The TeachingEconomist Issue 12, Fall 1996 1/3

The Teaching Economist

Issue 12, Fall 1996

William A. McEachern, Editor

Economist as Movie Hero?

Grapevine

Odds and Ends

The EvidenceFile

Reality Bytes

The Internet is growing like crazy. About eighteen months ago, my Internet search using the Lycos engine reported going through about 9,000,000 unique addresses, or URLs. By September 1996, Lycos searched about 60,000,000 unique addresses, representing a growth rate of over 11 percent per month. There is also a growing gravitas to the list of organizations and institutions on the Internet, including government agencies here and abroad, central banks, corporations large and small, nonprofit organizations, labor unions, universities, research centers -- you name it.

Because the Internet offers an ever expanding window on the world economy, it holds much promise as a learning tool. Some professors are putting their courses on the web, where students with an Internet connection can access course materials and hook up with relevant web sites. Typically, a course web page includes a syllabus, assignments, exams, grades, web links to other materials, and often lecture notes. The World Lecture Hall provides links to more than two dozen economics courses on the web. For example, Dick Stratton at the University of Akron offers a home page for his macro principles course that includes a syllabus, performance contract, student feedback, lecture notes, homework assignments, guidelines for critical essays, sample tests, and test results, as well as links to data and news sources.

Linking students to real economic activity via the Internet, with real bytes of economic information, not only makes economics more relevant but can help develop critical thinking skills. For example, you could ask students to tour some of the world's central banks, where they might compare the kind of information reported and the monetary policy expounded. The U.S. Federal Reserve's Board of Governors home page is at http://www.bog.frb.fed.us/. Their so-called Beige Book can be found at http://www.bog.frb.fed.us/fomc/bb/current/. The Beige Book for each of 12 Federal Reserve Districts can be found by appending the district number to bb in the above address (e.g., the First Federal Reserve district is found using "bb1" instead of "bb" in the above address). Minutes of the British Chancellor's monthly monetary meetings with the Governor of the Bank of England can be found at http://www.hm-treasury.gov.uk/pub/html/minutes.html. An English version of the Central Bank of Turkey's activities is at http://rfe.wustl.edu/World/CenBanTur.html. And the most recent monetary statement for the New Zealand Reserve Bank can be found at http://www.rbnz.govt.nz/monetary/index.htm.

Consider the web pages offered by the popular business press. Business Week's web page provides each issue's cover story and a brief summary of the rest, including a separate section for international topics. London's Financial Times presents an extensive web page, especially for news on the world economy. Users are asked to register and complete a brief questionnaire (which the Times promises not to divulge to third parties), but otherwise the service involves no charge. The Economist provides selected coverage from its weekly magazine, including the cover story. The Forbes site also posts its cover story along with selections from its other publications. Fortune posts extensive coverage of the current issue. The above media sites are free. The Wall Street Journal's Interactive Edition continually updates business news from around the world. That site was free but now costs $29 per year for newspaper subscribers and $49 for others.

The possibilities for student exploration on the Internet are boundless. To draw on this resource, the new edition of my principles book (Economics: A Contemporary Introduction, 4th ed., South-Western College Publishing) includes over 140 Internet problems and examples and over 200 Internet addresses. Students can key these addresses directly on the Internet or they can go to the book's home page, which provides point-and-click links to all the Internet sites provided in the text. The home page also offers other resources for students and instructors, including updates to text material, excerpts from the study guide, and monitored discussion lists for students and for instructors. I am not yet aware of any other principles book with such Internet ties, but others will surely be forthcoming.

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Internet Courses

Using the Internet to supplement course materials is one approach. One could also offer a course covering economics on the Internet as is done at Chico State, where Frederica Shockley focuses on the tools necessary to gather economic information through the Internet. Students learn about search tools, Telnet, Archie, FTP, html, and the like. Course materials include an on-line text and glossary as well as a hard-copy text. You can check out this noncredit course at http://www.csuchico.edu/ econ/personel/syl/SYL_fs005f96.html.

Another approach, one that relies more on economics, is to offer a course on the economic of the Internet, such as the course entitled Info Net Economics offered by Jeffrey Mackie-Mason at the University of Michigan. This course examines information networks, technologies, vertical integration, government regulation, congestion, intellectual property, electronic commerce, digital currency, electronic publishing, and other topics with strong economic content. The syllabus contains abundant Internet links.

A variety of interesting economic questions have emerged with the growing popularity of the Internet. One is obviously the congestion arising from the common pool problem of the network. Another involves the allocation of domain names (addresses, or URL). Because allocation is on a first-come first-serve basis, some enterprising individuals early on laid claim to famous corporate or political names. Unlike trademarks, domain names do not have to be used to be retained, so anyone can stockpile addresses. This activity raises questions about property rights and the efficient allocation of resources. More generally, food for thought for such a course would include the 1995 federal report, Intellectual Property Rights and the National Information Infrastructure.

Another interesting economic question is how some companies make money selling information on the Internet. Charging an access fee is an obvious approach, but some information providers couple access with the use of a related product or activity. For example, the Bloomberg Personal page requires an access code that viewers must learn anew each week by watching the Bloomberg Personal TV show. Some businesses provide a product free to students so they will buy that product later on the job. For example, EXPO is a software package offering more than 700 data analysis functions using financial and economic data. According the promotional material, this package sells for $4,000 and is used by professional analysts, traders, and economists around the world. A version is available free to registered students.

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Caught in the Web

The Internet has tremendous potential, but it also has some drawbacks. According to the Washington Post, a growing number of students are spending too much time either surfing the Internet or chatting on discussion lists. At the University of Maryland, a new campus support group called "Caught in the Web" has been formed to counsel students with a problem of excessive on-line use. Alfred University in New York studied the background of 76 students who flunked the fall semester last year. Thirty-two of them said they had spent excessive late-night hours on the school's computer system. They were mostly freshman, male, and, notwithstanding their academic failure, considered bright.

Some universities are limiting the time students can spend each day or each week on campus computer, though the limits appear quite generous. For example, the University of Maryland limits students to 40 hours a week on campus terminals. Some freshman orientation programs now include warnings about overuse of the web. In my day, card games were the activity of choice for students looking to waste a lot of time.

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Term Papers for Sale

Another dark side of the Internet is the ease with which students can plagiarize research by downloading term papers over the Internet. For example, a company called High Performance Papers offers a custom-written paper that allows the student to specify the title, topic, page length, and even the number of references cited. The paper is written and sent to the student by e-mail within a day to a week; the price is $10 per page. At the lower end of this market, the Termpaper Warehouse charges only $6.50 per page, but its papers are off-the-shelf and the selection is extremely limited (for example, there are only 13 papers in economics, thereby increasing the odds that another student in the class might submit the same paper). At another web site, http://www.schoolsucks.com, students can download, for free, papers sent in by other students. This operation hopes to make money through advertising on its web page and licensing its logo.

In view of the ease of plagiarizing, we should be particularly watchful when assigning a research paper. Precautions might involve requesting an outline, an abstract, and an initial bibliography well before the paper is due. Also, get a first draft and ask for the student's notes with the final draft. If the class is small enough, you could ask students to present a brief summary in class and respond to questions. It was one student's inability to answer questions that led me to uncover the complete plagiarism of his paper from a single book (I found the book he used in the library, still marked with his instructions to the typist).

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Teach-Econ List

As mentioned in earlier issues, the Teach-Econ discussion list was established by Jim Barbour at Elon College to focus on teaching economics. Because the list is unmonitored, much extraneous material goes out, including multiple confirmations and some off-the-wall messages such as a request for charitable donations. One active participant sees all issues through the eyes of Henry George. Compounding this content noise have been technical difficulties that shut down the server from late 1995 early 1996. After the restart, traffic dropped considerably, from an average of 314 messages per month in 1995 to an average of 111 messages per month in 1996.

Though there are still some useful discussions on the list, a variant of Gresham's Law appears to be operating: unhelpful messages drive out useful discussion. The manager is now taking a slightly more active role to limit the subject to teaching. You can subscribe to Teach-Econ by sending an e-mail message to majordomo@majordomo.elon.edu. The text of the message should be limited to "subscribe tch-econ" on the first line and "end" on the second line.

Messages for Teach-Econ since 1993 have been recently archived by Bob Parks of Washington University in St. Louis. This hypermail archive includes the most recent traffic along with annual totals by subject, author, and year. Before you sign up for Teach-Econ, you can sample discussions in the archive. Even if you don't join the list, you can visit the archive periodically and check out the buzz for the most recent week or two.

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Economist as Movie Hero?

The success of the TV's top show during the 1980s, L.A. Law, may have prompted some students to apply to law school. Doctor shows, such as top-rated E.R. and Chicago Hope, may now be having a similar effect of medical school applications. More generally, TV and film portrayal of various professions may influence career choice, at least in the short run. Even scientists, though often depicted as nerdy, have their screen heroes (e.g., Indiana Jones in Spielberg's movies and the Jeff Goldblum character in Independence Day). But economists have no screen presence, nerdy or otherwise. Economics could benefit from a TV series or movie that portrays an economist doing interesting, challenging, and worthwhile work. Any script writers out there?

Incidentally, some well known actors majored in economics in college, including Paul Newman (Kenyon College) and Arnold Schwarzenegger (Univ. of Wisconsin). Rocker Mick Jagger, who also starred in several documentaries and a few movies, went to the London School of Economics. All three are successful business people. Newman produces a variety of foods, including salad dressing and spaghetti sauce (he donates profits to charity). Schwarzenegger has extensive real estate holdings. And according to Forbes magazine (9/23/96), Jagger's group, the Rolling Stones, is "rock's most efficient corporation." Both Schwarzenegger and the Stones ranked among the ten best-paid entertainers in 1995 and 1996 (see "The Evidence File").

Perhaps a background in economics contributed to their business success -- at least that's a possibility worth considering when discussing with students the long-term benefits of economics courses.

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Grapevine

William A. McEachern, Editor

Daniel Y. Lee	Phil Schlarb
David J. Hoaas and Harold R. Christensen	John Jascot

Daniel Y. Lee of Shippensburg University of Pennsylvania invites you to visit his web page "Internet Resources on International Economics & Business." Coverage includes links to information on international trade, finance, development, trade law, statistics, econometrics, and references. From this web site there is a link to his course in international economics.
Phil Schlarb of North Central Missouri College in Trenton sent me an official looking certificate issued by The Institute of Dog & Flea Economics designating me as an "Economic Animal." He says that living in today�s economy is similar to the relationship between a dog and its fleas. When the dog suffers, the fleas share in its misery. The document, signed by Professor Schlarb as "Dog & Flea Economist" states that I qualify for the distinction "by virtue of [my] acknowledged visions of opportunity cost, marginal utility, and the laws of supply and demand" and my "fantasies of break-even points, business cycles" and the like. He uses these certificates as one way of generating student interest in economics.
Last fall, I talked about the economics of science fiction. This prompted a discussion of economics in fiction more generally. David J. Hoaas and Harold R. Christensen of Centenary College in Shreveport, Louisiana, sent me a copy of their paper entitled "Economic Concepts in Selected Western Movies: A Comparative Study," which examines the wealth of economic content in the movies Silverado and Rustlers� Rhapsody. The paper argues that Western films can be used to supplement the principles of economics course. Economic concepts they identify in these two movies include specialization, comparative advantage, production possibilities, real versus nominal, property rights, pure competition, pure monopoly, oligopoly, game theory, asymmetric information, and rational/adaptive expectations.
To demonstrate the free-rider problem, John Jascot of the Hartford Community and Technical College asked students to call the economic bulletin board to get information for the most recent quarter. He told students that if someone could volunteered the information the next class, the entire class would receive a grade bonus. The next class, not a single student could provide the information. This failure sparked a discussion of public goods, the free-rider problem, and opportunity cost.

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Odds and Ends

After a slump lasting several years, enrollments in economics may be headed back up, at least they are at the Universities of Connecticut and Massachusetts. What�s your experience this fall?
For decades the Federal Reserve has been publishing comic books for high school and college students on topics such as household saving and banking. The latest, entitled The Story of Monetary Policy, is perhaps the Fed�s most ambitious. The art is campy and the approach has a bit of economist-deprecating whimsy. For example, one panel shows a woman reading a book entitled Interesting Concepts About Economics in the "New Expanded Two-Page Edition." Ed Steinberg, an economist with the New York Fed�s communications office, wrote the comic. Copies can be obtained by calling the New York Fed at (212)720-6134. The first 35 copies are free to teachers; after that, they cost 25� each.
"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new."
� Machiavelli

"If one cannot state a matter clearly enough so that even an intelligent twelve-year old can understand it, one should remain in the cloistered walls of the university and laboratory until one gets a better grasp of one�s subject matter."
� Margaret Mead

"We should be careful to get out of experience only the wisdom that is in it�and stop there; lest we be like the cat that sits down on a hot stove-lid. She will never sit down on a hot stove-lid again�and that is well; but also she will never sit down on a cold one any more."
� Mark Twain

"The real act of discovery consists not in finding new lands but in seeing with new eyes."
� Marcel Proust

"What is the hardest task in the world? To think."
�Ralph Waldo Emerson

"Every thinker puts some portion of an apparently stable world in peril."
� John Dewey

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The Evidence File

In 1985 the U.S. government negotiated a fixed annual rent of 70,000 rubles for its official residence in Moscow. At the time, that was worth about $60,000. Because of hyperinflation of the ruble, 70,000 rubles was worth only $13 in September 1996. The U.S. government is apparently reluctant to renegotiate the rent.
Thoreau advised, "Simplify, simplify," but until recently, that credo did not apply to consumer product lines. For example, Proctor & Gamble spent decades introducing variations of its existing products. Some economists would say the company did this to hog shelf space. As a result of all this product differentiation, the average supermarket sells about 30,000 different products. Sales are slow for some products (nearly one quarter of all products in a typical supermarket average fewer than one unit sold per month). But P&G has reversed its trend and has cut its product line by one-third during the 1990s (see Business Week�s cover story, 9/9/96).
Forbes just released its list of top-paid celebrities for 1995 and 1996. The top ten are:
1. Oprah Winfrey ($171M)
2. Steven Spielberg ($150M)
3. The Beatles ($130M)
4. Michael Jackson ($96M)
5. Rolling Stones ($77M)
6. Eagles ($75M)
7. Arnold Schwarzenegger ($74M)
8. David Copperfield ($74M)
9. Jim Carrey ($63M)
10. Michael Crichton ($59M), the first writer ever to make the top ten.
According to the New York Times, records from 31 prestigious institutions indicate that last year these institutions used on average $3,765 from the average tuition and fee bill to support need-based scholarships; this amounted to about 20 percent of the average bill of $19, 110. Twenty years ago the portion of tuition and fees used to fund scholarships was 9%. This greater redistribution supposedly stems from declining government support for scholarships based on need and greater efforts to diversify student bodies. In the last decade, government funding dropped from 21% to 12% of need-based scholarships. About 47% of the students in the 31-college consortium receive scholarships based on need. In the 1995-96 academic year, $50.3 billion was available for financial aid from federal, state, and school sources at the 2,800 member colleges belonging to the College Board. This was up 75% in nominal dollars from a decade earlier. Most of the increase was in the form of student loans.
The College Board found that undergraduate tuition and fees this year increased by an average of 6% at four-year public colleges and 5% at private colleges. This is down from double-digit increases earlier this decade. In-state tuition and fees now average $2,811 at public four-year colleges and $12,823 at private colleges. The average annual cost of two-year colleges was about half that of four-year colleges. Because most students attend public institutions, three out of four students pay less than $6,000 per year on tuition and fees and most pay less than $4,000.

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