn more by attending the lecture in person
  44

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Active learning in large lectures

• Classroom experiments
• Small group work

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Classroom experimentsin large lectures

• Partial class participation
• Example double oral auction
• Some students participate as buyers and sellers
  on stage
• Rest of the class observes how the market works
• Total class participation
• Example free rider experiment

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Free rider experiment

• Students invest fixed number of tokens in private
  account and/or public account
• Public account yields a higher interest rate, but
  the dividends are shared with everyone
• Six rounds
• No communication
• Results posted after each round
• Break for communication between rounds 3 and 4
• Cash prize for one randomly selected person

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Free rider experimentFall 1999-2000
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Free rider experiment and learning

• Students quickly recognize similar phenomena in
  different settings
• Strong impression in the minds of the students
• I believed in humanity until today!

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Small group workin large lectures

• Important characteristics
• SGW mode
• verbal and audiovisual clues
• example Economic Jedi
• very small groups pairs (with neighbor)
• very focused one small problem or subset of a
  problem, not a big discussion
• very short 90 seconds to 3 minutes
• share findings with the whole class

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Economic JediThe mystery of increasing poultry
consumption (1)

• Why has consumption of chicken and turkey
  increased so dramatically over the last several
  decades?
• Small groups
• Draw initial equilibrium in poultry market
• In the same graph, show what could have happened
  to explain the increase in the consumption of
  poultry

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Economic JediThe mystery of increasing poultry
consumption (2)

• Alternatives
• increase in demand consumers are more health
  conscious and have switched from red meat to
  poultry.
• increase in supply cheaper ways of raising
  chicken and turkey and getting them to the market
• How would you check which hypothesis is true?

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Economic JediThe mystery of increasing poultry
consumption (3)

• Between 1950 and 1990 the real price of poultry
  decreased from 2 to 0.80 per pound.
• Changes in supply were more important.
• Mystery solved!

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Assessment

• Results
• More small group work and discussions improved
  performance
• Peer review and the additional reading did not
  improve performance

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END