Teaching economics – Econlib

In his excellent post entitled “To Fix Economics, Try Education Economists,” Alex Salter provides a nice overview of some of the best books for teaching introductory economics, intermediate microeconomics, and advanced economics.

I largely agree with his assessments, but I have a few disagreements about the categories of introductory economics and intermediate economics.

Introductory economics

My favorite text for teaching introductory economics, which Alex doesn’t mention, is The economic way of thinking by Paul Heyne, Peter Boettke and David Prychitko. I have a few minor criticisms of the book, but only a few. I managed to teach US Navy officers in an Executive MBA distance course. Of course I added some measurements, but Economic way of thinking was the key.

I also note that you don’t necessarily have to use or assign the new edition. Textbooks change very little from edition to edition and not always for the better. One thing I did to my students was to recommend that they buy used copies of editions that were two before the current edition. This way they saved a lot of money.

Mediocre microeconomics

I agree with Alex that it is from Steven Landsburg Price theory and applications is excellent. As an economist, I loved David Friedman Price theory: an intermediate text a lot of. And certainly the price, considering David has offered it for free online, is a strong selling point. But as a teacher, I didn’t like it as much as Landsburg’s text.

This is why.

When we teach economics, one of the things we do that can open students’ eyes is to show them something that is counterintuitive but makes absolute sense. Every good textbook does some of this. In my opinion, David Friedman’s book does this too much. The one that was a showstopper for me and persuaded me to use Landsburg’s text instead of Friedman’s was David’s section entitled “Application: House Prices – A Paradox.” He shows that once you buy a house, you are better off if the price rises, but also better off if the price falls. See if you can figure out why before you look at that part of the book.

That one application convinced me that I would have to spend so much horsepower driving home from that point that I would have less time for other things. Moreover, it is only true in the narrow sense: you buy a house to consume ‘housing services’. So he is implicitly saying that you use all the housing services that the house offers. But what if you buy one house to live in and the other to speculate? His argument falls apart. And so, if you convince the students that he is right, you convince them of a narrow point, but you miss a broader point that is probably the way they think and is right.

Twenty-five years ago, a student enrolled in our program at the Naval Postgraduate School told a colleague the following story. She started as an ensign, fresh out of the Naval Academy, and invested in housing. When she made enough money from one house, she borrowed on it and bought another house. Eventually, she started buying duplexes. Then four plexus. Rinse and repeat. By the time she was in our program, she had a net worth of $6 million. She benefited enormously when house prices rose.

It is with some trepidation that I say that David is wrong. When I first met David at a conference at Columbia University in the fall of 1971, both of his talks taught me things I had never thought about. So maybe he can convince me of this. I doubt it anyway.