 Okay, good afternoon and welcome to Crotty Hall. The Department of Economics is delighted to sponsor this roundtable on the new microeconomics. I'll just say by way of, I'll say a couple of words by way of introduction. It was pretty clear to me already as a sophomore in college that there was something wrong with microeconomics, a world of infinitely divisible pizza and beer. And that that was not a model that was going to give me an enormous leg up on understanding the world that I was in. So I'm delighted to be a, to play a small part in the development of this project. Sam Bowles, who has a much greater acquaintance with the shortcomings of microeconomics as it's currently conceived, has been running kind of a pincer's movement with his graduate course, the Four Seas, let's see if I can get all of them, the economics of conflict coordination, cooperation and communication. I think I got all the C's there at the graduate level. You got all the C's, but one of them was wrong. Help me out. So let me try again. Coordination, competition, conflict, and the missing C. So that's at the graduate level and then at the undergraduate level, there's already a, I encourage everyone to have a look at the core econ free online textbook developed with Wendy Carlin and a rather large team that's developing at the introductory level. But intermediate micro has remained the real challenge. So the folks from the Department of Economics here will tell you about a project that they've been developing in this department. And we also have guests from the Resource Economics, which is undertaking innovative efforts to improve the instruction in intermediate micro. So let me introduce, I will start, I guess, at your right and introduce our panelists from the Department of Resource Economics, Professor Angela de Oliveira, and also from the Department of Resource Economics, Professor John Spraygan, who will talk about their efforts to reinvigorate microeconomics in their department, from the Department of Economics at the University of Massachusetts, Professor Daniela Girarde, Ph.D. student Sai Madureka. I would also like to acknowledge in the audience, Ph.D. student Carmen Nadeau, who's been very heavily involved in this project, from Smith College, Simon Halliday, and back to Department of Economics at UMass Amherst, Sam Bowles. Missing from this duo who have actually written the textbook that we'll be talking about today is Duncan Foley, Professor of Economics at the New School for Social Research. So I don't think I have too much else to add since I'm not actually doing the work. I'm going to pass off to the panelists now. So we'll work down the list. And actually, I'm encouraging you to speak from your location, but feel free to walk. Well, let's see if the ambient noise is good enough. We're going to run through, I don't know, in exactly this order. Is that what we're being asked? Yes. We happen to be CPU writers. This is actually a student of Juan Camilo Cardenas from the Resac Department. And she's graduating there from Universidad de las Andes. And she has this wonderful statement she wrote on a blog that before she studied economics, she thought it would be great to learn how to predict human behavior using mathematical tools. The idea seems fantastic to me. It still seems fantastic. But after all these years, she had many tools, but the people she wanted to study had disappeared. So she thought about it. I mean, it's interesting. It wasn't that it was too mathematical. It was something else that was wrong. So I wanted to talk about these two gaps, which is inspiring a lot of rethinking in economics, not just in micro or in intermediate micro. The first is a remarkable gap between what we teach our grad students and what we teach our undergrads, at least in the first year course and in many cases in the second year course as well. And the second is a huge gap between what the students came to economics to study, to learn about, to be able to discuss and debate. And the topics that they're having discussed in those courses. Now, I don't mean to suggest that what we teach them in the courses is irrelevant, but a student going through the course might think it was irrelevant because they don't get much application of these things. This is a word cloud of, if you ask the 100 Bank of England new recruits this year, what's the thing that's the most important thing for economics to address? This is what they said. We just did a word cloud from this. Interestingly, Brexit and so on. We've done this all over the world. I recently did the same thing at the Central Bank of New Zealand and got exactly the same thing. And you can see this is what Moncamilla did at the University of Los Andes. This is another one. This is UCL. This was by the way in the fall before Trump was elected. Donald Trump was one of the things that economics thought to be addressing. And you can go on. This is Humboldt University in Berlin. I haven't done this in the US, but all of these ones, these recent ones, are done before they've heard a word in the course. They just walk in and the first thing they get is, please write on this piece of paper. Now, so I think there is a tremendous interest in economics. I was surprised that inequality was so large in these things. And there are a couple of places where you'll find other things almost as important. For example, in France, you'll see unemployment is very high on the list. But basically, everywhere we do this in inequality, climate change is important. There is an ambition to this project associated with this new course and this text, which I'd like to now reveal to you. And that's the following. When we face new problems in economics, this often is the occasion for the evolution of a new paradigm. And so we have a new problem, massive unemployment during the Great Depression. We have the Keynesian Revolution in economics. And this is then associated with a new textbook. For example, Samus in 48 was famous and became really a great textbook because it integrated some elementary Keynesian ideas along with standard neoclassical ideas. I think you could say the same of Marshall 1890 and of Mill half a century before. It seems interesting. It seems to happen about half a century. That there is some new set of ideas, new problems and new textbooks. These textbooks here, this was the dominant textbook. Actually, when I was studying economics at Harvard, we actually were reading Marshall as a textbook. It was a pretty good textbook, by the way, and we didn't read Mill. Now, if you look at the current, you know, the outstanding new textbooks, including Aja Mulu at all, it's extraordinary how little has changed in the content since Samuelson. They're much, much better pedagogically, and some of them have really, really good examples. But the content is remarkably unchanged. Now, there are, here's an outstanding intermediate text. One of the things you notice is economics is defined primarily in terms of the market. It's about the market. It's about essentially buying and selling stuff. So that's important. This is what you start off with. So, you know, the student is being given the idea that economics, I'm being a little unfair here, but the message is economics as shopping. And there are a number of advances that I think we can say economics has achieved, which tend to be sidelined. This is an example. I was trying to find disequilibrium in Varian's book, which I couldn't find, but I decided to look up equilibrium. And it's hardly mentioned, but here he says, well, we're not going to deal with the problem of disequilibrium because, quite candidly, he was saying, we don't really understand it. And I don't really think that's fair anymore to say that we don't understand disequilibrium. We have a lot of models, which actually can be taught to undergraduates about what happens out of equilibrium. But the extraordinary thing, again, this is Varian, look where behavioral economics comes. Chapter 30. Does anybody ever get to Chapter 30? Game theory in Chapter 28. So they're not going to do any strategic thinking until Chapter 28. And it goes on. I mean, Varian himself is a pioneer in asymmetric information. And that's the last chapter in the book. Externalities in public goods. Well, market failures clearly are important enough to be included in the book, but it's really beach reading for the summer for the students. It's not going to be on the exam pretty clearly. Now, when I've talked to people about this, they say, oh, well, those topics are at the end of the book because either they're more difficult and they really should be in advanced courses. Or you have to know the stuff at the front of the book to do this stuff at the back of the book. And, you know, the more I thought about that, the more I didn't think it was true. Some of this stuff is that the back of Varian is incredibly easy to teach. Students love it like behavioral economics. They immediately understand things like prisoner's dilemmas and ultimatum games. They get very engaged. And they learn a little bit of elementary game theory, Nashek, or even some other basic concepts. It's not that it's too difficult. It's not because the prior study of theories was required. For some of those topics, you have to unlearn what was in the rest of the book in order to study carefully the types of topics which were then at the end of the book. I think, and I'm only supposing this, that the reason why they're at the end of the book is because if you put them at the front of the book, you'd have to rewrite the rest of the book. That is the whole book would be changed if you actually started off by saying we're going to have a view of humans which is we're complex psychological individuals. We have limited cognitive capacities. We have both selfish and unselfish preferences. We engage strategically with each other as the norm, price-taking behavior is quite an exception. Price-making behavior is the standard thing which people do in at least many important markets if not grocery markets and at least labor markets and credit markets. So there would probably have to be some new concepts. So suppose you surveyed students in our universities and this was the list you came up with of stuff that they're interested in. I think it would be something like this. I mean, I've done it a lot in those word clouds or an example. Here would be innovation, I think it would be technical change, innovation and something like this. Suppose these are the things they're interested in. Now, I would say they're not wrong to be interested in these things. They should be interested in these things because these are the things we want them to come out of the university being able to debate reason about, come to some reasonable conclusion about. But if these are what they're really going to learn how to discuss, well, then we're going to have to have some new topics. By the way, we're going to have to have a whole lot of the old topics. I mean, there's nothing here that says that things like opportunity cost substitutes and compliments and so on are irrelevant. Not at all. Those have to be taught. But you can't teach about wealth creation and growth innovation without teaching about rents, shrimpaterian rents and, of course, out of equilibrium behavior. You can't teach about environmental problems without talking about non-market social interactions in the spirit of Shelling, for example, or Ostrom. Again, if you want to talk about inequality, you have to talk a lot more about institutions in more detail than simply markets and private property, rents, bargaining power and so on. If unemployment and fluctuations are important, then clearly incomplete contracts, credit and labor markets would be part of the story that you'd hope that people learned about. If instability is important, you'd want the students to have learned a basic perspective from Hayek and others that prices are information. People gather information from changes in prices and sometimes that moves the economy in a direction which we think is the right direction and sometimes it leads to large-scale divergences from the fundamentals. Now, the fact that the basic courses that we're teaching, this is either intermediate, I think it applies also to the info levels as well, if this is the model, this is the old benchmark model. Again, we can disagree about the details, but something like that, I think, is the old benchmark model. The first thing you notice is if that's the benchmark model, it's okay that we don't care about sociology and psychology and political science and law, because those things have actually been pretty successfully excluded once you assume these assumptions here. It's a way of getting rid of the other disciplines. We don't have to care about their insights. But if you now start modifying this with what I call contemporary microeconomics, almost everybody in this room knows I'm an optimist, so I think that that's actually what's happening in microeconomics. If people have motives in addition to self-interest, well, then social norms are important. Obviously, then sociology and psychology come into the picture. Of course, price-taking behavior takes place, but price-making also does. If our information assumptions are that they are insufficient to enforce important kinds of contracts, that leads us to contracts being of a rather different sort, not classical contracts, but rather the kinds of contracts that lawyers study, which actually makes the legal profession a highly profitable thing to engage in, namely that the contracts don't enforce themselves. This, of course, leads to a view of institutions which goes way beyond markets and includes, obviously, legal institutions and states. The idea that rents are discussed sometimes in economics texts at the intermediate level, they're always bad. There's something the government introduced. Taxi licenses or import licenses. This new view of micro rents play an important role, not only from Ethereum rents, but, for example, the rents that employees have on their job, which is part of the motivation to work hard and well on their job, and the same in credit markets and so on. So rents are now privately generated as a part of the way a well-working capitalist economy works, and without which, it wouldn't work very well. Imagine, given all the incomplete contracts that we have, imagine that somehow God came down and said, you can't have rents. Well, if you couldn't have rents, then how do you motivate work and so on? And finally, these are some of the other things. If we care about the fairness and inequality, obviously we have to try to develop in our students not a particular view of fairness. I don't think we could or should do that, but we should give them a language with which to discuss it. So they're at least familiar with such ideas as the veil of ignorance. Where do the ideas come from? Well, all this stuff is very new in economics or so it's said. So I just wrote down this list. I think about who are the people who we're constantly referring to in the book that Simon and Duncan and I wrote. There is Smith and Marx. Cornell plays a big role in the book. Part of the role is I want to convey to students that Cornell is not the first and only mathematical economist, but he did a wonderful thing in conveying the power of math and economics. Marshall is frequently mentioned. In fact, our math boxes are named after Marshall. Hayek, because of his view of the economy, which I see as being a great advance, the role of information in it, because we could add others to the list, but that's where these ideas come from. So what I'm going to do here is basically to show you some examples from our book where we're trying to incorporate some of these insights that Simon was just mentioning into an intermediate text. Now, I'll also show you some of the pretty standard stuff in the book so far, and which we kind of elucidate upon when we're trying to show our innovations. So you're going to see both sides of that coin. So to get a sense of that, when we frame how people make decisions or how economic agents make decisions, our general framework is this idea that people have preferences, that individuals have beliefs, and that there are often constraints on the different actions that people can take. In terms of some other topics, the different preferences are important. The idea that Simon brought up of rents occurring as a consequence of exchange, the mutual gains from trade that we talk about in economics, those are occurring. And then furthermore, we want to think about the ways in which institutions operate within exchange settings. Then the third one which I'm going to talk about is this notion of coordination failures, how we look at that in the book a little bit, and then how we allow it to let us think about the different ways in which institutions can interact with coordination failures. So drawing on people like Admiral Ostrom, Ronald Coase, and others when we're thinking about the ways in which we see a coordination failure, and then how do we as economists and social scientists think about coordination failures in a variety of settings. So this is a graph with which many of us are familiar. We have what we call in the book a feasible frontier with a feasible set which you typically should have seen at some point in your introductory course with a set of indifference curves. So we have this in the book. Here a choice for a student choosing between hours of leisure and a great point average. So this is a decision that the students in our courses obviously have to confront every single day. What is my GPA going to be and how much leisure am I going to enjoy? Or another thing that you should have seen at some point or the kind of thing that gets taught in a standard course is we have a budget constraint with different curves and then we find the point at which we maximise whether to a tangent. Now the thing that we want to extend this to when thinking about the different kinds of preferences that people might have, or I'll come back to that in a second, is what happens when people in fact don't only value their own utility but value the utility of someone else. So we introduce a pretty basic model of altruism where we say that I as Simon, I value my own utility and I am consuming one good, say it's money in order to think about an experimental setting and that Sam, over here, he also values money and I care about Sam. Now what's going to happen then is that we're going to have two different people. We're going to have here an A and a B. We talk about Aram and B in the book or Al and Bob in a variety of other different people with different backgrounds. And when I think here, well that same setting that you saw over here in your feasible frontier setting with your indifference curves, that same framework applies to a situation of altruism, to a situation which I have not just self-interested preferences but social preferences. And that's what we see here is we're going to once more have a feasible frontier but in this case we're going to have indifference curves which look slightly different to what we saw previously when I'm valuing my own utility and your utility but your utility isn't quite as valuable to me as my own utility, my own consumption. But we're going through the same process of finding a tangency, higher curves are better and I'm going to choose the point the combination of your utility and my utility in a setup where I've got slightly more than you basically, here I've got double the amount of utility that you do but we're illustrating this choice in terms of okay I've got some money which I'm trying to distribute and I'm going to have to make a decision on how to do this because we do refer to experimental economic results in this context. So what do we see in experiments? Now given these experimental results how do we explain it in some kind of basic economic theoretic way where we could teach this in a constraint optimization setup? So that's one that we do something else I want to show you and I obviously incorrectly ordered the slides was what we also regularly try to do is empirically ground a bunch of things where there's this great set of papers by Alan Kirman and his co-authors where they take actual buying and selling data from a variety of fish markets this one is from Somati in France and what we want to show here is that look you can actually derive some kind of demand function from actual buying and selling choices and for some of the students you can explain that this is from a regression line and that's coming from some empirical data but you can basically think about the way in which that's structured from data. Now thinking about something else what I want to think of here is I said I'd also speak a little bit about exchange now what you want to think of here is that this is basically a standard Edgeworth box that you would confront in a setting where you're talking about exchange in an intermediate microeconomics course so what you want to think of there is that I have, person A's indifference curves are increasing they're getting high utility as we go to upwards and then B's origin is up in the corner and they're getting high utility as they come down here now what we also see is that we have an endowment point where they both start and then they can engage in exchange and if they engage in exchange then they can move into a Pareto improving lens and eventually arrive at a point in the long of Pareto efficient curve what we also call the contract curve now we've renamed a couple of things in the book because we've found it hard to justify certain things to students so for example we're calling the thing which was describing those things that are Pareto efficient to contract curve we couldn't come up with a good reason for that because it's a Pareto efficient curve because that seems to make more sense to us and it's made more sense to our students when we're going to introduce it to them now knowing that we said okay, fine we've got this thing and here we have two people who are homo-economicists who have self-interested preferences now we can also really talk about a world in which there are different sets of institutions that negotiate, sorry that operate in terms of deciding who gets what in exchange and obviously when you reinterpret this you could say what could happen when we have market operations and that would get taught in the standard course we have kind of we'll raise the entatonement and we'd end up at the market but another thing that we could think about is what happens when we have take it or leave it offers so if I as player A have more power than you as player B and I can make an offer that you cannot refuse or you basically end up at back of your endowment then what that's going to tell me is that we could actually end up in a world here at point F where I have more power than you I'm going to determine the offer that I make you you're going to end up in the same, basically the same indifference code that you started off with at your endowment a little more utility than that but you're going to end up at point F now this immediately allows us to talk about inequality and distribution of rents who gets what and why we ended up at this place where I have more utility than you do as a consequence of my having more power than you do so that's one thing in terms of the institutions that operate in terms of who gets what now the other thing that you want to think about too is I've introduced them to altruism or to social preferences in earlier chapter and then you might want to think to us along with others I should say you might want to think okay well can you get altruism or some kind of social preference in an Edgeworth box setting so the question I want to ask any of you is have any of you seen a model of social preferences in an Edgeworth box well here's one so the first thing that you're going to notice is that social preferences make your indifference curves in an Edgeworth box look pretty weird they look like the lovels so what you want to think of here is that we've got A's indifference curves are in green they like outcomes where they have both more apples and more oranges B also has these blue indifference curves and they also like outcomes where they have more apples and more oranges but notice what gets closed off for us what gets closed off is a situation in which I as player A or you as player B consume all of the apples and oranges okay I actually prefer outcomes where you, I as A prefer outcomes where you as B get some of the apples and oranges B prefer for a world in which I as A get some of the apples and oranges there is still going to be a Pareto efficient curve and there's still going to be some kind of conflict of interest around like who's getting the amount of apples and oranges there but the really interesting thing here is that we get a Pareto efficient curve there's conflict of interest over it and we're going to be able to discuss what happens when we have either low levels of altruism or high levels of altruism in this case we have high levels of altruism and surprisingly in this alternative case what's happened to the Pareto efficient curve it's extended and we have lower levels of altruism I care about you but I don't care about you as much as I did in the other world as a consequence I'm quite happy for you to get a little bit less than I would if I'm player B or similarly if I'm player A okay engaging in exchange so all I want to show you here is obviously in a kind of a world of self interest and a Pareto improving lands and a Pareto efficient curve but what we're seeing too is that you can think about things that we exclude and things that we include okay so that's exchange oh something else that I also want to illustrate quickly is one of the things that we will be doing throughout the project is so this graph here these are obviously the final graphs that a student will see but obviously when you're teaching this kind of thing just throwing this up there gets pretty intimidating so what we'll also be doing is we have a variety of graphs where the graphs get slowly built up so what you want to see here is I'm just going to show you a sequence of graphs I'm not going to be able to explain every single step because we don't have time to constrain but what you want to see here is what's going to happen as we derive the different curves in a final graph there's another set of institutions that you would have here instead of the world in which I take your power over you in that situation what happens instead is I can simply choose a set of prices to offer you as the first mover now as a consequence we end up at a Pareto inefficient outcome we'd illustrate that more in greater depth in the book but the thing I want to show you here is kind of the step by step process that we go through in order to basically present the offer curve which is also a best response function and then get the point that would be chosen by the players in exchange now the final thing I want to discuss briefly with you is some people sometimes get concerned about what's going to happen to marginal analysis to marginal benefits, marginal costs so one of the chapters that we talk about is coordination failures and the institutional responses so there we want to think about the example we have is a basic common pool resource so like a lake or an ocean where people are engaging in fishing where they could be extracting the wood or two people engaged in the use of a common ground now there are many many different examples where this occurs but what you want to think of is that I as an agent in that world I impose an external cost on someone else there's a negative externality and someone else who's operating in that also imposes an external cost in me this makes it immediately strategic interaction now what you want to think of then is what is the basis by which we can think of and we can straight up think what's going to happen in terms of the marginal cost for an individual making a decision and we've got for them an increasing marginal cost because your effort that you exert is providing you with this utility so your disutility is increasing as you exert more effort and then the other thing you want to think of is your marginal benefits as someone who is extracting from this common pool resource those are going to be higher or lower depending on the amount of effort exerted by the other person here are different situations where you've got higher or lower marginal benefits depending on what the other person does in terms of what an individual decision maker is doing now what then happens is when we once more find the final result of this what we see is a model drawing on Cournot drawing on Nash drawing on basic work from Coase and others where we have a Cournot style interaction we have the players in difference curves so green for A blue for B in the circumstance A's utility is higher as these in difference curves move down and B's utility is higher as the in difference curves move leftwards now what you want to think of here is we arrive at a Nash equilibrium now what you can immediately notice is that Nash equilibrium is not on the Pareto efficient curve the Nash equilibrium as we've seen from a prisoner's dilemma game is Pareto inefficient and then knowing this what do we say well this is our motivational mathematical and graphical example but then we want to say how do we intervene in this and we argue that there are three main ways that we can do this we can use markets, we can use states and we can use communities if I'm a member of a community with Daniele Daniele and I I might display altruism towards him and he might display altruism towards me or he might have other social preferences where Daniele might punish me if I break a social norm now the use of those is that they in fact take us away from the Nash equilibrium and bring us closer to the Pareto efficient curve okay another way to think about this is that if we have instead markets what happens is markets allow one person with private property to own the lake I own the lake Daniele does not own the lake I can then employ Daniele and tell him how much time effort he should exert or I should stipulate some court about how much fish he's going to catch on the lake and then we can move from there or with states a government could stipulate a tax, there were taxes in terms of the amount of fish that we would catch the amount of effort that we would exert now all of that would then follow from this graphic and some discussion of the different ways in which those solutions would be implemented to take us to a Pareto efficient outcome so what do you want to think of here is that we return again and again to a variety of different themes we have that preference and belief in constraints model in a array of different situations we think about diverse preferences so it's not only self-interest but it's also social preferences of altruism inequality aversion or concerns about social norms we've got gains from trade or rents as Sam was mentioning to us there's also a conflict of interest over rents so even when you have social preferences the people engage in exchange still end up in conflicts over rents now what then happens is that the institutions that you have can either exacerbate that conflict over that conflict of interest or they can mitigate it depending on the kinds of institutions that you have and with coordination failures we want to think that external effects positive and negative externalities that they pervade many kinds of strategic interactions many kinds of economic decisions that we as individuals have to make and they're also the kinds of decisions that the students in our classrooms are making for many of those students they're not thinking that I take X as given as a consequence I maximize subject to that X and I have no effect on anyone else when I do so they know that in their dorm rooms it annoys them when their necks or neighbors playing music really loudly and they're having to make a decision about what to study or trying to go to sleep when this other person has a negative externality on that and this generalizes to a variety of other examples and then within that we want to think what are these institutional responses that we could have, communities, markets states are the ones that we highlight but obviously there are a diverse array of things that fall into those categories okay so I hope that's given you a nice taste of some of the things that we do what I've just described is basically the first kind of third to a half we're talking about in the book obviously with a whole bunch of stuff left out but yeah that's just a kind of quick taste reman okay thank you very much thank the department for giving all their support to this project and to the team for giving me this opportunity to teach it it's been an incredibly enjoyable and intellectually stimulating experience and who doesn't want to be called a professor without totally deserving it so thank you so much what I want to do is focus on three aspects of the book that make it in my view a robust resource for the instructor and very good learning material for the student so the first thing I wanted to talk about was about the relatability and relevance of the book to the students we talk about for instance how slow wi-fi on campus is essentially just a prisoner's dilemma problem or how they can expect their team members to put in effort or not on a team project what explains the relationship that they have with their managers at work so the book is about their life so for instance this is an email that I had received from a student somewhere towards the end of the course and he was sharing a comedy clip with me and telling me how watching that clip actually helped him answer questions on wages and effort levels in class he also apologized for the crude language so repeatedly I felt like the book was about them and that I think is in stark contrast to most traditional microeconomic courses where there is a model and the instructor is expected to find an example that fits that model so this was very refreshing getting video clips from students or having them discuss their experiences with respect to some of the models that we were studying the second reason why it's relatable and relevant is that it's based on actual economic behavior so about in the third or the fourth class of the semester we played the dictator and ultimatum games and they realized that they also apologized for how shoddy the results looked to all the experimental economists in the room but they got the point the point was that they chose to give away on an average a couple of dollars out of the 10 dollars that they had and it changed in the ultimatum variant of the game so and then as Simon pointed out we go on to talk about how social preferences are not inconsistent with rational behavior and about altruistic preferences incorporated into goal oriented behavior so again they felt like the book and the content was directly about them because they were seeing it in action during the duration of the course and this made them both like engage so they felt more engaged with the content and they were scientifically more curious they wanted to know what was coming up next and that was very refreshing the fact of the book that I thought was very interesting was that it was both challenging and rewarding so when the students come into econ 203 they have just been introduced to basic elementary economic concepts and they are just about familiar with the language of math and graph so they just about know it but they have not been able to use these skills to actually ask interesting economic questions and try and answer them and that's what this course I think allows them to do it allows them to polish those skills and use them to become actual economists so and a large part of the course therefore involves the hard task of becoming rigorous analytical thinkers but what was surprising was that there were very few complaints they didn't seem to feel unhappy or maybe they just didn't show it to me but there wasn't enough I didn't see enough I didn't see as much unhappiness about the rigor of the course as I expected to and I think that goes back to A. the structure of the content and B. again it's relevance so let me give you an example so Simon showed this graph in his presentation it's basically the first time that they come across the idea of utility maximization with respect to someone else's best response function or with someone else's incentive compatibility constraint and the idea that the outcome that results is Pareto inefficient is actually quite a hard one to grasp it's pretty complex to teach it and they take some time to understand it but this isn't chapter 5 and between chapter 5 and much later they get to see multiple iterations of this idea of utility maximization with respect to someone else's best response function and eventually they master it and while talking about labor markets and incomplete job contracts they have absolutely no difficulty understanding how the Nash equilibrium in an incomplete job contract is Pareto inefficient so this is I understand this is too much detail but to me this is a classic example of how early on in the semester they have to deal with some hard concepts that they have to master but with eventual iteration in practice they are able to see very powerful things about the labor markets about how an HRM manager here in the United States has control over a textile worker in Bangladesh about credit markets they are able to see very powerful things so they come out of the semester feeling extremely empowered even though they had a difficult semester that as an instructor is very satisfying and finally of course makes for excellent support for anyone that wants to be an economist in the future so first of all I think it's a great introduction to thinking like an economist so throughout the duration of the semester we start by observing a historical concept we start by observing a historical phenomenon or actual real world phenomenon we then go ahead and build a simple clear model and then we come out with insights about the historical phenomena we started out investigating and we do that repeatedly during the course of the semester and that to me is a great introduction to how economists or how one can think effectively as an economist and second I think if they even midway through the semester what we talk about allowed to understand the basic ideas or the basic arguments being made in most of the recent literature that's coming out in behavioral microeconomics they don't even have to be very far into the semester to be able to do that they can do it even midway through the semester so a student that's actually trying to make up her mind about whether she wants to become an economist or not has enough to work with in terms of making that decision and if she does she has a great introduction to the content and we would have given her good support in order to be able to do this so I think that as an instructor those have been the three big things that have helped me go through the semester and my students its relatability and its relevance being how challenging and yet rewarding it was and finally how it was good support to an undergraduate that wants to become an economist so first of all I would like to thank Michael and the department for giving me the opportunity to participate to this project as a teacher it has been a really great teaching experience I also noticed that there was a very overall very positive reaction from students on this and so the things that I said I agree with them I saw them also in my course students it's easy for them to relate with the materials because they see that everything is clearly aimed at understanding something about the real world the world they live in so it's easy for them to make connections with their everyday lives and the society they live in so definitely these things apply to my course so I will not repeat them but I definitely agree I would like to add something on the relation between what we teach in microeconomics to undergraduates I teach also intermediate macroeconomics so I have somehow a privileged point of view on this and so if you consider what we teach today in intermediate macro if you take the latest edition of the Blanchard textbook which is what everyone uses in intermediate macro you see that also the teaching of macro is changing so if you take the latest edition of the Blanchard book you have a New Keynesian model that is not based doesn't find its micro foundations in variation general equilibrium but in incomplete markets, in perfect competition and coordination problems so in this model basically you have three main building blocks, you have a wage curve that is basically the idea that the real wage is a degree in function of the unemployment rate then you have a price setting curve that is basically the idea that firms set prices as a markup over costs and this markup is a function of market power and then the third building block of the model we teach in intermediate macro is the Keynesian consumption function the idea that people's consumption reacts to changes in current income so what are the micro foundations of these three big pillars of the model we teach to students in macro in the chapter in the model, labor market model that we provide to students in this new course we derive exactly the wage curve that is the first building block that I mentioned of the Blanchard model the treatment of competition in this book by Simon Simon puts in the central place the Cournot model that produces exactly the price setting curve that is the second pillar of the model that we now teach in macroeconomics the chapter on the credit market provides a model of the credit market that as a result it produces the fact that people are credit constrained and so their consumption will react to changes in income so I think the bottom line of all these is that there is a strong case to be made that a change in the way we teach microeconomics along the line that Sam has described is necessary also to have more consistency between what we teach to students in micro and in macroeconomics so today what we are going in terms of teaching intermediate macro is model that have their micro foundations in imperfect competition in complete market coordination problems that is exactly the things that these new course takes from the bottom part of the book and puts them in the first chapters so basically the point I want to make is that we need to in this direction also because there is a very nice complementality where we are going in terms of this new intermediate micro course and where the teaching of macroeconomics is going I'm John Spragg and I'm from the Resource Economics Department I've been teaching intermediate microeconomics now for 17 plus years and basically I've used the kind of textbook that everyone uses and for me the idea seems to be to introduce the underlying principles of demand and supply and it's always a struggle for me to fight them through this before I finally get to the end of the course and I can start to teach things that are starting to become more interesting and so I've had a little bit I've had the opportunity to have a little bit of a look at Simon and Sam and Duncan's book and I think they've done a good job of cutting to the chase to getting away from a lot of the the introductory of getting to the meat of the issue but I've been pretty impressed with it so thank you guys for that and I guess the other thing that I'll say is for me as a student the important part of my microeconomics class was what the instructor could get excited about and I had the opportunity to have two intermediate microeconomics classes and I had one that was the more standard supply, demand and market structure course and I really enjoyed that basic course where they were just presenting these very simple models models to us and then I had another class that was on efficiency and equity and these are more the things that you guys are trying and you're trying to integrate these two things together and I think that's great but I also think that to the extent that you're providing a structure that instructors can get excited about is a really good thing okay, thanks like John, I'm an experimental economist and a behavioral economist and so the types of things that are being discussed in this text are certainly the bread and butter of the type of work that we do in terms of our research and thinking about how people are making decisions and what's impacting their choices and if they're making choices in a risky world where those risks impact other people, when do they care and when don't they when do the standard assumptions work well and when do the standard assumptions fail and so those are certainly some of the questions that many of us in this room find to be very interesting and exciting the things that we care about and when you talk about those sorts of questions and projects with the students it's the things that get them excited and so how these sorts of things have historically gotten integrated into courses by the professors who care to integrate them is by talking a little bit about their research or bringing in experiments as examples in some of the teaching portions or having students read papers about okay we've learned about how it works well let's look at what happens when it doesn't and so it requires a lot of additional effort on the part of the professor to keep the students engaged and to bring in some of the newer insights that are not necessarily addressed in the current texts and so it certainly is very exciting to think about presenting both the rigor and the ability to analyze critically that we value so much in teaching of intermediate micro-economics with some of some of the interesting questions and the things that students are going to get very engaged in. Thank you very much Chancellor. I think we'll open the floor now to we'll open the floor to questions you can certainly feel free to make comments if you have experience in teaching micro-economics. You can also direct questions to individual panelists or ask them in response to the poll. I'd like to ask Donald. Donald and I have been talking about micro-economics for more years than either of us can remember decades and I've always learned a lot and I know that you teach course different from this course that's laid out and you've thought it for a great many years very successfully. So I'm sure you have some sense of this. Obviously I don't expect it to be favorable. We've had many conversations before but you're Mr. Intermediate Micro around here and this is sort of may seem fattish or overly ambitious or whatever I want to hear what you think about it. Well, first of all I think it's very interesting what you're using and what you're doing. It's just that when I think of micro-economics I think of it very differently in the way you think. When I gather the way you're approaching there are a variety of different topics and questions and problems that you want to find yourself. And I think that's very good and very interesting. I look at it very differently. I look at micro-economic theory and I look at it in a lot of ways and that's a very different perspective I guess that comes from my generally delivery background and I'm looking at the overall aspects of the way things operate and how we gain understanding what the methodological issues are how this all of this relates more generally than you're talking about to the real world. And I don't see any I have no objection to what you're doing in any way. I think it's very interesting. I think it's quite complementary to what I do. A lot of the topics that some of the topics that I've heard today I think are very important and I talk about some of the media courses, like externalities and public views I don't get into much of game theory I don't get into much of the uncertainty but that's I think that's only because we're out of time we're either having a second semester of media micro-economic and how we don't have an objection. I'd like to mention one more thing Don, I don't agree One thing we've agreed on is that we enjoy talking to each other about this The other thing which may strike you as odd is that I think I'm speaking for you now that one of the most interesting ideas that's ever been proposed in any of the sciences I think is the idea of a general equilibrium of a competitive system I sometimes have said ask yourself, what do economists know that a well-trained sociologist who studies the economics or political scientist don't know I think the answer is general competitive equilibrium I mean it's the same problem that is how things which are happening here can affect other things here and so I think one of the things I think is unfortunate is that the study of how a whole economy a many market economy works has fallen into essentially ill-attentioned not typically taught or not taught much and that certainly is not true of Donald's course either graduate or undergraduate I think that he's right in focusing on that as being a really fantastically important idea where we disagree is about the adequacy of the models we now have for that but that's been a friendly and fruitful disagreement over what, 30 years so 40 years What about this year like you do theory competitive markets do you have a new book what can we see about that There is a there are really two chapters that are relevant to that the one is fairly standard it's called competitive equilibrium or a perfect competition and invisible hand it's finished but not actually circulated and it talks about it's a fairly standard, it starts off fairly standardly and it uses the edge with box to teach general competitive equilibrium and its properties and second welfare theorems fairly fairly clearly I think it then moves on to say what's something like what's wrong with the fundamental theorem and really two points one is it may not be applicable to most real economies because of the the fact that the complete markets or complete contracts assumption is typically violated and secondly there are problems about the out of equilibrium behavior by which you get from an endowment point to the volverizing equilibrium problems that have yet to be solved except for under what I think are special conditions and Donald doesn't object too much to so the fact that goods are gross substitutes will do it there are a few other ways you can do it the auctioneer clearly isn't a description of a market economy it's a highly centralized fiction and that's a problem in that theory we then go on to say I mean it may surprise you we then go on to show that you don't need the auctioneer to get efficiency as long as you have efficient cosy and bargaining you'll get to the contract curve where the efficient contract goes just through a process of everybody bargaining with each other this is something which Foley pioneered actually Steven Smale had a similar idea before Foley we teach cosy and bargaining and then we end up a very non-technical treatment of the Meyers and Satterthwaite theorem about how the impossibility of efficient exchange even with well-defined commodities because of the impossibility of eliciting true statements about the valuation of goods this sounds much more technical than it is and then we both start and we start with Nixon and Khrushchev in the kitchen in Moscow debating about living standards and actually the things I said were pretty interesting I have the whole, the CIA as the whole thing, you can get it online and then we come back to that at the end and we talk about the way that the General Equilibrium Model informed that debate and why that according to us was a mistake and that Hayek actually had it right in 45 when he said really the problem with planning is information and then we close by saying let's not compare ideal systems, let's see what we can do in the second best world so that's that. There's an earlier chapter which Simon mentioned in which we introduce the Edgeworth box we have these two people that are discovering this, there's no production they discover a bunch of stuff and then they discuss all the different ways they might allocate it and everything from a benevolent planner to an auctioneer to take it or leave it offers that allows us to look at all the different ways they could interact in that Edgeworth box some of those things might be called General Equilibrium and some would clearly be called something else so those are the two main places where this appears and we but obviously devoting just a part of the course of that you can't, I mean I think we're very appreciative of the importance of the idea we don't know how effectively we teach it because that part hasn't been taught yet so I mean if Donald would say maybe two chapters is not enough I'd have to say I don't know, maybe you're right I would never say that why don't you call on people over so maybe you can talk about the fact that the book teaches you know the conceptual understanding of economics in a very intuitive kind of way there's lots of graphs and things that students can understand but traditionally macros can be taught in a very technical way with mathematical tools and methodology have been really an existing part so you know when you see engineers who don't have economic intuition who do very well in economics because of those technological reasons and how do you balance them to a basic level okay so I just want to answer your question, one is that the other that we've realized while teaching the course so the thing that you have to think about in terms of the market for intermediate micro-economics approximately two thirds of that market do not use calculus in the teaching of intermediate micro so we do use calculus in the book so at the moment that means that we're fitting into one third of the market that uses calculus which and as a consequence of that we're kind of also navigating both this intuition aspect that you speak about both is on the technical stuff so it's been pretty interesting for me because I've taught a course with initially notes and then first draft and then most recent draft where we are with this book at Smith College and as I've gone through those iterations I've seen the ways in which my favorite different aspects of this has favored or disfavored different kinds of students and so I would have a student who's come in for example three semesters of calculus the first time I was teaching was at Cornell and she just knew it excellently she was right there and she was totally happy but then I had the same student when I was showing them and trying to understand why in a coordination problem like the one that I showed there why we have these strange directions in terms of the disutility that you intuitive the experience from exerting a lot of effort plus the effect that someone else has on you that student could show this stuff mathematically but then there was this kind of you see these lovely moments where students have these eureka moments like oh wait I've been in this situation where I don't want to exert any more effort but I'm better off when someone else exerts less effort and they do grasp the intuition from a graphical way in a way that they didn't get just from the math like the math for them it was often divorced but this thing that they could do in an engineering and kind of step by step wrote man but then having to think through it and also the other thing that I do is I get my I'm doing a very Smith-like liberal arts collergy way of doing this sometimes where I get them to reflect upon this stuff and have discussions with each other about the kinds of problems that they feel the supplies to and so in doing that they have to think more generally about what the applicability of this is and we do within the book and within our wider discussion of how to teach the book we do try to situate this in the modern learning sciences what do you need to do in order to get a student to think more intuitively about a concept and not just do it in the right manner how do you leave different topics how do you revisit them again and we're trying to do that throughout the book in order to improve the student's intuition and always to get them to think not only is this mathematical stuff relevant but how do I then interpret that in an economic way that makes sense given the theory we're making our best attempt at that do you want to add anything more to that do you use calculus in the Resec Intermediary we do, yeah and we try to have it both ways we stick a lot of it in boxes and so on there's not a lot in the text but students still students who are mathematical like yeah we battle with this and so we use a textbook that has the math integrated and we integrate the text into our lectures and we've added a lab where we focus directly on the math and just making sure that they've got those math skills yes, ready to go so I did the same, so basically my first discussion section is like a quick like a revision of powers and laws and differentiation and I have an online quiz where they do they do a little bit of that stuff just as a refresher because what you do end up with is you have quite a bit of inequality among the students in terms of like a student who's taken Calc 1 and she might have done it in high school and someone else who just that semester has completed the previous semester has completed Calc 3 so that's just something that I as the instructor have to navigate and understand something that other instructors have to navigate to our distribution is a little bit different we have we have people who don't have any Calc effectively and so we do the introduction to powers and laws and the graphing lines and we spend at least a couple of weeks doing differentiation because even if they're headed in a course and but they don't have it in their heads right or the intuition or the intuition I have a class that requires micro where I start out by talking about markets the way you heard about them in micro or some of them in the metaphor so I like this idea of thinking about markets as one way to represent an exchange of real people I completely agree with the idea that it's more engaging for students to look at some of the problems that you look at early like taking from the back of the book in front and it reduces some of my problems when I do teach one of the introductory and intermediate where I did a lot of work trying to bring that into the topics early on to engage students and show that it wasn't all like stretching and math but did have relevance to their lives very early in the course and finally for girls but I have problems at the same time thinking about how to use time how do I prepare introductory students for this kind of intermediate class if my introductory students are prepared then I won't need two semesters to get what I want to get out of your introductory material because I don't feel the existing introductory courses prepared them all enough for the intermediate course where I would want to use this book to its best use moreover that your book may create new things that I have to spend a lot of extra time on given that first problem I only had a chance to look at a few chapters but I felt even one of the slides here that there are topics and specific examples that would need a lot of supplementation a complimentary work on my part to keep everyone on the same page and not lose some people to dissonance and maybe even alienation for example we also was the one for their choosing across 16 hours how to allocate time to leisure and to studying when many of my students have to work and you just lost those students when they did that and two examples of race one is price discrimination in the labor market one is, I think it's a coordination you remember in housing the inequality I think it's great that there is race in there, lots of micro texts that don't have race anywhere it's going to lose some students who have a or a rich vision of how the labor market and housing market discrimination really work maybe just distraction but it could be alienation and it shouldn't be interpreted as ignorance or lack of intelligence so when I teach micro, I teach everything I'm looking at the emotional responses to students that everything they read and everything they say and how can I best use that to keep them all together moving forward great I think it's a real attention because for example we teach the segregation model and what we're trying to do is we're trying to use their high motivation to study that and that modeling is pretty cool and maybe they shouldn't believe in models but what you're saying is somebody who's thought a lot about that and maybe has strong feelings about it says what? this model is nothing about my experiences in the segregated housing market and they could actually feel offended because I'm not here but see I jump on that and I build on that with extra readings or acknowledge that dissidents for some of those students and that's why you add to this information problem related to the fact that here's a reading Real Truth is in New York a couple of years ago in a survey that did not show the same partners to find the problems as to see if partners in buildings that were integrated or partners to blackboards who passed to see partners in buildings that were registered white how do you use that information to keep them focused while acknowledging the real world and the housing market more work it's a lot more work and that's I mean it's possible it works if they have a teacher like you and the problem with the textbook is you don't know who you're going to get we have to have I don't think we succeeded I would say what doesn't work is having quite students think it's just an information problem just a coordination problem and never getting to learn about that so it's more important that's not just finding the right teacher it's at least acknowledging the textbook here's some more to read or not a way to think about this even in a footnote one of our PhDs acknowledge what's missing or you're going to move to a student not just from your book but from the discipline that's right those are a lot of good ideas Justine Burns who you may remember was a PhD student here years ago she's teaching the course at University of Cape Town to what 400 400 intermediate students who are undoubtedly those questions must come up right to the 4 we should ask her but I'm going to convey to her what So just a little bit on that so I was just in Cape Town I gave a guest lecture in the course and they also have this motive they have to write an essay at the end of the course and they're going to be writing an essay about land reform they pick that what the students do is use the models from the book to talk about land reform and these different policies that could be that have recently been proposed for example the president was recently saying that he wants to talk about expropriation of land what are the different incentives about that how does that fit within the framework of this and what are the alternatives and they do also they've got some additional readings that they're doing yeah so I think it's done a variety of different ways in terms of what you were just also talking about there one of the things that I spoke about with my students when so just so that everyone knows we do this model of segregation in the chapter where we teach competitive markets in order to show that competitive markets can result in both efficient and kind of parade of efficient outcomes but also there are situations in which it results in inefficient and kind of objectionable outcomes in terms of something like segregation and so I had this really great and fruitful discussion with my students about this recent evidence from Airbnb on how different Airbnb hosts are prejudicial to people with African American names when they're trying to get a place to stay and so the students were it also catalyzed an interesting discussion of I can't capture every aspect of that in this model but what you also want to think of is that economics offers a set of tools that allows us to start thinking about this in an interesting way and this is one of the first steps that we can take in order to do that because we're not able to deal with every single nuanced model to confront every single problem in one intermediate micro book but it does open the doors for us to do that in a variety of new and interesting ways and so I've gotten more students because I've had activist students who are in there and they're thinking oh, okay, economics actually isn't as yeah, because you've got the students who are in there because their parents told them they have to get a major in econ and they're doing it because they have to complete it and many of them think excuse my language, I think economics is bullshit and then you're showing them the stuff that's wait, it's actually grounded in proglevance and a bunch of stuff that I can actually relate to so in my experience so far it's been valuable in terms of addressing those kinds of questions well I'm intrigued because I don't teach Michael like John Angelo did to that but I'm intrigued because it seems that the text would promote more critical thinking skills among students and I should be one of our primary objectives but Simon, you've been teaching this for three years you have any feeling or sense about how students do and beyond the micro between courses so great question, I wish I had an experiment yeah, so it's been three years that I've been teaching out at Smith and so there's a bunch of stuff that also is going to enter into us which creates noise the fact is when I taught this I was shifting into a liberal arts college from having taught in massive classrooms and obviously we're writing the text and there is some noise there in terms of my ability to teach it as someone who's at the same time contributing to it so I'm going to have some kind of inside info that other people wouldn't have if they were instructing with the same book at the same time, my interpretation so far, so I teach obviously both intermediate micro and a couple of other courses so I teach an economic development elective I teach a seminar on African development and I teach an upper level in behavioral economics I had a massive selection effect into my behavioral economics upper level elective where students were really demanding that it exist in the first place and I had students who did well or really loved the intermediate micro course with me who wanted to be in that course and they then they just really had an empirical project that they had to do and they would run with the ideas so in terms of my engagement with that I think it's been very successful it really lights a fire under them about the different ways in which economics operates then also when I engage with them again in either economic development with the elective or intermediate micro sorry, my seminar then I've also seen the students there's a difference in the students who have taken that thinking oh but wait, this kind of thing that we're addressing in terms of thinking about this randomized controlled trial in Kenya it's a consequence of incomplete contracts and an issue with insurance and if a student have not seen that in their intermediate micro class which many students do not see then they wouldn't have gotten how pervasive those problems are and so they can then read the paper in a more nuanced and critical way when they're doing that in their seminar I'm writing this capstone research paper so I'm biased I'm going to be suffering from confirmation bias all over the place when I'm doing this but it has felt like a really good experience to me seeing those connections that the students are able to make as a consequence of having taken that course with me I feel like there's a qualitative difference in the students and many have an idea about this one of the things we really ought to do is do some experiments for surveys maybe a 2x2 before after and also standard course and non-standard course to pick up some of these things and it'd be interesting to see obviously we'd be interested in the cognitive learning that is what we're actually able to do at the end of the course but also something about career objectives attitudes when you think about engaging in sort of critical thinking as people who study evaluation now that's one of the hardest things there is to actually test but it's obviously something that we're all trying to do and I mean certainly that's one of the things that we think we're doing a lot of emphasis on problems that they're they're engaged with and then say okay don't tell me what I think is and what I think that use the model or some data to give an answer it sounds like it's a good way to teach that but I mean any kind of methods but have you thought about how to do that in econometrics it's really hard I started thinking a lot and reading a lot of the literature and it's not so easy coming out from an undergraduate program inside I've had this is what the second semester was we were teaching this form of 203 and the response I'm getting from students granted only a couple of students is that so far this is the most difficult course they've taken at the university which is generally 203 that intermediate my course considered among our undergraduates doing the most difficult course but it's been the best course they've taken so far one of the things that one of the questions they had though both of these students who've commented to me have taken the the level of calculus of the university that's for math majors, art science econ students who want to go to graduate school in economics, namely math 131 to 132 and they really wonder how anyone who's taken the math for social scientists the calculus for social sciences which is taught in very large last year multiple choice exams things like that, how they could possibly handle the course and I'm not saying it should be slowed down for those students or not but I think that that's the vast majority of our students as well as I believe body rosette who take 127 that I know that these students and I don't know how what the experience is with your class whether you've asked about math they've taken the social sciences calculus or the calculus for math majors and art sciences and how those notice the difference in how they fare in the course I think that's actually been a problem because I think they come in as you said taking just one course in calculus and some of them see the idea of partial derivatives for the first time when they enter the class and this just came unsolicited from them they walked in and they said once that they would like to change the prerequisites for econ 203 they were suggesting that they should there should be two calculus courses that are required before econ 203 so that and they have to do it if they have to get an econ major anyway so they were suggesting a reordering of a program but I mean I understand there's feasibility concerns there's scheduling concerns but in general I've noticed and this goes back to the question that Carmen was asking I've noticed that as long as we're talking about interesting things they pick up the skills along the way so I've realized that by the end of the semester they're able to do the math pretty easily but almost as a by-product that wasn't the intention was not to teach them the math but they end up doing it because the focus is on actually answering questions and the focus is on asking interesting questions and then like getting tools to be able to answer them so the process is working almost backwards than learning the math and then answering questions so I think we've been able to deal with it but maybe we could consider reordering so that they do about a couple of courses of Calc before doing the contour 3 Lisa? I just wanted to mention with regard to critical thinking Marcus Das, who's an office does is involved in a national and regional critical thinking assessment that I volunteered my class to participate in this semester it requires an age writing assignment and very little work on the part of the instructor except to fill out cover sheets describing the goals and basically what critical thinking skills you would like your students to have achieve and demonstrate in this assignment and then you have feedback on it and you don't have to participate if you don't want to in the communities that are reading they collect thousands of papers from throughout the campus this is the second year that I submitted from last year I think that over 50,000 papers if you're interested in critical thinking outcomes you might participate in that but as I said they require they actually have to I have 5 to 7 pages now it's 8 to 10 pages the students write some of their class the other is that my class this fall was the first semester where students in my class that has micro as a prerequisite to volunteer that some of them took sides and we don't have a complete record of who took what and how they did but the students who talked to me about it did have some need some special attention and some foundations like Martin and Marshall analysis for example but they were very successful students and overall compared to the community so we might have if this continues to be taught we might have some people who use your course as a prerequisite to get some data on how we're using that in subsequent courses at least could you email me the name of that person Martha? Stassen Martha Stassen do you email me the reminder just another comment on the math thing so the other thing that I found I've really had to think about pretty carefully while going about teaching this is what is the point of the math and I say this because when I took into me that my economics is an undergraduate and we had to do like the grain just the grain genes and go about doing that constraint maximization problem they could have some like a 30 point question where you had A, B, C, D and E and E would depend on D and D would depend on C and C would depend on B and B would depend on A and if you got A wrong you'd lose all 30 points basically maybe you would have been fortunate enough to accrue like one or two partial credit points but they were pretty mercenary about how they created that kind of thing maybe that's just true in kind of a British style system like we have in South Africa but that was what would happen but then while teaching this I've had to think pretty carefully about what I actually want is it's useful it's a student I want the student to convey like what do I mean by modulator substitution like what does that actually mean why does it make sense that we want to think about that in terms of an indifference curve and the indifference curve can take a whole variety of different shapes and so what my general discussion that we've been having while teaching this and that I've been sharing with other people who are test teaching the course like we have someone in India teaching it been taught in Ireland, being taught in South Africa we have a prospective person in China teaching it someone else in Japan so there are people here with various different backgrounds about how to teach this and one of the things that I've been saying to them is like look one of the things that you can often do is actually show them the mathematical answer to something so one of the things that I've been doing is say show that this is the answer and then interpret this because what I'm doing there is I'm trying to say look yeah you're going to get some points for doing the math for sure and like I want to get why you think the math isn't important but I also want you to show like why this thing actually makes sense in terms of economic insights now this is again going like I was part of this group on discussing pedagogy at Smith and the learning sciences and being taught about how to think about this kind of these kinds of ideas more clearly and so that has helped inform our conversation about what we put in it more we encourage people to assess but I think that's part of a wider conversation not only about our course but like how we assess mathematical and mathematical literacy and numeracy in economics courses rather than just what's going on in our book because then the problem that we often face is that students have an absent counter factual they take our course but that means necessarily that they're not taking someone else's course it's like if this intermediate economics course is so hard but they don't have any other intermediate economics experience to compare it to because intermediate economics generally is hard so yeah sure go ahead it's the first semester of this course I'm not observing a very strong correlation between the initial math skills and how they are doing in the course so I'm not observing this thing that you mentioned that happens often that people that are very strong in math even if they skip the intuition they recognize the optimization problem they can solve it I'm not observing this because I think the correlation I'm observing I think people that are doing well in this course are the ones that have the patience and the motivation to look for 10 minutes at the graph like the ones that Simon showed and say okay this element means this and it has this shape because of this reason and spend some time looking at the graph until they understand all the elements and make sense of them these are the people that are doing well and if a person like this is weak in math I observe that they find a way to understand how to take a partial derivative of a linear function so I have people that are very strong in math but they are not doing that well because they would like to start immediately like solving the optimization problem they don't have the patience to spend time with the problem looking at the graph and so on and so this course I think the book is done in such a way that you probably favor more the people that spend time with the problem than those that have the mathematical skills and go with it so I agree with Si also observe that it's possible for people to overcome the math problem if they have the motivation so I would like to bring the behavioral comments so one of the functions of intermediate library is to have create some major policy reaction against the minimum wage against tax and medallions against in favor of free trade against rent control and so even if the world doesn't conform to that micro intermediate micro typically has and I think one of the reasons that behavioral economics allows some main students to kind of fly off the handle you get kind of outrage responses sometimes to they have undermined the benchmarks that intermediate micro taught as the optimization versus the book so I'm interested to hear you reflect on that and then also to the authors and the implementers to what extent does the perfect competition to what extent does it sort of come out as a benchmark and what extent has it been thrown out all together because you know what I mean oh that part of these types of competitive enough ensure that company has a little bit of non-alistic habits of modest deviation from the perfect competition out in the various or Chicago perspective I think they may talk about them pharmaceuticals and stuff you know that that can do a pretty different angle than I think the one that's coming out of your book or out of the neighborhood so could you tell me how do you reflect on the role of benchmarks and perfect competition yeah so I'm not going to speak for you I'll speak for me and you can speak for you it has been my perspective kind of from you know starting into the world of behavioral economics my second year of grad school and continuing that perfect competition in the benchmarks are very useful in that they apply in a lot of settings and they're very simple models that give you elegant predictions and it gives you something to compare against and so they're powerful models and I at least know of the perspective that they are not something that we should throw out because they are unique to us and are an important perspective that said even with those benchmarks and with the types of policy implications that you mentioned there are different ways that you can think about those so one way to think about those is oh there's a loss in surplus and therefore it's bad another way to think of it is oh there are winners and losers and how we evaluate that depends on what we value as a society and so those are different discussions based on the exact same policies coming out of the standard benchmark and so that's one thing that there's different ways that you can think about teaching it so one of the standard ways that people teach things like the prisoners dilemma is the equilibrium is that you should defect and thus you should defect another way to teach it is we're not at the social optimum and that's a problem how can you try to solve it and so even taking the same games and the same issues there's different ways that you can shape that discussion to focus on different aspects of the problem I think that's right and I think for me the behavioral and just tempers the kind of standard results and so perhaps when you look at experimental evidence about monopoly we don't see as much monopoly as theory might predict and there are a wide range of these things where the experimental behavior results suggest that these things aren't quite as serious of problems as what the standard theory predicts if they're about non-compliance in a lot of different areas we don't see people cheating on the taxes near as much as theory would predict yeah and so that's how I work that in I think that actually fits really nicely with their tax thank you I have something that happened in my research I think is really what you said about having I mean what is the the thing that we don't see as the benchmark and what we don't see as the special case so I had an exact question about evaluating the statement that it was something like a self-interest person is rational but the sense was does rationality imply self-interest so I assume that student would answer by taking self-interest as the benchmark and then saying but also other kinds of behavior can be rational because that's what we did in the course and a student answered like this well it started in the right way as I mentioned the right answer to this so he said rationality does not impose the content of your preferences it's about being consistent with your preferences and then he said for how strange it might seem to us even a self-interested totally self-interested person can be rational which was totally not what I was asking because I assumed that they would have considered self-interest in the normal case and they had to demonstrate that you can have something else but because they didn't have the standard course for this course they didn't take self-interest as the benchmark but I think this shows that there is really some effect in changes what we consider the benchmark and the special case changing the perspective on this as an effect I know we're out of time but I think you said Angela because I think it's exactly right the story we tell about the perfectly competitive model and actually what we represent it as is it's a very rich problem okay we've got some people exchanging things but if they're exchanging voluntarily there must be gains from trade so that's a big point and then you want to think about well at the end of the day are all the potential good question to ask but that because there are gains from trade there is some positive rents to be distributed then immediately they have to ask well who gets them and so they immediately come to questions which is okay they're gains from trade that's obvious under what conditions will they be fully exploited and under what conditions will they be distributed in a way which somebody ethically would think was fair so the model can do a whole lot of work I mean it's nothing conservative about it because there's so many ways in which the outcome is either going to be unfair or it's going to be that you don't get there but I think it's important that when we talk about the perfectly competitive model that I'm sorry Donald's not here because I that we don't talk about it in the Valrasian sense of a price taking equilibrium that's a short cut and I mean I'm really very high on Hayek as you may have noticed that is essentially a bargaining to the frontier is what we typically do now there's some special cases in which you can do it through you know auction like thing but once you get the perfectly competitive model stated in terms of people who are actually not I mean I we should stop using the word perfect competition and we should use the word perfect competitors the perfect competitor is somebody who exploits all possible mutual gains from trade for example perfect price discrimination means that even if you're facing a downward sloping demand curve you will still price the marginal good at the marginal cost so just thinking about all the ways that a perfect competitor would exploit the possible gains and of course you're going to get to the frontier then but of course it may be that all the gains are made by one side I mean you could go on for weeks just teaching the basic thing without doing anything more than that and it wouldn't be right or left or anything it would just be understanding that process and just to add to what Sam said the other point here is that we teach a perfect competition or perfect competitors as a consequence of a strategic interaction in the sense that price taking is in fact a best response it's not that we're assuming that price taking is the thing that gives us that function but rather that there are strategic reasons that depend on that result rather than treat it as an assumption which comes out as this kind of Hayekian and Kornos style thinking and we're going to give you the last word there and we've gone a little bit over it let's thank all of you guys