Thoughts on a $15 Minimum Wage

~ 800 words, ~4 min reading time

The $15 minimum wage is back in the news, thanks to Pres. Biden’s support for this wage. So, let me get some thoughts down on this.

1. Too many people rely on Card & Krueger’s Study

Pretty much any time you see a minimum wage advocate talk about the minimum wage, they’ll bring up Card and Krueger’s 2000 study. In brief: this pair of economists studied the data from fast food restaurants in NJ and PA when there was a minimum wage increase in one of the states, and found no significant employment effects. What effects they found seemed, on average, more positive than negative.

However, Card and Krueger are not the ONLY study about the minimum wage. There are loads – so it is only fair to look at what we term a “meta analysis”. These studies compile the results of other empirical studies. It’s a way of putting any one study in a broader context so that you can make more general statements about results. There are several meta analyses of the minimum wage out there. Here’s one clearly opposed to minimum wage increases and another which is much more favorable to them. Interestingly, the actual statistics aren’t that different between the two. So, this is a better place to look.

2. The data shows “significant, but modest” negative employment effects

The consensus seems to be that MOST minimum wage studies find negative effects on employment, but these effects aren’t very big. Something near a 0.05% drop in employment among low-wage workers for a 1% increase in the minimum wage seems to be about average. So, is this “significant”?

On the “yes” side we have those that like the language of “statistically significant”. What this means: the 0.05 result has a small enough margin of error that we are pretty confident it’s REAL. That is, the effect isn’t actually 0, but happened to look negative as a statistical anomaly. Instead, there is a real negative impact.

On the “no” side we have those that like the language of “economically significant”. What this means: 0.05 isn’t very big. Is this true? Well…

3. Even with a “modest” negative effect, a $15 minimum wage may lead millions of people to have problems with employment.

There are estimates that about 40% of the US workforce earns under $15 an hour. That’s about 64 million people. If each 1% increase in the minimum wage disemploys 0.05% of the impacted workers, then a move from $7.25 an hour to $15 an hour would lead to a drop in employment of about 5%. (I’m rounding a bit here.) That’s 3.2 million people.

Is 3.2 million people “a lot”? For perspective: there are currently about 11 million unemployed workers in the US, by the BLS’s definition. (For the BLS being “unemployed” means you “have no job, but are actively seeking employment” – it has no definitional connection to whether you’re getting unemployment compensation or not.)

I’ll let you decide if adding 3.2 million to a group of 11 million is “a lot”.

Naturally, this is a very rough “back of the envelope” calculation, and might be biased upward a bit – after all, the minimum wage of Washington state is already slated to go to $15/hour, so a federal minimum wage of $15/hr, slowly phased in is unlikely to have much effect there. The CBO’s estimates are that we’d see something close to a loss of 1.3 million jobs, though 3.7 million is a possibility on the high end. So, my back of the envelope calculation is close to the CBO’s worst case scenario.

4. There are better options.

While economists disagree on a lot, I think it’s fair to say that most economists would say that the way to help poor people is to give them money.

For example: economists generally agree that the Earned Income Tax Credit is a pretty efficient way to help those with low incomes, while even most of those that support a minimum wage increase don’t see it as very efficient.

I think it’s fair to say there isn’t a lot of consensus among economists on exactly what should be done about poverty – it’s a complicated issue, and the solutions depend very much on the multitude of causes – but the simple fact that even most of those that support a minimum wage increase don’t think it is very efficient is important. There are better ways.

A couple that might be worth thinking about: a Universal Basic Income or a Job Guarantee. Neither of these is “perfect”. However, they both offer options that could improve the well-being of those with low incomes without the small-but-real negative effects on employment that minimum wages have. They also have the benefit of putting the burden on the taxpayers rather than on employers. But, I confess I have developed a strong aversion to unfunded regulations.

Thoughts on JS Mill and Social Media Bans

~200 words, ~1 min reading time

I’ve been reading Chapter 2 of John Stuart Mill’s On Liberty – “Of the Liberty of Thought and Discussion”. In part, I wanted to figure out what Mill would think about things like social media outlets banning or restricting the speech of people like President Trump.

A couple observations:

  1. JS Mill does not draw a sharp distinction between legal consequences and social ones. As far as he’s concerned, if there are penalties that arise from simply expressing a thought – even if those penalties are just social stigma – then it is a violation of the liberty of discussion. In this way, Mill would disagree with a position that I’ve seen many Hoppe/Rothbard libertarians suggesting that “these are private companies, so they can do what they want”.
  2. On the question of instigation to riot, JS Mill’s most informative passage in this chapter is in a footnote. In this footnote, he talks about how discussion of Tyrannicide should be allowed. In brief, his view is that the discussion of tyrannicide should be allowed – it is a totally valid moral question to consider – but that instigation to tyrannicide could be punishable IF there is an actual act and “at least a probable connexion can be established between the act and the instigation.”

Given all this, I suspect that Mill would be opposed to a Twitter ban for Pres. Trump, though he seems be in favor of treating incitement to riot as a crime. But, dishing out punishments for a crime before there’s a trial would probably be an issue.

Summary and Response to “Macroeconomics of Epidemics”

~1100 words, ~6 min reading time.

I’ve been reading and thinking about The Macroeconomics of Epidemics by Eichenbaum, Rebelo, and Trabandt. Here’s my summary:

Model

The paper takes the basic SIR model and adds to it a macroeconomic component. The SIR model is a standard way of modeling the spread of an epidemic. In brief: the number of new infections is affected by the number of people who are susceptible to the illness (have no immunity), and the number who are infected. This paper adds a number of economic models to it. See below:

SIR model – the transmission is independent of economic behavior, but the economy is impacted by transmission. Specifically, if people are sick, they’re less productive. If they die, they will never produce again (obviously).

SIR-Macro model (“Baseline”) – transmission from three channels: shopping (proportionate to amount spent by susceptible and infected populations), working (proportionate to hours worked by susceptible and infected populations), and community (same as SIR model). People are aware of how their behavior affects their probability of infection, and take that into account when deciding to work or shop.

Medical Preparedness model – like Baseline, but the mortality rate is impacted by the # infected. This captures the idea of hitting the health care system’s capacity.

Treatment & Vaccine models – these models are like Baseline, but incorporate the expectation that a treatment (which is usable on the infected, and ensures recovery) or vaccine (which is used on the susceptible to ensure they never become infected) will be discovered.

Policy Instrument

All but the straight SIR model includes some kind of policy response. The paper models this as a tax on consumption – which would reduce consumption spending and work. Obviously, that’s not what we’re actually doing – but we can use this as an analogy by looking at the results on GDP from the real policies being enacted and the hypothetical consumption tax.

The paper involves a search for “optimal policy” – that is, policy that maximizes utility for the population. This isn’t just “don’t do anything” because, while people account for how their economic activity affects their own risk of infection, they DON’T account for how their activity affects the risk of infection for others.

Results

SIR Model – In the straight SIR model, 8% become infected at the peak, and 70% are eventually infected, and ~0.7% of the population die. There is also a mild recession – about a 2% drop from trend at the trough, and long-lasting economic effects because of those that died.

SIR Macro Model (baseline) – compared to the SIR model, there is a smaller, later peak (only about 5% at peak), and only about 50% of the population are ever affected. So, only about ~0.5% die. In brief: people being aware that they’re more likely to be infected if they go to work or go shopping will encourage people not to, so infections spread more slowly. But, we also get a much larger recession (9% drop in consumption at trough), and it lasts about 3 months longer. In this model, the optimal policy (based on a utility-based CBA approach) would be to increase restriction measures keeping pace with infection, and slowly back off as the % infected dwindles. Doing this would decrease the peak % infected to 2%, and would decrease total infected to about 35% – with 0.35% of the population dying. On the other hand, this leads to a deep recession – about 20% off trend at the trough and it takes about 3 years instead of a year and a half to get back to normal.

Medical preparedness – compared to Baseline, there is a smaller % infected (only about 3%), though there are more deaths (over 1% of population). So, a relevant health care capacity constraint leads people to be more cautious – decreasing infection rates – but not enough to totally offset the higher mortality rates. Because of this, the recession is very deep (- 20% drop in consmption at the trough). An optimal policy involves measures that aren’t much stronger than in the Baseline optimal policy scenario, but come much earlier, and are removed much more slowly. Interestingly, the optimal policy’s effect on the economy is to lengthen, but not deepen the recession. The trough is about the same depth – but the recession starts sooner (because of faster containment policies), and lasts longer – all because of the approach to containment.

Model with treatments – compared to Baseline, a model with treatments expected with a 2% probability each week (but that doesn’t actually materialize) shows almost no change.

Model with vaccines – compared to Baseline, a model with vaccines expected with a 2% probability each week DOES change the optimal policy significantly. Policy should kick in immediately – though not be quite as severe as in the baseline case, and slowly back off over the next 18 months, as the proportion of those with acquired immunity increases. (Policy doesn’t have to be as severe because of the possibility of a vaccine – so policy doesn’t have to do all of the heavy lifting with saving lives.) Interestingly, you end up with deaths with optimal policy here than in the baseline, unless a vaccine actually arrives. (Not that surprising – less severe policy means fewer lives saved by policy. If vaccines don’t cover the difference, then more people die.) The result of optimal policy is a faster, deeper, and longer recession than in the absence of policy – though the recession isn’t as severe as when optimal policy is applied to the baseline case.

Thoughts and Takeaways

First, I have some doubts about the basic economic model. Specifically, they don’t have capital in the model, so they’re probably overstating our ability to get back on track when policy is relaxed. I suspect that adding capital to the model would mute the optimal policy responses somewhat. Also, I’d not pay too much attention to the specific numbers – the calibration is naturally a bit tentative.

The choice of a consumption tax struck me as weird at first, but isn’t too bad, given that we’re stuck with this baseline model.

Takeaways:

(1) In every single case, there is a tradeoff between saving lives and saving the economy. However, their model doesn’t account for creative solutions that might be able to decrease transmission without creating significant economic costs on basically everyone. (Example: replacing general social distancing with more focused isolation for those infected or at high risk of it. Practically, we can’t do this in the US right now because we don’t have the testing capacity required.)

(2) In every case, there is some argument for a policy response – but this is only true because people don’t take into account their affect on others’ risk of becoming infected. In as far as people took this into account, then fewer restrictive measures would be justified in the model.

(3) An early, seemingly disproportionate response is justified if (A) we’re worried about the health care system’s capacity increasing mortality, or (B) we’re holding out for a vaccine – but even then, we should start to loosen up as people acquire immunity via the infection/recovery channel.

Designing Economics of the Environment – Part 3 – Assessment Strategy

~2000 words, ~10 min reading time

Part 1, Part 2
So, in Part 2, we learned that my students will have lots of ‘splaining to do, as the verb “understand” in my course learning objectives more closely align with the facet of understanding called “explanation”. So, that should play some role in my assessment strategy.

Elements of Assessment

A few elements that I’ve decided need to be part of this, for one reason or another:

(1) “Chapter Assignments” – to convince students to read, they have to, in some way, respond to that reading. So, I’m going to have my students do Chapter Summaries. Based on the course learning objectives, I’ve decided to make these written assignments where students select some combination of economic models, problems, and solutions, and explain them. The main purpose is to get students started thinking about these, and convince them to at least skim the chapter with enough attention paid to write a summary of it. Graded for completion.

(2) “Article Responses” – this is an opportunity for students to go a bit deeper into topics they find interesting. They will read papers from academic journals (or similar sources). Totally their choice. The purpose is to get students to engage with the material a little beyond what we do in class. Graded for completion.

(3) “Case Studies” – the department declares that “problem sets” are part of this course. The professor who has taught this before has provided me with the details for 5 case studies that they assign. These are reasonably advanced assignments (he noted that his students needed help with these), and require some of the more technical skills that we’ll be talking about. This hits the “Applying” aspect of “understanding”. Here, I will want to grade for quality rather than just completion.

(4) “Term Paper” – the department declares that a “research paper” is part of the course. So, here I’m doing that. I’m forcing students to go through a 4 step process – proposal, annotated bibliography, rough draft, and final draft – with a response to comments and a reflection.

(5) Reflections – every assignment has a required “From this assignment, I learned that…” section. This is to encourage reflection. Also, the form of this statement is important. “I learned that” forces a sentence to follow. “I learned…” doesn’t. Example: “From this assignment, I learned about elasticity.” That’s just a word. Only tells me that you saw the title of the chapter. Not nearly as good as “I learned that elasticity is how much quantity responds to a change in price.” In addition, I have built in “Midterm Reflections” every few weeks, to encourage students to keep track of their progress in the course. These, however, are not required.

(6) Final Exam – I’m going to follow Linda Nilson’s advice and give them the final exam early in the course – ideally, on the first day, if I can get my act together. Final exams of some variety are required by the University, and I think they are a good way to see what students actually absorbed. Because this can’t be revised, I do grade this one with partial credit.

(7) Revisions – Students are allowed to revise any unsatisfactory assignment except the final exam, as long as they submit a “Revision Form”. (This is a Word document where the student has to answer four questions: which assignment they’re revising, why they didn’t meet specs originally, what they changed to meet specs, and what they plan to do to ensure they meet all specs in the future.)

Specs Grading – The Core Concept

The core concept of specs grading is grading assignments on a pass/fail, satisfactory/unsatisfactory basis on the basis of clear “specifications”.

What these specifications look like is up to your goals for the assignment. A good rule of thumb: look at the rubric you use now. Write your specs to be somewhere around the top 2 levels of your rubric. Naturally, you don’t want to be too mechanistic about doing it this way – take the opportunity to think about WHY things are in the rubric and what is really acceptable and what would lead you to hand the paper to the student and say “do it again”.

For my purposes, I write up two sets of specs, depending on the assignment: format specs, and content specs. Format specs lay out things like length, file type, work cited pages, numbers of sources. Content specs say what should be in the paper. If I’m grading for quality, the content specs will include descriptors like “correctly” or “reasonable”. Otherwise, they won’t.

Just as a couple examples: for my chapter assignments, students must meet these specs:

A satisfactory submission will:

(1) Be at least 300 words.

(2) Be submitted as a Word document.

(3) Contain a summary that deals with at least one of these elements: (a) economic models, (b) problems in the economics of the environment, or (c) solutions to these problems, and for each of these you must include:

(a) For economic models – describe the economic model, explain its assumptions, uses, and limitations.

(b) For problems – describe the problem, and the conditions that lead to it occurring. Examples are encouraged, as appropriate.

(c) For solutions – describe the problem being solved, the solution, why the solution could alleviate the problem, and any limitations to the solution.

(4) End with a paragraph starting “From reading this chapter I learned that…”

Remember, this is a “completion” grade. For these, I can use “power grading” – or what I like to think of as “grading at a glance”. Import the file to word, check the word count. Check the last paragraph. Skim the middle to make sure it’s relevant. Done. Doesn’t need to take more than a few seconds – but as a written assignment, I can get some “deep” data about what students think is worth including and what they think they are learning.

For the final draft of their term paper, my students will have this set of specs:

To be satisfactory, the final draft must be at least 1,000 words long, be “complete” in terms of its structure (with a clear introduction, body, and conclusion), have a bibliography or works cited page in MLA, APA, or a similar format, use at least 5 sources, be submitted on Blackboard in Word format, and the body must state what the problem is and evaluate two possible solutions for the problem, clearly stating the strengths and weaknesses of each approach. Finally, after the works cited page, the Final draft must have two additional sections. The first is a “response to comments” – in this section, you must respond to any suggestions that were made on the first draft, either stating how you incorporated those suggestions or stating why you decided not to. The second is a paragraph that starts “From writing this term paper I learned that…”

Here, there’s more concern about quality. “Clearly stating the strengths and weaknesses of each approach” implies that they can’t just write nonsense. If they say something is a strength that ISN’T, then the paper isn’t satisfactory. Also, notice the last parts: one of the most annoying things as a professor is when I give students comments on a rough draft telling them how to improve the paper, hand the paper back, and the student proceeds to turn EXACTLY the same paper in for the final copy. Requiring a “response to comments” section prevents that situation. Even if a student doesn’t incorporate my comments, they at least have to say why they didn’t. Both of these require that students do something they often don’t: read my comments and think about them on some level. Another thing this does: it speeds up grading of final drafts by letting me just check the revised parts.

Because pass/fail grading is somewhat high stakes, students should be given SOME chance to revise assignments. There are a number of ways to do this. Some only allow the first assignment to be revised. Some allow a fixed number of revisions for each student. Some employ a “token economy” in which students are given or awarded “tokens” (perhaps for answering questions in class, turning work in early, etc.), which can then be redeemed for various things (like a bump in the final grade, opportunity to turn an assignment in late, an additional “skip day”, etc.). Personally, I find limiting revisions to be too time consuming to track, and question the pedagogy of telling a student not to bother redoing work that wasn’t good enough. I’d rather just leave them unlimited opportunities, but force them to be a little reflective about the situation.

Putting it Together: Getting to Letter Grades

Under Specs Grading, there are two main approaches to turning a set of S&U grades into a course grade: a points-based approach and a “bundle” approach. Personally, I like the “bundle” approach, but I’ll talk a bit about each.

The points-based approach does as is typical in any other point-based system. There are X points in the course, and you need 90% of them for an A, 80% for a B, etc. (adjust as you like). The only “specs” part of it is the satisfactory/unsatisfactory grading with some revision opportunity.

The bundle-based approach ties each grade to a bundle of assignments that must be completed. For example, in my course, here are the C and A bundles:

To earn a C you must: complete 10 chapter assignments satisfactorily, complete 2 article responses satisfactorily, and complete 3 case studies satisfactorily.

To earn an A you must: complete 13 chapter assignments satisfactorily, complete 3 article responses satisfactorily, complete 4 case studies satisfactorily, and complete a term paper satisfactorily.

Notice: there is a combination of “more” and “harder” to move up the grade scale. A student who just wants a C (or a B, for that matter), can forego the term paper entirely. In my opinion, this ability to tailor the TYPES of assignments to specific grade levels is a strong reason to use the bundle-based system.

What about the final exam? I’ve decided to make the final exam determine +/- grading as follows:

>85% on the final adds a “+” to the grade.
50-69% on the final adds a “-” to the grade.
<50% on the final bumps the grade down to the “+” of the next letter down. (So, a B becomes a C+ if the final is really bad.)

For Principles of Microecon, I have the final exam as part of the bundle (so, an A in the course requires at least an 80% on the final exam, plus the other work). There are pluses and minuses to both methods. The Econ of the Environment method increases certainty for the students going into the final (“I’m going to end up with something between a B+ and a C+ in the course!”). But, it leads to interesting gaps. For example: I expect a D+ would be very rare, as would an A-, and if these DID happen under this system, I would suggest it’s a weakness of course design somewhere. (A student can do all the A work otherwise, but still end up with <50% on the final? Either your final is super-hard or your A work isn’t actually encouraging much learning – or something is poorly aligned.) On the other hand the Principles system makes the final more high-stakes, and led a few students to complain to me about how their final dragged down their course grade. (“I’m a bad test taker!”) Though, practically, the final by itself never seemed to make more than a letter grade of difference for any student. Still, high-stakes testing tends to unnecessarily increase student stress, even though I try to include a fairly significant buffer (requiring an 80% for an A, 65% for a B, 50% for a C).

So, how to figure out what I’m actually doing IN class? That’s a subject for another entry (or more!).

Commencement Address – Fall 2019

~1800 words, ~9 min reading time

Congratulations, graduates! This afternoon we are here to celebrate your accomplishments with you. You have worked hard to master the skills and the content that we have thrown at you, and today you receive the evidence of what you have achieved. So, on the behalf of the faculty, let me say “well done.”

When I was asked to give this talk, I naturally thought back to my own college commencement. Do you know what my commencement speaker spoke about? Well, neither do I. However, I am hopeful that what I say may have some positive impact on you today, even if you don’t remember a word a decade and a half from now. Reflecting on this sense of hopefulness, it felt appropriate to make the theme of my talk the value of hope.

To explore the idea of hope, consider this story from ancient Greece, recorded by Hesiod …

After Zeus ascended to claim kingship over the gods and men, the Titan Prometheus – who had sided with Zeus against his fellow titans – was convinced that Zeus was a tyrant – Zeus probably deserved this reputation, as he decided to deny humanity access to fire. In response, Prometheus snuck to Mount Olympus – home of the gods – and stole fire, which he brought back down to earth to be shared with humanity.

Zeus, naturally, was not too happy about Prometheus’s rebelliousness, and set the Olympians about crafting revenge. Working together, they created the woman Pandora, who was gifted with a sealed jar – often mistranslated “box”. Inside that jar lay burdensome toil, sickness that brings death, diseases, and a myriad of other pains.  Pandora was offered to Prometheus’s foolish brother Epimetheus as a wife – despite Prometheus’s warnings to never accept a gift from Zeus, Epimetheus accepted her.

On being accepted, Pandora opened the jar, scattering the evils contained within across land and sea. Only one thing remained in the jar: Hope.

Now, there are a number of interpretations of this myth, especially centered on this question – what is the significance of hope remaining in Pandora’s jar?

Here’s my suggestion: Hope is at hand, ever near, and hope is in our control. While we have little choice but to face a number of troubles in this world, we can choose to face them with hope in hand.

When I graduated from high school and from college, I received cards containing a passage from the Jewish prophet Jeremiah. I wouldn’t be surprised if some of you are going to be opening cards with the same passage sometime soon, if you haven’t already. The passage goes like this: “For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future.” And this passage sounds very nice, but I fear that, taken out of its historical context, it loses a great deal of its meaning. When considered in context, Jeremiah has a lot to tell us about what hope means.

The situation was this: Jeremiah watched as his home was invaded by Babylon, and he watched as the Babylonians carried many of the nobility and skilled workers off into exile – leaving only a remnant in Jerusalem and the surrounding area.

In short, things weren’t looking good. But, things were even worse than it first seemed, as there were two emotional forces fighting against Jeremiah, and his message of hope. It turns out that this “graduation card” passage is part of a letter that Jeremiah sent to the exiles in Babylon. The beginning of that letter encouraged the exiles first, to settle in their new home in Babylon, and, second, to seek to prosper there.

This two-fold encouragement suggests that there were two temptations that the exiles were falling to.

The first temptation was one of denial. One set of exiles, driven by wishful thinking, was just waiting to be sent back home. Thus wishful thinking was paralyzing. A second set of exiles were tempted to despair. That is, they accepted the reality that they were in exile in Babylon and would continue to be, but they felt no drive to prosper under these circumstances. Thus, we see two enemies of hope: denial and despair. And both of these prevent us from taking action.

Hope – true, active, invigorating hope, hope that drives us to courage, requires that we first recognize our circumstances, and then choose to act out of a belief that our actions will improve things. In the words of the Dalai Lama, “When we meet real tragedy in life, we can react in two ways–either by losing hope and falling into self-destructive habits, or by using the challenge to find our inner strength.”

Psychologist Charles Snyder suggests that hope consists of two elements – which Scott Kaufman has dubbed the “will” and the “ways” of hope. That is, hope contains, first, the will – the determination – to achieve goals. Second, hope includes the “ways” that the goal will be achieved.

A number of studies have shown that those with hope – that is with a sense of determination and a belief that they have multiple ways of achieving their goals – are more successful, even when you control for other factors influencing success. Students who have a sense of hope when they start college are much more likely to perform well and to graduate, despite what their high school GPA, IQ, or ACT scores might suggest. Interestingly, Kevin Rand found that performance in law school is better predicted by a measure of hope than by your LSAT scores.

Now, you may be thinking that this all sounds great, but that you’re just not a very hopeful person by nature. After all, not everyone can walk around with a smile on their face all the time, feeling totally in control of the world around them.

To you I say: choose hope!

Now, this may seem silly to just tell you to be hopeful. But, it turns out that doing exactly that can make a difference. Psychologist Rebecca Goerres found that simply telling people to be hopeful led them to perform better at divergent thinking – the kind of thinking that includes brainstorming – that is, thinking up multiple ways to tackle a problem or handle a situation. And remember: one of the key elements of hope is believing that there are multiple ways to solve a problem. What better way to do that than to actually discover those multiple ways!

This suggests that hope feeds on itself. Simply telling people to be hopeful results in them doing those things that justify that hopefulness.

Now, I know that many of you are facing challenges of which you’re painfully aware. I also know that all of us will face challenges of which, like Jon Snow, we know nothing. But, in hope, we can say not just that things will get better, but that we can make them better. This sentiment is beautifully captured in this poem, author unknown. It reads:

Look to this day,

For it is life,

The very life of life.

In its brief course lie all the truths

And realities of your existence;

The bliss of growth

The glory of action, and

The splendor of beauty;

For yesterday is but a dream

And tomorrow is only a vision,

But today well lived makes

Every yesterday a dream of happiness

And every tomorrow a vision of hope.

In this passage, we are reminded that, each day, we are given the opportunity to act anew. The opportunity to live that day well, and in so doing move us forward toward the vision of hope that is tomorrow. In the words of the Roman playwright Terence – Where there’s life, there’s hope.

Now, let me share some statistical reasons for hope about the world in which we live. Within your lifetimes, you have seen tremendous improvements – though we are often unaware of them.

According to the World Bank, in 1999, 28.6% of the world’s population was living in extreme poverty – living on just $1.90 per day or less. The most recent data suggests that percentage has fallen to just 10%, even after adjusting for inflation.

According to the US Department of Housing and Urban Development, the number of homeless in the US has fallen by about 15% over the past 20 years.

According to FBI data, the number of reported violent crimes in the US has fallen by 20% in the past 20 years – which, given the increase in population, means that violent crime rates have fallen by about 35% over that same time. Property crimes have fallen even more than that.

According to the UN, life expectancy in the US has increased by about 2 years since 1999.

According to the US Census Bureau, median household income in the US, after accounting for inflation, has increased by about 3% since 1999, despite the fact that we faced a serious financial crisis halfway between 1999 and today. If you measure from the depths of the financial crisis about 10 years ago, median household income has increased about 13% in that time, again after accounting for inflation.

In brief, in the past 20 years, we have gotten safer, healthier, and wealthier – and this increase in wealth has extended to the homeless in the US and the extremely poor around the world. Naturally, this doesn’t mean that everything is getting better. But, in the time you have been alive – or even less than that – we have made some significant strides toward solving some of the serious problems that we have faced. Problems remain, yes. And some problems are getting worse. But, we should keep in mind that we have a great track record – and that should give us reasons for hope.

I will close by asking you to do some self-assessment. I am going to ask each of us to consider these questions:

Are you hopeful about the future? Do you consider each new day as an opportunity to build toward the vision of a better tomorrow? Do you recognize that there are multiple ways to bring about that tomorrow?

Do you cultivate hope in yourself? When you see problems, do you resist the twin temptations of despair and denial, and instead choose to imagine solutions?

Do you cultivate hope in others? Do you remind those who surround you of their own successes, of their abilities to overcome the obstacles they have faced?

As you go through life, you will face uncertainty. You will face troubles. You will face obstacles. In those times, think back on the things that you have accomplished. Think back on this day, and look to the future with a renewed faith, and a hope that, together, we have and will build a brighter tomorrow.

Thank you.

Designing Economics of the Environment – Part 2 – The Problem with “Understand”

~700 words, ~ 3 min reading time

Part 1 here.

So, in the previous part, I laid out my course learning objectives for Economics of the Environment, putting the verbs in bold.

1. Students will understand economic concepts, models and tools for analyzing environmental and natural resource issues and problems.

2. Students will understand problems that arise in the efficient use of depletable and renewable resources, and understand potential solutions to these problems.

3. Students will understand problems that arise from the use of environmental resources such as air and water, and understand potential solutions to these problems.

Normally, the verbs in learning objectives provide a great clue for what kinds of assessments are appropriate for the course. If a learning objective says that students should “explain” something, you better ask them to “explain” it!

The verb “understand”, though, leads to…

The Problems with Understanding

There are two main issues with the verb “understand”:

(1) It can have multiple meanings, which vary by context.

(2) “Understanding” is inherently internal, which makes it impossible to observe – let alone assess.

Good news! There is a solution! Thanks to the work of Wiggins and McTighe on “Understanding by Design”, we have a way to translate the internal, unobservable “understanding” into observable activities that we can actually assess – the trick is actually to recognize the different meanings of “understand”, and then to assess based on those.

Wiggins and McTighe suggests there are 6 “facets” of understanding:

(1) Explaining – that is, the ability to connect “cause” and “effect”.

(2) Interpreting – that is, recognizing the meaning or importance of a concept.

(3) Applying – that is, being able to take a concept and use or recognize it in a different context.

(4) Shifting Perspective – that is, the ability to approach an issue from multiple points of view.

(5) Empathy – that is, the ability to imagine being in the place of someone else.

(6) Self-knowledge – that is, being aware of one’s own mastery and limitations.

Now, not every one of these “facets” is present in every learning objective that uses the word “understand”. For example, it would be silly to think that “understand” in “Students will understand economic concepts” means “empathize with”. However, “apply” and “explain” could pretty easily fit in there.

Translating “Understand”

So, a little rewriting, then. I’m going to take out “understand” and put the relevant verbs in…

1. Students will explain and apply economic concepts, models and tools for analyzing environmental and natural resource issues and problems.

2. Students will explain problems that arise in the efficient use of depletable and renewable resources, and explain potential solutions to these problems.

3. Students will explain problems that arise from the use of environmental resources such as air and water, and explain potential solutions to these problems.

Much better! Now, when looking at it this way, it’s clear that my students will have “some ‘splainin’ to do”! Also, I should be asking students to apply the various concepts, models, and tools in a variety of relevant problems. This, naturally, should have an impact on the kinds of assessments I give – specifically, this is not a class where multiple choice questions are going to do well assessing the learning objectives, unless I spend a lot of time crafting very good multiple choice questions (which is possible!). Probably just easier to have the students write – especially since I use Satisfactory/Unsatisfactory grading with revisions, which makes grading writing MUCH easier. Given the nature of the tools we’re using “applying” will require doing some problems, as well.

The Next Task

Now that I know what types of assessments I’m going to be giving (lots of writing), the next step is to figure out the content – in the learning objectives, there are three types of content mentioned:

(1) Concepts, models, and tools – I group these together, because, in this context, there is very little point in distinguishing between them.

(2) Problems

(3) Potential solutions to those problems

So, this provides a framework for me to start putting content into. Now, I have quite a bit of reading to do before I can really complete this… So, I’ll stop here for now.

Designing Economics of the Environment – Part 1 – General Principles, Backward Design, and Course Learning Objectives

~900 words, ~4 min reading time

Part 2 here.

So, next semester I’m going to be teaching Economics of the Environment for the first time. Because I think some people might find it interesting, I think I’m going to post some of my thinking process as I design this course over the break. So, I’m starting here today with some “initial thoughts”

General Principles

(1) I’m going to use Specs grading – I’ve been very happy with this so far. So, I’m going to stick with that.

(2) The Final is going to provide a “grade modifier” – where performance on the final will adjust the course grade based on other assignments by +1/3 of a letter grade to -2/3 of a letter grade. This gives the final a reasonable weight, but also ensures a clear “floor” to a student’s grade going into the final.

(3) The assignments are probably going to be a combination of reading responses, problem sets, and a research paper (for students who aim for an A). Also, need to ask metacognitive questions for all of these. (Even a simple “what did you learn while doing this assignment?” would work.)

(4) Deadlines scattered throughout the semester.

(5) I’m debating about giving the students the Final Exam on Day 1. When I heard Linda Nilson speak this year, she suggested this. For essay-based finals, I think this is pretty brilliant. As she pointed out, if you write a good final, you’re going to have students having the exact discussion that you want them to have over the course of the semester if you do this.

Planning Materials

While I believe very much that each of us needs to make a course “our own” in some fashion, I also believe that there needs to be enough commonality across instructors for a course that it can meaningfully be considered the “same course”. To that end, I have the following…

(1) Our Department has Course Learning Objectives for all courses. These have to be listed in the syllabus, and provide a good way too focus the course.

(2) Our Department also has “Basic Course Sheets”. This includes the Learning Objectives, the description in the catalog, and also a description of what in-class and out-of-class activities are used in the course.

(3) For courses that have been recently created or revised, we have “Course Information Sheets”. These add to the mix an example textbook or two, and a schedule with the amount of time spent on each topic in the course. Unfortunately, this course has not been updated recently, so getting one of these is extremely difficult.

(4) When I start teaching a course that someone else teaches or has taught, I often get whatever they’re willing to share with me – I usually just ask for a syllabus and thoughts on textbook choices, but often get more than that. The professor who teaches this course at the Kent campus was EXTREMELY generous, and provided syllabus, assignments, lecture notes, etc. I have LOADS of material here. Obviously, I’m not going to just use everything I was given – I have to adapt things to my style. But, editing a pre-existing course is much easier than reinventing the course from scratch.

Backward Design

“Backward design” is kind of the “state of the art” in course design. The idea is simple enough. While “forward design” starts with course activities/content, and then tries to figure out how to assess that, “backward design” starts with learning objectives, then moves to consider assessment, and finally designs the course activities with those assessments in mind. Now, the reality is that it’s a recursive process. Sometimes, when you’re teaching you realize that there are hidden learning objectives that you hadn’t thought about. Or, you realize that the assessments don’t *quite* assess what you wanted them to. Or that there are missing or extraneous course activities that don’t reinforce the assessed learning objectives. Alignment is a bit of a dance, and it takes a few iterations to get it right. (Example: when I taught stats this semester it was RADICALLY different than the last time I taught it.)

But, using a backward design, it turns out, works well as a first pass on the more realistic “recursive design” that actually happens. So, let’s take a look at my learning objectives.

Course Learning Objectives

Based on what I got from the Department, these are the three course learning objectives:

1. Students will understand economic concepts, models and tools for analyzing environmental and natural resource issues and problems.

2. Students will understand problems that arise in the efficient use of depletable and renewable resources, and understand potential solutions to these problems.

3. Students will understand problems that arise from the use of environmental resources such as air and water, and understand potential solutions to these problems.

When moving from learning objectives to assessments, the key is to look at the verbs in the learning objectives, as they hint at the kinds of assessments you should do. “Identify” is a different kind of assessment than “explain” which is certainly different than “apply”. (“Identify” often lends itself to a matching/multiple choice assessment strategy – though you can always frame these as short answer. “Explain” often lends itself to short answer or essay – but a well-crafted multiple choice question can do the same thing.)

As you can see, there’s a strong consistency in the learning objectives for this course – students will understand. It turns out that this is a particularly difficult verb to assess – but more on that in the next installment!

Miscellaneous Thoughts on Teaching

~300 words, ~2 min reading time

  • My students need deadlines throughout the semester – too many are just not very good at organizing their work on their own.
  • Satisfactory/Unsatisfactory (with revision) grading is AWESOME.  – Highly recommend.
  • Asking students to ask “FEEDBACK PLEASE” is also a great time-saver. – Highly recommend.
  • Need to clearly label all assignments as “Engagement” or “Mastery” assignments, to make clear what I’m looking for – and to make it clear in my mind, too!
  • I’m not comfortable with late penalties – make a form for requesting late work being allowed, which asks them to explain why and to develop a prevention plan.
  • All revisions should have a reflection attached, too. “Why didn’t I meet specs” and “What I will do to meet specs in the future.”
  • All assignments should have a meta-cognitive “What I learned” component. (A “cognitive wrapper”)
  • For Specs grading, I need to “adjust” the bars in certain ways. For Analytics, I set the bar too low, on the whole – except for the A level. Need to raise it for B and C levels, and reform my project to just being an “A” requirement, but make it more demanding. The bar isn’t way off for Micro, but ends up overweighting the Final in a way that is inconsistent with the Specs grading philosophy (that is, putting grades mostly in the student’s control, so that there’s little uncertainty for them). Shifting the Final to the way I’m treating the Final in Analytics would be an improvement. Need to replace with a more predictable “Mastery” component that happens throughout the semester. Need to think more about what that looks like. (Knewton is an option – but I don’t like making my face-to-face students pay to do homework…)
  • LOVED the Learning Target Quizzes in Analytics – sadly, can’t do it for Micro, because of scheduling issues.

Did Disney Really Underestimate Day 1 Demand for Disney+?

~400 words, ~2 reading time

It’s a common refrain. Before release: “New service/game/etc. coming out!” “Lots of pre-orders!” Day 1: “Site is slow and crashing!” “Underestimated demand”, etc.

The question: is it really reasonable for us to conclude that these companies, which are SO GOOD at estimating demand most of the time suddenly suck at it – ON A REGULAR BASIS, even when they have great data about what demand is going to be?

I submit that the best answer is “no”.

A few assumptions that I’m making here: (1) Day 1 demand is unusually high. (2) Setting up temporary servers that you won’t need in the long term is costly. (3) Companies believe that very few customers are going to punish them for poor performance on Day 1.

Put these all together, and you have an obvious interpretation of the situation. Disney+ estimated how many servers they’d need on an ongoing basis, and has that much capacity ready to go. (This follows from #2 above.) Now, they know this isn’t enough for Day 1 (#1 is something they can predict), so that there will be server problems – poor performance, crashing, etc. – on Day 1. But, that’s okay. The company isn’t really going to be worse off (#3). Yeah, there’s some PR that they’ll have to deal with, but that’s okay. They can always pull an EA, and offer people some free stuff (that’s how I got SimCity 4) – maybe put some movies they “didn’t plan to” on the platform, or offer people a free download of a specific movie through Google Play/Amazon Prime/iTunes, as long as they redeem in the next week. The point is that these are manageable, fairly cheap options compared to preventing the problem in the first place.

Now, there’s another possibility as well: it might be that Disney DOESN’T know how much long-term demand they’ll have. BUT, if it is costly to set servers up and then take them down, it might make sense for them to deliberately work UNDER the needed long-term capacity for the first couple days, so that they can get a better idea of what they should do.

Traditionally, manufacturers overproduce a bit – after all, if you run out of your good, customers will often just buy from a competitor that DIDN’T. (So, assumption #3 wasn’t true.) However, in a world of strong intellectual property protections and strong brand loyalty, that concern fades.

Marx’s Capital Volume III – Chapter 7 – Supplementary Remarks

~300 words, ~2 min reading time

Summary

This short chapter summarizes some of what came before, and also makes clearer the main purpose: Marx was trying to show that the rate of profit is typically not independent of the size of the capital involved. This view (which Marx attributes to the German socialist Rodbertus) claims that capital and profit levels move in lock-step – so a 20% increase in capital and 20% increase in profit would go together, so that the rate of profit would be unaffected. Marx claims that this is true in only two cases: First, if there’s a change in the value of the monetary commodity. In that case, it’s not really that capital and profit are both increasing by 20%, it’s that gold (or the dollar or whatever) is decreasing in value by 20%. So, here, there is actually no “real” (inflation adjusted) change in either capital or profit – only in its nominal (money) value. Second, if variable and constant capital move in lock-step, so that the ratio between the two does not change. (In modern terms, economists would say that the enterprise is changing by “replication”, a simple repeating of the same process an extra time, half a time or whatever.)

Why It Matters

Marx’s view of distribution and cycles are closely tied with the fact that there is a connection between capital accumulation and the rate of profit, I suspect. So, this is going to play a bigger role when we reach that point.

Where Marx Goes Wrong

Here, Marx’s comments are few enough, and mostly in the form of a recap and application against Rodbertus that I don’t have any specific objections that wouldn’t show up elsewhere.