Nobel Prize in Economics

Paul Milgrom (one of the authors of our textbook) shared the prized with Robert Wilson.  You can read the announcement here.

Interesting Piece About High School Education in The Week In Review.

The piece is here and if you read it I wonder how many of you found college to be similar to how they described high school. 

I've had a rugged year health-wise.  If for no other reason than to send some good cheer, drop me a note and let me know what you're up to now.

My Econ 490 WILL NOT be offered next fall.

I learned from the Econ department today that they couldn't get approval for the course from LAS (meaning LAS wouldn't pay for it) so the course was cancelled as an offering.  Going through the ICES for our class last fall, while most students had no prior opinion,  a handful of students had a prior positive opinion of the course and/or of me.  I'm guessing the same thing might be true for next fall. So...

If there are some students who would want to take it as an independent study, that might be possible.  If you know somebody like that you should have that person contact me to explore further.  Note that independent studies are 199, 299, or 399, but not 499.  So it won't fill the upper level course in the major requirement.  It would just be an independent study. 

Cows in Greece/ICES Reviewed/An Interesting Piece from HBR

Q: What do cows in Greece say?

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Because of the stress fracture in my foot (which has healed pretty much now) I didn't go to the Econ Department this semester till today.  So I finally had a chance to look at what you wrote on your ICES forms.  Here are a few reactions to that.

Nobody wrote explicitly about Akerlof's Gift Exchange Model, which is one of my favorite parts of the course, but one student put it into practice by using the comments section to tell a joke.  This was reciprocation for the "Quizzes" we did to start class sessions  near the end of the semester.  Reciprocation is part and parcel of gift exchange, so I liked that very much, even if the joke otherwise didn't speak to the subject matter of the course.

Among others who commented, some had positive things to say but even for them the course was not a "home run."  One might ask why (I will speculate on that below).  Others were more critical.

I think there is a fundamental disagreement between many of the students and me about what a good course should be like, whether it is my course or some other.  I am much more interested in developing general thinking and life skills than I am in communicating specific content that you need to master.  On the other hand, I believe that most of you need to engage far more with the subject matter than you did to use the course as a way to practice developing those thinking and life skills.  I encourage you to look at the next section and ask yourself whether your courses are preparing you to be effective in a problem solving team, which might be one way to reflect on the education you have been getting.

I know that not everyone was there the first day of the semester, but for those of you who were there, you may recall we asked about the purpose of our class, which was to produce human capital.  We then asked who owns the human capital.  Each student owns their own human capital.  The question then, is whether you were showing good ownership skills in the way you went about the course or if there is a fundamental moral hazard, students focus on grades to the detriment of better developing their own human capital. It's a question that each student should try to answer.

One student made, I thought, an interesting observation about liking the discussion based approach, but that my leading questions often didn't get answered well.  I would agree with that observation, but I'm not sure why.  The article I will mention in the next section says that effective groups have members who feel safe in that environment, so are willing to participate vigorously.  I wonder if many of you didn't feel safe in Econ 490, as far as responding to those leading questions, so opted out instead.  If so and if you have some further thoughts on what might be done to make the class feel safer, I'd appreciate getting those ideas.  I have been thinking about starting the semester with those joke quizzes and not saving them for near the end, but I wonder if students would just think of them as daffy rather than as ice breakers.

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This is the piece from HBR on good problem solving teams.  It's a pretty quick read but you might get the bulk of the message in the piece just from the bi-matrix in different shades of blue, found around the middle of the article, and then focus on the upper right cell, Generative Teams.

I thought this piece a good complement to Bolman and Deal Chapter 8, particularly the part about Argyris and Schon Models 1 and 2.  That chapter focuses on the style of the leader.  The HBR piece focuses on the culture of the group.  But they seem to me to be mirror images of one another. A generative team needs a model 2 leader.

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The bulk of the respondents to the ICES were seniors.  I know some of you have graduated already.  Many others will be graduating soon.  This is probably my last post on the site (unless something dramatic happens to Yankees between now and the end of the semester).   So let me close by wishing you good luck in your future endeavors.

Some Interesting Reading For Over Your Holiday

With spring break coming up, I thought you might find the message below interesting.  It was sent to a student who took Econ of Organizations in 2016 and is having me mentor him now.  We met yesterday and discussed a short story, Flowers for Algernon, that makes for an interesting read.  It subsequently was made into a movie, Charly, and a book length version of the story was also produced. 

* * * * *

Here are a few pieces to look at that come out of our discussion today.  BTW, Flowers for Algernon came out in 1959, according to the ever reliable Wikipedia.

This one is from 2005.  It is about child precocity and whether that predicts adult genius.  It includes the work of Terman, whom I mentioned in our discussion.  The Prodigy Puzzle

This one is from a few years ago, and is about ordinary people and their attitudes toward creativity.  It argues that everyone likes creativity in retrospect, but most people don't like it in prospect, because it is incurring risk. Most people want to reduce risk and therefore block creative efforts.  Inside the Box

And this last one is the blog post I wrote, which gets at the emotional side of worrying about our impact on others and how it should guide our behavior.  Retards

Professor Arvan

* * * * *

On a different but related note, as part of my volunteer work, I recently purchased a pro account for Zoom, an online video conferencing product.  It seems to work better than the video conferencing in Skype or Facebook, and the paid account has some features about recording a meeting that the free account doesn't have. 

I mention this because I will be a bachelor during much of spring break, just Ginger (our dog) and me.  The rest of the family is visiting my younger son out west.  So I would be up for trying a call with some students then, or even just one on one, if that possibly sounds like fun for you rather than drudgery.  If this interests you, send me an email and we'll try to set something up. 

Finally, I was totally flummoxed that the Big Ten Men's basketball tournament ended on Sunday, but the rest of college basketball is finishing up this week. Eve if the Illini won't make the NCAA tournament, I do root for the Big Ten.  Thais has got to hurt their chances. 

Relativity - In Pricing

You may have learned this line somewhere along the way in English class.

O, what a tangled web we weave when first we practise to deceive!
Sir Walter Scott

It turns out, it doesn't hold in retail sales.  Shoppers seem to prefer dishonesty in the pricing approach!  They want to get good deals, even when it really is no deal at all.  The linked piece explains this and makes for a good read.

We Forget That Everything Is Relative - Behavioral Scientist via kwout

Another obnoxious Yankees post

#JudgeandDrury

Sharing The Marbles Revisited

I thought this piece was interesting.  The underlying question is which poor people are deserving of of receiving government subsidies and transfer payments.  Note that at present the unemployment rate is quite low by historical standards, near 4%, but the labor force participation rate is also quite low by historical standards.  Are there people out of the labor market who really should be looking for work?  If so, what is the way to determine who these people are?

A particularly troubling case, not considered in the article, is that of veterans who are now homeless.  When you think through your own views on these matters, you might try to apply those views to the case of homeless veterans and see what you concluded there.

Who’s Able-Bodied Anyway? - The New York Times via kwout

Discussion Group

We're now meeting on Fridays at 1:30 in BIF.  If you'd like to join us, please do.  But drop me a note ahead of time so you can get caught up and participate in the conversation.

Something Other Than Illinibucks For Professor Arvan

I've had some recent experiences where life seems to imitate what we studied last semester. 

Something bad happened to my right foot.  It ultimately proved to be a stress fracture, but it took quite a while to conclude that was the cause.  Here's the story.

I got a pain in the ball of my right foot about a week earlier.  Such pains are not that unusual for me.  I had that happen a couple of times during our course, but in the left foot.  After a few days, the pain would go away.  So in this case, I did nothing about it, hoping for the same outcome.   For a few days, it did seem to be getting better.  But then it started to get worse (which is probably when the fracture occurred, from walking on the foot in an awkward way so as to reduce the pain).  After a day or so of that I made an appointment to see my health provider. 

The physical exam revealed a lot of tenderness and swelling in the foot.  They also ordered x-rays.  They revealed an old injury but no new problem.  An appointment with a podiatrist was made for 10 days later. 

I was very disappointed with this outcome.  There was a lot of pain and I wanted them to do something then and there to treat it.  They prescribed medication to reduce the swelling.  And they had given me some meds for the pain, but I thought that was too mild.  They didn't give me any external protection for the foot.  I was told to keep the foot elevated (good advice).  Yet I was pretty convinced that wasn't sufficient for the foot to heal by itself.

So I did something I wouldn't normally encourage others to do.  I wrote an impassioned letter to the guy who did the surgery on my shoulder back in 2012, asked him whether he could look at my x-rays, and if he could offer any access to treatment that would help.  He took my letter to heart. He got me into seeing a podiatrist this past Monday, in effect, jumping the line.  I was pretty desperate so didn't feel guilty about getting privileged treatment this way. 

They did another set of x-rays.  The new ones (barely) showed a stress fracture.  What I learned from the experience is that a stress fracture takes time to be visible under x-ray.  So the first time around, it simply wasn't visible at all.  They based their recommendation for treatment more on the x-rays than on the physical exam.  (Think about our discussions of monitoring and whether it reveals shirking or not.) 

This time they gave me a removable boot to wear that protects the foot, makes it much less painful while walking, and should expedite the healing.  I also got stronger pain meds, but had to make a special request for that. 

I am now in recovery mode (it takes about 8 weeks to heal) and partly telling this story because I'm looking for light hearted entertainment to bide my time.  If you have any more jokes like the ones we did as quizzes in class, please post those as comments or send to me in email.  And if you have any other sorts of entertainment you might recommend (stuff your parents or grandparents might like) you can post on that as well. 

I hope your semester has gotten off well for those of you who remain on campus.  And for those of you have graduated and left the area, I'm also curious about what you are doing now.  Whatever that is, I hope life is treating you well.

Best,

Professor Arvan

We Called It Strategically Misrepresenting One's Preferences

This piece gives a different meaning to "being a born liar."  I thought the thesis surprising, so possibly interesting for you.  Also note, social science of this sort should be viewed with a skeptical eye - you should not take it as the last word on the matter.  Given that caveat, it is interesting to ponder.  And if you have some experience observing younger children (2 or 3 years of age) you might ask whether this jives with what you have observed.

On a different note, I hope you are relaxing in some reasonably warm climate.  It has been terribly cold in CU for about a week.  I, for one, am ready for some more moderate weather.

Is Your Child Lying to You? That’s Good - The New York Times via kwout

Negative Power Prices in Germany and a Cold Spell in Champaign

Greetings on this holiday weekend:

I thought you might be amused by the thought of negative energy prices.

In our house, and I'm guessing where you are too if you are still in Illinois, it's pretty cold , partly as a way to keep the fuel bill in the manageable range as the weather is, unfortunately, quite cold and partly because temperatures are way below average.  I would love it if energy prices were negative now, so I wouldn't feel so cold in the house.

Power Prices Go Negative in Germany, a Positive for Energy Users - The New York Times via kwout

I hope everyone is enjoying the holiday and that it warms up reasonably soon.

An interesting read on Christmas

This piece is written by a philosophy professor.  I thought it was a good read.  Our course definitely wasn't a philosophy class, but maybe there was a bit of philosophy in it.  So enjoy and Merry Christmas.

Waking Up to the Gift of ‘Aliveness’ - The New York Times via kwout

A post course quiz

This is one from Alexa.

Q:  How many software engineers does it take to screw in a light bulb?
A:  None.  It's a hardware problem.

The Dilemmas in Undergraduate Education

Please only have a look at this after you've finished for the semester.  It is still more about your education, broadly considered, but not about our specific course.  And this time it about something I wrote.

Five years ago, meaning when most of you were still in high school and I was in the middle of that semester where I had rotator cuff surgery, I wrote a very long post called Why does memorization persist as the primary way college students study to prepare for exams?  If you do read it, you'll get a sense of two things:

(1) My view of the overall issues with undergraduate education at the U of I and like universities elsewhere.  Note that this is not something I came up with on my own.  But my experience in teaching largely supports those findings, as does my experience when I was involved with moving the corporate finance course in the College of Business to a blended format, where we did extensive evaluation of the students during the pilot phase, as well as prior evaluation work in a large course setting.

(2) An indirect diagnosis of the learning issues that many of you face, in my judgment.  This would be the reason for you to read the piece, to take a reflective look at your own education and see how well the diagnosis lines up with your own experience.

If you think the diagnosis is even in the ballpark - correct in general but errant in some particulars - the issue for you individually is what correctives you might take from here on out to redirect your learning in a better way.   There is also the issue from our course perspective, which is why the market or individual institutions don't correct these issues.  (Hint: a big part of the issue is that learning is unlike widgets.  You can count widgets.  It is very hard to measure real learning.)

You might then be amused about the suggested remedies in the piece.  I am far less confident those are right, or that they could possibly be implemented.  Know that I write pieces like this to promote discussion on the matter, not to make a planning document for implementation.

Finally, let me tie this to teaching our class.  In part I do that to see if some alternative might matter, even a little.  But in the last couple of years I've found my energy level is not what it was earlier, so I can't implement all the things I'd like to try.  Perhaps some of you might eventually get involved in undergraduate education on the supply side and then the baton can pass to you in doing this.

Take Aways

This is more you might read over the break.  The first three are somewhat related to the course.  The last two are more in the vein of a post from a week ago with links to pieces about learning goals.   In all,  these are just some suggestions of interesting reads, none of which are very recent, that you might peruse over the break or next semester for your own entertainment and edification.

• Bolman and Deal Part 2 - the second half of the book, which we didn't cover at all, is worth a read in its own.   It takes the four frames developed in the first half and recasts them in a leadership setting.  You might enjoy that. 
• We did not talk at all about executive pay, which really is a big topic.  Since the subject matter gets more than a mention by last year's Nobel Prize Winner in Economics, Bengt Holmstrom, I thought this might be interesting for you to look at.  Note in the second half of the piece the issue on whether the compensation must depend only on verifiable performance.  We did talk about that in considering the principal-agent model.  
• This piece called Is Giving the Secret to Getting Ahead? is from a few years ago and is by Adam Grant, a psychologist at Wharton (the business school at U Penn).  The giving he talks about is more random acts of kindness than it is where a quid pro quo is expected.  You might try some of your own random acts of kindness over the break - with your friends or your family.   See how they react, particularly whether you surprise them with your kindness.  A positive reaction (as opposed to a gift in return) may encourage you to try it again. 
• This piece called The Bell Curve is one I really like.  It by Atul Gawande, a MacArthur Genius Award winner and a prolific author (plus he is a very well known M.D.).  It is about what determines excellence when excellence can be measured, in this case in the treatment of cystic fibrosis.  It might interest you to to see excellence cast this way, as it probably defies many of the stereotypes you have for it.  
• This one called The Expert Mind mind and should appeal to those students in the class who have a chess interest (I didn't poll this year's class on that) and other students as well.  It is about how experts differ from novices in their thinking and what it takes to become expert.  Chess is used as means to illustrate the more general issues.  

Last obnoxious post about the Yankees

It's only 56 days till pitchers and catchers have to report to spring training.  Happy holidays!

Discussion Group Next Spring - Last Reminder

Two students are firm for participating in the discussion group.  So we are on.  It would be good to have a couple more students.  If you are interested, please let me know.

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There will be a few more posts on the site before I call it quits.  I hope this doesn't impact any of you, but I got the first spam comment on the site yesterday, so I imposed the requirement that comments have to be moderated. 

About the Final Quiz and Course Grades

The Final Quiz has concluded, as I'm sure you all know. The third and fifth questions produced perfect scores, which is reassuring since they were on previous quizzes.  The second question, on the principal-agent model, had the lowest mean.  It framed the issues in a non-geometric way and some of you didn't translate it well.  In a nutshell, if you reduce the spread between wL and wH, you weaken incentives.  If you hold one payment fixed and vary the other payment, you impact both the spread and the mean.  If the mean payment goes down, then the outside option become preferred. 

If I were into testing you, all the questions would be written in this manner - to translate into a different way of considering the issue.  Being able to translate the economics shows understanding.  But, as I said earlier in the semester, this sort of testing makes sense for intermediate micro, but doesn't really make sense for our course, as what we studied isn't a prerequisite for anything else.

The Course Grades have been uploaded into Moodle.  I will get them into Banner either later this afternoon or tomorrow morning.

I used a more generous grade distribution than was announced in the syllabus, so I hope everyone is satisfied with what they received.  This is the distribution I actually used.

Obnoxious post about the Yankees #2

It is now likely that there will be one more of these after I upload course grades.  This one is from here.