IDEAS FOR THE ECONOMICS LECTURE

1. IDEAS FOR THE ECONOMICS LECTURE John B. Taylor Stanford University

2. I cannot see that Lectures can do so much good as reading the Books from which the Lectures are taken. • I know nothing that can be best taught by Lectures except where experiments are to be shown. You may teach Chemistry by Lectures. You cannot teach making of shoes by Lectures! • Lectures were once useful; but now, when all can read, and Books are so numerous, Lectures are unnecessary. If your attention fails, and you miss part of the Lecture, it is lost. You cannot go back as you can upon a Book. • Boswell’s Life of Samuel Johnson (1791)

3. These same criticisms with the lecture format have been repeated again and again over the past 200 years • The pace is set by the lecturer, may be too fast or too slow • Taking notes distracts from hearing the lecture, but if you do not take notes it is hard to remember what was said in the lecture • You can’t go back and forth in a lecture • You can’t stop to take a rest in the middle of a lecture • Books give a more visual reinforcement than lectures

4. Yet the lecture format has had great staying power • Smith (Glasgow), Faraday (Royal Institution), Wilson (Princeton), Gurley (Stanford), Denslow (Florida) ,... • Here is what an admiring Wilson said of Smith: • “He constantly refreshed and rewarded his hearers...by bringing them to those clear streams of practical wisdom and happy illustration which everywhere irrigate his expositions.”

5. Some advantages of the lectureArthur Quillier-Couch (1927), Lecture on Lectures • Hearer comes in a state of excitement, anticipation, like the start of a sporting event • People coming together with a common purpose can be a lifting experience • Listening to a person with experience can be inspiring in and of itself • There is a penetrating power in the human voice, as politicians know

6. Surprise side economics • Lecture ideas to make economics • Less abstract • More intuitive • More relevant • More memorable • Combine entertainment with education • multimedia: animated slides, audio, video, internet • Not for everybody! • Designed for live lectures • but there is a role for an online component

7. Ideas for teaching skiing:No single way is best for allOLDNEW

8. 03_08A PRICE Supply curve 300 280 260 240 New intersection 220 Equilibrium price rises 200 New 180 demand curve 160 Equilibrium quantity rises 140 Demand curve 0 5 10 15 20 QUANTITY

9. I bet you wonder how I knewabout your plans to make me bluewith some other guy you knew before.Between the two of us guysyou know I love you more.It took me by surprise(drive me crazy),when I found out yesterday.Don’t you know that ...

10. I heard it through the grapevine.How much longer would you be mine?Oh I heard it through the grapevine,and I’m just about to lose my mind. Honey, Honey, Yea.Heard it through the grapevine, how much longer would you be mine, baby oooo oooo oo oo

11. 08_05 Dollars AT C QUANTITY

12. 08_05 Dollars AL QUANTITY

13. 08_05 Dollars BE QUANTITY

14. 0 Dollars ATC BE AL QUANTITY

15. Economies of Scale 10 workers together = 48,000 pins or 4,800 pins in a day a worker alone: 20 or 1 pin in a day 1/240th or 1/4800th as much

17. Let me tell you a story about William Swain • He was a young man who traveled from New York to California in 1849 • See map for the route • His goal: Find goldand go back home • Thousands just like him: the Forty-Niners • Much like an army • No “supply corps” but news, food, tools, entertainment was supplied • The invisible hand at work

19. The story goes on. Let me tell you about hydraulic mining • High pressure water from the Sierra mountains • Break down the canyon walls to get more gold • caused huge damage to landscape • impeded navigation downstream • An externality thwarting the invisible hand

20. To get a gut-feeling for the idea of comparative advantage, let’s imagine 2 people with 2 skills: lawyereconomist

21. What are the possible remedies for externalities? • Private Remedies Let the individuals work it out themselves • Need to define property rights • But transaction costs and free rider problem might prevent the private remedy

22. IT’S MACROPut on your Big Picture Glasses

23. Employment release on the internet

24. We will answer their demands for a gold standard by saying to them:You shall not press down upon the brow of labor this crown of thorns.You shall not crucify mankind upon across of gold.

25. A Lesson for Prospective Central Bankers • We want to suppose there is a shift in monetary policy • This shift is a common tactical mistake • What are the short run and the long run economic effects? • What are the political implications? • To learn this lesson let’s first observe some “Textbook Maneuvers”

26. WELCOME TOA school for central bankers.Dedicated to teaching the science and art of monetary policy.

27. Key Dialogue • Tom Cruise • You don’t have time to think up there. If you think your dead. • Kelly McGillis • That’s a big gamble with a $30,000,000 plane Lieutenant. Let me teach you about the “gain then pain scenario”. It starts with the Fed cutting interest rates when inflation is not too low and real GDP is just about equal to potential GDP.

29. “Gain then pain” scenario • Start: inflation rate = 2%, real GDP = potential GDP • Fed cuts interest rate • buys bonds • Economy booms---the “gain” • real GDP> potential GDP • Inflation starts to rise • Fed must raise interest rate • End: Economy returns to potential • real GDP = potential GDP • inflation is higher than 2%---the “pain”

30. Could you sketch the “pain then gain” scenario by hand?

31. A case where economic principles were ignored in the economic policy

32. Summary of survey results of the online lecture experiment • survey designed to assess students usage and perceived value • no direct assessment of effects on exam performance • about 2/3 response rate • may be biased against computer users because survey form was handed out in a lecture

33. How often did watch online lectures? • Once or more 45% • 1 to 4 times 30% • 5 to 9 times 8% • 10 or more times 7%

34. How long in a typical single sitting? • 30+ minutes 65% • 15-30 minutes 20% • 0-15 minutes 15%

35. To replace having to attend lectures in person 62% To review material from lectures attended 18% Both of above 9% Other 11% Main purpose of watching Econ 1 online?

36. I learn more online 15% I learn the same online versus in lecture 42% I learn more by attending the lecture in person 44% Learn more going to live lecture or watching online? (among online watchers)

37. Yes No Would you feel comfortable taking a course for credit using Stanford Online exclusively?

38. Typical pro “live lecture” remarks • Going to the lecture live is part of the educational experience • I get distracted when I watch in my own room • It wouldn’t be worth the $30,000 tuition for a computer to teach me • I wouldn’t have the discipline to sit down in front of a computer and watch it • A fully on-line course would be insane • I feel I learn better in person with others • I am bad at computers

39. Typical pro “online” remarks • I can stretch a one hour lecture into a two hour lecture, so I can better understand the material • I feel I learned as much online as if I came to class • Same things as large lectures • I prefer the online system because you can view the lecture at your own pace and stop anywhere a difficult concept arises and spend time figuring it out

40. Preliminary Conclusions from Survey • Online lectures are a good substitute for live lectures for some, but not most, students • Even online students express a need for a teacher to ask questions to • Indexed online lecture is a good study aid • You can go back to that part you missed • In sum, live lectures will not be driven out by the internet any more than they were driven out by books two hundred years ago • But internet will be useful (like books) and may even enhance lectures (like books)