an introduction to the world of economic thinking

Banjonomics: An Introduction to the World of Economic Thinking

An Introduction to the World of Economic ThinkingFebruary 22, 2012Mark C. SchugProfessor EmeritusUniversity of Wisconsin-Milwaukee

OverviewProblems teaching historyPerspectives of history and the social sciencesHow economic thinking might helpSolving economic mysteries

Problems Teaching History

Problems Teaching U.S. HistorySchools rely on U.S. history to teachOur national identifyAn academic understanding of our past Some states are encouraging teachers to place more emphasis on economics in non-economics courses such as U.S. and World History.History teaching is criticized as beingBoring in content and pedagogySuperficial/TrivialRemoteRarely focused on why

Status of State Economics Standards

Relationship Between Time in the Curriculum and LearningStudents usually take 6 semesters of U.S. history:Grade 5: 2 semestersGrade 8: 2 semestersGrade 11: 2 semestersYet, national tests show that achievement in history is low compared to civics, geography, and economics.

NAEP Achievement Levels

36 % below basic21 % below basic30 % below basicNAEP Achievement Levels: History

55 % below basicHow Economic Thinking Might Help

What Can Economics Contribute to Improving the Teaching of History?Economics stresses the idea that all people make choices.But, individuals dont know at the time what the consequences of their choices will be.

They Didnt Know How It Would All Turn OutIn writing history or biography, you must remember that nothing was on track. Things could have gone any way at any point. As soon as you say was it seems to fix an event in the past. But nobody ever lived in the past, only the present.The difference is that it was their present. They were just as alive and full of ambition, fear, hope and all the emotions of life. And, just like us, they didnt know how it would all turn out.

TALKING HISTORY WITH: David McCullough; Immersed in Facts, The Better to Imagine Harry Truman's Life By ESTHER B. FEIN Published: August 12, 1992 New York TimesThey Didnt Know How It Would All Turn OutThe challenge is to get the reader [student] beyond the thinking that things had to be the way they turned out and to see the range of possibilities of how it could have been otherwise.

Introduction to the Economic Way of Thinking

The Economics MythMythEconomics is all about the money.RealityEconomics is all about how people make choices.Economics is a way of thinking and understanding.

Perspectives of History and the Social SciencesHistory

Geography

Economics?

How to Start Thinking EconomicallyConcentrate on skills that require only a few basics to get started.Think about the basics of a sport or a hobby you enjoy.Swinging a golf clubGripStanceBackswingImpact and follow though

How to Start Thinking EconomicallyCasting with a spinning rodDriving a manual transmissionPlaying spider solitairePlaying a musical instrument

Its a World Filled with Mysteries

The Delaware Teacher MysteryHistory teachers have lots of things to do during the semester. They:Prepare lessonsAttend staff meetingsAttend parent conferencesTeach classesRun clubs and coach sportsGrade papers

Enter gradesAttend more meetings

Why would teachers with so many things to do want to attend a workshop on economics -- a subject most teachers love to hate?

A Guide to Economic ReasoningPeople make choices because they face scarcity.Peoples choices involve costs - - opportunity costPeople respond to incentives in predictable ways - - profits, self-interested behavior and competitionPeople create economic systems - - rules of the game - - that influence individual choices and incentives.People gain when they trade voluntarily - - specializationPeoples economic actions have primary effects and secondary effects.

Frdric BastiatThere is only one difference between a bad economist and a good one: the good economist takes into account both the effect that can be seen and those effects that must be foreseen.Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa.

Frdric Bastiat[Thus] it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

A Guide to Economic ReasoningPeople make choices because they face scarcity.Peoples choices involve costs - - opportunity costPeople respond to incentives in predictable ways - - profits, self-interested behavior and competitionPeople create economic systems - - rules of the game - - that influence individual choices and incentives.People gain when they trade voluntarily - - specializationPeoples economic actions have primary effects and secondary effects.

The Oil Reserves MysteryProven oil reserves stand at 531 billion barrels and we are consuming 16.5 billion barrels annually.Quick! How many years will it take us to run out of oil?This was the situation in 1970.By 2010, proven oil reserves had increased to over 1.30 trillion barrels even though the world is consuming about 35 billion barrels annually.How can this be?

The Battle for the Overhead BinsAir travelers kiss their loved ones goodbyeAnd then transform into baggage warriors stuffing all sorts to oversized bags rudely into overhead bins.Why do they do that?Bonus Question: How could a change in the rule of the game influence their behavior?

Why Cant You Buy A Car on SundayIn Wisconsin,You can buy a lottery ticket on Sunday.You can buy a cigar on Sunday.You can buy a bottle of gin on Sunday.

But in Wisconsin (and Colorado, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Maine, Minnesota, Missouri, Texas and Utah) you cant buy a new car on Sunday.Why?

27Why Grow Cotton in the Desert?Water is a scarce resource, especially in Arizona.Yet, growing cotton and citrus crops are an important part of the Arizonas economy.Why would farmers grow monsoon crops in the desert?

28Circling Back to Oil: Adam Smiths Invisible HandDoes Adam Smiths invisible hand and the profit motive contribute to providing all of us access to goods and services such as oil, books, movies, cars, homes, and iPads?

What is the metaphor of the invisible hand meant to convey?Free markets - - allowing people to act in their own self-interest - - promotes positive social outcomes even those these are not intentional.

But What Limits Profits?

Questions

Lightning Preview of Book Features

Lightning Preview of Book FeaturesFraming the Issue (with a personal story)Key Economic ConceptsThe Historical ContextThe Economics of ________Historical Questions and Economic AnswersPrimary SourceThen and NowDiscussion QuestionsWeb ResourcesGlossary










Preview of Teachers EditionChapter summaryLearning goals Suggested answers to all Questions for DiscussionAn extension activity that reinforces main ideas.Student assessment items: essay questions, a vocabulary-matching exercise, multiple-choice questions addressing history content, and multiple-choice questions addressing economics content.






The Mystery of the Alien BananasBananas are a tropical fruit. No one in Delaware grows them.Delaware statutes provide no plan for getting bananas to grocery stores. Yet, there they are there everyday, even the most rural grocery stores.How can that be?

67John Stossel Gets a Steak

68

an introduction to the world of economic thinking

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