Saturday, October 31, 2009

Do Students Discount the Future 500%


Would you like one Gummi Bear today or five tomorrow? When I asked that question to my sixth hour class, those responding said that they preferred to have one today. Many educators site this as an example of how much young people discount the future. In this case, the present value of five Gummi Bears was one. That discounts the future 500%?

Although I don't believe students discount all future events five times, I believe that they will trade tomorrow for today. that means students won't study when they can watch television. They will spend money on a credit card at a high interest rate. Gary Becker believes that criminals will heavily discount the future when the benefits arrive today but the costs are uncertain in the future.

Ruby Payne has written much about poverty. As I remember it, her research shows that children from poverty are always concerned that an unseen catastrophy will steal their wealth. If that is true, then they would have a huge incentive to consume now when the benefits are certain.

In the Iowa Core Curriculum, we are supposed to teach savings and investing for college education. There is no doubt in my mind that education increases earnings. But how will children from poverty change their attitude toward savings when their wealth can be stolen from them?

Why MC = S in Microeconomics

Geography of a Recession

The NY Times has an interactive graphic here. When you roll the mouse over a county, the map shows you the unemployment rate and the one-year percentage change in the unemployment rate.

As the recession lengthens, one would expect to see labor migration from counties with high unemployment to counties with low unemployment. This is intuitive economics since there should be equibibrium in the markets.

This blog is a work in progress. I would like to see if counties like Sanilac, in Michigan, will see a decrease in unemployment from 19.1% to a lower percent as labor moves from the area. The map shows that Sanilac county, Michigan, saw an increase in +8.5 percent over the last year. I interpret this to mean that many lost jobs probably related to the manufacture and distribution of automobilies. Since this is structural unemployment, some older workers will drop out of the the labor force. Some workers will move into another occupation. Others will move to a county with better employment opportunities. All of this suggests that the unemployment rate will drop in Sanilac County, Michigan.

Other changes will occur in the long run such as the creation of new jobs and sectoral shifts away from manufacturing.

Wednesday, October 28, 2009

My Lecture Today

Women in the Labor Force

Compelling data at the Bureau of Labor Statistics. The full pdf file is 101 pages of data.

Many economists believe that time-saving inventions have propelled women into the labor force. I sincerely believe that women enter the labor force to enhance the quality of life for their children.

Tuesday, October 27, 2009

Economic and Accounting Profit

Economists consider the opportunity cost in addition to explicit costs when constructing curves. This embeds choice in each curve.

Sunday, October 25, 2009

iPod App Video


November 1, 2009, iTunes will have my economics review on the market. The name of my app is called "Econexamcram". It's probably not perfect, but I'm proud of it. I believe today's students don't want to carry around a big book. Today's students are so busy that they want to carry their homework on the go to study in micro sessions. I believe this app gives students the versatility to study in micro sessions around the home, work, and school.

Notes on Perfect Competition

New Page 2

This site is highly recommended.  There are also tutors available to help solve your econ problems. 

Jason Welker has a "perfect" lecture on perfect competition here.  Both his description and graphical representation will complement the notes from the "New Page 2" link above.  There's no need to carry a heavy textbook around for this unit--just use the links above.
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Saturday, October 24, 2009

Dual Labor Markets

In a previous post, I showed how the supply of unskilled labor would shift to the right and the wages would fall.  Here, I think the demand for unskilled labor would shift the demand, MPL, to the left and the worker income would fall as well.  The data supports this conclusion.  Cheers.

Friday, October 23, 2009

Dual Labor Market

When the demand for skilled labor increases, so do the wages.  The relative wages of unskilled laborers fall as technology is subsituted for labor.  The data confirms this blog.

Profits as an incentive

Profits increase the quantity of goods produced which is good for both the business and the buyers.

Tuesday, October 20, 2009

Truth in Numbers

Truth in Numbers


A compelling graphic on job losses and gains is here.  I thank Tim Schilling for this link. 

I don't think US have been exported to Canada.  I think there's been a change in the demand for the goods that Canada produces. 

Saturday, October 17, 2009

Preparing Students for the Global Economy

Russ Roberts writes in The Price of Everything that technology is not a game of muscial chairs. In other words, technology doesn't remove a chair, or a job, without replacing it with another. For example, suppose a robot replaces a spray painter at John Deere. Many would think there are less jobs now. But who will fix the robots? Who will make the robot parts? Is it possible that there are more jobs now than before?

So how do we prepare students for a global economy? How about teaching students to be proficient in the careers that complement technology. Say a teacher feels that soon the careers of her students will soon be outsourced or automated. She should teach a complementary career. When Amazon automated the sale of books, many corner bookstores when out of business. But Amazon created new careers in how to return unwanted purchases and delivery channels along the supply chain. It is my opinion, that a teaching preparing students for a global economy would prepare students for those careers.

I posted this on the GATE Discussion Board earlier today.  I believe that Logistics will provide careers for our students that will allow them to compete in the globally. 

Sunday, October 11, 2009

Who's That Man?

In this pause, during a dynamic and dramatic moment, Flad lets the information sink in.  What a man.

I would to thank Jason Welker, Sandra Wright, Mary Suiter, Kathy Fladlien, and Troy White for all of the support they gave me during this presentation. 

See you next year.

Hands on Banking

Wells Fargo gives away a course in banking called "Hands on Banking".  The URL is Recommended for general business teachers.  The learning curve is short and there's a section for adults too.

Economic Resources

Standing in front of the Lincoln Memorial reminded me that freedom is learning.  Freedom is the access to economic resources.  The freedom to study science, math, and the arts.  All of the government spending cannot multiply GDP as much as free markets.

This picture was taken with a Blackberry phone and the image was sent in a text message to my email.  The "information" in this picture allows anyone reading this blog to experience the Lincoln Memorial.  The free exchange of information allows for greater human capital development and growth.

Saturday, October 10, 2009

Parking in D. C.

On Capitol Hill, parking isn't a problem.  Also, driving through the nation's capitol is easy.  How can a city of a half million and home of every embassy in the world have easy parking and driving?

It's very expensive to park and driving in the Capitol.  The prices determine who and how the resources are distributed.  The price system is gives order to the confusion. 

Do you think a parking czar could order the parking in and around D. C. better than the emerging order of prices?

This picture was taken from the Open Top Tour bus with a Blackberry phone. 

Tuesday, October 06, 2009

Technology in the Classroom

While firing up for another school day, I opened the Des Moines Register and Read Rekha Basu's column on texting while driving. She provided a website to see how much your are impaired if you text and drive. I used the overhead projector that is connected to my computer so everyone in the class could participate. What happened changed the way I interpret student learning. While a student was performing the simulation, another student was using her iPhone to search YouTube for an English video on four teens who were critically injured while texting. Still another student used her phone to find Good Morning America and we linked to the show. As the class evolved, I noticed that I was not in control but the class. It was the most invigorating law class I have ever had. Here's the link to the simulation video above.  In the simulation, you can only use the top keys for numbers and there's no reply. 

Today's Lecture on Consumer's and Producer's Surplus

10.05.2009 12:34p
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Sunday, October 04, 2009

Part of My Presentation in Washington

Federal Debt as a Percentage of GDP

I'm worried about the debt.  As long as GDP outpaces the debt and the US continues to innovate, the debt won't be a problem. 

For a lesson plan on the debt, go here.

Saturday, October 03, 2009

Teaching for a Global Economy

Juan can make a car by giving up 10,000 bushels of corn.  John can make a car by giving up 1,000 bushels of corn.  Economists would say that John has the comparative advantage because he has a lower opportunity cost in the production of automobiles.

Thomas Friedman open the world's eyes and borders when he wrote the book, "The World is Flat" inferring that countries will export those goods in which they have a comparative advantage.  Natural factor endowments determine comparative advantage such as land, labor, and capital. 

What can be done to prepare our students for the "global economy" where free trade allows trade with countries who have a comparative advantage with the United States?  The stock answer I have received is that teachers must develop the human capital or the knowledge base. 

What if the comparative advantage enjoyed by the United States changes because other countries change their focus?  In other words, what if China once had the comparative advantage in producing goods, but decides instead to focus on service?  Now, the dynamics change.  When there's an increase in competition, goods become homogenious, pricing power is lost, and profits disappear.  How will you prepare students for this competition?

Gloalization presents many challenges.  Globalization also presents many opportunities too.  As always, I say we should focus on what we can do and not what we can't do.  We should work to improve our students with skills that are not easily duplicated or competed away.

I sincerely welcome your views.

Using FRED Data in the Classroom

The word “economics” has its origin in the Greek “oikonomik√≥s” (relating to household management), from “oikos” (house). From Gene Hayward's Blog

When you teach, do you go a mile deep and an inch wide? Or a mile wide and an inch deep?

Using my plans is like drilling a mile deep an inch wide. My plans are rigorous in the sense that a student has to reinterpret data to discover the secrets hidden in macroeconomic data. I am reminded of my fourth grade teacher telling us that the more she watched a movie, the more she gained from each viewing. Reviewing that data from the FED often leads to new insights for me. Like a runner who must build up an aerobic “base”, students will return to the same data base then build new intuitions on the base.

Malcolm Gladwell writes in “Outliers” that American students are given problems that are unrelated whereas Asian students are given homogeneous problems. The latter approach is like going a mile deep and an inch wide. Mr. Gladwell means, I think, is that American students become a Jack-of-all trades but a master of none. In my opinion, American students do not discover the meaning of the concepts they are taught because they are not given the tools for rigorous examination. This plan provides the in-depth rigor and repetition needed to discover the deep understanding of economic concepts.

Robert H. Frank writes in the preface to Microeconomics, “The problem in our view, is these [introductory economics courses] almost always try to teach students too much….Our textbook grew out of our conviction that students will learn far more if we attempt to cover much less.” This statement captures the idea that true understanding of economic concepts means digging a mile deep and an inch wide.

It is my opinion that much of economics is taught in a dogmatic fashion without proof or argument. Students often get apocryphal content from the media, parents, and teachers. Some teachers believe that economics is a family budget, balancing a checkbook, and playing the stock market. Parents believe that economics is calculating the miles per gallon a car can travel on a gallon of gasoline. Economics is loosely construed to be anything that has to do with money, finance, or family and consumer sciences. With such a broad definition of economics, it is no wonder that most teachers choose to go a mile wide and an inch deep. Only sedulous study and rigorous examination of the data can students dig deeper into data and move beyond the anecdotal intuition of economics. Only diligent digging leads to learning that can be reliably recalled and applied to real world problems.

Knowledge should be tested for validity. If an archeologist wants to prove that the cradle of mankind is in the Olduvai Gorge, he must move beyond the theory and dig. The plans I have written here, students can dig into data and debase untenable concepts and divine a working definition of economics.

Working with data presented me with many challenges. When I thought the data would provide a clear explanation, I concluded that working with data poses complex cause and effect processes. There are also many exogenous variables outside of the economic models we use in AP Economics to explain output, prices, and employment. Instead of data presenting a definite solution, I was often left with more questions. At the end of this project, I felt humbled. My lack of the math skills necessary to bring this project to fruition was a constant source of my need to make learning a life-long activity.

I hope you will use my work as a springboard to enhance your classroom. I know that end-user innovation is where true social change occurs and innovation is born.