Banjonomics: An Introduction to the World of Economic Thinking Mark C. Schug, Ph.D. University of Wisconsin- Milwaukee February 5, 2010

Overview Perspectives of history and the social sciences Introducing the economic way of thinking Solving economic mysteries Sources of mysteries Developing new mysteries Wrap Up

The Economics Myth Myth Economics is all about the money. Reality Economics is all about how people make choices. Economics is a way of thinking and understanding.

Perspectives of History and the Social Sciences History Geography Economics?

How Do We Get Students Off to a Good Start Thinking Economically? Demonstrate skills that require only a few basics to get started. Maybe demonstrate the basics of a sport or a hobby you enjoy. Swinging a gold club Grip Stance Backswing Impact and follow though

How Do We Get Students Off to a Good Start Thinking Economically? Knitting a scarf Casting with a spinning rod Driving a manual transmission Playing spider solitaire Playing a musical instrument

Banjonomics Learning how to think economically is like playing traditional folk songs on a 5-string banjo. You need to learn 3 chords: G C D

Using Mysteries to Introduce Economic Thinking

FSU Student Mystery FSU students have many things to. They have: Classes to attend Papers to write Books and articles to read Tests to cram for Football games to attend And private lives to live Why would FSU students, people with so much to do, attend a course on economics – the dismal science - - a course most students try hard to avoid?

Handy Dandy Guide for Solving Economic Mysteries - - the six chords of economics 1. People choose. 2. Peoples choices involve costs. 3. People respond to incentives in predictable ways. 4. People create economic systems - - rules of the game - - that influence individual choices and incentives. 5. People gain when they trade voluntarily. 6. People's decisions have consequences that lie in the future.

The Mystery of the Alien Bananas Bananas are a tropical fruit. No one in Tallahassee, Florida grows them. Florida has no plan for getting bananas to grocery stores. Yet, there they are there -- everyday. How can that be?

Economic Mysteries: Oil Reserves Proven oil reserves stand at 531 billion barrels and we are consuming 16.5 billion barrels annually. Quick! How many years will it take us to run out of oil? This was the situation in By 2008, proven oil reserves had increased to 1.15 trillion barrels even though the world is consuming about 30 billion barrels annually. How can this be?

The Battle for the Overhead Bins Air travelers kiss their loved ones goodbye… And then transform into baggage warriors stuffing all sorts to oversized bags rudely into overhead bins. Why do they do that? Bonus Question: How could a change in the rule of the game influence their their behavior?

Economic Mysteries: Red Light Camera In Duluth Georgia, red light cameras are credited with improving safety as drivers became more cautious at intersections. But in 2009 the city police department wished to eliminate these safety devices. Why would the police - - people hired to protect the public safety - - want the roads to be more dangerous?

Why Are Teens Choosing Not to Drive? The quest to get a drivers license and access to the family car is less important to todays teens. Only 31% of 16 year olds got licenses in 2008 compared to 45% in 1998? Why dont todays teens want to drive?

Other Mysteries Why with better safety features in cars like anti-lock brakes and air bags are car accidents increasing? Why do people in poor nations have more children than people in affluent nations? Why buy brand name products when generic products cost less?

Still More Mysteries Why cant you buy a car on Sunday in Michigan? Why air-condition the air in the desert? Why can you easily talk to your lawyer on the phone and not your doctor?

Sources of Mysteries Capstone Focus: Understanding Economics in U.S. History Great Economics Mysteries Books Visit org/

Developing New Mysteries

Writing Your Own Mysteries Be on the lookout for something that seems odd. Pay attention to the news. WSJ and NYT are good sources. TV and other media also work.

Develop a Primary Proposition Polar bears can be dangerous. The migratory route of polar bears takes them through the small town of Churchill, Manitoba. Polar bears do great damage when they come to town: They pound on home doors. They break into homes. Small pets disappear. Trucks are attacked.

Develop an Opposing Proposition You might expect that the residents of Churchill would be searching for ways to hunt or divert the bears from their preferred migration route. They are not. Most of the residents of Churchill are delighted when the polar bears visit.

Identify the Mystery Explicitly Why would the residents of Churchill welcome such rude visitors to their community?

Focus on Economic Principles to Solve the Mystery How are choices being made? What are the costs? What are the incentives? What are rules of the game might be influencing behavior? How are people gaining from voluntary exchange? What might be the consequences that lie in the future?

Focus on Economic Principles to Solve the Mystery How are choices being made? What are the costs? What are the incentives? What are rules of the game might be influencing behavior? How are people gaining from voluntary exchange? What might be the consequences that lie in the future?

Mysteries in Your Courses Introduce your economics course with a mystery presentation on day 1. Present a mystery of the week. Ask students to develop mysteries as assignments. Send all you new mysteries to me!

Art History Research The Van Gogh Family Obnoxious brother Dizzy Aunt Brother who ate prunes Brother who worked at a convenience store Grandfather from Yugoslavia Please Gogh Verti Gogh Gotta Gogh Stop N Gogh U Gogh

Art History Research The Van Gogh Family Cousin from Illinois Magician uncle Mexican cousins half-brother Constipated uncle Ballroom dancing aunt Chica Gogh Wherediddy Gogh Amee Gogh Cant Gogh Tan Gogh

Art History Research The Van Gogh Family Bird lover uncle Nephew psychoanalyst Brother who was a Beatle Flamin Gogh E Gogh Rin Gogh