Banjonomics: An Introduction to the World of Economic Thinking

Mark C. Schug, Ph.D.University of Wisconsin-Milwaukee February 5, 2010

Overview

Perspectives of history and the social sciences

Introducing the economic way of thinking

Solving economic mysteries

Sources of mysteries Developing new

mysteries Wrap Up

The Economics Myth

Myth Economics is all

about the money. Reality

Economics is all about how people make choices.

Economics is a way of thinking and understanding.

Perspectives of History and the Social Sciences

History

Geography

Economics?

How Do We Get Students Off to a Good Start Thinking Economically?

Demonstrate skills that require only a few basics to get started.

Maybe demonstrate the basics of a sport or a hobby you enjoy.

Swinging a gold club Grip Stance Backswing Impact and follow though

How Do We Get Students Off to a Good Start Thinking Economically?

Knitting a scarf Casting with a spinning rod Driving a manual

transmission Playing spider solitaire Playing a musical

instrument

Banjonomics

Learning how to think economically is like playing traditional folk songs on a 5-string banjo.

You need to learn 3 chords: G C D

Using Mysteries to Introduce Economic Thinking

FSU Student Mystery

FSU students have many things to. They have: Classes to attend Papers to write Books and articles

to read Tests to cram for Football games to

attend And private lives to

live

Why would FSU students, people with so much to do, attend a course on economics – the dismal science - - a course most students try hard to avoid?

Handy Dandy Guide for Solving Economic Mysteries - - the six chords of economics

1. People choose.2. People’s choices involve costs.3. People respond to incentives in

predictable ways.4. People create economic systems - -

rules of the game - - that influence individual choices and incentives.

5. People gain when they trade voluntarily.

6. People's decisions have consequences that lie in the future.

The Mystery of the Alien Bananas

Bananas are a tropical fruit.

No one in Tallahassee, Florida grows them.

Florida has no plan for getting bananas to grocery stores.

Yet, there they are there -- everyday.

How can that be?

Economic Mysteries: Oil Reserves

Proven oil reserves stand at 531 billion barrels and we are consuming 16.5 billion barrels annually.

Quick! How many years will it take us to run out of oil?

This was the situation in 1970. By 2008, proven oil reserves

had increased to 1.15 trillion barrels even though the world is consuming about 30 billion barrels annually.

How can this be?

The Battle for the Overhead Bins

Air travelers kiss their loved ones goodbye…

And then transform into baggage warriors stuffing all sorts to oversized bags rudely into overhead bins.

Why do they do that? Bonus Question: How

could a change in the rule of the game influence their their behavior?

Economic Mysteries: Red Light Camera

In Duluth Georgia, red light cameras are credited with improving safety as drivers became more cautious at intersections.

But in 2009 the city police department wished to eliminate these safety devices.

Why would the police - - people hired to protect the public safety - - want the roads to be more dangerous?

Why Are Teens Choosing Not to Drive?

The quest to get a driver’s license and access to the family car is less important to today’s teens.

Only 31% of 16 year olds got licenses in 2008 compared to 45% in 1998?

Why don’t today’s teens want to drive?

Other Mysteries

Why with better safety features in cars like anti-lock brakes and air bags are car accidents increasing?

Why do people in poor nations have more children than people in affluent nations?

Why buy brand name products when generic products cost less?

Still More Mysteries

Why can’t you buy a car on Sunday in Michigan?

Why air-condition the air in the desert?

Why can you easily talk to your lawyer on the phone and not your doctor?

Sources of Mysteries

Capstone Focus: Understanding

Economics in U.S. History Great Economics Mysteries

Books Visit

http://www.councilforeconed.org/

Developing New Mysteries

Writing Your Own Mysteries

Be on the lookout for something that seems odd.

Pay attention to the news.

WSJ and NYT are good sources.

TV and other media also work.

Develop a Primary Proposition

Polar bears can be dangerous.

The migratory route of polar bears takes them through the small town of Churchill, Manitoba.

Polar bears do great damage when they come to town: They pound on home

doors. They break into

homes. Small pets disappear. Trucks are attacked.

Develop an Opposing Proposition

You might expect that the residents of Churchill would be searching for ways to hunt or divert the bears from their preferred migration route.

They are not. Most of the residents of

Churchill are delighted when the polar bears visit.

Identify the Mystery Explicitly

Why would the residents of Churchill welcome such rude visitors to their community?

Focus on Economic Principles to Solve the Mystery How are choices being

made? What are the costs? What are the incentives? What are rules of the

game might be influencing behavior?

How are people gaining from voluntary exchange?

What might be the consequences that lie in the future?

Focus on Economic Principles to Solve the Mystery How are choices being

made? What are the costs? What are the incentives? What are rules of the

game might be influencing behavior?

How are people gaining from voluntary exchange?

What might be the consequences that lie in the future?

Mysteries in Your Courses

Introduce your economics course with a mystery presentation on day 1.

Present a “mystery of the week.”

Ask students to develop mysteries as assignments.

Send all you new mysteries to me!

Art History ResearchThe Van Gogh Family

Obnoxious brother Dizzy Aunt Brother who ate

prunes Brother who

worked at a convenience store

Grandfather from Yugoslavia

Please Gogh Verti Gogh Gotta Gogh

Stop N Gogh

U Gogh

Art History ResearchThe Van Gogh Family

Cousin from Illinois Magician uncle Mexican cousin’s

half-brother Constipated uncle Ballroom dancing

aunt

Chica Gogh Wherediddy Gogh Amee Gogh

Cant Gogh Tan Gogh

Art History ResearchThe Van Gogh Family

Bird lover uncle Nephew

psychoanalyst Brother who was a

Beatle

Flamin Gogh

E Gogh Rin Gogh