Experience at a lower price

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

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

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

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

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

Talking Through the Results: Competitive Market Game

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

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

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

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