Interactive Economics: An Update
We posted the first module of Interactive Economics on April 11, and have since published three more. We will now pause for a while as far as new content generation is concerned, and focus our efforts on distribution and instructional videos that illustrate the power and value of these learning tools.
The materials are accessible to people with no background in economics, including first-year undergraduates and even high school students. Each module is self-contained and examines a single concept in considerable depth and detail. I use these in conjunction with the open-access text The Economy by CORE, to which I also contributed at an early stage. But they can be used alongside any text, or no text at all.
This is a project that has been years in the making. I explained the goals of the effort in an earlier post, along with a detailed look at the first module on measuring inequality. The other three modules are on specialization and trade, technology and costs, and intertemporal choice, and a brief overview of all four can be found later in this post.
The uptake so far has been encouraging. In just a month or so after launch, we have had 784 active users in 56 different countries, the top ten of which are the following:
Although about half the users are in the US, we have managed to reach people in Kyrgyzstan, Kazakhstan, Chad, Ghana, Costa Rica, and many other places where I have never had any professional contacts. This is immensely gratifying.
Here is a brief overview of the four modules published to date:
Measuring Inequality looks at ways in which income (or any other) distributions can be compared across time and space. The difficulty arises because we need to be able to compare societies with very different population sizes and average incomes. The unit considers two ways of doing this: using Lorenz curves, and using certain first principles (or axioms), and shows that the two approaches lead to exactly the same ranking. The unit also shows how this (incomplete) ranking can be completed using the Gini coefficient. Without really realizing it, students get to understand the axiomatic basis for the Lorenz criterion.
Specialization and Trade explores a model first developed by David Ricardo two centuries ago, featuring two countries (England and Portugal) and two goods (cloth and wine). Even if one country has higher labor productivity in both sectors, global production of both goods can be higher if they specialize in accordance with their comparative advantage. That is, they can both benefit from specialization and trade. However, if total output of both goods is to exceed production under self-sufficiency, the pattern of specialization may need to be incomplete, in the sense that both goods are produced in one of the countries while the other fully specializes.
Technology and Costs defines technologies as processes for transforming inputs into outputs, and considers how technology choices respond to changes in input prices. In general, a change in prices will lead to shifts that economize on inputs that have become relatively more expensive. However, there can be some technologies that would never be chosen regardless of prices, even though they are not dominated by any other technology. Lurking in the background is the concept of convexity, though this will be invisible to most undergraduate students.
Intertemporal Choice deals with the transfer of claims to resources across time, through the process of borrowing and lending. It shows how patterns of consumption over time can be much smoother than flows of income, with people borrowing early in life, accumulating wealth in peak earning years, and spending down savings after retirement. The manner in which smooth consumption choices depend on income flows and interest rates (which are generally higher for borrowers than lenders) is explored.
That’s all we have so far.
All these materials are available free of charge worldwide under a creative commons license. If you find them useful, send us feedback at the email address on the contact page. You can also sign up for updates at that location, or make a tax free donation (no amount is too small) if you’d like to help us with the effort. And if you are (or know) a program manager at a foundation or funding agency who may be interesting in seeing a proposal for further development of these resources, please get in touch!
