The Hindu Business Line : Getting the message

CLICK and think, not chalk and talk.' That's not about how most of us are taught, but the title of a new paper posted on www.ssrn.com on `An Interactive Spreadsheet Approach for Teaching Economics', by Jeremy T. Schwartz , Ronald F. McPherson and Raymond T. Brastow.

Economics lectures on topics `such as demand, supply, competition, and monopoly' can make the lecturer busily sketch graphs and scribbling equations on the board, black, white or green. "While some students have the mathematical skills to follow the equations so adroitly placed on the board, scores of others wonder what relevance these symbols have in their lives," note the authors, quite sympathetically. "While attempting to clarify with graphs and the use of the differential calculus, the professor leaves such students lost and frustrated," add the authors.

Workbooks are one of the solutions to overcome `some of the difficulties of the chalk and talk approach', points out the paper, citing prior research.

"Instead of chapters, these workbooks present topics in the form of experiments where the student answers questions before the experiment, participates in the experiment, and then follows-up by responding to questions after the experiment," they explain. This teaching innovation addresses the issue of relevance, but it lacks an interactive feature that would allow students to learn more independently, say the authors, as the rationale for using spreadsheet for teaching monopoly and duopoly.

The paper describes in detail the laboratory experiment, spreadsheet models used, and extensions/ modifications, using tools posted on http://159.230.5.3/jeconed. "In the experiment each student acts as a competitive firm trying to maximise profits. The resulting interactions drive the students to the Cournot-Nash equilibrium after a number of iterations," describes the summary. One learns that students could observe graphically "in real-time the reaction of optimum profit to parameters changes made to demand and total cost functions," as the authors state, with satisfaction. I hope the students weren't playing some computer game in `mute', or doodling on a `paint' program, stealthily minimised, when not displaying prank messages on the screen, all behind the back of the professors. In due course, you'd find the teacher monitoring all the monitors too with strategically placed cameras! Computers belong to the new learning environment. But it may take ages before the computer use becomes widespread in classrooms - as in `third-grade classrooms at Perkins Elementary School' mentioned in an October 9 story on St. Petersburg Times by Donna Winchester.

The report informs that "110 children will be introduced to their very own laptop computers", and that "for the rest of the school year, they will use the laptops to read textbooks, do math problems and play educational games". Also, "They'll take the computers with them when they leave for the day so they can do research and work on assignments from home." Wish they got some time to play too.

Think through computer model

CAN you use a computer simulation model to help students `think like economists' in intermediate macroeconomics? Yes, say Edward M. McNertney and Robert F. Garnett, Jr in a recent paper. The model that they propose allows students "to analyse, in increasingly complex settings, how changes in selected behavioural, structural, and policy parameters affect aggregate levels of employment, income, spending, savings, product prices, interest rates, exchange rates, international payments, and other dependent variables."

What does it mean to `think like an economist'? The paper explains that "microeconomic alertness to the role of incentives, opportunity costs, and strategic interaction in individual and social life" are usually associated with the phrase. "Yet the ability to comprehend the complex causality, interdependence, and unintended consequences that arise in macroeconomic settings is equally fundamental to economic reasoning," they supplement, and then attempt to incorporate all these in their model.

There are four `pedagogical advantages' of computer simulation model for students, aver the authors. One, it provides an integrated structure, "a coherent model that progressively incorporates more aspects of the macroeconomy." Two, it stimulates their interest in economics, promotes active learning and improves problem-solving abilities.

Three, "it strengthens students' macroeconomic insight by emphasising equilibration processes, unlike standard graphical and algebraic exercises which focus only on comparative static results." And, four, it develops an appreciation for model building. However, to increase the `intellectual value' of the course, the computer-based learning tool should be `carefully integrated with other course activities'. What was the finding of the authors? After exposure to the computer model, students seemed to emerge from their classes with "a better sense of the usefulness, limitations, and `art' of macro-theoretical modelling", say the authors, quite satisfied that their computer model `vividly conveyed and effectively reinforced' all the core macroeconomic ideas.

A nagging worry, though, is whether economists who think through computer models will only look at people like you and me as mere variables.

New metrics

DOES your corporation have a `Chief Service Officer' on the payroll? You don't have to be apologetic that you don't have one such, because Aberdeen's research has found that only 5 per cent of companies have someone with such a title. But why a CSO? Because more product categories are getting commoditised, and product-based profit margins grow slim, even as competition stiffens, which means you need to rely increasingly on post-sales service organisations for revenues, profitability, and competitive differentiation, explains Aberdeen. Check, therefore, if your information systems provide measures such as "percentage of overall revenues derived from service, overall profitability as a percentage of gross revenues, and percentage of customer base under service contracts."

Innovation taxonomy

A RESEARCH paper of importance is `Towards a taxonomy of innovation systems' by Manuel Mira Godinho, Sandro F. Mendonça and Tiago Santos Pereira, on http://econpapers.repec.org. It applies National Innovation System to 69 countries, constituting 87.4 per cent of the world population, and uses a set of 29 indicators along eight major dimensions.

The dimensions include "market conditions, institutional conditions, intangible and tangible investments, basic and applied knowledge, external communication, diffusion, and innovation." Under each of these are indicators.

Thus, for `openness and absorption', indicators are: `(Exports + Imports) / GDP', `(Inward + Outward stock of FDI) / GDP', and `bandwidth (bits per capita)'. For the `diffusion' dimension, indicators are: Personal computers per 100 inhabitants, Internet hosts per 10000 inhabitants, Internet users per 10000 inhabitants, cellular phones per 100 inhabitants, and `(ISO 9000 + ISO 14000 Certificates) / Population'.

That the most important emerging economies, viz. China, India, Brazil, Mexico and South Africa all do relatively well in innovation (+0.3), is a heart-warming line from the paper. However, these countries show weak performances in knowledge (-0.7) and in institutional conditions (-.06). Useful research.

ITworks@TheHindu.co.in

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