Big Changes Test Econ

For students motivated by grades, ways to teach are limited by ways to test. No matter how insightful your lectures, grade-focused students will only attend to what it takes to pass your tests. So better ways to test give better ways to teach.

Economics is usually taught as a series of abstract concepts, and such concepts are usually tested in the abstract as well. Alas, this encourages neglect of how to apply abstract concepts to concrete situations.

Yes, one can instead ask concrete questions, about what would happen in the world if a specific social change were made. For example: what would happen if we discovered a huge new oil field? Problem is, there are many ways to guess at specific consequences without using abstract economic theory. People come to economics with lots of complex intuitions about how the social world works, or how it should work, so if you ask them specific questions they tend to use such intuitions instead of abstract concepts.

For example, lots of questions about changes within the usual range of experience can be answered merely by projecting observed trends, or by making analogies to similar situations. Yes, these are reasonable ways to guess at social consequences, but they can get in the way of assimilating economic concepts. Yes, tests can reward using abstract concepts, but even so it can be hard to get students into that habit.

A related problem is that small changes seem to have limited consequences. One might notice a few immediate consequences, but indirect consequences seem to quickly fade into “pretty much no effect” on more distant parts of society.

So to teach (and test) students to really apply economic concepts, it helps to consider concrete changes well outside of their usual range of experience. For changes that are big and dramatic enough, students can see the inadequacy of analogy and trend projection, and so are willing to look to abstract theory. And big changes more obviously have distant indirect effects.

My post yesterday on Tube Earth Econ was an example. If I ask you to estimate the social consequences of your planet having a very different shape, it is hard to make analogies to similar past events. That will push you more to go back to basic concepts and work from there.

I apply this concept in my masters level microeconomics course. One quarter of the grade is for this assignment:

Big Change Paper – Imagine a single big change to our economy, and then use microeconomics to describe the consequences of that change, including whether those changes are good or bad. You might, for example, imagine how things would be changed if people became immortal, if Star Trek style “transporters” were available, if very reliable lie detectors were available, or if no one needed sleep.

We talk about the consequences of similar big changes in class, to give students examples to follow in their papers. Such discussions and assignments are especially fun for people like me who enjoy science fiction and the drama of thinking about big dramatic social changes.

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  • Gulliver

    Three thoughts and a question:

    1) The partial similarities of two problems can lead one to infer that the abstract model useful for studying one is also useful for studying the other, when in fact the dissimilarities may call for a different model. Actually, this is also a problem with applying non-abstract analogies.

    2) Abstract models are still only models, and as such don’t account for Murphy’s Law and other sources of unforeseen consequences. They are useful, but they are hardly prognosticative (it’s a word now).

    3) One the biggest challenges I face with undergraduate physics students is getting them to think about the models they’re learning in relation to the real world problems those models were designed to explain in the first place. Part of the problem here is that text books place far too little emphasis, IMHO, on applied knowledge.

    Do you find econ texts feature the same shortcoming, or is it mainly a lack of imagination on the part of the students that keeps them from making the “real world” leap?

  • Nick

    That’s clever. What are some especially good answers students have written?

  • Poelmo

    “So to teach (and test) students to really apply economic concepts, it helps to consider concrete changes well outside of their usual range of experience.”

    The problem I have with this is that “proper” economic theory itself is based on intuition.

    For example, economists in the 19th century believed that if the poor got more purchasing power they would just have more children. The 20th century proved poor people weren’t having children because they could afford it but because of religious pressure and lack of contraception, something that economists in the 19th century could have known if they had held anonymous polls before they declared their hypothesis the law of the land.

    Today it is still true that there are a lot of subjects where 10 different economists will give you 10 different answers.

    I think more experimenting and psychological research has to be done in economics and Robin is one of the people who can help us with that. Economics really can’t afford to work with models that assume perfectly rational, perfectly informed people anymore.

    If people were perfectly rational and perfectly informed then there would be no religious conflicts, advertising wouldn’t work and people would collectively refuse taking advantage of mortgage deduction.

    It’s time to map the biases of the human mind and it’s time economists learned to say “I believe” or “probably” before giving a prediction of the future they can by no means be certain of.

    “Big Change Paper – Imagine a single big change to our economy, and then use microeconomics to describe the consequences of that change, including whether those changes are good or bad. You might, for example, imagine how things would be changed if people became immortal, if Star Trek style “transporters” were available, if very reliable lie detectors were available, or if no one needed sleep.”

    There is no right answer to any of these questions (I know they don’t have to give a solid answer, just demonstrate a thought process): they depend on the politics, economics and culture of the future: one popular politician or religious leader can influence the thinking of millions of people at any moment. The best one can do is provide a number of possible philosophies (libertarian, religious, socialist, same as today, etc…) that may dominate the future and describe how the societal changes in the questions would play out under those philosophies (using the set of economic principles which have actually been tested in the real world).

  • ChristianK

    If the concepts that you teach don’t change the intuitions of students about answering meaningful questions, what good do your concepts do in the first place?
    What’s the point in “teaching” them?

    • Mark M

      Some things are counter-intuitive. Teach them to rely on training, rather than intuition.

      • ChristianK

        This assumes that it’s actually possible to teach someone to disregard their intuition.
        I don’t think that’s something that you can teach students by lecturing them.

      • Mark M

        You sure can’t teach someone to overcome intuition with training without training them first. Or were you trying to make the point that it can’t be done so we shouldn’t try?

  • Mark M

    A related problem is that small changes seem to have limited consequences.

    You might ask your students to consider a small change with big results: a “butterfly effect”. This has the advantage of starting with something that is somewhat realistic while still providing a platform for extrapolation and creative thinking.

    The idea is to consider things that are possible, not necessarily things that are likely. History is full of unlikely things. Who would have thought that introducing bananas to Europe would lead to the overthrow of governments and the establishment of banana republics?

  • Kitty_T

    You might consider the format many law school exams take. A lot of law is taught by the case method – you learn how given legal principles were derived from specific facts, and then how the abstract principles were applied (or adjusted) to different facts.

    While that teaching format wouldn’t be useful for a lot of economics (it isn’t always great for teaching law, either), the typical exam format that arises from it might be: you present a factual situation and require the student to explain the appropriate abstract principle to apply, how to apply it and what the result would then be for the given fact pattern. It doesn’t necessarily inspire imagination, but they can’t just go with their gut.

  • Matt

    Many law school exams do this. Exams provide “fact patterns” to which students have to apply the relevant legal rules. Professors often provide outlandish fact patterns that require require a more analytical application of the rules and do not allow for intuiting “reasonable” outcomes that are available in more common place legal settings/disputes. I think it works well to have at least some portion of the testing use this method.

  • GregS

    Hey, Robin. Has anyone ever done something like: “The existence of super-powered mutants?” I would totally do that if I had such an awesome assignment as the one you’re describing. I’ve actually put a lot of thought into this. If I had more free time, I’d flesh out this imaginary world of mine on paper.

    A precise specification might be something like: “The existence of exceptional humans whose powers make the state’s monopoly on violence obsolete.” I know this is total nerd stuff, but I’m hoping it’s welcome on an econ blog.

    • Doug S.

      I think that what you end up with looks a lot like Fist of the North Star rather than Marvel Comics.

      TV Tropes describes the world thusly:

      Imagine just how messed up life would be for an ordinary person in a world where all the real power is wielded by a relatively small number of people, and that power is not financial or political, but militaristic. Democratic government is essentially meaningless since no union of ordinary people can stand against the might of a lone Badass. Because everyone knows that violence is the force that drives the wheel of civilization, fights occur constantly, and everyone with a bit of ability wants to claw their way as high up the badass scale as possible, whether for the sake of protecting innocents or enforcing their own will on others. The only genuinely powerful people who have any interest in being in charge are usually megalomaniacs, and sociopaths besides. Governments tend to be either tyrannies, or farcical constructs whose laws can only be adequately be enforced by sympathetic vigilantes and a few Knight Templar civil servants who butt heads with them at every opportunity. Countries are constantly in flux between the two as Evil Overlords are dethroned by good guys, replaced with ineffectual governments, and conquered again by new bad guys. The series… Fist of the North Star. One of the first shonen fighting animes!

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  • David

    For me, the best test is an oral test. I just schedule 20 minutes of face-to-face time with each student, give them an idea of what sort of questions I will ask, warn them that there will be follow-ups and requests for elucidation, and that their grade will be based on the extent that they know what they’re talking about. Since it takes me about that much time to grade a written exam, this system doesn’t add to my work and solves my urge to put off grading. I also feel like I’m finally testing what matters, seeing students focus more on this, and I’m giving grades that better reflect their true level of mastery.