Classroom Discussion Starter

I was reading Jane Galt's February 21, 2007 Assymetrical Information (link no longer operative) blog about behavioral economics. It was interesting, but one of the comments caught my attention because it reminded me of something I used to use when discussing price, incentives, and the role of government in the economy. It was borrowed from Milton Friedman, although I can't remember if it was in one of his books, articles or his TV program.

Regardless, I used to write this on the board and then ask students if they thought it was correct and whether it had relevance to discussing the role of government in the economy. I would get students who agreed and who disagreed. But it got them thinking. That was the key. Here's what would go on the board.

1. You spend your money on yourself. You care about price, but also about value.
2. You spend your money on a present for someone else. You care about price, but not so much about value.
3. You spend someone else's money on yourself. You really care a lot about value, but not so much about price.
4. You spend someone else's money on yet another person. You don't care about value or price.

I'd be interested in hearing from others on their experience with this.

Posted by TSchilling at February 21, 2007 11:38 AM


Comments
I have always been interested in price as a signal of utility, value, diminishing marginal utility, and market forces.I'll try this. Thanks for all of the excellent resources you mention, too...flad

Posted by: mike fladlien at March 10, 2007 6:11 AM

Stories about Inflation

Some may say it is a result of working at the Fed, but I've always been interested in inflation and hyperinflation. I would point to early interest when my grandfather gave me several currency notes from Weimar Germany (circa 1923) ranging from 500,000 marks to 100 million marks. His stories about the time period always fascinated me. (My favorite was the one about going to a restaurant and paying when you ordered because the price would change by the time the food arrived.)

Consequently, I was attracted to Greg Mankiw's post today about hyperinflation in Zimbabwe. He links to two stories in the New York Times which are definitely worth reading. You may find the policy prescriptions particularly interesting. Once you've done so, I then encourage you to visit my recent post (January 24, 2007) on economic growth. Go to the recommended link. Once there, select "Zimbabwe" and run the graphic. Of particular note are the dates of 1980 and 1987. You might want check out the Zimbabwe 's political history at those points.

I'd be interested in your conclusions, if any.

***Update***
I would hope that your student can recognize that this is another example of interesting coincidence, as opposed to correlation or causality.

***Update***
For an interesting lesson regarding inflation in Zimbabwe, check Aplia Econ Blog.

Posted by TSchilling at 11:41 AM Comments (0)

Artistic Economists or Economic Artists

I recently had an interesting conversation with a couple of high school teachers regarding the minimum wage. Both indicated some concern among their students regarding the minimum wage hike. One even indicated that the students were already being told by employers that positions or hours could be cut. Given that these might be "scare tactics," it nevertheless got me thinking along these lines.

Then yesterday, Russ Roberts announces an animation contest over at Cafe Hayek. There doesn't appear to be any age/grade restriction on his offer, and I would think those most impacted by this proposal may be in the best position to act on it. Add to this, I know there are some amazing computer artists out there. You can check here for the latest updates and caveats. Let me know if any of your students find this interesting.

Posted by TSchilling at 11:03 AM Comments (0)

Congrats Colts

First of all, congratulations to the Seventh District Indianapolis Colts for keeping their cool after the Seventh District Chicago Bears jumped to an early lead in Super Bowl XLI. Payton Manning and the rest of the Colts offense kept the vaunted Bears defense off balance, and the Colts defense overcame its season reputation and caused endless problems for the Bears offense. But of greater interest....

Check out a post by Chicago Fed economist, Mike Munley, on our other Chicago Fed blog. Mike looks at the link (if any) between Super Bowl perfomance and the unemployment rate in the participating cities. He notes that in 16 of the past 22 games, the city with lowest unemployment rate saw their team win the game. (Yes, Indianapolis' rate was lower than Chicago's.) This provides another interesting example in understanding data, correlation and causality. You may also find some of the comments received on the blog of interest.

Your comments are welcome.

Posted by TSchilling at February 5, 2007 8:54 AM


Comments
Despite this, the Bears may want to explore making Rex Grossman unemployed. While this may only worsen Chicago's unemployment, it may actually give them a better shot at the Super Bowl next year. It really doesn't matter though, Colts to repeat.

Posted by: Chrissy at February 27, 2007 6:58 PM