As students in my 300 class will soon learn, one of the bedrocks of consumer choice theory is that we take tastes as given.
In a possibly related note, this house was just brought to my attention.
Author: David Gerard
************ Advice for Potential Majors & AIM Placement
Here is our message to those of you thinking about pursuing an economics major (or minor). For more on the collegiate economics major more generally, here is some information from the American Economics Association.
Advice to Potential Majors: Students interested in a major in Economics should begin with introductory classes in economics and mathematics. The first economics class is ECON 100.
Students who have satisfied the ECON 100 requirement should consider taking 200-level classes based on their own interests (e.g., 200 Development Economics, 205 International Economics, 225 Decision Theory, 245 Law & Economics, 280 Environmental Economics, 290 Economics of Medical Care).
There are three intermediate theory courses that are offered sequentially each year – ECON 300 Microeconomics in the fall, ECON 380 Econometrics in the winter, ECON 320 in the spring. These courses are most effective when taken sequentially in either the sophomore or junior year. Freshman should not enroll in these courses.
Sophomore year is a good time to take ECON 225 Decision Theory. This is not a required course, but we strongly recommend it for all majors and minors.
Mathematics Requirements and Advice: The introductory mathematics courses are essential because they are foundational to intermediate theory courses. Calculus (MATH 120 and 130 or MATH 140) is a prerequisite for ECON 300 and ECON 320. Statistics (MATH 107 or the equivalent) is a prerequisite for ECON 380.
For the purposes of the Economics Department, we believe students should consider MATH 120 and 130 if they are interested in applied problem solving and developing some Excel skills. Students who plan to take math beyond the calculus sequence should take MATH 140. The decision on which calculus to take is probably worth a discussion both with the math and the econ department faculty.
A typical sequence for a student who comes in as an economics major.
Freshman: Introductory Economics (ECON 100), 200-level courses based on student interest, Calculus (MATH 120 and 130 or MATH 140).
Sophomore: Intermediate sequence (ECON 300, 380, 320), 200-level courses based on student interest, Statistics (MATH 107). ECON 300 and MATH 107 are offered in the fall.
Junior-Senior: Advanced electives.
This sequence can be pushed back a year for those who decide during their sophomore year to pursue an economics degree.
MINOR: The minor requirements are indeed minor. No significant planning is necessary during the Freshman year to complete this degree, though our recommendations in terms of taking introductory economics and mathematics courses remain the same for majors and minors alike.
AIM Placement: If you scored a 4 or 5 on the AP micro test, you can obtain credit through the Registrar’s office for ECON 100. This satisfies that requirement for the department, though we strongly suggest you take at least one 200-level course before beginning the 300 sequence. Talk to a faculty member in economics for appropriate recommendations.
If you earned a 4 or a 5 on the AP macro test, you can obtain 6 units of Lawrence credit, and you should take Economics 100.
What Can I do with an Economics Major?
Why not take him/her out to lunch with you?
No, no, no. Of course, I’m talking about what sort of Life After Lawrence is out there for our economics majors? Well, the American Economic Association is encouraging its members to share this video. Here’s the link:
A career in Economics… it’s much more than you think
Much more than finance, banking, business and government, a degree in economics is useful to all individuals and can lead to many interesting career choices. These four diverse individuals offer their insights on how a background in economics can be a tool for solving very human problems.
- Marcella Alsan, a physician of infectious disease, discusses why she needed to pursue a degree in economics to improve the lives of her patients.
- Randall Lewis, a research scientist at Google, uses economics and “big data” as tools to improve the functioning of markets.
- Britni Wilcher, a PhD student of economics, offers insight on some misconceptions about economists and factors influencing her career path decision.
- Peter Henry, dean at the NYU Stern School of Business, points to the true nature of economics and the importance of diverse voices informing the field.
Here is the American Economic Association’s link of information for students considering an economics major, covering topics from what economists do to what type of skills you will develop as an economics major.
If you are considering a major, please click on the Advice for Potential Majors link that you should see in your left frame.
In your life expect some trouble, when you worry you make it double…
Those of you interested in international financial markets probably noticed there have been some rather dramatic changes in the the major stock indices over the past week. The US benchmark Dow Jones Industrial Average stood at 17, 345 last Thursday and subsequently plummeted to 15,666 at the close of business Tuesday. Following a turbulent Friday and some bad news from China on Monday, the Dow went into a free-fall on Monday, losing over 1,000 points before closing 588 points lower.
On Tuesday, the Dow seemed to regain some of its mojo, soaring 442 points in early trading. That mojo was a no-go, however, and by the end of the day the Dow had shed another 205 points. Ouch.
On Wednesday things really did turn around, with the Dow closing 619 points higher, the third-largest gain ever in absolute terms. As of this writing on Thursday, the Dow is up another 200 points, continuing to scratch back some of the losses from last week. (Wait, now it’s only up 150 points, better post this picture before it changes again):
The causes of these wild gyrations are quite varied, and would be difficult to explicate before the market moves a hundred points in either direction (that is, even if we knew what all of those causes were, which I’m not convinced that we do). The question for the decision maker is what do these market fluctuations mean to you?
Well, many flesh-and-bone economists will tell you with a straight face that you are either in the market or you’re not, so if you want to get out now, you shouldn’t have been in the first place. If you are in, you should just sit tight.
Although that might seem preposterous to you, what economists will tell you is that the idea that you can either predict or time the market is even more preposterous. More on this after the bump: Continue reading In your life expect some trouble, when you worry you make it double…
River Red
Some of you have certainly read about the mishap at the “abandoned” Gold King mine site in Colorado that left Animas River a peculiar shade of orange — here is a before and after picture that I nabbed from Reddit.
The basic story is that EPA is working to reclaim and shore up a historic mine site, and one of its contractors accidentally breached a dam that led to a spill of several million gallons of toxic water into the Animas River. The High Country News tells us nine things we need to know about the spill.
In the department of self-promotion, I also used to spend time thinking about cleaning up hazardous waste sites, and recently did a Q&A with PERC about the problem of abandoned mines. If you are interested in law & economics, or some of the knotty problems of environmental policy, consider taking a look. The abandoned mines problem could use some fresh thinking, that’s for sure.
Event Studies
I was recently chatting with some alumni who shocked me by saying they regularly hit the Lawrence Econ blog for… Well, I forgot to ask why they came to the blog, but presumably for posts like this.
Today’s question: how can we quantitatively assess the impact of a big event?
The answer, sometimes, is to set up an event study! Craig MacKinlay has a nice overview in the Journal of Economic Literature (cited more than 3000 times!) where he shows how to evaluate the impact of an event on the value of a firm (or firms). The basic idea is that if the event is unanticipated, you can look at the value of the firm before and after the event, and see how “the market” assessed the event’s impact.
Leah Libresco at the FiveThirtyEight website recently took a look at how the recent Supreme Court decision on the Patient Protection and Affordable Care Act (PPACA) (a.k.a. “Obamacare”) affected the value of big insurance companies. The picture is after the bump: Continue reading Event Studies
Econ Colloquium — Big Data Monday at 4:30
Big Science + Big Data = Big Opportunities: An Overview of Statistics in Astronomy
Department of Statistics
Carnegie Mellon University
Progress in disciplines such as astronomy is increasingly being made through large-scale, multi-institution projects, often referred to as “Big Science.” It is only through careful statistical analysis that the massive amount of information (the “Big Data”) produced by these endeavors will be translated into answers to the questions of interest. This talk will make a connection between fundamental statistical concepts and the challenges facing astronomers and cosmologists as they seek to make use of the flood of data that result from modern experiments.
Monday, May 18, 4:30 p.m.
Steitz Hall 102
Ice Cream Social, Friday at 4:30 p.m.
Economics majors are welcome to an Ice Cream Social Friday at 4:30 in Briggs 217 (and probably the surrounding area). Typically, the faculty member chosen for the Convocation Award has lunch with a few students after the Convo, but I actually have class in this slot and I decided that I wanted to include more than a handful of students.
I expect several of my colleagues on the faculty will be in attendance as well.
We have budgeted for 50 students, so ice cream priority will be given to those with either a Convo program or a ‘selfie’ taken at the Convo. A selfie with an Econ prof will give you preferential access to the toppings. You can forward the selfies to me some time prior to Friday. Please exercise discretion when taking the selfies (i.e., *not* during the performances or during Professor Niblock’s invocation).
If you could send an RSVP to Linda Peeters linda.o.peeters@lawrence.edu by Friday at noon, that would be super.
Thursday Convo
I am the Convocation speaker Thursday at 11:10. It is Honors Convocation, meaning a number of your fellow students will be recognized.
GMOs, Blood, Sperm, Human Milk…. not necessarily in that order
Here are two upcoming talks that are certainly of interest:
What you need to know about GMOs
Tuesday, April 7 in Warch Campus Cinema. 7 p.m.
Explore the benefits and drawbacks of GMOs in a panel discussion led by Professors Beth De Stasio and Dave Hall. They will cover the facts and myths of GMOs and how they affect human health and the environment.
For a recent economics survey article on GMOs, see Geoffrey Barrows, Steven Sexton, and David Zilberman. 2014. “Agricultural Biotechnology: The Promise and Prospects of Genetically Modified Crops.” Journal of Economic Perspectives, 28(1): 99-120.
For Sale: Markets in Eggs, Sperm and Human Milk in Modern America
Kara Swanson, Associate Professor, Northeastern University School of Law.Thomas Steitz Hall of Science 102 – Lecture Hall. 4:30 p.m.
Here is a recent interview with Professor Swanson in The Atlantic Monthly. For a recent economics survey article on blood, see Robert Slonim, Carmen Wang, and Ellen Garbarino. 2014. “The Market for Blood.” Journal of Economic Perspectives, 28(2): 177-96.
Climate Change References
Selected References:
Initiative on Global Markets www.igmchicago.org
Jeffrey A. Frankel & Andrew K. Rose “Is Trade Good or Bad for the Environment? Sorting Out the Causality,” The Review of Economics and Statistics 87(1):85-91. (2005)
Michael Greenstone and Adam Looney. “Paying Too Much for Energy? The True Costs of Our Energy Choices.” Daedalus141.2 (2012): 10-30.
Alan Krupnick et al. Toward a New National Energy Policy: Assessing the Options, Resources for the Future (2010)
William Nordhaus, The Climate Casino: Risk, Uncertainty, and Economics for a Warming World. (2013)
Nicholas Stern, The Economics of Climate Change: The Stern Review
World Bank World Development Indicators (2014)
New Look Econ Blog
New look blog, new look department.
Front (l-r): Hillary Caruthers, Marty Finkler.
Back: Adam Galambos, David Gerard, Jonathan Lhost.
This was taken before Professor Finkler’s Povolny Lecture, ““China Ranks Number One. Or Does It? Should We Care?”
Updated Schedule for 2015-16
The most recent iteration of the 2015-16 schedule is below and you can also find a slightly less updated one in Banner. The red bolded entries represent updates. Click here for non-garbled version.
Fall 2015 Draft
ECON 100 ● INTRODUCTORY MICROECONOMICS (Q) ● 1:50-03:00 MWF ● Jonathan Lhost
ECON 208 ● SUSTAINABLE CHINA: ENVIR/ECON (G) ● APR ● 02:30-04:20 TR ● Jason Brozek
ECON 211 ● IN PURSUIT OF INNOVATION ● 11:10-12:20 MWF ● Adam Galambos, John R. Brandenberger
ECON 271 ● PUBLIC ECONOMICS ● 12:30-02:20 TR ● David Gerard
ECON 290 ● ECONOMICS OF MEDICAL CARE ● 09:00-10:50 TR ● Merton D. Finkler
ECON 300 ● MICROECONOMIC THEORY (Q) ● 08:30-09:40 MTWR ● David Gerard
ECON 405 ● INNOVATION & ENTREPRENEURSHIP ● 08:30-09:40 MWF ● Adam Galambos
ECON 421 ● INVESTMENTS ● 12:30 -2:20 T ● Merton D. Finkler (Approval required)
ECON 460 ● INTERNATIONAL TRADE (G,Q) ● 01:50-03:00 MWF ● Hillary Caruthers
Winter 2016 Draft
ECON 100 ● INTRODUCTORY MICROECONOMICS (Q) ● 09:50-11:00 MWF ● Hillary Caruthers
ECON 151 ● INTRO TO ENVIRONMENTAL POLICY ● 12:30-01:40 MWF ● Staff
ECON 200 ● ECONOMIC DEVELOPMENT (G,Q) ● 02:30-04:20 TR ● Hillary Caruthers
ECON 245 ● LAW AND ECONOMICS ● 12:30-02:20 TR ● Jonathan Lhost
ECON 380 ● ECONOMETRICS (Q) ● 9:50 – 11:00 MTWR ● Jonathan Lhost
ECON 415 ● INDIVIDUALITY & COMMUNITY ● 09:00-10:50 TR ● Steven Wulf
ECON 420 ● MONEY AND MONETARY POLICY (Q) ● 12:30-02:20 TR ● Merton D. Finkler
ECON 444 ● POLITICAL ECONOMY – REGULATION (W) ● 09:00-10:50 TR ● David Gerard
ECON 601 ● SENIOR EXPERIENCE: READING OPT ● 02:30-04:20 T ● David Gerard
ECON 602● SENIOR EXPERIENCE: PAPER ● APR ● 02:30-04:20 R Arranged ● Merton D. Finkler
Spring 2016 Draft
ECON 100 ● INTRODUCTORY MICROECONOMICS (Q) ● 08:30-09:40 MTWR ● David Gerard
ECON 215 ● COMPARATIVE ECONOMIC SYSTEMS (G) ● 11:10-12:20 MWF ● Adam Galambos
ECON 225 ● DECISION THEORY ● 01:50-03:00 MWF ● Adam Galambos
ECON 280 ● ENVIRONMENTAL ECONOMICS ● 12:30-02:20 TR ● David Gerard
ECON 295 ● TOP: FINANCE ● 12:30-01:40 MWF ● Gary T. Vaughan
ECON 320 ● MACROECONOMIC THEORY (Q) ● 09:50-11:00 MTWR ● Hillary Caruthers
ECON 320 ● MACROECONOMIC THEORY (Q) ● 03:10-04:20 MTWR ● Hillary Caruthers
ECON 400 ● INDUSTRIAL ORGANIZATION ● 01:50-03:00 MWF ● Jonathan Lhost
ECON 410 ● ADV GAME THEORY & APPLICATIONS (Q) ● 08:30-09:40 MWF ● Adam Galambos
ECON 481 ● ADV ECONOMETRICS & MODELING ● 11:10-12:20 MWF ● Jonathan Lhost
Right to Work
Governor Walker signed “right to work” (RTW) legislation earlier this week, which it is fair to say has led to mixed reactions among the electorate. A Wall Street Journal piece touts the “right to work advantage,” whereas Slate.com teaser says “It has never been more painful and humiliating to be a Wisconsin Democrat.” Owie.
(Curiously, the sign on the table in the photo is “Freedom to Work,” rather than “Right to Work”).
Right to Work laws generally allow employees to work in unionized workplaces without paying union dues. In principle, the free-rider problems caused by the elimation of compulsory union dues mitigates union bargaining power, hence lowering wages (ceteris paribus), and increasing employment. Clearly, then, this legislation potentially has fundamental implications for employment, wages, output, and probably a whole lot of other stuff. How is one to sort all this out?
Fortunately, Ed Dolan at EconoMonitor has taken it upon himself to sort it out for us. He begins by providing a nice review of the history and basic logic of RTW legislation. Following that, he reaches the conclusion that, well, it’s complicated:
The bottom line is that the economic effects of RTW laws are not nearly as clear-cut as their advocates and opponents make them out to be. Correlations of RTW laws with wages and employment are economically small even when they are statistically significant. Most problematic of all is the question of causation—does RTW cause observed differences between states, or do pre-existing differences cause the passage of RTW laws?
It’s almost too bad that the effects are so benign, as RTW is a genuine political dynamo. In response to Walker’s signature, President Obama took to his Twitter feed today to “blast” the Wisconsin legislation and encourage the 25 states that don’t have RTW legislation to keep it that way.
Be Like Mike?
Michael Greenstone, that is.
One of our esteemed alums forwarded me the link to the eponymous “Which famous economist are you most similar to?” website, and yours truly — though I probably shouldn’t be telling you this — has landed atop Professor Greenstone, the University of Chicago energy economist and President Obama’s former Chief Economist for the Council of Economic Advisers.
The data are procured from the University of Chicago’s periodic IGM Economic Experts Panel, and the matching is done via a principal component model (which, I suppose is ironic, because the principal-component model isn’t really part of our standard toolkit). That bit of hilarity aside, here is what it looks like:
Daron Acemoglu
Though I landed near Professor Greenstone, I, pictured here as a red dot, was actually matched with Daron Acemoglu. Unfortunately, I couldn’t think of a good post title playing on the word “Daron”. Perhaps I should have been a little bit more…. adventurous?
The Pox of Liberty
For those of you who missed the talk this past Tuesday, here is University of Pittsburgh Professor Werner Troesken’s talk, “The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection.”
Here’s a link to the book from University of Chicago Press, and here is a draft of the introductory materials.
Fed Chair Breaking All the Rules?
This bit of amusement is brought to you by the University of Oklahoma’s Kevin Grier. Federal Reserve Chair Ben Bernanke opposes a congressional rule that would require the Fed to follow a policy rule.
“The Fed already has a rule,” Mr. Bernanke said during a panel discussion at the Brookings Institution’s Hutchins Center on Fiscal and Monetary Policy. “It’s committed to hitting a 2% inflation target and aiming for the natural rate of unemployment. These are rules.”
And here are the data showing 33 straight months of consumer prices rising at less than 2%:
The Pox of Liberty, Tuesday at 4:30 p.m., Wriston Auditorium
The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection
Werner Troesken
University of Pittsburgh
Wriston Auditorium
Tuesday, March 3
4:30 p.m.
Provisional Schedule 2015-16
Click here if the times are bleeding into your right margin.
Note UPDATES IN BOLD. Also, ECON 421 Investments will be offered in a special, directed study format on Tuesdays at 12:30.
| Term | # | Title | Instructor | Time |
| Fall | 100 | Introductory Microeconomics | Lhost | MWF 1:50-3 |
| Fall | 290 | Health Economics | Finkler | TR 9-10:50 |
| Fall | 271 | Public Economics | Gerard | TR 12:30 |
| Fall | 208 | Sustainable China | Brozek | TR 2:30 |
| Fall | 211 | Pursuit of Innovation | Galambos | MWF 11:10 |
| Fall | 300 | Intermediate Micro | Gerard | MTWR 8:30 |
| Fall | 405 | Innovation & Entrepreneurship | Galambos | MWF 8:30 |
| Fall | 460 | International Development | Caruthers | MWF 1:50-3 |
| Term | # | Title | Instructor | Time |
| Winter | 100 | Introductory Microeconomics | Caruthers | MWF 9:50-11 |
| Winter | 245 | Law & Economics | Lhost | TR 12:30 |
| Winter | 200 | Development | Caruthers | TR 2:30-4:20 |
| Winter | 380 | Econometrics | Lhost | MTWR 3:10 |
| Winter | 420 | Money & Monetary Policy | Finkler | TR 12:30 |
| Winter | 444 | Political Economy of Regulation | Gerard | TR 9 |
| Winter | 601 / 602 | Senior Experience | T / R 2:30 |
| Term | # | Title | Instructor | Time |
| Spring | 100 | Introductory Microeconomics | Gerard | MTWR 8:30 |
| Spring | 215 | Comparative Economic Systems | Galambos | MWF 11:10 |
| Spring | 225 | Decision Theory | Lhost | MWF 1:50-3 |
| Spring | 280 | Environmental Economics | Gerard | TR 12:30 |
| Spring | 295 | Special Topics: Finance | Vaughn | MWF 12:30 |
| Spring | 320 | Intermediate Macro | Caruthers | MTWR 9:50 |
| Spring | 320 | Intermediate Macro | Caruthers | MTWR 3:10 |
| Spring | 481 | Advanced Econometrics | Lhost | MWF 11:10 |
| Spring | 410 | Game Theory | Galambos | MWF 8:30 |
Playing the Market
For those of you interested in financial markets, we have an upcoming talk and a fall seminar that may be of interest. First up, this Monday, Grinnell College professor, Mark Montgomery, will give a lecture about the ins and outs of “The Notorious Efficient Market Hypothesis,” as he calls it.
The efficient market hypothesis is essentially in two parts: First, that all publicly available information is immediately internalized into the extant stock price. Immediately is pretty fast, so it’s tough to beat the market. So, secondly, it is not possible to earn above average returns without taking above average risks — a disheartening message for any would-be financiers. I’m certain that Professor Montgomery will give us a lively talk.
The talk is Monday at 4:30 p.m. in Seitz 102.
For those of you interested in learning about how economists think about investments should consider the Investments directed study that we will offer in the fall of 2015. In the next few weeks we will roll out our 2015-16 schedule, so watch this space for details.