1. Google, and Uber, and Drones (Oh, My!): A Less-is-More Approach to Teaching with Superexamples Jim Hornsten Northwestern University j-hornsten@northwestern.edu We hope using anecdotes (e.g., examples from recent articles) makes our courses more accessible, interesting, and up-to-date, without making them feel superficial, disjointed, or ephemeral. In this session we consider developing a few detailed “superexamples” that one can employ like a Swiss army knife to teach multiple topics both within and across courses perhaps through themed lectures, homework, or exams. For instance, the market for drones naturally involves [a wide variety of microeconomic topics], so focusing on drones could be a cost-effective way to prepare simultaneously for a portfolio of courses or topics. 1

2. Google, and Uber, and Drones (Oh, My!): A Less-is-More Approach to Teaching with Superexamples Why Do We Teach Using Examples? What’s the Ideal # of Examples? The Educational Input Mix One Idea for Many Topics Mapping to Mankiw’s Micro Principles Themed Homework or Exams Superexamples Google Uber Drones One Idea for Several Courses Workshop: What Other Topics Might Work? 2

3. Why are we here? Thinking about an educational production function! How can I better attain my teaching objectives? My motivations could be  Improve student results (e.g., understanding, retention, fun, TUCE scores)  Improve teaching results  Have more fun  Cut prep time/costs  Inject novelty & variety into familiar material  Establish credibility  Build rapport  Challenge self to learn a new “technology” (At a national economics teaching conference) 3

4. 4 Ways of Communicating Most ECON Ideas Intuition  Explain it to your roommate, parent, or stranger at a party Anecdotes (Examples)  The singular of data is anecdote – G. Stigler  Find it in The Economist, NY Times, WSJ, Wired, Cosmo, Sports Illustrated Math (Theory)  Plug numbers into a formula; find a first-order condition Graphs (Theory)  Find peak of a hill-shaped profit function GOAL: Teach students to fluently translate between these forms, as if they were translating Thank you into other languages [Gracias, Merci, Danke, Grazie, Arigato, Diakuju] 4-D hard to draw; let’s simplify to Theory & Examples 4

5. Teaching With Examples: Why Do This? This is a weak list … What am I missing? PROS  Accessible  Interesting  Up-to-date  Fun to do online searches to “prep for class” CONS  Superficial  Disjointed  Ephemeral  Costly to do each term There are a lot of examples out there competing for our attention, so how do we narrow them down? 5

6. 6 How Many Examples to Employ? A Spectrum of Possibilities Probably Too Many; Redundant or Overwhelming; No Time Left to Cover Theory Probably Too Few; Unclear if ECON Applies to Real World; Maybe Professor Doesn’t Really Know This Topic Goldilocks Level in a Laffer Curvian Way N=0N smallN large N  It’s probably not a bad idea to think about this occasionally, especially when preparing a new lecture or course N = # of Examples

7. IsoQuants: Q Widgets = f[Labor, Capital] Labor, L (Humans) Capital, K (Robots) Perfect Complements: Q = min {L, K} Perfect Substitutes: Q = L + K Imperfect Substitutes: Q = LK 7 A benchmark model from micro theory

8. IsoQuants: Q Education = f[Examples, Theory] Examples, E (anecdotes & articles) Theory, T (Graphs & Math) Perfect Complements: Q = min {E, T} Perfect Substitutes: Q = E + T Imperfect Substitutes: Q = ET E.T. The Extra-Terrestrial (1982, Universal/Amblin) 8 Let’s replace (L,K) with (E,T) and widgets with educational outputs

9. ASIDE: From the Students’ Perspective, IsoUtility: U Education = f[Examples, Theory] Examples, E (anecdotes & articles) Theory, T (Graphs & Math) Prefer a Heavy Dose of E: U = E 0.8 T 0.2 Theory is Bad: U = E – T Bliss Point: U = 100 – (E – 3) 2 – (T – 3) 2 9 How do our students feel about our mix of theory and examples?

10. SUPEREXAMPLES: A Way to Kill 2 (or more!) Topical Birds with 1 Course Prepping Stone Sometimes we want to show how ECON fits together in a cohesive way. It’s not just a collection of anecdotes. (Cf. behavioral )  End of Unit Review  Wrap Up Course Why do we typically teach micro principles around the model of perfect competition … and then venture off into monopoly, oligopoly, externalities, public goods, moral hazard, adverse selection, transactions costs? Nice to set up benchmark, and then do comparative statics. “The View From 30,000 Feet” 10

11. Table of Contents for Greg Mankiw’s Microeconomics 1.Ten Principles 2.Thinking Like Economists 3.Gains From Trade 4.Mkt Forces of S&D 5.Elasticity 6.Govt Policies and S&D 7.Mkt Efficiency 8.Taxation 9.International Trade 10.Externalities 11.Public Goods & Commons 12.Tax Systems 13.Production Costs 14.Competitive Firms 15.Monopoly 16.Monopolistic Competition 17.Oligopoly 18.Factor Markets 19.Discrimination 20.Income Inequality 21.Consumer Choice 22.Micro Frontiers 11 Challenge: Pick a topic, and try to link it wo each of these chapters

12. Application: Themed Exams In Micro Principles I’ve used smartphones, beef, summer, umbrellas, tofu and space PROS:  Easy to keep track of – when students come to office hours it’s a lot easier to refer to the chicken soup exam than Practice Exam #1, the Fall 2014 Midterm Exam, or F14ME  Can be fun if students wonder what the theme will be CONS:  May seem strained (desperate)  Adds constraints, making it a bit tougher to write exam  Makes the exam a bit longer as you add words to place into context 12

13. E.g., Pharmaceutical Patent-Themed Homework 13

14. E.g., A Space-Themed Micro Principles Exam GOAL: Cover Unit 1 Material with Common Theme TASK: Find space-y topics to test S&D shifters, etc.  S&D shifters in the mkt for wool blankets, used by stargazers. [Weak]  Cross price elasticity of demand using P fleece and Q wool  Minimum wage & occupational licensing in futuristic, competitive labor mkt for Vomit Comet pilots (weightlessness from flying in parabolic arcs)  Public Good: Near-Earth Object Program to track comets & asteroids  Externalities: City Lights reduce crime, but obscure meteor shower viewing  Gravity as an artificially scarce good; P>MC creates DWL  Subsidizing Armageddon-style space heroes  SpaceX CEO Elon Musk’s income taxes 14

15. Links to Microeconomic Topics 1.New Year’s Eve demand for rides; WTP more? 2.Uber drivers use own cars; costly to supply rides 3.Equilibrium price may be high; surge (peak-load) pricing 4.Voluntary, mutually beneficial trades 5.PED: Do many ppl switch from traditional cabs to Uber b/c P low 6.Taxicab medallions & occupational licensing: govt policies 7.Welfare analysis: CS = WTP – P paid, DWL from scarce cabs 8.ASIDE: An interesting topic; current freshlings enamored by sharing economy possibilities (rent/share rather than own; live at home and pay off college loans) 15

16. UBER: Link to Sharing Economy 16

17. Links to Microeconomic Topics 1.Antitrust troubles in Europe 2.Online search 3.Big player in M&A; often averages one acquisition per week 4.Hardware: 5.OS: Android 6.Patents: Motorola 7.High Tech Gadgets: Google Glass, driverless car 8.Censorship 9.Prioritized search results 17

18. 18 Who’ll Win?

19. Links to Microeconomic Topics 1.Military spending 2.Privacy & noise externalities 3.Cool, new 3-D selfies 4.Shd FAA keep them away from airports? 5.Shd another regulator keep them from spying on me? 19 The market for drones naturally involves civil aviation regulation, airspace property rights, privacy and noise externalities, public goods (Samuelson’s rule, taxes, voting, bureaucracy), delivering goods to soldiers or Amazon customers way off the beaten path, and defense contract bidding, so focusing on drones could be a cost-effective way to prepare simultaneously for a portfolio or courses or topics.

20. 20 DRONES: Link to Automation: Replacing L with K When does it make economic sense to use/send a machine instead of a (wo)man?

21. SUPEREXAMPLES: A Way to Kill 2 (or more!) Course Prepping Birds with 1 Topical Research Stone Assumptions:  In your educational production function, perhaps theories and examples are perfect complements  E.g., Q = min {T, E}, so you need one good example to clarify each theory  You have an endowment of theory inputs (i.e., you don’t need to prep the theory part of your lecture)  Examples get stale/dated/unfamiliar/unproductive, so you regularly need to buy new examples. Sorry, that’s life.  It takes X hours to develop one new example  Each lecture requires one example  You teach three different courses Goal: Spend less than 3X. Indeed, try to spend only X. Idea: Cut prep time by spreading fixed costs across courses. How? Find examples that work in multiple courses 21

22. Case: 3 Courses on Regulation, 1 Common Topic ECON 101: Freshling Writing Seminar on “Economics of Regulation”  Licensing cosmetologists, seatbelts & Peltzman Effect, recalling Buckyball magnets, texting while driving PSAs, online privacy & targeted ads, soda taxes to fight obesity, raw milk cheese bans, Too Big To Fail banks, soaring student debt, FDA & e-cigarettes, Facebook’s network effects, adverse selection & ACA, low- flow water fixtures, how to slow climate change ECON 250: Business and Government (for non-majors)  Apply micro principles to study the proper role of government in the economy ECON 350: Monopoly, Competition & Public Policy (Jr/Sr majors)  Apply micro theory to study monopolization in the context of public utilities, intellectual property, cartels, predation, horizontal mergers, and network effects Should we discourage patent assertion entities (“trolls”)? 22

23. Google, and Uber, and Drones (Oh, My!) The Wizard of Oz (1939, MGM) What are some other current topics (markets, firms, products) that would allow you/me to exploit these efficiencies in course preparation? 23