Pencils

I know many of you use I, Pencil early in the course to explain interdependence, gains from trade and specialization. But now you can revisit the humble writing instrument when discussing market structure, competition and pricing. Today's edition of The Wall Street Journal has a fascinating story about the competition between the two largest and oldest pencil manufacturers. It opens the door for all kinds of discussion about the firm and even has this engagin video.



I would love to read your reaction.

People Respond to Incentives...or the Lack Thereof

I don't have any links for you on this one. Largely that's because I suspect some of your students could provide better references than I could.

I think the ongoing legal problems of a certain young starlet could provide a very real example of how incentives (the positive and negative reinforcements provided to correct behavior) or the lack thereof lead to certain predictable behaviors.

This certain starlet has been hauled before judges on various charges over the past few years and has had sentences passed. The sentences are then reduced or commuted to provide for help with problems. That help has been frequently ignored or cut short and the cycle repeats.

If there are no negative consequences for behavior, what makes the behavior stop? Personally if the process doesn't change, it will stop only when the actress does herself or someone else great bodily harm. I'd welcome your thoughts.

The "Non-economist's Economist"

The Wall Street Journal contained an excellent piece on economist John Kenneth Galbraith this weekend. What made it better was that it was written by James Grant. The piece marks the publication of the Library of America's collection of Galbriath' major works. It looks like an impressive collection. And Grant does a very good job explaining why Galbraith was popular, as well as what was wanting in his work.

Of additional worth is the excellent reading list Grant provides on related topics - particularly the Great Depression. I highly recommend the article if you would like an introduction to "the non-economist's economist." And if you would know Galbraith better, I would think the collection would be a good place to start.

Teaching Economics

There's a very engaging discussion in The Economist. The question is "How has the crisis changed the teaching of economics?" The answers are provided by some very well-known names in the profession. And while it really doesn't address what is done in the high school as much as it addresses the collegiate and graduate level, it still makes for good reading. I find it particularly interesting that many of the respondents think there should be renewed emphasis on economic history as a component in collegiate studies.

At the very least, I suspect it's made high school students a bit more curious about what happened and why; and perhaps more interested in the course. Is that your experience?

Deflation and Fisher Equation

Many of us use the Fisher Equation: Real interest rate = Nominal interest rate - Inflation rate. Many more of us don't know that Fisher was thinking about a specific market.

This article in the October issue of Monetary Trends by the Federal Reserve Bank of St. Louis provides some historical context. But more importantly, it puts the equation into current context by providing another view of the complex challenge the Fed faces as it deals with a slow economy coupled with the possibility of renewed inflationary pressure. I strongly recommend it for that section on monetary policy in your macro sections.

And share your thoughts. Is this usable with your classes? Or too "high-end"?

Trade-offs and Opportunity Costs in Macro

Okay, I'm almost a week behind on my posting. It has not been a good week - too many fires to put out and not enough firemen. But there is one item I definitely want to draw to your attention. It was from last Tuesday's edition of The Wall Street Journal.

The article talks to the issue of entitlements in the budget and asks how an "entitlement" society can hope to bring the federal budget under control. The video and interactive graphics are also interesting. If you teach fiscal policy in AP or in a more traditional survey course (or even in American Government) you will want to check this out.

And please share your thoughts. Are there additional resources you would recommend to bring into the discussion?

You Can Find A Number of Concepts Here

Choices, opportunity cost, marginal cost/benefit, marginal productivity...

The Undercover Economist on Economics

Tim Harford, the Undercover Economist, has this excellent short essay about the value of economics. While I know this is carrying coal to Newcastle, it’s so well-written that it deserves a look. (HT MarginalRevolution.)

More Reviews of Smith Biography

Last week I pointed to a review of Adam Smith: An Enlightened Life. Here is another collection of reviews, courtesy of Marginal Revolution. I'm adding the book to my carousel at left. So if you think you're interested in the book and would like to help support this blog, I encourage you to either click there or on the title above.

Follow-up on Haiti

One of my ongoing themes this year appears to be Haiti. (I won't bother you with a bunch of links. It's easier if you just put Haiti in the search at the upper left corner of the blog.)

Here is a follow-up courtesy of the folks from Planet Money at National Public Radio. It seems that entrepreneurial spirit can accomplish wonderful things - even overcoming bureaucratic barriers of all kinds.

Incentives Matter

Finally, here is something from the Incentives Matter Department. It seems that prices affect behavior. (Who would have guessed?) First, prices can lead to more crime. (HT to Division of Labour)

And second, according to this piece from Planet Money, prices can improve treatment of passengers. Who would have thought that prices can be such powerful messengers?

Globalization and Growth

Today's edition of The Wall Street Journal has an article (subscriber content at this writing) that really links growth to globalization. Here's the video that accompanies the article.



You might want to put the title of the article in your browser to see if you can find an ungated version of the whole story somewhere. But the video explains the salient points. And when you teach macro, this can provide a good insight.

As I've pointed out to my students, looking a net trade can be deceiving. One gets a much clearer sense of the importance of trade to the U.S. economy if you look at the absolute value (add the value of imports and exports).

A Child's Assessment of Opportunity Cost

Okay, it's from Calvin's perspective...but still.

Myths about Exports

Don Boudreaux at Cafe Hayek had a very useful post a couple days ago. It was a letter he sent to The Washington Post regarding a recent article. The article itself is interesting and useful. If you want to help your students understand exports and be able to counter various myths about exports, it's just the thing.

But as Boudreaux points out, it has a misconception - a myth if you will - of its own and he is as eloquent as ever in explaining it. And in the process reminded me of the dual nature of Gross Domestic Product. I look forward to your comments.

History of Economics

I know I come at this topic from a position of bias, but I think Dr. Bruce Caldwell of Duke University makes some excellent points in this article (HT Division of Labour).

Over the years, I've said many of these things to people who ask why I'm interested in the History of Economic Thought, but I don't recall stringing all of these together and certainly not as eloquently as Dr. Caldwell has.

In a related item, here's a review in The New Statesmen of a new biography of Adam Smith that looks promising. Titled Adam Smith: An Enlightened Life, it takes a broad look at the man who became the father of modern economics.

Is it worthwhile to learn about the great economists? I think so. I've gained much insight from reading biographies and the master works of thinkers such as Smith, Keynes, and Schumpeter - certainly more than I would have gained by reading only biographies or only the master works.

Do you integrate the economists and their ideas into your class or do you "stick to the facts"? I look forward to your comments.