17 Comments

Students treat a literal economics exam question as if it were an economics exam question. I'm not sure how you can be surprised by this even if you put some vague language at the start that you hoped meant "don't treat this as an economics exam question" but is easy to misinterpret

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Do you mean to say that you expect students to have such strong priors about what exam questions must be that they cannot be expected to answer a specifically worded question, much less correctly apply the proper model to the situation described in the question as opposed to picking a model at random?

It would seem by your post that I could write an exam comprising roughly of "Please answer 5 economics exam questions, on the topics of taxation, supply and demand for peanuts, elasticity of lawnmowers, and two other topics you wish, with at least one paragraph of response, and preferably a graph." and I should expect to get roughly the same answers from various students. After all, they have such strong priors about what an economics exam question should be and how it should be answered.

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All models are wrong. Some are useful.

Discussion of this truth could go a long way.

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Mostly you can't as long as the students are mostly there to jump over an arbitrary bar. The whole education system mostly asks students to simply spit back the tools supplied in the class because it makes teaching easier and the students largely aren't actually there out of a desire to directly learn.

If you taught a class where you didn't give grades and students were there because they just wanted to learn for their own purposes I suspect you'd see different responses. To a degree at least.

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In the "real world", these students are writing an economics exam. Either they skim through the question and miss the bit about "in the real world" or they see it and think: "It's a trap!"

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Start teaching econ from the bottom up. Establish a firm inductive understanding of economic behavior before introducing rationalistic modes. When you do introduce the models, use your previous inductive conclusions as a baseline to test the model's validity. Reject it if it doesn't cohere with observed reality. Obliterate the alleged differences between "macro" and "micro" economics. Learn the limits of mathematics when describing human behavior. Just a few starter suggestions.

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Academia is noted for being detached from reality

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You can't do better. You can't change the motivations that students have for taking economics, and those motivations are not always intellectual curiosity, or a desire to seek the truth.

In the real world, people study subjects for all kinds of selfish reasons. In the real world you should treat all professionals of X as a group of people who have just one thing in common: they all studied X for a number of years. That's it.

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I’d suggest economists go back to the first day of Econ 101 and re-interrogate Homo economicus. Is he the guy you think he is? What has science taught us about human psychology & human behavior that might persuade economists to say: ~ Yowza! Our initial assumptions about human beings were way off target. As a result, the theoretical foundation upon which our discipline has been built is fatally flawed. We’re going to shut down our academic operations until we can figure out what the hell is going on…” ~

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I believe our educational system has decided that it’s better, for a host of benign and nefarious reasons, to fail to teach children critical thinking skills and agility, but to teach regurgitation and concrete thinking. I see it everywhere, and it drives me mad.

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"For example, an exam question might ask, “What determines the price of water when two individuals bump into each other in a remote desert?” Many economics students will then start talking about supply and demand"

I'm not exactly sure what's wrong with that answer. I thought such an analysis applies only to the price of water on the *local market* -- assumed to be the two persons & the amount of water and monies (or other exchangeable goods) possessed by each of them --, not to the price of water in downtown Nashua, NH or anywhere else in the world. Or did I miss something regarding the hypothetical?

While I generally see the point our host is making, I would have appreciated some pointer regarding what he deems a satisfactory answer to this particular question.

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Im guessing more like the end of this classic scene: https://youtu.be/XP9cfQx2OZY?si=JFDrjRMjWInyo11m

"There are two kinds of people. Those with loaded guns, and those who dig."

In other words, there is no price because this situation isnt a market. Its two people fighting for something they both desparately need to survive.

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Jul 5·edited Jul 5

I think the answer is more 'it depends on their supplies, social connections/standing, cultural norms and, yes, weaponry. It could be anything from freely given to taken at the cost of one of their lives and all their goods.' But I admit that would be a hard answer to give on an economics exam, I'd probably give it, then move on with a 'but assuming we're working under model x...' to actually showcase what I learned...

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I would have graded your answer pretty well for the first half, then wondered why you didn't give an example of some of those cases (freely given if X, traded at high cost if Y, fought over if Z) then looked really hard at whether your chosen model matches the assumptions that it requires. Knowing when not to use the model is nearly as important as knowing how the model works.

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I'm not an economist, which model purports to address gift economies, or banditry?

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That's just it, there isn't a formal mathematical model that does, exactly. You could describe gift via exchange of goods for self approbation ala Smith, or banditry via expected payoff of stealing from someone compared to the expected loss through violence. It would be very wrong to apply a standard market exchange model, but discussing how each person might see their expected costs and benefits, possibly with some game theory, would be good.

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> there is no price

I can see that happening, but then the question isn't one of economics, but of political science.

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