Economists and Cocktail Parties

Sometimes I remark to my students, “This is why economists don’t get invited to cocktail parties.” This post is about that.

From 2008 – 2011 I taught a course at Florida State called “Economics of Compassion”. It is a course co-designed with my mentor Mark Isaac. The class discusses historical and contemporary problems related to poverty, both at the domestic and international levels. Having heard about the course, the Social Justice Living Learning Community at Florida State wanted me to teach the course to their incoming freshman. 

It was quite different from other courses they were taking that seemed to talk in terms of solutions without regard for scarcity. My role was to put parameters on their utopia and get the students to think carefully about a couple questions related to issues they care about:

  • Compared to what?
  • What happens next?

The students seemed to like the class, but, for a committed group of people who want to change the world it was also quite a downer. It was a downer for them the same way economics is a downer for people at cocktail parties.

We start with scarcity. Scarcity is a fact of life. There are never enough resources to satisfy everyone and there will always be unmet desires. For the economist, the notion of trade-offs — you must give up one thing to get another — flow from this scarcity. It means that anytime a solution to a problem is attempted you are always giving something up.

For example, the death of George Floyd this summer sparked conversation about how to reduce police violence. One approaching to curbing this important social problem is to eliminate or reform qualified immunity (QI). This is a legal doctrine intended to protect police and others from frivolous lawsuits. The problem is that QI has made accountability extremely difficult. The logic of reforming QI is that doing so will increase accountability, raise the cost of police violence, and therefore lead to less police violence. That’s good economics.

But, remember there are trade-offs. In a new world where police are opened up to lawsuits, local government might need to increase police compensation to retain or attract qualified men and women. Where does the money come from? Can you reduce the number of police and/or will you have to raise taxes? There are other trade-offs too. Will police become more reluctant to enter dangerous neighborhoods? After all, there is a greater chance that inserting themselves into a risky situation will lead to financial ruin.

Moving from heavy to light. If you haven’t seen Yoram Bauman’s comedic schtick on Principles of Economics Translated, take five minutes and check it out here. As he illustrates, “economic profit” depends on alternatives: A Snickers bar valued at one dollar with no alternative implies an economic profit of $1. However, if the alternative was M&Ms that you value at 70 cents then your economic profit is 30 cents … Your profit from pursuing one course action declines as the value of the alternative increases.

By accounting for trade-offs the net benefit of a course of action goes down. When we bring up trade-offs in conversation, economists effectively eat into people’s mental profits for some course of action.

Another thing to consider, when you’re intervening, that intervention can sometimes have dramatic side effects that you didn’t even think about. You cannot merely move people around as if they’re pieces on a chessboard (head nod to Adam Smith).

For example, it is possible that eliminating qualified immunity leads to less police violence but more neighborhood violence overall if police decide not to insert themselves into situations that could be more costly. Beyond this hypothetical example I have been using, there are loads of other unintended consequences economists talk about.

Thinking in this way is the bread and butter of economists. This is how we see the world. But, don’t try this in social settings. As EconTalk host Russ Roberts once commented (this podcast), a pleasant picnic veered into chilly company when he pointed out someone’s proposed minimum wage could have negative employment effects. The others at the picnic started to inch away from him on the picnic blanket. At parties, I’ve had people talk about the idea that a tax won’t effect them because it is only on sellers, homeowners, etc. I’ve had to ask myself, “Is it worth it to bring up that the tax is likely to be passed through?”

So while my last couple posts sing the praises of economics, I should let you know, at cocktail parties people don’t like to think about scarcity, tradeoffs, and unintended consequences. Economists like to think about the seen and unseen. Many others, especially in social settings, would rather the unseen remain unseen.

Experience at a lower price

In an earlier post, I discussed the idea that memorable and persuasive arguments have the force of logic, credibility, and emotional appeal. Economists who stink at emotional appeal do so to their own detriment. One strategy to make an emotional appeal is to use the power of beauty to promote a sense of wonder and awe (see here). In this post, I discuss the use of experience in the classroom. 

This idea really hit home with me in an EconTalk podcast with Milton Friedman. In that episode, Friedman suggested that public appetite for price controls was low — not because economists educated the public on their dangers — but because people still remembered the long waiting lines for gasoline. Once those memories faded, or the people who experienced those lines died, there would be a renewed desire for price controls.

Gas Lines Evoke Memories Of Oil Crises In The 1970s : The Picture Show : NPR

Experience is important. But, the gas lines were a costly way to learn that lesson, especially if the lesson needs to be re-learned in every generation. How can we give students experience at a lower price? We can tell them stories from experiences around the world. I am in favor! I love case studies and their thick descriptions. At some point I will blog about my favorite stories to tell. But, for this post, let me propose the widespread use of classroom experiments.

The basic idea of a classroom experiment is to embed students inside an economic environment and give them a goal to maximize. For example, in an experiment on supply and demand students are embedded in a market institution and serve as either a buyer or seller. Their goal is to buy something at a low price or sell at a high price. These experiments can be run either with paper-and-pencil or electronically.

Talking Through the Results: Competitive Market Game

To show how these experiments can result in emotional appeal, let me recount a story. In a unit on price controls, I had students participate in a market without price controls followed by a market with a price ceiling. Back when I taught the Economics of Compassion class at FSU — specifically to the Social Justice Living Learning Community — I remember the following (quoted from here): 

“The market without a price control demonstrated smooth convergence to the equilibrium prediction. The double auction with the price ceiling was chaos. Once the frenetic burst of trades stopped, buyers started yelling at sellers, “Post some asks!” and “Why aren’t you selling anything? We’re posting bids, why aren’t you doing anything?” The sellers of course shot back, “If we sell [at the max price] we will lose money!” It was chaos! I remembered that visceral reaction, the frustration, and the silence as all students waited with no trades happening … tick-tock, tick-tock, until the clock timed out. They felt the shortage. Students would stop me on campus (sometimes years later) saying they remembered playing that game.”

Experiments enhance credibility through engaging students in theory testing. But, to close I want to emphasize that experiments also help provoke visceral reactions and audible sighs. Experiments can help provide experiential punch in different institutional contexts at a low price. All of that connects students to the material in a way our logic and credibility alone cannot do.

The Problem of Paying Attention in Online Classes

Currently, I subscribe to Bloomberg Businessweek. Instead of ranking MBA programs, this year they decided to report on a survey of students about switching to online classes. (in the Sept. 21 issue)

Overall, the reaction from students has been negative. They believe an online MBA is not as valuable as the traditional in-person experience.

Something MBA students state, which I have already heard from my own undergraduates, is that it’s difficult to focus during online instruction hours. If your face isn’t being watched through your webcam, then it’s tempting to “multitask” and not pay attention to the professor. I feel the same temptation when I join online research seminars.

What’s the most sympathetic view of this situation? Doing your online classes “isn’t that hard”. I feel like the scold looking over my bifocals at millennials saying, “going to a dry cleaner isn’t that hard”. (We millennials cannot be bothered to go to a dry cleaner.)

Here’s my first and brief thought: College students today have been taught to use screens for recreation by their parents.

Parents put kids in front of screens to get rid of them. I get rid of my own kids by putting them on screens. I ensure that they are not watching something evil.

I hope parents are diligently ensuring that their preteen daughters are not chatting up predators. What responsible parents have been told is to try to limit total screen hours and also to try to keep your child out of the digital equivalent of dark alleys.

That kind of guidance doesn’t teach students how to use screens constructively. They are suddenly being asked by teachers to be constructive on the screen. Some of them can hack it. Some of them can’t. None of them were prepared for this.

Your typical 20-year-old college student today must have done well in traditional classrooms because they did, after all, get admitted to college. But when they were on their screens, they were scrolling and gaming and indulging their impulses. As long as they physically showed up to class on Monday morning and turned in enough homework assignments, no adult was going to make them do chores on screens.

Since screens are here to stay, we need a lot more research on how to raise humans who know how to be responsible on screens.

No answers came to me when posed this question to the hive mind:  

The Most Valuable Class I Took

In middle school, when I was about 12, I had a rotating non-academic period in my schedule. For at least 6 weeks, I can remember we had a typing class. We would go into the school computer lab and practice “touch typing”. I typed the letter “f” with my left index figure hundreds of times. They made us put a cover over our hands to force us to practice typing without looking.

I resented that class. I hated taking the long way round. I hated typing the letter “f” over and over. Since it’s so boring, I don’t know if I would have forced myself to learn QWERTY touch typing. Part of the value of school is a framework in which you do things that you don’t have the discipline to do on your own. (Tyler Cowen has written somewhere about teachers as coaches, but I could not find the link.)

Looking back, this is the most valuable thing I did in school. I’m writing this post almost as fast as I can think of the words.

Learning to type is not useful if you can’t read or write. I’m not saying that nothing else I did in school was valuable. Also, I recognize that this would not be the most valuable class for every student.  

There is the potential for Speech to Text to make touch typing obsolete. I don’t think I would work better that way and I do not personally know any professionals who write using Speech to Text.

A Covid Conversation… But with Humility.

We know WAY more about Covid-19 than we used to. But there is plenty of appropriate and inappropriate incredulity concerning the data meaning, validity, and implication. I want to take a minute and give it the good ol’ Stat – 201 college try. Here’s the level-headed and appropriately humble Covid statistics conversation.

A: “The US has more cases of Covid than Portugal.”

B: “Yes, but that’s not important. They are very different countries. After all, 65% of people in Portugal live in urban centers. For the US, that number is 80%. Obviously, people being close together, such as in urban places, will contribute to more Covid cases.”

A: “OK. Fine. They may be incomparable. But the US has more cases than the UK, which has a similarly urban population of 83%.”

B: “Yes, but the US is larger. The UK has a smaller population – Of course the US has more cases.”

A: “Ah! And the US also has a Covid positivity rate well in excess of the UK.”

B: “Hmm… That is something. The problem is that the testing is not administered in the same fashion in both places (or across time). That is, neither set of tests is a simple random sample of people and neither is biased in sampling in the same sort of relevant ways.”

A: “But how do you know that the samples aren’t collected in the same sort of ways? Someone feels poorly, then they go and get tested. Isn’t that how is works everywhere?”

B: “Not necessarily at all. Some countries and municipalities offer free testing. Other places have more or less scarcity of tests and surely that affects whom they decide to test. Not only that, different people are differently willing to get tested (maybe they’d have to involuntarily stop working, for example). My point is that the testing samples are not both biased in favor or against positives in the same way and we have little way of telling either the direction or magnitudes. The fact that both countries test a similar proportion of the population doesn’t address the sampling method.”

A: “OK. Well, I suppose that we ought not try at all then, according to you? Isn’t some problematic data better than none?”

B: “Problematic data is not better than none at all if we have good reason to think that there isn’t enough in common between sample collection methods to make valid comparisons.”

A: “Right, so you’re saying that we have to be agnostic.”

B: “In some sense, yes. But rather than Covid cases, we can track relevant variables whose sampling is more comparable. Hospitalizations are better, but we still have the issue of selection bias among those being admitted and a bias due to different hospital capacities between localities. The best measure is the number of deaths due to Covid. People can’t elect out of that sample.”

A: “Hm… Ok. But while total deaths is a more dependable statistic, it is less relevant. Of course deaths matter a great deal, but Covid makes people feel terrible and may even have long term effects.”

B: “You’re right. Covid deaths Vs cases has the trade-off of relevance Vs dependability. Arguably, deaths are the most important possible symptom – although I take your point that it’s not the only relevant symptom. Ultimately, however, the death numbers are more dependable and we should use them if we want a high degree of certainty.”

A: “Fine. The US has more Covid deaths than does the UK, both in level and in deaths per thousand of population.”

B: “Yep. You are right. But the US has more Covid cases, so of course it has more Covid deaths than the UK. The correct statistic is, given a Covid diagnosis, how likely are you to die of Covid? In the UK, a much higher proportion of people with a Covid diagnosis die. In other words, Covid is more dangerous in the UK than it is in the US.”

A: “Time out. Two things: 1) Didn’t you say just a moment ago that the testing data wasn’t reliable enough? Now you’re using it as if it’s reliable. 2) If we are making a cross country comparison, then can’t we just say that a person, randomly drawn from the population, is more likely to die from the Covid in the US than in the UK?”

B: “Mea culpa. You’re right on both points. At the end of the day, a US person is more likely to die of Covid. But, in the UK a person with Covid may be more likely to die. So what do we do about that?”

A: “Good question…”

 

Teaching with SAS Viya: First Report

I teach a 400-level data analytics course to undergraduates at the Samford business school. Every semester, I have students apply the concepts we learn by using some analytics software. This semester, it was imperative that I choose a product that students could access from their own computers. We cannot all be together in the computer labs due to Covid.

For the first time, I am using SAS Viya for Learners. Currently, the students are learning SAS Visual Analytics through the Viya platform. SAS makes detailed tutorials that make it easy to teach software to a class. Something that I’m particularly happy about this Friday is that the product works. Class time is not getting chewed up by students who get errors that are difficult to troubleshoot.

(Of course, I tested the software myself before asking students to use it. Anyone who has taught large classes knows that there is no way to fully anticipate the problems that could arise when dozens of humans with different computers all try to do something.)

Something to know about SAS Viya for Learners is that it is free but the free version does not come with the whole range of functionality that SAS Visual Analytics offers. What seems most significant to me currently is that students cannot upload data into the program. There is a library of datasets to work with. That is what we are using for demonstrations and homeworks.

In previous semesters, students have been instructed to find their own data online and use that for their final project. This semester, students will use data that is pre-loaded into the SAS Viya for Learners library. There are many right ways to do a final project. Having less decisions to make about what data to use will allow students to focus more on the analysis and presentation.

So far, all we have done is logged in and built confidence with the interface. That’s the first step with any software. It works. The tutorials give excellent guidance. I will post another update as we get further along with SAS Viya.

No coding is needed (not even SAS coding). I have concluded that coding and data analytics are separate skills. They are both good skills to have. Sometimes teaching coding along with data analytics is appropriate. But the trade off needs to be recognized. Time spent learning to code, to some extent, takes away time spent learning about data analytics. Feel free to fight me on that in the comments if you disagree.

I also use a textbook to teach this course. So, SAS Viya is not the only resource.

New Blog: Via Egnatia

My friend Dr. Alex Salter started a blog a month before I did. We are almost blog twins. His blog, which has multiple contributors, is Via Egnatia. You know it’s going to be good when the name is in Latin and immediately sends you to Google a fascinating ancient road.

These posts are deep. The modern mind (I’m thinking of you, dear reader, and myself) likes to go deep but not for too long. Thus, a blog post is the perfect size.

Liberal Economics? is Alex’s first post. Alex has articulated what the opposition thinks:

Perhaps a well-rounded education contains a bit of economics, as a concession to the distasteful reality of our calculating, commercial society.

Alex’s summary of what many people think about economics classes

I believe that my students can incorporate the economics they learn in our department with the “great books” they read as Freshman at Samford. Economics makes a student more well-rounded. Commercial society is not distasteful. You don’t have to take my word for it. Alex is going to convince you, one blog post at a time.

I will be posting in the future about the elective course I teach in which students will study The Grapes of Wrath alongside Tyler Cowen alongside a mainstream economics textbook.

Back to school, in person

For almost 30 consecutive years, I have had the privilege of starting school in the Fall. This year, I’m wearing a mask and I’m only coming to campus when I teach. I just taught my first class to 18 people in the room and to more than 20 students who logged in virtually. It wasn’t perfect. I had to restart the live stream twice.

My Samford students were very helpful. They are happy to be back in school, even though it’s nowhere near what we like to offer in terms of events and activities. The students who I couldn’t see chatted in to thank me and even told me I was doing a great job.

I don’t anticipate having any trouble with safety rules being followed during class time. Of course, there is the potential for things to go awry. Only time will tell if the rules and cooperation can allow our campus to stay open until Thanksgiving. As our President keeps saying, we are only opening for 100 days.

Like most colleges, we required every single member of the campus to get a test before starting back. The problem is that positive cases are still circulating in Jefferson county where we all live.

As far as I can tell, universal masking rules in the state of Alabama have helped slow the spread of the coronavirus as more people emerge from their houses to shop and even eat at restaurants. The opening of many schools across the state will be a big test.