TEACHING TOOLS: SHOULD WE TEACH MICROECONOMIC PRINCIPLES BEFORE MACROECONOMIC PRINCIPLES?

No consensus exists about the optimal sequencing of economics principles courses. We show that most top-ranked economics departments either do not specify an ordering or require microeconomics first, while most textbooks present macroeconomics before microeconomics. Using a national economic education database, we find that students learn more in principles of microeconomics after taking a course in macroeconomics. However, students do not learn more in principles of macroeconomics after taking a course in microeconomics. This implies that, ceteris paribus, principles of macroeconomics should be taught before principles of microeconomics for optimal student learning.     

TEACHING TOOLS: ECONOMICS OF CHILDHOOD IMMUNIZATION

Recent outbreaks of measles and other childhood diseases have put immunization policy on the national agenda. This teaching note on childhood immunization, intended for principles courses, discusses the rationale for government involvement, the situation in the U.S., and the policies of Northern Ireland and Austria. It emphasizes (a) the use of financial incentives to motivate behavior, (b) the distinction between shifting and moving along the demand curve, and (c) the notion of negative prices (i.e., paying the customer to "buy" the item). Students especially like the idea of the demand curve extending below the x-axis.     

TEACHING TOOLS: TEACHING METHODS IN UNDERGRADUATE ECONOMICS

Lectures have long been the dominant pedagogical approach in undergraduate economics courses, but they are certainly no longer the exclusive approach. Much of the recent soul-searching in the discipline, dealing with the desirable characteristics of economics programs and their graduates, has largely ignored the issue of promoting the use of innovative and more active forms of teaching and learning. We review a considerable literature on new teaching approaches, developed by economists over the past twenty-five years, and argue that this should also be a part of the current debate about curriculum and training reforms for the profession.     

TEACHING TOOLS: COOPERATIVE LEARNING IN ECONOMICS

Cooperative learning is a structured, systematic instructional technique in which students work together in small groups toward a common goal. We demonstrate the effectiveness of cooperative learning with an illustrative example for teaching the labor supply curve. Recommendations for introducing the technique, forming groups, the instructor's role during group work, grading and extensions of cooperative learning to other topics are discussed.     

TEACHING TOOLS: A POLLUTION RIGHTS TRADING GAME

This article describes a classroom game in which students simulate the US. EPAS market for emission allowances to understand the efficiency benefits of market-based incentives for pollution control. It can be used in either a principles or environmental economics course. Acting as managers of coal-fired power plants facing different clean-up costs, students compare the cost of pollution reduction to the cost of acquiring permits to emit pollution. The game can be conducted in one 50-minute class period with discussion of the results carried over to the next class. (JEL A2)     

TEACHING TOOLS: SIMULATING MONEY SUPPLY CREATION IN CLASS

Students in introductory economics or intermediate macroeconomics can learn and experience the process of creating money through an interactive simulation in which students play the roles of bankers, loan customers, and business firms. The simple version of this simulation is easy to set up, though many instructors will find the more structured version worth the additional setup cost. During the structured simulation, students encounter other macroeconomic concepts such as the marginal efficiency of investment curve, and broad versus narrow money. This simulation offers some experiential learning and adds variety to a macroeconomics course. (JEL A22)     

TEACHING TOOLS: HOW IS INTRODUCTORY ECONOMICS TAUGHT IN AMERICA?

We describe the faculty, students, teaching methods, and assessment instruments used in 180 introductory economics classes taught by 122 different instructors at 53 different colleges and universities. Despite variation in class size and types of institution, both introductory macroeconomics and introductory microeconomics are taught predominantly as lecture courses, with the largest part of students' course grades determined by performance on multiple-choice question tests. There seems to be little experimentation with alternative pedagogies or assessment techniques despite an in-creasing amount of attention to these issues in recent years.     

TEACHING TOOLS EXPERIENTIAL LEARNING IN THE UNDERGRADUATE CLASSROOM: TWO EXERCISES

We describe two classroom exercises which can be used to reinforce undergraduate students' understanding of (1) production and cost concepts and (2) the concept of economic scarcity. In the first exercise, students use their experience in producing "widgets" in a single variable input environment to derive a wide range of production and cost data. In the second exercise, students use their experience in producing two goods under various allocations of a fixed set of resources to generate a production possibilities frontier. The resulting links between concept and experience enhance students' understanding of these important concepts.     

THE EFFECTS OF MACROECONOMIC CONDITIONS AT GRADUATION ON OVEREDUCATION

This article shows that unfavorable economic conditions at graduation decrease the likelihood of a good job‐worker match over a worker's subsequent career. Mismatch is quantified in terms of overeducation by both industry and occupation. The German Socio‐Economic Panel and region‐level unemployment rates from 1994 to 2012 are used. Instrumental variables estimates account for endogenous graduation timing. A single percentage point increase in regional unemployment causes an increase in the probability of overeducation of 1.6–1.7 percentage points for university graduates. Effects for technical tertiary education and apprenticeship graduates are smaller. Labor market entry conditions affect workers for up to 9 years after graduation. (JEL J23, J22, E32, I23)     

TEACHING TOOLS: INTERTEMPORAL RESOURCE ALLOCATION: DISTRIBUTIVE ISSUES SURROUNDING GASOLINE PRICE HIKES

This paper shows that many people misinterpreted the gasoline price increases that followed Iraq's invasion of Kuwait in August 1990. Consumers expressed outrage when prices increased immediately even though a production shortfall did not materialize for several weeks. But by withholding output in the invasion's aftermath arbitragers (including oil companies) reallocated output intertemporally to make more available when it was needed most. The welfare consequences in general depend upon demand elasticities and their rate of change, but in this instance consumer surplus would probably have been maximized with a full and immediate price adjustment and oil companies profited from their restraint.     

TEACHING TOOLS: WHY WORKERS SHOULD WANT MANDATED BENEFITS TO LOWER THEIR WAGES

Mandating that employers provide job-related benefits is not a free lunch for employees. Despite the claims of some advocates of mandated benofts, economists have long recognized that much of the cost of those benefifs is passed on to employees in lower wages. What has gone unrecognized is that the more employees pay fir a mandated bentefit relative to its cost the more they gain from having the benefit provided.     

A MACROECONOMIC MODEL ON THE QUALITY OF GOVERNMENT AND ECONOMIC PERFORMANCE

We determine the relative rewards to producers, private rent‐seekers, and bureaucrats and allocation of talent between them in a general equilibrium model. Unproductive activity creates a negative externality on the relative rewards to producers. If the size of bureaucracy is exogenously given, among the multiple equilibria, the one with fewer private rent‐seekers yields higher welfare. By choosing a small size of bureaucracy, the government can establish the superior equilibrium as the unique outcome, which also achieves the constrained optimum. If the population of bureaucrats is endogenously determined, however, a larger bureaucracy enhances production and welfare. The size of government and economic performance are jointly determined, and their relationship depends on the quality of government. Our result supports the view that the size of government may not matter much; what is important is the quality of government. (JEL E60, E61, H00)     

NEW EVIDENCE ON THE RETIREMENT AND DEPRECIATION OF MACHINE TOOLS

This paper uses data from machinery dealers to estimate the retirement and depreciation patterns for a broad set of conventional machine tools. According to the dealers, the average service life of these machines at the survey date was about thirty years. Service lives were even longer in the mid-1970s, with the reduction over time likely caused by the diffusion of superior, computer controlled machines. Consistent with the relatively long average life, the conventional machines have depreciated slowly. I use the results to assess the average service life assumed by the Bureau of Economic Analysis to construct capital stocks for metalworking machinery.     

THE IMPACT OF MACROECONOMIC CONDITIONS IN CHILDHOOD ON ADULT LABOR MARKET OUTCOMES

This study examines the influence of business cycles in childhood on economic performance later in life. I relate unemployment rates between the year before one's birth and the year of one's 15th birthday to schooling, employment, and income as an adult. The analysis exploits variation in macroeconomic conditions across states over time. I address a number of identification challenges related to cohort effects, linear trends, current events, and economic persistence. The caregiving behaviors and background characteristics of parents are also studied. The average unemployment rate in childhood normally has a negative effect on human capital in adulthood. (JEL J11, J24, J31)     

DIMENSIONS OF MACROECONOMIC UNCERTAINTY: A COMMON FACTOR ANALYSIS

Uncertainty about the future course of the economy is a potential driver of aggregate fluctuations. To identify the distinct dimensions of uncertainty in the macroeconomy, we construct a large dataset covering all types of economic uncertainty. We then identify two fundamental factors that account for the common dynamics in this dataset. These factors are interpreted as macroeconomic uncertainty. The first factor captures business cycle uncertainty, while the second factor represents oil and commodity price uncertainty. While both types of uncertainty generate a decline in output, time‐varying oil and commodity price uncertainty is more important for fluctuations in real activity. However, nonlinearities seem to amplify the effect of business cycle uncertainty during the global financial crisis. (JEL C32, C38, E32)