Rethinking microeconomics

Why did you start to rethink the microeconomics course?

Believe it or not, the structure of this course is fairly standard across the country if not the world. So, if you were to say ‘intermediate microeconomics,’ it’s amazing that you have this agreement on what this course should cover and also the order in which it should be covered. The order in which the topics should be discussed, that particular order and range of topics have been fixed in stone for at least half a century. No change.

Why did you think a change in the course was needed?

In part it’s because I didn’t come through the traditional economics route. I’m a mathematician by training, and my first job was actually in a business school rather than in an economics department. In a business school, I was essentially meeting an audience who you could think of as the primary consumers of the knowledge that is related to economics. 

Even though many of them had taken economics as undergraduates, it was clear that they had not made any connection between what they had learned and what they were doing. 

I was also teaching executives, and because I was designing the course for executives I was not bound by the usual conventions. My experience with my students who were executives was they had no idea economics could be so useful. For them it was eye-opening, even though some of them had seen economics as undergraduates. Again, they had not made the connection.

That made me think that there is something not quite right here. When I moved to Penn, I got this opportunity to fix the problem at the source. My colleagues were kind enough to bear the risk of letting me have my way. Typically when you make a change in the course the general advice is to make small changes, and, certainly with a course this size, small mistakes are easily magnified.

What was lacking in the traditional approach to the course?

Two things, and one of these Penn had already solved. The problem that Penn had already solved is the issue of how much calculus should students know before they take intermediate micro. And Penn I think is unusual in that they took the position that they must have multivariable calculus before they take the course. Other schools do not operate that way. That means that they are simultaneously teaching students calculus while trying to teach them economics. In my view that combination just never works because you are asking students to master two things at once. That’s hard enough for adults to do. 

I think one of the consequences of this is that you don’t have enough time to do any serious economics and what students remember is the pain of very quickly trying to learn multivariable calculus.  And they don’t even learn it very well. In that sense, Penn solved that problem.

The second one is nobody reads the manual of their smartphone before using it. They just use it. And the classical structure is very much like, ‘Here’s the manual. You have to read it all the way through and then you can use it.’ While there’s a certain logical purity to the order, what is logically coherent is not necessarily the right way to get students involved in the subject. The right way is you have to give them a problem that they care about, for which they then want to know what the solution is. So, apart from what is essentially cosmetic rearranging of the order, the deeper change is focusing the course around problems that they might potentially care about. Then they’re curious to know what the answer is. Then they’re listening. 

What was your main goal in restructuring the class?

One was to convince the students that economics was relevant for thinking about a number of problems that I hoped they would think of as important. And there’s also a second goal which is getting them to appreciate and adopt the economics mindset. 

The goal is not to get them to adopt the economic mindset to the exclusion of all other perspectives, but it’s to emphasize that here’s a useful perspective, and it’s one that may deliver surprising insights that other perspectives may not. 

To do this, it means thinking carefully about what kinds of illustrations and problems you want them to focus on. In the course, what are some of the questions that I anticipated the students would find relevant and important? For example, will automation kill my job? Fairly simple intermediate microeconomics has some interesting things to say about that. It makes them realize that the issue is actually complicated in a variety of ways.

Another example is should vaccination be mandatory? We could imagine a world where people buy permits that give them the right not to be vaccinated. The idea is you, supposing you have children and you care about them being infected, and I am doctrinaire in my position that vaccination is a bad thing. Well, there’s one way to deal with it. You could pay me to get my children vaccinated. Or I could pay you to purchase the right not to have my children vaccinated.

The point is there are many ways we can resolve conflicts between humans that we sometimes resolve through political institutions. But part of what the course says is some of the time we could resolve them by thinking about property rights that could be traded and setting prices on them. I’m not saying it’s the right thing to do. My point is to emphasize a different way of thinking about things. 

So those are the things: focusing on problems they might care about and delivering surprising, counter-intuitive insights. 

What are some of the changes you made?

The biggest was changing the order in which topics are presented. But the other innovation is in the design of our problem sets. This might seem like a small thing, but in my view you never want homework assignments to be busy work. There should be an ‘aha’ moment in them. It is a huge strain for the teaching assistants, myself, and my colleagues to come up with interesting new problems. You can’t find them in books. They are built around things we read in the papers, for example, things like surge pricing for Uber and Lyft. Should you tax soda? If so, should you tax users or should you tax soda producers? We are looking at the newspapers, and we are coming up with problems that students can relate to.

What are some of the benefits to Penn students with the new course?

So far I have some anecdotal evidence from my colleagues who teach follow-up courses who have told me that the students seem better prepared and more importantly are asking more interesting economics questions, rather than, ‘Why is that variable x and not y, and why did you plug in 5?’

From my former students, they will tell me they learned skills that were useful not just in their economics courses but other courses they took as well. They also have said it just made them better prepared for job interviews. The course makes greater demand on their analytical skills, and I hope gets them to think more imaginatively about social problems.

Are other universities considering using your approach?

I know the publisher has sent copies of the book, and some of my colleagues who were reading my blog knew there was this alternative. Now the question is whether they are willing to make the investment to make the change. 

In going around to give talks on my work I meet colleagues who are teaching the course who are thinking about using this approach. I sense there is dissatisfaction with the existing model, so I’m hopeful my more daring colleagues will think about the switch. 

In some respects I’ve anticipated it because the book is very thin compared to the traditional textbooks, 200 pages versus 400 pages. Part of it was intentional because I don’t think people read books in a vacuum anymore. Thirty years ago if you were writing a book I think it would be reasonable to assume that book would be the only source of information for the reader. I know from my students that’s not the case; they’re flipping between the book and Wikipedia.

To me, it was not so important that it be comprehensive. For faculty there is this dilemma where students want a book, but if you follow the book then they complain, “If you’re going to follow the book, why did I need you?” My answer to that dilemma is make the book small, so it should be more a skeleton on which an individual faculty member can hang their own designs. 

So I’m hoping that will encourage adoption, too.

Vohra is the George A. Weiss and Lydia Bravo Weiss University Professor in the Department of Economics in the School of Arts and Sciences at the University of Pennsylvania and in the Department of Electrical and Systems Engineering in the School of Engineering and Applied Science at Penn.