THE TEACHING ECONOMIST - William A. McEachern                 

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Issue 42, Spring 2012

William A. McEachern, Editor


Some of you are old enough to remember Monty Python's Flying Circus, the goofball British comedy series that aired first on the BBC and later on American PBS. In one wacky sketch, "News for Aardvarks," Eric Idle parodied the contorted efforts of news anchors seeking the angle on any story that would interest the targeted viewers. In this case the targeted viewers were—well, aardvarks. For example, in a report of a ten-car pileup, Idle breathlessly assured his viewers that "No aardvarks were involved. I repeat: no aardvarks were involved."

That single-mindedness is also the approach of The Teaching Economist. We may look at a variety of topics, but it's always with an eye towards teaching economics. With that mindset, I turn to Daniel Kahneman's wonderful new book Thinking, Fast and Slow (Farrar, Straus and Giroux, 2011, 499 pages, $30). It landed on the best-seller list when it first appeared in October and has been there ever since (most recently, ranking 8th on and 7th with the New York Times).

The title comes from the two cognitive systems Kahneman describes. What he calls System 1 does the fast thinking, performing automatically and quickly. With little or no effort, System 1 provides the quick answer, the intuitive response. Much of the book is about the biases and faulty reasoning that can spring from thinking too fast. We are all full of mental tics that lead us astray. These tics lie at the heart of behavioral economics in challenging the assumption of rational decision-making.

System 2 is more deliberate, effortful, and slow, but more reliable. Why don't we abandon the biased and error-prone System 1 and let System 2 take over? Because real thinking is hard work, so our daily lives are organized to economize on thinking. And System 2 is lazy. We activate System 2 only as needed. According to Kahneman, the division of labor between Systems 1 and 2 is highly efficient; it minimizes effort and optimizes performance. But, again, System 1 sometimes screws up.

Kahneman, arguably the most influential psychologist of our time, won the 2002 Nobel Prize in Economics for his research in behavioral economics. The Economist has called him a modern day Copernicus for demonstrating that humans are often not the paragons of reason we think we are. Although his book is not about teaching (teach, teacher, or teaching does not appear in the index), he tries to teach us how System 1 sometimes short-circuits rational thought. The list of mental tics he rounds up is long—about thirty in all, from "anchoring effects" to "validity illusions." I could try to summarize each of these tics, but that way madness lies. Such a compressed menu may sound like a gourmet feast but it would soon turn into a hot-dog-eating contest. Plus it would get us off our focus on teaching economics. Instead, I'll underscore five points and tease out a teaching implication of each.

  1. Precise measurements of blood chemistry show that glucose consumption increases when System 2 is active, and the central nervous system consumes more glucose than most other parts of the body. Because real thinking is hard work, System 2 tries to minimize effort by taking the path of least resistance. Here's an account related by Kahneman that shows the bias that can result. Eight judges in Israel spend their days reviewing parole applications, averaging six minutes on each case. The default decision is to deny parole (on average, only 35% of requests are approved). Chances of parole reach about 65% after the judges eat a meal but drop towards zero just before the next meal. As Kahneman notes, "tired and hungry judges tend to fall back on the easier default position" (p. 44). Teaching implication: We should be aware how glucose levels affect our ability to teach and students' ability to learn. Just before a meal, we and our students are tired and hungry and we may both resort to default positions. As teachers, we may be more inclined to teach from System 1, to teach without thinking. At the same time, students become less engaged—more inclined to zone-out.
  2. System 1 sails through intuitive tasks, but any cognitive strain triggers System 2. In an experiment, when test questions were in normal font on a computer screen, 90% of students made at least one mistake. That proportion dropped to 35% if the font was barely legible (p. 65). Test performance was better with the less readable font because students had to stop and think. Teaching implication: Cognitive strain, whatever the source, mobilizes System 2, which is more likely to reject the easy, intuitive answer served up by System 1. Students using System 2 are less likely to get suckered by mental lapses, such as confusing "changes in demand" with "changes in quantity demanded." In previous issues I have discussed how our presentations should involve a "desirable degree of difficulty." A desirable difficulty is one that moots the quick and easy answer and instead calls for some real thought.
  3. A premise of the book is that it is easier (and much more fun) to recognize and label the mistakes of others rather than our own. Teaching implication: It's good to get feedback on our teaching from colleagues and students. They can recognize our strengths and weaknesses more easily than we can. Feedback, from whatever source, is valuable even if unsettling.
  4. Anything that occupies our working memory reduces our ability to think. Teaching implication: What are students thinking about during class—food, texting, Facebook pages? Our presentations need to be engaging enough to occupy their thoughts.
  5. Fairness considerations are of top importance in human relations. An individual treated unfairly will make an extra effort to retaliate. Strangers who observe an unfairness will often join in the retaliation. Retaliation of this sort has been shown in experiments to benefit pleasure centers of the brain. Our brains are not designed to reward generosity as reliably as they are to punish unfairness. Teaching implication: In administering courses, we should place the highest priority on fairness. Students hate unfair behavior even if others in the class are the ones who suffer most. Much of our good work in a course is undermined if students think the course is unfair.

Finally, should our class presentations try to reflect the mental tics described in the book? According to Kahneman, the answer is no, at least not at the principles level: "The basic concepts of economics are essential intellectual tools, which are not easy to grasp even with simplified and unrealistic assumptions about the nature of economic agents who interact in markets. Raising questions about the assumptions even as they are introduced would be confusing, and perhaps demoralizing. It is reasonable to put the priority on helping students acquire the basic tools of the discipline" (p. 286). In other words, students must learn to walk before they can run.

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