Principles of Economics

The QWERTY Keyboard and Technological Lock-in

Ronald Shereni Principles of Economics, Technology 0 Comment

The QWERTY keyboard is an often-cited example of technological lock-in–when prior use of a technology makes the adoption of subsequent technologies difficult. What is interesting is that technological lock-in can lead to establishing inefficient  technology and even economic institutions.  The emergence of thumb-typing on smartphones and tablets may be giving rise to a new, more efficient keyboard. Will technological lock-in prevail? When reading Chapter 26 (9e) of my Principles of Economics textbook, students may enjoy listening to the episode of NPR’s Here and Now. A more in-depth discussion of QWERTY including the more efficient, replacement for thumb-typing called  KALQ can be found on the Smithsonian blog, Design Decoded.

First Published : June 4, 2013

 

Intro Economics Textbooks Are Changing

Ronald Shereni Current Events, Economic Education, Principles of Economics 0 Comment

If you are interested in teaching economics an excellent resource is the teach-econ listserve. I encourage anyone interested in teaching it to follow it up.   Don Coffin, who is a regular contributor, recently made the following post on it referring to the following Krugman blog entry:

Don writes:

“It’s about a year old, but interesting (although not everyone, obviously, will agree with everything/most/much/any of what Krugman has to say.

I’ve long believed that much of what one reads in intro econ books (particularly in intro macro) reflects the macroeconomic issues that were facing people when they were in grad school.  So, for example, from my generation of grad students (the 1970s), I would have expected (and, I should note, got) a focus on inflation and stagnation and real shocks.  It’ll be interesting (if I’m still around and (capable of) paying attention) to see what intro macro looks like in, say, 2025…”

Here is my response to Don on the Teach-Econ Listserve.

“Actually, intro economics textbooks are already changing. Consider the most recent, and just published, 9th edition of my textbook. In it I have an entire chapter on the structural stagnation policy dilemma. The chapter discusses how the current economic situation differs from previous seemingly similar situations, and why many economists believe the slow growth will continue for years. I call it the structural stagnation view.

In that chapter (you can read here: Structural Stagnation Policy Dilemma Colander 9e)  I contrast that structural stagnation view with the standard Krugman shortage of aggregate demand view that was presented as Keynesian thinking, and also with the Classical self-correcting view that was presented as Classical thinking in what we learned. (Neither of those presentations was satisfactory; both Classicals and Keynesians were both more nuanced than what was presented, but that’s another story.)

The reality is that what students get in graduate school today is all too often simply a math bootcamp with little true discussion of policy. One student when I asked where their views of fiscal policy came from for my book, the Making of an Economist Redux, responded that it didn’t come from classes. He said that monetary policy might have been in one of the variables in the model, but it was lost in the equations. Since graduate students are never trained in discussion of policy that reflect the nuanced views of Keynesians and Classical economists, they find it difficult to teach those nuanced views. Instead, they rely on textbooks to define what they teach. After all they can’t teach what they haven’t learned. That’s sad.”

First Published : April 26, 2013

Bride Prices

Ronald Shereni China, Principles of Economics 0 Comment

In the United States people bristle at the thought of paying for a bride. Not so in all countries. The practice in China gives us an explicit example of the effects of supply and demand on price.  It’s one-child policy is now affecting the number women compared to men of marrying age, along with an increase in income, is raising the price men must for a bride. The negotiations occur in a ritual called chuanmen. This NPR story provides an example for the classroom when teaching Chapters 4 and 5 in Colander’s Principles of Economics.

First Published : April 23, 2013

 

Wealth Distribution

Ronald Shereni Current Events, Principles of Economics, Wealth Distribution 0 Comment

In the past few years, income and wealth have become more unequally distributed in the United States, which has made them important topics in policy debates. But what are American’s perceptions of current wealth distribution and what do they believe is the ideal distribution?

Recently, a Harvard professor Michael Norton did just that. He polled 5,000 Americans and found that they perceived wealth to be distributed much more equally than is the case. For example, respondents believed that the top 20 percent held 60 percent of the wealth while, in fact, they held 80 percent. Norton also asked about the ideal distribution. Respondents believed that in an ideal world, the top 20 percent should hold 30 percent of the wealth. You might poll your students for their opinions.

You can show this Youtube video for visual presentation of Norton’s work. The Harvard Business Review also published an article about Norton’s work. Note that along with the data, the narrator of the Youtube video expresses strong normative views about wealth distribution. The data along with the normative discussion could be used to launch a class discussion about fairness.

First Published : March 24, 2013

The Drug Legalization Debate

Ronald Shereni Drugs, Policy, Principles of Economics 0 Comment

Two recent Economist articles, “Illegal Drugs: The Great Experiment” and “Winding Down the War on Drugs: Towards a Ceasefire” report on drug legalization programs in Colorado and Washington State in fall 2012. Economists have been on the forefront of this issue for a long time, and it is a great teaching topic that raises nice questions about the ethical interface with economics and the limitations of controlling drugs by law.

The reality is that the prohibition of drugs has done little to reduce drug production and consumption. Drug use of some illegal drugs has increased by as much as 300 percent over the past 15 years.  The effect of drug laws that prohibit drugs such as cocaine has led to an underground system in which drug sellers earn huge sums of untaxed income and create drug-running crime organizations to protect their monopoly. It has also led to millions of people, who could be productive members of our society, in jail.  The law creates criminals.

The solution to the drug problem that economists have put forward (and I think should continue to push) is legalization coupled with hefty taxes, and a strong educational program warning people about the dangers of drugs, along the lines used in the fight against smoking.  The current taxes accompanying the new legalization laws that these two states are enacting seem far too low.  Since drugs are at least as hazardous as cigarettes, they should be taxed at least as high as the taxes on cigarettes—a 500 percent tax—with some of that revenue used to significantly reduce illegal sales. That tax revenue will provide the funds for the educational programs against drugs and rigorous enforcement of tax evaders, thereby setting up a legitimate supply chain. (For a longer discussion download my more extensive analysis from an earlier edition of my principles text here: Legalizing Drugs Colander.)

First Published : February 25, 2013

Public vs Economists’ Opinions

Ronald Shereni Policy, Principles of Economics, Teaching 0 Comment

We all know that economists and the public differ in their views, but a recent study by Northwestern economist Paola Sapienza and Chicago economist Luigi Zongales (Economic Experts vs. Average Americans) quantifies those distinctions, providing a good entry into policy discussions.  It concludes that a panel of top economists and public opinions differ about 37 percent of the time. They provide a table with additional comments, which can make a great resource. I plan to incorporate it into class by asking students to characterize the differences, and to see if (1) they agree with the public or the economists, and (2) if they can explain the reasons why.  There is a summary article in the Economist Magazine, www.economist.com/blogs/freeexchange/2013/01/economists, but I would suggest exploring the Chicago website (http://www.igmchicago.org/igm-economic-experts-panel) for the original material.  For those using my Principles text book (which is now out in the 9th edition) It would be useful to use at the beginning of a Principles of Economics class or as a reference to Chapter 23,  “Microeconomic Policy, Economic Reasoning, and Beyond.”

First Published : January 17, 2013