As mentioned in the previous post, I like using stories to teach microeconomics. One of the main things to take away from undergraduate micro courses is good economic intuitions and the ability to meaningfully ask (and sometimes answer) the question "Why would this person do that?"
In teaching intermediate micro this summer I had students write two economic intuition papers. The point of the papers is for students (1) to notice things in the world around them that lack obvious explanation, (2) ask relevant questions that get at the underlying choices and behavior of decision makers, and (3) use the reasoning of the course and an understanding of how people respond to the incentives around them to explain interesting behavior. Overall, I think it was a great success.
At the request of a friend, here is a sample of questions students came up with (obviously without names / grades / identifying characteristics):
-Why do DVD boxes have similar dimensions to VHS boxes?
-Why do most restaurants offer free refills on drinks?
-Why do some restaurants stay open 24 hours/day despite very little business overnight?
-Why do companies give money to charities if their sole purpose is to make money for shareholders?
-Why do pizza businesses mail out coupons, but not offer them to customers when they make an order?
-Why does Philip Morris advertise that 'there is no safe cigarette'?
-Why does basic cable cost the same to everyone, no matter how much programming different customers watch?
-Why do car dealerships advertise discounts on hail damaged cars?
-Why would more experienced taxi drivers use more shortcuts and reduce the driving time for each fare?
-Why does Wal-Mart have such a liberal return policy compared to other stores?
-Why would electric companies try to get their customers to use less electricity?
-Could having more restaurants on Ed Noble Parkway actually make Norman residents worse off?
While many of these could be explained as altruism, habit, good-PR, discrimination, or irrationality, all of these questions can be answered better as simple, reasonable responses by rational people to the incentives around them. While those other influences do matter, their importance is greatly overstated much of the time because economic insight is ignored.
If you'd like to hear some basic answers to any of these questions, just ask. And feel free to ask your own economic intuition questions in the comments!
HOW I FEEL WHEN I’M TWO WEEKS OUT FROM QUALS
9 years ago
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4 comments:
"Discuss this situation in light of economic insights" is a great game to play with your economics PhD candidate husband. No, really. It's fun.
If all those restaurants on Ed Noble suck, then yes we are worse off. And I'm pretty sure we are.
firstly, Johnny Carino's is a fine and laudably established emporium of excellent edibles. Jenny and I like it, so there.
what's up with the electric one? Is it because electric companies are publicly subsidised, like farmers, and can earn money along the same lines (e.g. not growing corn) for producing less juice? I imagine that would increase their margins, too.
Heh, well in the restaurant example, we'll assume all the restaurants and fine as far as quality goes. But we still might be worse off.
Regarding the electric company-- their prices are restricted by regulation, so it's difficult for them to change their prices. They are also required by law to have sufficient productive capacity to meet 110% of peak demand, meaning they have to have buy enough machinery to sell electricity to anyone who wants it. So, if they can get people to use less electricity during peak times (say, middle of a summer day), then they don't have to buy as much equipment, which can amount to saving millions of dollars every year. If the price is the same either way, that can mean the difference between making a bunch of money and losing a bunch of money.
Hope that clarifies.
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