Making Economics Relevant: Introducing Social and Global Issues into the Classroom

Most students will likely only take one or two economics courses (either Principles of Macro or Principles of Micro) in their lifetime, so exposing them to policy analysis in the economics classroom is of great importance. Fundamentally, economics is concerned with choice and exchange (mutually beneficial and otherwise), and the consequences arising from the process of allocating resources. Connecting social issues with basic economic theory helps students to realize the implications of their choices, how other’s choices may affect them, and how their own choices may affect others. What strategies can we employ to help students to think as policy makers and to consider a range of outcomes that may arise from a variety of potential policy solutions?

Teaching economics can be very technical and abstract. According to Hansen (1991, p. 1054), “What economists do is what they are trained to do in their graduate program.” However, the audience for the majority of economics courses is non-majors who take these courses to satisfy either program requirements (mostly business majors) or to fulfill general education requirements for courses in the social sciences.

Economics instructors face a number of challenges in instructing these students. There are generally few if any prerequisites required before students can enroll in a principles of economics course making it difficult to introduce and fully explain the basis for a number of concepts, such as market responsiveness to changes in prices (elasticity), evaluating consumer welfare, or the effects of changes in sales or income taxes and government spending, that rely on mathematical concepts from calculus. While not limited to the discipline, many concepts in economics build upon each other. For this reason, engaging both well-prepared and underprepared students in meaningful classroom dialogue and exercises requires a certain level of creativity to avoid free-rider problems. Additionally, while all of our students are fully engaged in a wide range of daily economic activities from working (part or full time) to buying books or downloading music or other products, many of our students have the impression that their economics courses are far away from their life, especially during the introduction of basic models such as demand and supply.

Given all of these challenges, it is more important to convey the practical implications arising from economic thought by introducing and analyzing social and global issues in the classroom rather than simply presenting techniques and pure theory. This approach helps to connect the concepts introduced in the classroom to the students’ everyday lives and provide them with a base of practical applications that they may be able to apply long after they have left their economics course. The purpose of this presentation is to discuss a few strategies regarding how to connect students’ lives with economics by introducing social and global issues.

Fundamentally, economics is about choice with constraint. The decision-making process and the consequences arising from it illustrate the way to allocate limited resources in order to maximize one’s payoffs. In teaching non-majors, it is more important to expose them to the basic contours and applications of economic thought as opposed to fully delineated models and theories. After taking a course in economics, a student should have some insight into the potential effects of a rising consumer class purchasing automobiles in India and China on oil prices, or explain why prices for air travel or gasoline tend to rise in the summer. Thus, a proper strategy in teaching economics to non-majors should vividly demonstrate the interaction among participants during the decision-making process.

One strategy that we recommend instructors use is classroom experiments. In their description to students of classroom experiments, Bergstrom and Miller (1997) inform students that “as one of these interacting economic agents, you will be able to experience first-hand the problems faced by such an agent.”

In principles of microeconomics, one of the topics that students are exposed to is market structure and competition. As part of this topic, students are exposed to the concept of game theory-essentially the strategic interaction of economic agents. One of the most well known games is the “Prisoners’ Dilemma.” In its simplest form, a two player game, each individual must make a choice which has definite consequences or payoffs without knowing what the other person will choose. For example, two competing firms producing the same product could choose to sell their product at a high price or a low price. If one of the firms sets a low price while the other firm sets a high price, the firm with the lower price would get the majority of the sales for the product and presumably higher profits, while the other firm may incur losses. If both firms set a high price, they both might receive moderate sales and respectable profits. If both firms set a low price, both firms may have larger sales than if they charged a high price and moderate profits (but lower than if they charged high prices).

Two students are randomly selected and asked to step out of the classroom while the game is introduced to the rest of the class including the possible payoffs facing each prisoner. The two selected participants are asked to step back into the classroom one by one. The background of the game is introduced separately to each of the participants, and they are asked to make a choice without any prior knowledge of their competitor’s choice. During the whole process, the rest of the class is asked to keep silent and asked not to make any comments until the end of the game. What makes this experiment interesting is it could end up with different outcomes in different classes, which can be consistent or inconsistent with resulting in the so-called “Prisoners’ Dilemma.” After the two participants make their decisions and the payoffs are revealed, the class is asked to discuss the outcome and how it reflects the rational decision making process. There are two stages to this game and the learning process. In the first stage, students are able to watch the interactions between two participants and learn basic game theory. During the second stage, students learn to analyze how to make a rational decision and where the dilemma comes from.

However, classroom experiments are not well suited for all classes. They work well with a medium to large class (medium to large in this instance refers to class sizes of 30-40 students). When a game requires more participants and interactions, it is relatively more difficult to conduct it in a small class. Second, it is usually more time-consuming than standard lectures. Instructors have to leave enough time to conduct the experiment and may require that other topics in the course be omitted. Nevertheless, the benefits of classroom experiment outweigh its limitations and its use has become more popular in introductory economics courses.

To learn economics, students need compelling examples to engage them in the journey. Hansen, Salemi, and Siegfried (2002) suggest that that an introductory economics course may fail because it does not teach students how to apply economics to their personal, professional, and public lives. Making economics relevant by introducing social and global issues in classroom can be as simple as sharing current events in class. In courses like Principles of Microeconomics and Principles of Macroeconomics, students are asked to bring newspaper or magazine articles to class. In the process of sharing their news articles with the rest of the class, the students are encouraged to identify basic economic concepts and issues from their articles to the rest of the class. Students are rewarded by earning extra credit points. In upper-level economics courses, students can take this learning activity further and apply a greater range of analytical and critical thinking skills by undertaking a more complete analysis of their news article.

The advantages of news sharing in class are twofold. First, it helps to better evaluate students’ understanding of economics. If a student does not perform well in the exam, this strategy can work as a supplementary tool of assessing students’ learning outcomes. Second, it does not require as much time as conducting classroom experiments and is more flexible.

Gullason (2009, p.88) suggests that “the full-time economics instructor has a comparative advantage in teaching theoretically-oriented subject matter, while the adjunct instructor has a comparative advantage in imparting real-world application of theory”. Therefore, he suggests a strategy of team-teaching by both a full-time and an adjunct instructor in order to complement the strengths of both. However, it is not practical to have one full-time instructor and one adjunct instructor to teach an economics course at the same time. Therefore, we suggest inviting guest speakers to class to reinforce the real-world application of economic theory to achieve a higher quality of effective economics education. Guest speakers can be experts or specialists in a number of different fields, and students can also be invited to share some of their real-world experience which reflects economic principles and concepts.

In conclusion the introduction of both classroom simulations and experiments, and real-world social issues and concerns helps to make economics courses relevant to the students. It enables students to apply concepts from the classroom directly to everyday economic problems and situations that they may face. And it ultimately enhances the learning process and we believe leads to greater understanding and long-term retention of economic concepts that students will be able to apply long after they have graduated.

The authors would like to acknowledge and thank the State University of New York Joint Labor Management Individual Development Awards Program for its support in conducting and presenting this research.