LESSON THREE: Should We Let Them In?: A Cost-Benefit Analysis of Allowing a New Chain Store Into Town
It's a good bet that your students have already performed an informal cost-benefit analysis (or perhaps a "pro-con" chart) to help them make an important decision. This lesson has them conduct this type of analysis to determine whether a town should allow a large chain store to open within its borders. They'll consider the arguments made by both sides of the debate in the STORE WARS documentary, and they'll look at some Web sites that provide further information about the topic. They'll create a chart that summarizes the possible costs and benefits in economic, social, and environmental terms, and they'll summarize their opinions in reports to the town's mayor.
Lesson Objectives2. Relevant National Standards
This lesson addresses the following national content standards established by McREL.
Civics Standards3. Related Resources
Wal-Mart official home page (be sure to link to "Investor Relations")
The Home Depot official home page (link to "Company Info.")
Target official home page (link to "Company")
Office Depot official home page (link to "Company Info.")
Hibbing, Minn., Opens A 'Monster' Wal-Mart
Ready or Not, Here Comes Wal-Mart
Retail, Wholesale, and Department Store Union's Wal-Mart Dispute Page
The Benefits of Doing Business Locally
4. Method of Activity
1. Ask students to list the names of as many large chain stores as they can think of. They might mention Wal-Mart, K Mart, Target, Home Depot, or Office Depot, just to name a few. Ask them how many of these stores are located in or near their home town. What do they think of these stores? What do their parents or other adults think of these stores?
2. Provide students with a brief introduction to the video by explaining that it's a documentary set in Ashland, Virginia. Ashland was approached by Wal-Mart to open a new store on the town's outskirts. This proposal sparked a significant controversy in the community.
3. Show students the following segments of the video, or have them view the entire program. After viewing, ask them to answer the questions below in a class discussion:
4. Ask students to define the words "cost" and "benefit." Under what circumstances would they compare the costs and benefits of something? They might mention that they consider costs versus benefits when they're shopping for something expensive or when they're deciding whether to sign up for a club or athletic team.
5. Ask students if, in their own lives, costs and benefits are always measured in terms of money. Can they think of other types of costs and benefits? Inform them that although many people think of costs and benefits strictly in financial terms, a decision can also have social or environmental costs or benefits. Social costs and benefits relate to how a decision will affect social interactions and culture in the place where it is implemented (e.g. how the decision will affect where and how people are able to make new friends or meet old ones; how the decision will affect the town's architecture; how the decision will affect residents' "sense of community"). Environmental costs and benefits relate to how the decision will affect the natural environment (e.g. how the decision will affect levels of pollution or the availability of natural animal and plant habitats).
Note: The definitions above are not strict definitions used by economists but lend themselves well to the issues raised in the video. If you're teaching advanced economics students, inform them that different economists have different ways to define these types of costs and benefits. For example, environmental costs and benefits are often considered a subset of social costs and benefits.6. If you're teaching high school economics, inform students that social, environmental, and some economic costs are forms of externalities. An externality is "A cost or benefit that's not included in the market price of a good because it's not included in the supply price or the demand price" (from the Economic GLOSSarama). In other words, an externality is a cost or benefit that's a side effect of an action or investment, affecting people or groups of people who have not directly contributed to the investment. In the dog park example below, neighborhood residents would experience costs and benefits from the park even if they did not invest directly in the financing or construction of the park.
7. To illustrate different types of costs and benefits, ask students to imagine that their town or neighborhood council has proposed to convert a vacant lot into a dog park. Some examples of costs and benefits include the following. Can students think of others?
9. Ask students to imagine that they live in a town that doesn't yet have a large chain store such as Wal-Mart. The executives of one of these retail companies want to open a store in the town. The Mayor has hired your students to perform a cost-benefit analysis to assess the pros and cons of allowing the chain store to open. They may assume the store is a Wal-Mart, or they may select another retail chain to use as their example.
10. Give each student or pair of students a copy of the Student Handout, which contains a cost-benefit chart. Have them watch the video segments and visit the Web sites listed above. As they go through these resources, ask them to list on the cost-benefit chart the economic, social and environmental costs and benefits that they think would be incurred if this new chain store were allowed to open.
Students should be as specific as possible when creating their charts and should provide numbers and examples from the video and Web resources. For example, in the Economic section, they might state as a cost that, between 1983 and 1993, businesses in Iowa lost more than $603 million in sales (according to a study cited at Sprawl Busters) and as a benefit that Wal-Mart contributed $22.8 million to the state of Iowa in the fiscal year ending 1/31/2001 (according to Wal-Mart's Web site - link to "Investor Relations" and "Economic Impact").
Note: Be sure to make students aware that they will most likely not be able to directly compare the numbers they find for the economic costs and benefits. For example, the numbers stated above for Iowa refer to different measurements (sales losses versus state tax contributions) as well as different time periods. It is not likely that students will be able to gather monetary figures that they can directly compare. Instead, when they're drawing their final conclusions about the costs versus benefits (see step 12), they should analyze the significance of the individual figures and try to determine which ones carry the most weight based on the evidence they've seen in the video and Web sites. If they were economists who were seriously studying this problem, they'd have to compare costs and benefits in the same measurements and units. However, finding this type of information would require more advanced research and calculations than is practical for this lesson.
11. Discuss students' cost-benefit charts as a class. Did they tend to come up with the same costs and benefits for each category, or were there notable differences between students or pairs of students? Ask more advanced students (upper high school) to think about the ways in which the cost-benefit analyses might look different for different towns. What factors do they think might affect whether or not a town benefits from a new chain store? Might some towns suffer greater costs or incur greater benefits than others? Why or why not?
12. Ask students to write their recommendations to the Mayor, expressing their opinions based on their assessment of the cost-benefit analysis. Their letters should provide specific examples from the chart and the resources they've looked at.
5. Assessment Recommendations
Since every class is different, every teacher will assess students in slightly different ways. However, areas of consideration should include the following:
Betsy Hedberg is a teacher and freelance curriculum writer who has published lesson plans on a variety of subjects. She received her Secondary Teaching Credential in Social Studies from Loyola Marymount University and her Master of Arts in Geography from UCLA. In addition to curriculum writing, she presents seminars and training sessions to help teachers incorporate the Internet and other technologies into their classrooms. She recently presented a seminar entitled The World Wide Web Can Help Your Students Think Critically at the California Council for the Social Studies 1998 annual conference. In 1997, she founded Curriculum Adventures, a curriculum development, publishing and consulting business.
Story | Small Towns | Big Stores | Sprawl
Talkback | Film | Resources | For Teachers | ITVS