THE TEACHING ECONOMIST - William A. McEachern                 

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Issue 3, Fall 1991

William A. McEachern, Editor

International Coverage

The world has grown smaller and the principles course naturally reflects the increased importance of international topics. At the same time, there are reasonable arguments for expanded coverage of other topics. For example, a recent article in the Journal of Economic Education lamented the short shrift the entrepreneur gets in most principles books. Other topics that also can make a justifiable claim for additional coverage include the environment, game theory, the savings and loan mess, experimental economics, and the economics of information, just to name a few. the point is that topic coverage is a competitive process, and additional international material must compete with existing core coverage and with other potential topics.

Thus, we must recognize that including more of one topic usually involves a tradeoff. Sometimes textbook authors apparently avoid making hard choices by simply adding another section or another chapter to cover the latest timely topic. But since principles textbooks typically include more material than can reasonably be covered in a term, since the college term remains fixed, and since students appear less prepared than ever, the instructor's choice of topics becomes all the more critical.

What we need in making choices about international coverage is a place to stand, a perspective. I believe a tool we teach early in the term, the production possibilities frontier, might provide such perspective. The production possibilities frontier in the accompanying exhibit reflects possible combinations of international material and other material that can be covered during the term, given the available teaching technology and available resources (e.g., instruction time, student study time, books, support materials, and so on).

Notice that, as drawn, this frontier has more of a bulge than usual. Here's why. At point A course resources are employed exclusively to cover non-international topics. But some international topics, such as comparative advantage, shed light on the core of economic principles. So the introduction of such international topics allows for fuller coverage of non-international topics. The move from point A to point B involves taking up those international topics that help students understand non-international topics as well. Thus the move from point A to point B increases coverage of both topics.

Once point B is reached, coverage of additional international topics involves an opportunity cost, but that cost is initially quite low. Some international coverage easily piggy-backs on core topics. For example, once such core topics as inflation, unemployment, and market structure have been introduced, comparative data for key countries around the world can be added at little opportunity cost. So the slope to the right of point B is initially somewhat flat because references to other countries do not require a new theoretical framework.

Other international topics, however, build on the existing theory in a way that involves a greater degree of complexity. For example, once the aggregate expenditure function is introduced, the addition of net exports to the model requires further explanation. Likewise, fiscal and monetary policies become more complicated in an open economy. Thus, the slope becomes steeper to reflect the greater opportunity cost of these additional international topics. A still higher opportunity cost involves topics that must be developed largely from whole cloth, such as the J-curve.

Thus, the movement from B to C reflects an increasing opportunity cost as one moves from international topics that are easy picking to those topics that rely little on non-international material. Once at point C, attempts to cover still more international topics cut so much from the core of principles topics, that students would be unable to grasp even the level of international covered at point C. So as the instructor attempts to cover still more international material, coverage of both topics declines, as reflected by points from C to D.

Since it would be irrational to operate on the upward sloping portions of the frontier, we can rule out points along these two extreme ranges. Consequently, the real choice lies along the range from B to C.

Notes that points along the frontier reflect a given amount of student study time. Prompting students to study more, ceteris paribus would shift out the frontier. (Sounds good to me.) Of course, even to get on the frontier, we must be using the given resources efficiently. Some of us may be experiencing a form of X-inefficiency by failing to use the best technology or by making poor use of the blackboard, student time, handouts, overhead displays, events in the daily newspaper, textbooks and supplementary materials.

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