Thursday, July 14, 2011

Paper: Teaching Managerial Economics with Problems Instead of Models

Luke Froeb
Vanderbilt University - Owen Graduate School of Management

James C. Ward
Vanderbilt University - Owen Graduate School of Management

THE INTERNATIONAL HANDBOOK ON TEACHING AND LEARNING IN ECONOMICS, Gail Hoyt, KimMarie McGoldrick, eds., Edward Elgar Publishing, 2012

In this chapter, we address the problems of teaching microeconomic principles to business students. We describe the peculiar features of student demand that make teaching economics using a model-based pedagogy unsuccessful. We conclude that a problem-solving pedagogy is a better way to satisfy student demand for business education.

Keywords: Managerial Economics, Business Education, Problem-Solving Pedagogy, Microeconomic Principles

JEL Classifications: A22, A23

1 comment:

  1. I think a problem-based approach worked extremely well for managerial economics, but it might not work as well in other subjects. Much of my practical knowledge of macro got tossed out the window in 2008.

    In physics, much of the interesting science occurs at critical points, called "phase transitions", where one local set of physical laws give way to a different set. T < 32F, you have ice. T > 32F, you have water. Knowing how ice behaves doesn't give you any predictive power if it turns to water. You have to understand the global physical laws (quantum mechanics) from which the local physical laws derive.

    Economic depressions appears to be a similar phenomenon. When consumption > saving, the economy is good, deficit spending is bad, austerity is good, and government spending crowds out. When saving < consumption, the economy is bad, deficit spending is good, austerity is bad, and government spending doesn't affect interest rates. Keynes shows how those two different sets of local laws are actually different manifestations of a more fundamental global law, and gives you at least *some* predictive power. Whereas an MBA with a head-full of rules of thumb would be lost.