In many of my blog posts I address either issues related to COVID or teaching economics. In this post, I want to combine the two. One thing economists of a certain age struggle to do is find examples to illustrate economic concepts which will actually connect with 18-22 year olds. The silver lining of the pandemic is that we now have an example that everyone is familiar with, and can be used to illustrate a host of economic concepts.
A great new book by Ryan Bourne, Economics in One Virus, really pushes this idea to the limit. He uses examples related to COVID to explain almost every single concept you would cover in a typical introductory economics course: cost-benefit analysis, thinking on the margin, the role of prices, market incentives, political incentives, externalities, moral hazard, public choice issues, and more.
I especially like the chapter on externalities, and I’m already thinking about how to incorporate this into my lectures (I’ve already used these concepts a bit in some public talks I’ve done on the pandemic). It’s sometimes a challenge to come up with examples that really grab students attention for externalities. Pollution as a negative externality is pretty straightforward, but that’s mostly on the production side so not directly relevant to a student’s everyday behavior. But the possibility of passing a deadly virus on to your neighbor (perhaps without knowing it!) as you sit in class? That will grab their attention.
But the pandemic also gives us a great example of a positive externality: getting vaccinated not only benefits you, but it also benefits your neighbors. And moreover, the production of vaccines itself entails large positive externalities, the benefits of which will never all be captured by the companies that developed them. Government funding of research, as well as potentially paying people to get vaccinated, has a very strong economic rationale during a pandemic.
These are just some initial thoughts as I read through Ryan’s new book (full disclosure! He sent my a free PDF copy, but I also purchased a hard copy with my own money based on looking through the PDF). If you are looking for some new ideas to help you teach students about basic economic concepts, I highly recommend this book. It’s also well-written and, in my opinion, avoids being overly dogmatic on a topic where everyone currently has a very strong opinion (yes! he talks a lot about the trade-offs from “lockdowns” — 379 times!).