Issue 15, Spring 1998

William A. McEachern, Editor

Grapevine

Bill Marker of Lewis University in Romeoville, Illinois has found an effective way to underscore one misleading aspect of unemployment statistics. He begins class on the day that topic is to be covered by saying that 10 of 40 students are doing substandard work, yielding a "poor performance ratio" of 10/40, or 25%, and a "success rate" of 75%. He explains to students that, to lower the poor performance ratio, he is going to advise those below average to drop the course. He tells them that if he can convince just five of the 10 underperformers to drop out, the poor-performance ratio will fall to 5/35, or to 14%, and the success rate will move up to 86%. Student gaze on him with disbelief and contempt. After he has their attention in this way, he goes on to explain that one measure of the economy's performance, the unemployment rate, uses a similar statistic in that discouraged workers are not counted in the labor force. His approach works best, he says, if students believe he is serious. Of course, after their initial shock, he quickly explains he was just role playing. I would add that this sort of self-selection goes on in most courses. Certainly, students who drop the course tend to be those below average, thereby pumping up the average course performance. I once taught at a university where students, without much administrative difficulty, could drop a course right up until the final exam. As a result of students' rational expectations, there were fewer poor grades at the end of the term and virtually no failing grades. Instead of pass/fail, it was pass/drop.

David R. Henderson of the Naval Postgraduate School in Monterey California says that he likes the fact that his students are reliable and, more important, very curious. At the beginning of each class, he sets a timer for five minutes during which anybody can ask any question about economics. It could be based on something they read, heard, witnessed, or just wondered about. If the answer relies on material students are expected to know, he draws students out. Professor Henderson says this question time has been tremendously successful and gets raves on student evaluations.

When Mark Chandler of Vilnius University in Lithuania teaches public choice, he uses the Vietnam war as an example of non-single peaked preferences. He believes the cycling theory explains U.S. policy during the conflict. Lately he has added the conflict in Northern Ireland as an example. Among the British, the two most preferred positions are (1) the military should aggressively crack down on the IRA and (2) the military should pull out and go home. He says the least preferred alternative is a quasi-police action with low levels of death on all sides but high levels of aggravation. This mix yields a classic multiple-peaked situation, which leads to cycling.

Eric K. Steger of East Central University in Ada, Oklahoma finds deregulation of natural gas and electricity to be a gold mine in discussing natural monopoly. He also relies on our experience with telephone deregulation to discuss some potential costs of having to choose among many suppliers. For example, the intense efforts that long-distance telephone service providers exert to get customers will likely be duplicated by suppliers of electricity and natural gas. Consumers may become confused by competing offers when choosing a supplier.

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