Principles of Economics
Principles of Economics[Enter Course]
This course teaches the core principles of economics using a collection of experiments and workbooks. In the experiments, students become traders in a market and attempt to make profitable deals with one another. At the conclusion of the experiment, the data are used to form a customized, online workbook. Each workbook guides the student through the analysis of the experiment’s outcome, while simultaneously presenting the key ideas and core principles in economics needed to gain a deeper understanding of both the experiment and economic life.
In these experiments the student is both a participant and an observer. As a participant, the student experiences first hand the issues that all economic agents must confront; as an observer, the student sees how modern economic theory can explain the complex interactions that occur in both the experiments, and the economic world at large. Students often report that they learn nearly as much about economic principles from their experience as a participant as they do from their analysis of the experiment as an observer.
Students learning on their own or in small classes (generally fewer than 10 students) can still use the workbooks, but will be given synthetic data. Small numbers of students participating in experiments does not yield enough data for the workbooks.
Additional Course Details
- Topics Covered:
- Supply and Demand, Sales Tax, Minimum Wages, Monopoly and Cartels, Externalities, Information and Adverse Selection, and Network Externalities.
- Estimated Time to Complete Course:
- This course supplements a one semester introductory economics class.
- Additional Software or Materials Required:
- You will need to have Flash, Java, and LiveConnect installed. These programs are free. More detailed information is provided in the course under “Test and Configure Your System.”
- Maintenance Fee (per student):
- Free for both independent learners and academic students.
This course supplements and complements a traditional economics course with minimal effort required on the part of the instructor. It is easy to integrate the experiments/workbooks with existing material and lectures, and it is far more enjoyable to give lectures to these students given their active engagement with the material and inherent motivation to learn. The experiments rely on discrete supply and demand curves (stair steps versus lines, if you will), and this is a slight change from the typical presentation. That being said, it is a change that works incredibly well, as the students actually see the curves come alive and gain a very deep knowledge about what they truly mean. Once they learn discrete curves, they can easily transition to continuous ones if you like (it is rather tricky to go the opposite direction).
Using experiments is an inherently motivating and fun way to teach someone the core ideas in economics. Students gain key insights into the underlying economic principles during the experiments, and then remain motivated to learn how economic theory can be applied to their recent action. Typically the theory does a great job in explaining the observations, but even when it doesn’t work quite as well, it is still insightful.
You will need to run the “Supply and Demand” experiment first, as it introduces key concepts that are used in the other experiments. You may want to give students some extra time and coaching for the initial assignment. (Some faculty have provided in-class demonstrations of the system via projection screens, others have given students the option of not including the first assignment grade in their final score, etc.) Encourage students to develop good academic skills. For example, students who leave their assignments until the last minute may suffer from computer problems or find that they get locked out of the system because the assignment is a few seconds past due.
After students get one assignment under their belts, things seem to go very smoothly. After Supply and Demand, the experiment/workbooks are modular, so you can mix and match as needed.
The course management features ease the teaching task. The instructor sets up the due dates for the experiments and workbooks and the course automatically presents the material to students, supports students in learning the concepts, tracks student progress, and grades the results.
From an instructor’s perspective, this approach has some minimal start-up costs (moving to the online system and some changes in how you present the material) with a lot of benefits (motivated students who are able to learn the material in a serious way, automatic grading, and an easy way to integrate it into existing courses). We have found that once instructors try this approach they stay with it. Academic studies of the experiment/workbook approach indicate that students do substantially better on standardized tests of economic knowledge and also report much greater enjoyment for the course. Moreover, the approach allows fairly advanced concepts, like information economics, to be easily accessed by novices.
There are seven experiments and related workbooks:
- Supply and Demand
- A key concept that is needed for all of the other experiments and workbooks.
- A Sales Tax
- How does the imposition of a tax alter economic behavior?
- Minimum Wages
- What is the impact of price controls, like minimum wages or rent ceilings on economic markets?
- Monopoly and Cartels
- What happens to markets when perfect competition breaks down?
- What happens to a market when economic activity leads to outcomes external to the market, like pollution?
- Information and Adverse Selection
- How does the lack of information, like the quality of a used car, impact economics behavior?
- Network Externalities
- What is the impact on a market when the consumption of a good—like a computer operating system of social network site—is tied to the number of people who use it?
The above topics cover a key swath of economic principles, and combining them with some more traditional materials makes for a great introductory course. Moreover, this approach also works well for more advance students who need an interesting refresher in economic principles, as the experimental approach is inherently interesting and insightful, and provides a new, and enjoyable, way to look at old material.