Ken Jackson

A new article on The Athletic (note, there is a paywall after a free trial) on competitive balance in the NBA:

https://theathletic.com/1067413/2019/07/09/economists-weigh-in-on-the-competitive-balance-question-after-kawhi-leonards-decision-preserves-parity-for-now/

To summarize – there is no consensus on whether competitive balance matters to fans, whether it affects team or league revenue, or how we should measure it. There are lots of rules in leagues that are arguably designed to improve competitive balance (the entry draft and salary caps are two main ones), but it seems as likely that these are primarily intended to control salaries, and effects on competitive balance are far more muted.

One of my sabbatical projects has been to develop a new course on the economics of sports. This is nowhere near complete, but it is beginning to take shape – given my teaching schedule, it will likely not be offered before Winter 2020, or maybe even Spring 2020.

The plan is to offer it at a 2nd year level, with an introductory microeconomics course (EC120 or equivalent) as the only prerequisite. The class is being designed with a blended perspective, with the bulk of the content delivered online, and then an in-class lab that is focused on discussions and applications.

One of the interesting questions for such a course is the purpose – why would I care about teaching an Economics of Sports class? There will be people that disagree, but my opinion is that there are definitely alternative topics that I could teach that are more important – something like Economic Development, or the Economics of Poverty, which I have taught before are topics that I would prefer that students understand.

My perspective is that I’ll teach an Economics of Sport class because it allows me to focus on an application of economics, where motivation is (hopefully) provided by the students. Do firms act as if they are maximizing profits? Does game theory offer reasonable predictions of the behaviour of decision-makers in strategic situations? What are the costs and benefits of a large-scale government decision? Each of these questions can more reasonably be asked in another course – my goal in this course is simply to get students to look at something they are already interested in from an economic perspective.

If you have any suggestions or comments with regard to the course, please feel free to let me know in the comments.

Over the past month, I have noticed an increase in the frequency of calls to change how we teach intro courses in Economics. This is probably just a reflection of my Twitter feed and other sites that I visit, but it has led me to reflect more on how I teach.

The objections that I am seeing come in three broad forms:

1. Instructors should stop teaching X. For example, we should stop teaching that GDP is a good goal for governments to strive for, or to stop teaching that Pareto optimality implies a positive outcome. With both of these examples, and most others, my natural response is simply that I don’t teach those things.

1. Instructors should start teaching Y. For example, we should start teaching behavioural economics (and stop teaching that all people make choices in a self-interested, perfectly rational way to maximize consumption, see objection 1).
2. Instructors should use a different textbook – one that reflects the “correct” choices based on objections (1) or (2). Over the past couple of years, the recommendation that I am seeing is to move to the textbook “The Economy” produced by The Core Economy group. This is a free textbook created and endorsed by a group of leading economists.

These objections are all, to some extent, valid. From the start of university (and preferably before), students should be challenged to think about difficult questions in our society, and to start to use economic reasoning to understand the answers to those questions.

Making Choices

That said, there is a limited amount of time in any university course, so instructors must make choices. In my opinion, there are three possible areas of focus in an introductory economics course:

1. Teaching students about the economy.
2. Teaching students how economic research answers critical questions.
3. Teaching students to use simple models to try to answer critical questions.

The Effects of Minimum Wages

As an example, a key economic question that engages many undergraduate students is to try to understand the effects of minimum wages on economic outcomes. On this issue, we can:

1. Teach students about historical minimum wage policy, and about recent changes in both minimum wage and employment levels.
2. Explain the ongoing debate about the effects of minimum wage policy within the economics profession.
3. Use simplified economic models (competitive labour markets, and monopsony labour markets) to understand how minimum wages might interact with the economy.

My approach is to discuss all three, but most assessment is based on the third approach.

Anyway, I’ll write more later – my intent is to develop a companion document to go with my course outline to help students understand why my course is designed the way it is. Along the way, maybe I will begin to understand it myself.

A recent article in the Economics of Education Review suggests that this encourages students to major in Economics, especially if the paper is written on a topic not generally associated with Economics.

Link to paper (gated) here.

The only concern I would have is the magnitude of the effect – 2.7 percentage point increase in students majoring in Economics is not enough of an effect to justify this change to the course design.

Many students in my first-year classes love to challenge the basic assumptions introduced in the Introduction to Microeconomics course. For those students, here is the Nobel Prize lecture of Richard Thaler, recently published in the American Economic Review:

https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.108.6.1265

It goes through a wide range of results in behavioural economics, and how the basic model of individual choice needs to be adapted to match the way that most people make choices.

And for students at Laurier interested in this topic, I strongly recommend EC305, Behavioural Economics.

For the 2018/19 year, I will be on sabbatical. While I will be around Laurier, I will not be teaching classes. What will I be doing on sabbatical? – that is still to be determined.

As of July 1st, I am no longer the Undergraduate Program Director in Economics at Laurier, and later this summer, I will also end my term as Undergraduate Program Director in Business.

My primary focus this year is the redevelopment of our first-year Economics courses to work even more effectively within a large class setting. I will be using this website to link to related articles, blog posts and other material that students in those courses may find interesting, but that is not specifically part of the Economics courses. Students will find the primary content on the Laurier MyLearningSpace page.