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Reader Question: Interesting Macro Materials?

January 13th, 2014 · 6 Comments
Macroeconomics · Reader Questions

Reader Michael sent me the following yesterday:

I feel your pain, bro- I certainly wouldn’t self-identify as a macro person, so I think I struggle more to “sell” the concepts than I do in micro. Second, I’m not sure it’s a good idea ask me to spice anything up, since you might end up with something like this:

But at least it’s macro appropriate, and the expenditure categories of GDP never looked so sexy! But back to the problem at hand…I think that you could start your discussion by reviewing the distinction between microeconomics and macroeconomics and then point out that learning macro is really important because it’s what most non-economists intuitively think about when they think about economics. (In other words, people need to learn a bit of macro so that they don’t make granny think that she’s wasted her money helping pay for an education because one’s economics education can’t answer her seemingly basic question about recessions and interest rates. And no, rolling one’s eyes and explaining that you study microeconomics almost exclusively does not get the response one is hoping for. Trust me.)

From there, I might appeal to students’ desire for a good controversy by explaining that part of what macroeconomics interesting is that there are still a number of theories that are still up for debate. To explain why this is the case, you could start by asking the class a simple middle-school science project type question (my younger self, for example, examined such riveting topics as “which design of paper airplane flies the farthest?” and “Do ants prefer real or artificial sugar?”) and then discussing how one would answer the question using the scientific method (you know, control group and experimental group and all that). You can then conduct a thought exercise where students try to use the scientific method in order to, say, analyze the impact that a change in interest rates has on the economy- clearly, this goes haywire very quickly, since it’s hard to randomize U.S. citizens into a clean control and experimental group and so on and so forth. (I do, however, like the idea of randomizing based on the last digit of one’s social security number, especially since this is done a few times in the behavioral economics literature.) The point is that (most) macroeconomists aren’t stupid, they just can’t test all of their theories right away because they have to wait for appropriate data, and, thankfully, things like depressions and crashes don’t happen every day.

This may be a little advanced for your students, but I really like the history of economics slideshow that I found the other day (you saw this from the original Twitter conversation, but I figured it would be helpful for others):

The accompanying narrative in The Economist is also worth reading. Obviously, a principles course doesn’t cover everything mentioned here, but I think it’s still helpful for students to understand how what they are looking at fits into the bigger picture. Also, I think that Paul Krugman’s freshwater versus saltwater article helps students reconcile what they see in class with what they read in the news and such.

You could even introduce the suggested discussion above with this graphic:

Or you could show this at the end of the course and discuss whether the graph is accurate. (Fun fact: somebody in my department printed this out and wrote in a point for “Keynesian Macro” in the top right quadrant. Someone else from the department then wrote in “HA!” in big letters.)

One last thing: As your course progresses into different macro topics, I recommend the following items:

Hope this helps! Readers, if you have anything fun to add, contribute to an important public good and put your suggestions in the comments.

Tags: Macroeconomics · Reader Questions

6 responses so far ↓

  • 1 James Tierney // Jan 13, 2014 at 5:56 pm

    This year I plan on really hitting unintended concequences hard in both micro and macro the first week. In micro I’ll discuss things like taxing plastic grocery bags and subsidizing birth control. For macro I’ll talk about unemployment benefits and education subsidies. Thanks for the post. I’ll probably put one up myself for both micro and macro !!

  • 2 econgirl // Jan 13, 2014 at 8:43 pm

    @ James: For your bag discussion:

  • 3 Dr, John S. Harvey // Jan 14, 2014 at 1:29 am

    Keynesian top right, Perfect Competition bottom left.

  • 4 Jonathan Lines // Jan 14, 2014 at 6:57 pm

    It’s not mine, but it makes me smile, ‘micro has all of the answers but no interesting questions, whereas macro has all the interesting questions but no real answers’

  • 5 Dave Tufte // Jan 19, 2014 at 2:35 pm

    I’m a little late for this thread … but …

    I like to talk about Rawlsian questions right in the beginning of principles of macro.

    I emphasize how their education/major, attitude, and work habits wouldn’t count for much if they were randomly assigned a country to go work in forever upon graduation. This shows that the value of their education, attitude, and work habits are very dependent on their macroeconomic environment.

    I ask if they’ be in college at all if they were randomly deposited at some other location on Earth at birth. Again, value is dependent on location’s that get their value from macroeconomic features.

    I ask them if it’s the smarter or dumber graduates who emmigrate from hometowns where the skills they acquired in college are not well-compensated. I then ask them to extend that logic to immigrants arriving from, say, Central America.

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