I had a surprise todayI
had a surprise today. Apparently, as part of an ongoing accreditation
process, every semester we test a random sample of our students'
knowledge of economic principles with a short multiple choice test. Not
nice to discover that there is a standardized list of things that our
students are expected to learn in the fourteenth week of the semester. Also not nice to discover what is on that list. Several questions in the test demand an understanding of U-shaped cost curves,
and this puts my students at something of a disadvantage: they've never
seen them. The standard way we teach competitive supply imagines a
world in which all firms are identical and eventually face diseconomies
of scale. The explanation for diseconomies of scale is always vague --
some handwaving about coordination problems in large firms -- and takes
up no more than a couple of sentences. That something so central to the
whole analysis of competitive markets is explained so briefly and
unconvincingly suggests something is wrong. What is wrong is that the
notion is more fiction than reality. Empirical evidence, at least as
far back as 1963, shows that in most cases unit costs are constant or
declining even at the highest levels of output [Walters, A. A., "Production and cost functions; an econometric survey", Econometrica, 3(1):1-66.
Moreover, U-shaped long-run average costs curves introduce some logical
inconsistencies in what we teach. For example, it is typical to point
out that monopolies produce less than their competitive equilibrium
counterpart, as though the marginal cost of the millionth unit of
output for a single firm were equal to the marginal cost of the 1000th
unit of output for one thousand identical small firms. There is another
way to approach the determination of supply under competition -- based
on the combination of heterogeneous firm capabilities and binding
capacity constraints -- that I have tried to develop in my course. But
I'm not really losing sleep over the shape of cost curves to come. I am
more concerned about the principle that as teachers we need to ensure
our students learn a fixed set of ideas. I object because lists
developed by committee always end up reflecting tradition --
conservative tradition -- and traditional syllabi in economics
principles classes have been under attack from faculty and students
(registration required) alike. Innovation in the classroom, one would
therefore suppose, is to be encouraged, even if at times it fails. My
friend and former colleague John Miller has pioneered the use of experiments in teaching principles.
Doing so comes at a cost -- of not covering some material that gets
covered when you race through a textbook -- but John has been very
successful in getting students excited about economics. I can't imagine
that John wouldn't have felt stifled by a committee's contents list. I
am neither as adventurous as John, nor as good in the classroom. But I have
spent 10 years thinking about why too many of our principles students
appear so disengaged, and I am trying to do my own small part to
address the problem. I only see things getting worse. Last year the Florida Board of Governors devised an "Academic Learning Compact."
Best as I can tell, its implementation will involve a statewide
committee that decides on a common denominator of material we must
teach and have our students tested on. If that is not stifling enough,
the compacts will be reviewed by Florida's Department of Education
Staff for whether they meet expectations. I'll be interested to see how
many staff members at the Department of Education have a developed
opinion on the validity of u-shaped cost curves.
8:46:58 AM
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