Dr. Allen's Teaching Blog
Spring 2012
Monday, 23 April
All Students: I wanted to reiterate how much I enjoyed teaching you this semester. I very much appreciate your hard work and accomplishments. Keep it up for one more exam! I will likely not be in the office for the rest of the week. However, if you have questions you're welcome to email them to me.
Wednesday, 18 April
All Students: I encourage anyone interested to browse the website of Gordon Tullock, a pioneer in the study of rent-seeking behavior, an activity often attributed to monopolists and other firms with market power, including sports organizations. Professor Tullock is now an emeritus professor of law at George Mason University. One cannot speak of public choice theory, a big part of which considers issues of rent seeking, without acknowledging the great contributions of James Buchanan, whose website at George Mason can be accessed here.
Principles Students: Joan Robinson (1903-1983) was one of several influential scholars who pioneered the economic analysis of markets characterized by limited competition. Long associated with the University of Cambridge, she was barely 30 years of age when she published Economics of Imperfect Competition. Her work in this area resembled that of the American Edward Chamberlin (1899-1967), who had transformed his doctoral dissertation into The Theory of Monopolistic Competition; indeed both independently reached the conclusion that monopolistic competitors would reach an equilibrium "tangency solution" and would operate with excess capacity. Robinson's work, however, placed a greater emphasis on the concept of "marginal revenue," a term coined by her husband, E. A. G. Robinson. While Chamberlin continued to focus principally on the theory of the firm over the course of his career, Robinson made contributions in many other areas as well, including monetary economics, economics of foreign exchange, and Keynesian macrotheory.
Sports Economics Students: The NFL's Minnesota Vikings are one of the latest teams to encounter a conflict with its local government (the Twin Cities) about the financing of a new place to play. In this short article, note the central relevance of the possibility of the Vikings receiving a subsidy from the state to fund a new stadium, as well as the "angst" attributed to fans. Where there's angst about the absence of a new venue, there's goodwill for the team, but for how long?
Wednesday, 4 April
Principles Students: If you've ever played or otherwise know about the classic board game Monopoly, which now has all sorts of computer versions, you know that the winner of the game (although it can be a notoriously long time for the winner to emerge) ultimately owns all or most of the property around the game board, designed to mimic real locations in Atlantic City, NJ. In this way, the winner of the board game, the surviving monopolist, essentially has used the rules of the game and his/her own ingenuity to establish great monopoly power that drives those pesky competitors, the other players, out of the market. The key source of that monopoly power becomes ownership of key resources, real estate locations, just as we have learned in class this week. Now, imagine designing parlor games that reward some other market-cornering activity, like favorable cost structures or technical innovation. Who knows, maybe this has even been done already...
Sports Economics Students: Read about the history of the NCAA, as the NCAA relates it, at their website here. We'll touch on some more of this history as we go along in class.
Monday, 2 April
Principles Students: When we learn about competition, including the market structure/model we know as perfect or pure competition, we encounter one of the modern implications of concepts discussed by ancient philosophers. A Greek called Heraclitus believed in the central role of change as a driving force in the world and famously observed that "War is the father of all things." What he meant was that opposing forces (like demand and supply) continuously struggle against each other, inevitably leading to balance, harmony, and equilibrium. The seeming paradoxes of some of his ideas, especially as perceived by his peers, partly explain why he was called Heraclitus the Obscure! Certain degrees of harmony and equilibria come about from the kind of competition we learn about in perfect competition, and those outcomes can change under different fundamental assumptions, as we see with monopoly and beyond.
A recent article at CNN.com about Best Buy illustrates how firms can find it efficient to reduce the size of their operations, just as we discussed in class in the context of the selection of the optimal plant size in the long run. Notice how the article cites Best Buy's difficulty competing with Amazon, etc., suggesting that its profit-maximizing output level (as a retailer) has decreased of late. Also notice the specific discussions of cost savings (although not expressed in average cost terms) from reducing its size. Familiar stuff!
Wednesday, 14 March
All Students: I won't see you until after spring break, so I just wanted to wish everyone an enjoyable break! I look forward to showing you some more economics on the 26th.
Monday, 12 March
All Students: Around the time of a test, it's important to realize that economics students, both at the principles level and in the upper division, tend to get better as a semester progresses. Our upcoming test gives you a golden opportunity to demonstrate that. Students get better for a number of reasons. They grow more comfortable with the style of my tests: the sorts of things I'm asking about and how I ask about them. Students eventually come to realize that I'm interested in helping them become better thinkers, as opposed to simply going through the motions of reviewing material to pass the 80 minutes of time we have every class day. Students come to understand the importance of concentration and attention to detail, practices that will serve you well your entire career as a student and beyond. Getting better in these areas can mean leaving behind old, superficial, counterproductive high school-oriented studying and test-taking habits and embracing new practices that will serve you better in a university environment, one that emphasizes thinking, critically, for yourself rather than just regurgitative recall. But the most important reason students get better is that they keep working at it and in many cases figure out a way to work harder or at least more efficiently. As you prepare for a new test, or a homework set, or even a quiz, you should always come to terms with what you have done well in the past and what you didn't do well, and then ask yourself why you did well on the things you got right and why you missed the things you missed, having seen what the correct answers (and approaches) were. If you're unclear on those matters, please talk to me and I'll help you figure them out. Honest self-assessment and hard work are powerful forces for better outcomes down the road. Happy studying!
Wednesday, 29 February
Sports Economics Students: I invite you to browse the website of the economist Lawrence Kahn (Cornell University), whose work on labor market discrimination in the context of sports is highly influential. If you examine his vita, you'll see that he has been involved with research on a number of interesting aspects of sports economics. I also invite you to browse the website of Neil Longley (University of Massachusetts), whose work on labor market outcomes (including discrimination) in hockey continues to move our thinking forward on those matters.
This news item reports how majority San Diego Padres owner Jeff Moorad has withdrawn his bid to buy the remaining shares of the franchise in order to concentrate on getting the club a new local television contract. This illustrates, again, how individual clubs in sports leagues typically fend for themselves in securing media rights, while relying on the league as a whole to secure national media rights. We encountered this idea recently in class.
Wednesday, 22 February
Principles Students: About a year ago CNN posted an article that illustrates nicely how a supply-side calamity in one market can impact outcomes in a related market, here in the context of how the tsunami in Japan has disrupted the flow of various types of capital goods to the U.S. auto industry. One could easily think through the potential implications for equilibrium prices and quantities of automobiles in the relevant market, the sort of analysis we have done frequently in our classes.
Wednesday, 15 February
Principles Students: Please note a correction: The high score on Test 1 was 99, not 94. I made a grading error. So, collectively you folks did even better than I originally thought, and that was already pretty good!
Some of our recent analysis calls to mind the insights of Ernst Engel (1821-1896), a statistician and economist from Dresden, Germany. Engel devoted most of his work to the study of consumer expenditures (especially on food) at different income brackets. He made the concept of income elasticity of demand, which of course we learned about the other day, central in microeconomic analysis. Indeed, the principle now characterized as Engel's Law suggests, in part, that the income elasticity of demand for food is less than 1: ceteris paribus, as income rises, consumption of food increases, but the proportion of income spent on food declines. This regularity may suggest systematic relationships between living standards and health, among other connections. Engel's insights also allow us to demonstrate that at least one good in a consumer's consumption bundle must be normal and that certainly food must be normal. We can demonstrate this using indifference analysis, which we will learn about soon.
See you on Monday...
Wednesday, 8 February
All Students: As we approach our first test, I want to give you a few tips that that can help you do your best on my tests, especially Part 2 items. (Probably other professors' tests too...)
-Answer the question. Part 2 items frequently ask a specific question (sometimes more than one): does something increase or decrease? is a statement true or false? does an explanation make sense or does it not? will the consumer/firm do this or do that? what is the optimal level of something or other? All kinds of questions. Students sometimes present a pageful of analysis, accurate or otherwise, only to leave the central question of the problem unanswered, which usually earns them a score of 0. It seems simple enough, but it's amazing how often students fail to address the actual question being posed in a test item. Answer the question.
-Don't just talk about diagrams, show them! Don't just talk about mathematical operations, show them! You should show your analysis, not merely a narrative of your analysis.
-Show up on time. Some students have a habit of showing up late to class. If this is you, I recommend eliminating this from your playbook as soon as possible. Remember that our class goes for 80 minutes, which, among other things, means that I design my tests to be completed comfortably in 80 minutes (I will actually give you 85 minutes). If you're late arriving to a test, you are robbing yourself of precious time. Don't turn an 80-minute test into a 65- or 70-minute test; you will end up working hastily, rather than thoughtfully, and it will drastically hurt your performance.
-Remember that as economists we mean what we say, and we say what we mean...and we assume you do too. If a test item has something to say about the demand for a good, we mean demand; we don't mean quantity demanded. If a test item has something to say about supply, we don't mean production and we don't mean quantity supplied. If a test item refers to equilibrium price, it's not referring to any other price. By the same token, if you use a specific economic term, like demand, I will assume you are using the term sincerely, and I will evaluate your answer on that basis. One message I'm sending here is: know your definitions, know your concepts. The other message I'm sending is: test items do not exist to confuse you, trick you, or mislead you. You do not have to worry that when one of my test items says one thing it might mean something else, and I will not assume you are playing those games either. Having said all of that, remember that you can always ask me for a clarification during a test.
-Explain. The most common word I write (in red ink) on students' tests is Why? The phrase What's the analysis? probably comes a close second. As a university student, you want to get away from simply making statements, flat declarations that have no foundation in anything established in the problem or in your answer. We (professors) are interested in your analysis, not just your final answer; we want to help you think better, so process is important. A university course is not a quiz show. If you decide that some statement is false, or that a curve shifts a particular way, or that an equilibrium price changes in a certain direction, or that a consumer will prefer one thing or another, etc., one would logically presume that you have a reason for that conclusion. Making those reasons clear, in writing, is what explaining is all about.
-Analyze the problem in front of you, the one that's on the page---nothing more, nothing less. Any given test item will provide you information relevant to that problem. Any possibilities not in evidence in the problem become irrelevant to that problem and aren't worth discussing; in fact, discussing them only makes things worse. Even from a purely practical perspective, realize that you have only so much time to write your test (see above for more on time use); don't waste valuable time addressing questions that aren't even asked!...One of the key purposes of my demand/supply drill sheets (in principles) is to afford you the opportunity to practice engaging in a disciplined analysis (of markets, in this case) free of irrelevant speculation, free of assumptions of facts not in evidence. For example, if all you are told is that celery is an inferior good and that consumer income increases, this and only this is what you should analyze. Any possibility that the implied reduction in demand, equilibrium price, and equilibrium quantity might persuade some celery farmers to leave the industry, resulting in lesser celery supply, and later repercussions for price and quantity and who knows what else, becomes purely speculative and irrelevant to the question at hand---thus undermining your analysis and making it less concrete than it would be otherwise...Think about it this way. Many test items, in essence, seek to simulate a real-world difficulty that an authority figure or a decision maker faces (this is why we call them "problems," after all), and we can imagine that such a person has called upon you to address the issue at hand using sound economic analysis. In that context, no one is in a better position to know exactly what the problem is than the decision maker him/herself. I mean, it would be presumptuous and arrogant to assume otherwise. So, we can safely assume that person will ask exactly the question he/she wants answered, nothing more and nothing less. An answer containing superfluous, unsolicited speculation, or that speaks to issues that the decision maker never even brought up, simply clouds the issue and makes your answer inefficient and useless. In an academic test setting, it results in a poor score. In an employment setting, it can mean the difference between advancing in your career or not, or it could get you fired. Students sometimes characterize this error as "reading too much into" a problem, and this is a very accurate description.
Wednesday, 1 February
Sports Economics Students: I was mentioning Bill Veeck, a true pioneer in many ways that touch on the field of sports economics. I invite you learn more about him at ESPN Classic; the link is here. You might also enjoy learning a bit more about Paul Beeston, another pioneering executive in major league baseball though nowhere near as colorful as Veeck! This link takes you to his page at the Canadian Baseball Hall of Fame, to which he was inducted in 2002.
Wednesday, 25 January
Principles Students: Economists have studied and written about the market equilibration process for many generations. The process by which a market steadily finds its way towards equilibrium was formalized and described famously by the great French-Swiss economist Léon Walras (1834-1910) [pronounced "vahl-RAH"], who characterized the process in French as tâtonnement (literally, "groping"). (The photo linked here shows him before he lost his rock-star hair, but in the long run he kept the beard...) The market literally lurches around seeking equilibrium, but in a systematic way that would inevitably move it there. What we learn about the equilibration process this week represents just a small modern representation of some of Walras' work. Indeed, economists sometimes refer to a hypothetical "Walrasian Auctioneer" to describe the invisible force that leads a market, or a system of markets, to equilibrium.
Monday, 23 January
Principles Students:The formalized notions of comparative advantage, which we considered in micro principles the other day, have origins with the influential British economist David Ricardo (1772-1823). Ricardo's discussions of comparative advantage facilitated one of the first compelling justifications for the benefits of international trade. Ricardo wrote that foreign trade would "very powerfully contribute to increase the mass of commodities, and therefore the sum of enjoyments." Put in less flowery English, he meant that specizalization and exchange benefit not only the productivity of an economic system (such as a global economy) but also the productivity and social welfare of the individual nations themselves, very much as suggested within Bill and Ted's Excellent Ironing Adventure!
Wednesday, 12 January
Hello to all students, and welcome! This is my blogging area for my Spring 2012 classes. Over the course of the semester, I will post the occasional tidbit here related to our classes: trivia, further examples, reminders, tips, interesting web links, that sort of thing. I also may comment periodically about why I do some of the things I do as an instructor. So, visit often, and feel free to ask questions along these lines. You could see my answer here, if not in class.
I look forward to our first class meetings this week. I will post PDF versions of my course syllabi after Monday.
