Guest Host: Robert Frank as the Economic Naturalist
Paul Solman: As many NewsHour viewers and Business Desk readers know, Cornell’s Bob Frank is a great favorite of ours. I’ll spare you the usual economiums (encomia?) and links: if you’re intent on “drilling down,” just Google our names and you’ll find pieces in which he’s featured as well as admiring references to him.
So, we’re delighted that Bob has agreed to be a guest host here on the Business Desk, as The Economic Naturalist, for the next few weeks. You are hereby urged to begin responding to his examples right away, especially if you think you have better answers than Bob’s current favorites. If you can displace the current “best answer,” we’ll give you a priceless, collector’s item prize. (Adam Smith’s voice on your home answering machine? A free lunch? Your picture and name in an imposing font right here on the Business Desk? We haven’t yet decided.) Enjoy.
Robert Frank: As traditionally taught in universities in the United States, introductory economic courses leave almost no measurable trace on students. Six months after having taken them, students score no better on tests that probe their understanding of basic economic principles than others who never took the courses at all.
In other domains, such dismal performance would have long since provoked a spate of malpractice lawsuits. Why not here? One possibility is that most people out in the world also lack a working understanding of basic economic principles, so few notice that our students haven’t learned much. In any event, we are talking about waste on a grand scale: Tens of millions of dollars and hundreds of millions of person-hours are devoted to introductory economics courses each year.
One reason students learn so little is that professors usually try to teach them far too much. The typical syllabus throws literally hundreds of concepts at students, many of them wrapped up in dense algebra and complex graphs. So it’s little wonder that, by semester’s end, everything seems to have gone by in a blur.
Fortunately, there are only a handful of simple principles that do most of the heavy lifting in economics. In the late 1990s, Ben Bernanke and I wrote a text whose premise was that if we focused exclusively on those principles and illustrated their use repeatedly in examples drawn from familiar contexts, most students could master them in a single semester.
At the core of our approach lies an exercise we call the economic naturalist writing assignment. Twice during the semester, we ask students to pose an interesting question based on something they have personally observed or experienced, and then use basic economic principles in an attempt to answer it. Their space limit is 500 words, and we tell them that many of the best submissions are substantially shorter. We also caution against larding their submissions with technical jargon, equations and graphs. (We call it the “economic naturalist” assignment because the exercise was inspired by the work of field biologists who use Darwinian principles to interpret the traits and behavior of living things.)
The mother of all economic principles is the cost-benefit principle, which says that a rational person should take only those actions whose benefits exceed their costs. This principle could hardly sound any simpler, but it takes practice to be able to apply it correctly. Once mastered, it can help explain myriad otherwise mysterious patterns of behavior, including even government regulations.
My former student Greg Balet asked, for example, why parents are required to strap toddlers into a safety seat for even a short drive to the grocery store, yet are permitted to fly across the country with unrestrained toddlers on their laps. Some people are quick to answer that if a plane crashes, it won’t much matter if toddlers are in safety seats. But Mr. Balet argued that because the real benefit of restraining devices in airplanes is preventing injuries caused by air turbulence, safety seats would actually be just as useful in planes as in cars, if not more so. After all, heavy turbulence is far more common than automobile accidents.
The explanation for the regulation must therefore lie on the cost side, he reasoned. Once you’ve set up a child safety seat in your car, it costs nothing extra to use it. But if you’re on a full flight from New York to Los Angeles and want to use a safety seat, you must buy an extra ticket, which might cost you $1,000. Safety seats are thus more likely to pass the cost-benefit test in cars than in planes. (Economists have a simple response to those who object that costs should play no role in safety decisions: “Do you get your brakes checked on your way to work each morning?”)
On their first attempt, due at mid-term, students don’t always find it easy to come up with an interesting question. But on their second attempt, due near the end of the semester, their more common problem is having to choose among several interesting questions they’ve identified. In some mysterious way that neuroscientists could probably explain, the assignment seems to cause students’ brains to become rewired more usefully than in traditional economics courses. Once students get the knack for posing and answering interesting questions on their own, they want keep doing it. Not only does their knowledge of basic economic principles not decay once they leave the course, it becomes more deeply ingrained. When former students stop by my office during campus visits years after graduation, many seem eager to discuss the various questions they’ve come up with in the interim.
Being able to employ economic principles to better understand the world around you is not only interesting, it is also useful. People who learn to think more clearly in economic terms often choose more wisely among the alternatives they face. So I was especially pleased when the NewsHour invited me to introduce the economic naturalist exercise to its audience.
Once you’ve grasped a basic economic principle and seen it in action a few times, you’ll be surprised at how frequently you encounter it as you make your way through your daily routine. Please submit any examples and questions of your own, either in the comments section of my posts or in the comment field to the right, and we’ll post our favorites (and our thoughts on them) in the weeks to come.
Don’t fret about whether your answer to any question you pose is the final word on the subject. Think of it as a plausible hypothesis suitable for further examination. The great thing about sharing answers in a forum like this is that the collective knowledge of participants is vastly greater than any one person’s. Unpersuasive answers will be quickly identified and refined, in much the same way that flawed entries in Wikipedia evolve.
In the coming days, I’ll post additional examples of how basic economic principles can help answer interesting questions about everyday experience, beginning tomorrow with one of my all-time favorites from those that have been submitted over the years by my students: “Why do the keypad buttons on drive-up cash machines have Braille dots?”
If you’d like to see additional examples in the meantime, you can probably find my 2007 book, The Economic Naturalist, in your local library. And you can watch a video of a lecture I gave about the writing assignment here.
Robert Frank’s latest book, The Economic Naturalist’s Field Guide: Common Sense Principles for Troubled Times, was published last month.