An Economics Lesson: Teaching for Disciplinary Understanding

S. Abu Rizvi in Education Week:

ScreenHunter_948 Jan. 18 17.06Fifteen years ago, my colleagues and I observed that most economics undergraduates we taught quickly lost a third to half of their knowledge. “A” students turned into “C” students in a matter of weeks, right after final exams. For those of us who wanted disciplinary understanding to be useful to students well after they left college, this and similar findings were sobering. They spurred us to revamp how and what we teach while keeping an eye on why: to prepare students to use their understanding of the disciplines in other times and places.

Let's begin where we want to end up, with an example of the successful and flexible use of disciplinary understanding. As we consider the activities of two professional economists, Atif Mian and Amir Sufi, we should keep in mind that the concepts they employ are taught in introductory economics classes.

Mian and Sufi's intervention arose from the Great Recession at the end of the last decade. Economic turmoil left many homeowners “underwater,” with homes worth less than what was owed on mortgages. Federal debt relief was a policy that was considered. But Timothy Geithner, the Secretary of Treasury at the time, claimed that the impact of relief on the economy would be tiny. By freeing overburdened homeowners to spend, even a large program of $700 billion “would have increased annual personal consumption by just 0.1 to 0.2 percent.” Mian and Sufi thought this figure was too low. They used the concept of the marginal propensity to consume (MPC), “a very well-researched question,” to show that relief this big would have had an impact six to thirteen times higher than Geithner claimed. His figure for the policy's economic impact was far too small. Their argument, made at the right time, could have carried the day against Geithner's proposal.

More here.