Teaching Economics

In his excellent post titled “To Fix Economics, Try Teaching Economists,” Alex Salter does a nice survey of the some of the best books for teaching introductory economics, intermediate microeconomics, and advanced economics.

I largely agree with his evaluations but I have a few differences on the introductory economics and intermediate economics categories.

Introductory Economics

My favorite text for teaching introductory economics, which Alex doesn’t mention, is The Economic Way of Thinking by Paul Heyne, Peter Boettke, and David Prychitko. I have a few minor criticisms of the book, but only a few. I’ve succeeded with it in teaching U.S. Navy officers in a distance-learning course of an Executive MBA. Of course, I added a number of readings but Economic Way of Thinking was the key.

I’ll also note that you don’t necessarily have to use or assign the new edition. Textbooks change very little from edition to edition and not always for the better. One thing I did for my students was recommend that they buy used copies of editions that were two before the current edition. That way they saved a lot of money.

Intermediate Microeconomics

I agree with Alex that Steven Landsburg ‘s Price Theory and Applications is excellent. As an economist, I liked David Friedman’s Price Theory: An Intermediate Text a lot. And certainly the price, given that David has provided it free on line, is a strong selling point. But as a teacher, I didn’t like it as much as Landsburg’s text.

Here’s why.

When we teach economics, one of the things we do that can open students’ eyes is show them something that is counterintuitive but makes absolute sense. Every good textbook does some of this. In my view, David Friedman’s book does too much of this. The one that was a show-stopper for me and persuaded me to use Landsburg’s text instead of Friedman’s, was David’s section titled “Application: Housing Prices—a Paradox.” He shows that once you’ve bought a house, you are better off if the price rises but also better off if the price falls. See if you can figure out why before checking that section of the book.

That one application convinced me that I would have to spend so much horsepower on driving that point home that I would have less time for other things. Moreover, it’s true only in a narrow sense: you buy a house to consume “housing services.” So he is implicitly that you’re consuming all the housing services that the house provides. But what if you buy one house to live in and another to speculate with? His argument falls apart. And so, if you convince the students that he’s right, you will convince them of a narrow point but miss a broader point that is probably the way they think and is right.

Twenty-five years ago, a student who was in our program at the Naval Postgraduate School told a colleague the following story. Starting as an Ensign fresh out of the Naval Academy, she invested in housing. When she had made enough money on one house, she borrowed on it and bought another house. Ultimately she starting buying duplexes. Then four-plexus. Rinse and repeat. By the time she was in our program, she had a net worth of $6 million. She benefited big time when the prices of housing rose.

I say, with some trepidation, that David’s wrong. When I first met David, at a conference at Columbia University in the fall of 1971, I learned, from both of his talks, things I had never thought of. So maybe he could convince me on this one. I doubt it though.

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