Some More Thoughts on Teaching “Economics as a Way of Thinking” Or, on getting students to see “the Seen” and “the Unseen” in the world around them

By David M. Hart

Version: 25 Aug. 2017

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Table of Contents

I. Goals

  • General Goals
  • Getting Students excited about Economics
  • Pedagogical goals
  • Political goals

II. Two of My Pet Topics

  • Economics and the art of persuasion, the art of economic story telling
  • A Plea about the Importance of History

III. Resources for Teachers: A Palette of Tools and Teaching Aids

  • Intro
  • Sources of Information
    • Online Resources
    • Other Resources
    • In-class library
  • Textbooks and Model Lesson Plans and Modules

IV. Things to do in the Classroom

  • Telling Stories
  • Discussing the Economic News
  • Class Debates
  • Student Writing
  • Mock Political Debates
  • Current economic controversies
  • Teach them How to Lie with Statistics

V. Other Teaching Aids and Things to Discuss

  • Show examples of “Good” Economics
  • Examples of “Bad” or “Zombie” Economics
  • Myths and Legends to debunk/refute
  • Placards for classroom use:
    • Six (or Ten) Key Economic Concepts (Twelve Apostles, Ten Commandements)
    • The “Top Ten” most common Economic Fallacies (Sophisms)
  • Econ in film and fiction
  • Great Defenders and Critics of Capitalism/the Free Market
  • Showing how markets have made us all better off
  • Showing how intervention has made people worse off



I. Goals

General Goals

  • How to engage your students and make them excited about econ?
  • How to popularize hard to understand/non-intuitive econ ideas?
  • What can FB and other successful popularisers/teachers teach us (Paul Heyne)?
  • What resources do we have or can create to teach and learn about econ better?

Summary: Need to humanise, historicise, theorise, and “humourise” econ

Getting Students excited about Economics

problem of how to get students excited about econ ideas

  • show them the power it has to explain their own behaviour, the world around them (other people)
  • see their faces when "the penny drops: and they get it (the logicv of it)
  • the “good citizen” argument (not one I like), teach them how to be good citizens, able to make sense of claims and promises made by politicians, experts on TV, special interests/lobbyists; need to expose lies, falsehoods, sophisms, poor logic, errors (often recurring ones); arguments that responsible citizens (future taxpayers and voters) need to be well informed on economic matters; Bryan Caplan’s depressing arguments in The Myth of the Rational Voter

Pedagogical goals

Teaching economics as a way of thinking (and seeing the world economically)

  1. instilling in students understanding of sound theory; ability to reason and think critically about econ
  2. debunking myths and legends about free market and industrial system
  3. giving them some historical knowledge about econ history and history of discipline of econ

learning information, understanding theory, critical/sceptical thinking, ability to reason and argue about economic matters in prose and speech

importance of having right balance in curriculum between

  • theory/principles
  • history (historical practice and history of ideas)
  • current practice
  • mastering/understanding econ data
  • expression and criticism in writing and speaking about econ

Political goals

debunk myths and falsehoods about free market and learn about impact of government intervention in the economy

II. Two of My Pet Topics

Economics and the art of persuasion, the art of economic story telling

different ways of imparting economic information

How best to impart Economic Information/Arguments

  • McCloskey’s “rhetoric of economics”
  • discursive arguments, equations, statistics, images
  • telling stories: ideas/principles via stories (FB and AS), arguments,
  • classroom games

how do we persuade people of the truth of any given economic claim or argument or theory?

Heyne - “the art of economics”; not just a science or collection of data; telling “plausible economic stories”

McCloskey - “the rhetoric of economics”. Donald (Deidre) N. McCloskey, The Rhetoric of Economics (The University of Wiusconsin Press, 1985).

  • things that persuade; rhetoric is the art of persuasion
  • graphs (supply and demand curve)
  • economic data
  • mathematical models; equations
  • discursive arguments (philosophical)
  • introspection (human action) - other people behave like I do
  • “stories”
    • historical stories (what caused the Great Depression)
    • economic tales and fables and thought experiments (FB the master of this kind of economic story telling)
  • blogs and letters to the editor (D. Boudreaux Café Hayek)
  • columns - Walter Williams, Thomas Sowell

A Plea about the Importance of History

plea by me to teachers to also include something about history

  • history of economic thought
    • the greats from the past still have much to teach us
    • we still have many of the same battles to fight today
    • not a static disciple which has all the answers
    • not all problems have been solved
    • emergence of different schools of thought, some of which still have influence today (Marxist, National Economics by List etc., neo-Keynsianism, central planing)

Need to give students a sense of history and that economists were people who lived in interesting times

  • when did key econ ideas 1st appear, by whom, under what circumstances? war, revolution, economic change/crisis?
  • give some stories about famous economists, show that they were people, human side to econ theory, e.g. FB in 1848 Rev, Mises in Nazi Europe (papers seized by Soviets), JSM speeches in Parliament and giving out info about contraception on street corner
  • impact of WW1, Great Depression, WW2, etc had on direction of ec. theory
    • war planning in WW1
    • Bolshevik rev. and central planning
    • failure to predict Great Depr., rise of Keynes as result
    • crisis of Keynesianism in 1970s - stagflation
    • failure to predict Great Recession of 2008–9
    • great experiment in QE and Zirp and Nirp (zero and negative), unknown results of this experiment
  • when did major economic policies/institutions 1st appear?
    • Fed. Res 1913
    • income tax, withholding tax in WW2
    • collecting econ stats by government
    • social security
    • Great Society
    • European welfare states
  • overview of key issues
    • inflation rate and falling PP of money over 20thC
    • graph to show % govt. spending of GDP; top tax rates over time
    • regularity/periodicity of recessions
    • D. Boudreaux and Mark Perry on growth of wealth over time (Sears catalog articles)
    • optimism vs. pessimism
    • pollution; health, “scarcity” of raw materials (Julian Simon bet with Paul Ehrlich)
    • wage stagnation
    • decline in manufacturing jobs
    • dispel myths of impact of free market and indust. rev.
    • refute pessimism of Greens/environmentalists
    • global warming - comparative costs of “solutions”

III. Resources for Teachers: A Palette of Tools and Teaching Aids


econ teachers need to build up a “palette” of tools and teaching aids over several years; share out work cooperatively with others in group; webpage to share resources and work collaboratively; things to buy and things yo make yourselves

what tools do teachers of free market ideas have to draw upon

  • traditional ones used by A Smith and F Bastiat
    • good writing and witty writing; clear exposition
  • new ones:
    • blogs;
    • recent excellent text books (Heyne, Boettke, Lee)
    • films, video (Hayek/Keynes rap video), TV shows (Yes, Minister)

the question is what to use from the past, the present, and create for the future

  • teachers like you have to make decisions about what is the best use of your time and energy in making use of old, creating new material, cooperating and exchanging info

The trouble with some of my suggestions is that they go beyond the set curricula in which teachers have to work and there is little or no time to do this

  • however, this needs to be done because curriculum is flawed, incomplete, and inadequate
  • how to merge somer of these better ideas/approaches into the straightjacket of the established curriculum (without working yourselves to death in the process!)

Sources of Information

Online Resources

Resources available to teach economics greater and cheaper than ever before: websites, blogs, govt. data

explosion of econ bloggers in last 10–15 years, especially

Other Resources

teachers need to make use of centres and institutions like D. Schmidtz’s, LF, FEE, Cato, Mercatus, IEA to get the material they need

form a cooperative or “intellectual exchange” to share info, techniques, lesson plans, don’t keep reinventing the wheel
- perhaps call it the Society of High School (Free Market) Economics Teachers (SOH=SET)
- website as clearing house and repository for ideas, resources, brainstorming, teaching tips, links to other sites

In-class library

build up small classroom library of classic works to consult when necessary (with lots of post-it notes marking key passages): e.g. “I wonder what Adam Smith (or Bastiat or Hayek) would say about this. Let’s take a look … ”

Have an in-class Library of Key Books in the Classroom for constant reference

  • WoN
  • FB ES
  • Hazlitt, Econ in 1 Lesson
  • Encyclop. Econ (great for brief bios, definitions of key terms, history of different econ schools
  • best of the current textbooks by FM economists (often for college level, hence need for SOH-SET to "translate/adapt them for HS classroom use)
    • P. Heyne, Econ as a Way of Thinking (1973)
    • Boettke, Living Economics: Yesterday, Today, and Tomorrow Independent Institute, 2010)
    • Cowen and Tabarrok
    • Dwight Lee, et al. Commonsense Economics (St. Martin’s Press, 2010)

Textbooks and Model Lesson Plans and Modules

model lesson plans (to use and share)

  • P. Heyne’s “six key econ ideas” enough for 1/2 semester??

finding about about the best textbooks to use

Lesson Modules (see the boxes I drew to show this)

  • what is happening in the world today in econ (on TV, prices of key goods)
  • econ theory
  • econ data/stats
  • “blast from the past” - econ history, history of ideas
  • econ myths and legends
  • econ stories
  • econ arguments and debates
Schemastic of Lesson Modules
Schemastic of Lesson Modules

mix and match to build a program of lessons for each week

over semester try to cove 6 items from of the following topics: theory, history, myths, debates

  • writings exercises to get skills in
    • data analysis/interpretation of theory, history, policy
    • policy analysis/criticism
    • exercises in “creative economics” (see below)
    • show videos/films??

IV. Things to do in the Classroom

Telling Stories

collect and tell stories/fables about econ principles/ideas

  • borrow classics from past like ASmigth’s pin factory, worker’s jacket; FBastiat’s Economic Sophisms
  • modify old ones to update them to present
  • write your own new ones: borrow from Am. literature like FB did with French lit: perhaps Tom Sawyer for econ fables/tales?
  • develop new ways to tell these stories (video, online games)

need for variety as well as unity of vision: one of FB’s great skills as a teacher and populariser of econ ideas was his ability to combine several important factors:

  • wit and humor and satire;
  • deep knowledge of econ stats and data (he was funny AND accurate)
  • deep knowledge of theoretical principles

Discussing the Economic News

constant use of current news items, blogs, TV about policy issues to demonstrate relevance of what they are doing in the classroom (not just abstract ideas but things which affect peoples’ everyday lives)

Class Debates

Organise class debates on current topics

  • important for them to be able to argue convincingly against free market ideas as well as for them (need to change sides all the time to learn about them thoroughly, each school has different strengths and weaknesses)
  • organise a debate around how representatives from different schools would argue for or against a policy: Keynesian, neo-Keynesian, classical, neo-classical, Austrian, pubic choice, Marxist, current socialist (Bernie Sanders - he is a great resource to use in class!)

Student Writing

get students to do some exercises in “creative economics”

  • to write their own economics tories/fables to expose poor economic thinking, like FB did
  • attempt to explain econ idea to others (parents, friends, neighbours)
  • writing letters to editor (like Don B.)
  • write a brief for a Congressional Committee on some proposed policy (pro or con)
  • do a cost/benefit analysis of some policy/proposal, e.g. sports stadium, Olympic Games; state tax incentive for new factory
  • get them to judge each other’s work on how effective it is in persuading others; try it out at home and report back
  • try different media to see what works best: rap video, song, animation, video games

Mock Political Debates

at election time stage mock “debates” between the candidates (if need be invent a free market candidate)

  • get the major party platforms and debate the proposed policies (automation, tax the rich, massive public works programs, more jobs for Americans, trade embargoes)
  • have mock TV interviews with the candidates about their policies (reverse roles again - free market minded interviewer and interventionist candidate; vice versa)
  • costing politicians’ promises at election time or when major legislation is before Congress (e.g. ACA)

Current economic controversies

  • Picketty’s book on Inequality and his critics
  • Trump and NAFTA
  • Nancy MacLean’s book on Buchanan and Public Choice and its critics (Don Boudreaux)

Teach them How to Lie with Statistics

show them how “to lie with statistics” - how data can be used to fool ordinary voters; hard to do well but important to breed scepticism

V. Other Teaching Aids and Things to Discuss

Show examples of “Good” Economics

find classic statements by famous economists on key econ ideas

  • D. Ricardo on foreign trade
  • AS on division of labour
  • JBS on markets
  • FB on money is not wealth

Online Library of Liberty resources:

-see the economics sections of the OLL’s “Quotations about Liberty and Power” econ topics include: Economics, Free Trade, oney & Banking, Property Rights, Socialism & Interventionism, Taxation, The State
- The OLL Reader with chapter length extracts on 12 topics, including econ: “Part IV: Economic Liberty”

need to explain why they are correct/sound and what principles they are based upon, e.g. opportunity costs, knowledge problem, broken window fallacy

Examples of “Bad” or “Zombie” Economics

The Problem of Zombie Economics

in spite of large number of resources, yet ignorance of sound econ ideas or existence of false econ ideas just as bad as ever; console ourselves that it has always been this way even going back to FB’s days in 1840s

problem of what I call “Zombie economics” - bad econ ideas that will never die not matter how many times they are refuted, e.d. protectionism/tariffs

  • irony that a Aussie Keynesian economist wrote a book with title bemoaning the fact that “free market” ideas which he opposes are also like Zombie economics!: John Quiggin, Zombie Economics: How Dead Ideas Still Walk among Us (Princeton University Press, 2012)

Do the same for bad economic ideas; get students to draw up list of these - an economic “Chamber of Horrors” with prize for best/worst one

  • dire predictions which did not come true:
    • Malthusian population crisis (and his modern supporters Erhlich)
    • Luddites fear of mechanisation (robotics today)
    • running out of resources (peak oil)
  • things “not seen” or predicted
    • Irving Fisher “everything is OK” on eve of Great Depression
    • Janet Yellen’s prediction that no more recessions in our lifetimes
  • current bad or stupid things said by politicians, journalists, pundits

I wanted to create a taxonomy of econ fallacies and sophisms and give them a number for easy reference (“this is another example of fallacy no. 5”)

  • class could collect list of bad econ ideas/arguments over semester and list them under categories we have set up; should be impressive list at end of S
    • proposal to send men to Mars; draw up list of “opportunity costs”, alternative things money could be spent on, e.g. how many hospitals, schools, department stores, etc could be built for same money
    • they would learn how much these other things cost
    • also ask who benefits (cui bono?) from space program and who pays for it; list corporations and groups in favour (vested interests)
    • who gets to decide econ priorities and how/why? (rent-seekers, power politics, lobbyists)
  • students will see same one recurring again and again, sometimes in slightly different forms
  • exercise would encourage students to read econ press, watch news

Myths and Legends to debunk/refute

  • immiseration of the workers
  • need for a “living wage”
  • population explosion (Malthusianism)
  • resource depletion (Simon/Ehrlich)
  • workers and the “satanic mills”; working conditions of WC
  • automation, robots (Luddites)
  • that crises are inherent in capitalist system (business cycle)
  • growing inequality (Piketty)
  • inherent injustice of wage labour (also profits, interest, rent)
  • selfishness of business and capitalists vs. pure, selfless motives of government officials and bureaucrats (public choice)
  • government can keep the economy functionig by “priming the pump” of monetary policy/interest rates
  • that price controls works and help the poor (rent controls, min. wage, gouging in gas shortages)
  • public works “create” jobs and reduce unemployment
  • arguments for protection (zombie economics): “infant industry”, national economic development, strategic industries
  • only govt. can provide public goods
  • govt. can plan the economy (central planning, strategic industries, take “long view”)
  • that money “is” wealth not goods and services
  • myth of the ide of “homo oeconomicus” vs. “acting man”
  • myth of “pure competition” - this is pure fiction
  • competition is “bad” - “dog eat dog” harms workers and consumers
    • competition is “good” when producers compete with each other to sells as better products and cheaper price
    • competition is “bad” when workers compete against each other by offering to work for lower wages or under worse conditions

Placards for classroom use:

  • based on “Seven Deadly Sins”: The 123 Most Common Fallacies/Sophisms
  • based on “The Ten Commandments”: The 123 Key Economic Ides/Principles
  • “price trackers” (showing long term changes, esp. recessions): interest rates, gold price, other key commodities, stock markets (% not absolute numbers for daily changes)
  • Freedom Index
  • Blog Watch: what the good economists are saying right now; what the bad economists are saying (Krugman)
  • pictures of famous economists
  • timeline showing key people, books, econ events, schools of econ thought

Six (or Ten) Key Economic Concepts (Twelve Apostles, Ten Commandements)

perhaps for wall poster/placard in classroom, like a catechism referred to constantly and always in sight; like periodic table for chemistry

based on Paul Heyne’s article/textbook?

pound these into students heads EVERY lesson until they know them all off by heart

  • opportunity cost (Broken Window)
  • economising of scarce resources/time
  • spontaneous order
  • coordination of activity of billions of people by means of prices (changes in relative prices)
  • the knowledge problem
  • only individuals act, choose
  • everything has a trade off
  • supply and demand curve
  • the economy IS cooperation on a massive scale involving billions of people/actors
  • politicians and regulators/bureaucrats also pursue their own interests (public choice axiom) - humanity is the same all over

From my evening talk:

The Key Concepts/Ideas of Economics

Human Action (individual)

  1. the principle of human action: all individuals evaluate, choose, and act in order to achieve their ends (whatever these may be)
  2. the value individuals place on the things they desire, and the costs and benefits they expect to get from them are subjective
  3. individuals respond to incentives/disincentives, that is the expected benefits and costs to themselves
  4. the things we value are scarce (including time and information)
  5. scarcity makes economizing necessary
  6. economizing means making trade-offs
  7. the concept of opportunity cost - buying something means you don’t buy something else
  8. cost to whom? when? and where? - cost is always at the margin, at that position in time and space where the decision maker currently stands

Human Interaction (social)

  1. principle of human interaction: humans interact with other in a myriad of ways, individual (one-on-one interactions) and social/institutional (many-to-many)
  2. institutions matter: they create or embody incentives and disincentives which favour or discourage economic activity; allow cooperation and organisation for large-scale projects; protect property rights and contracts; dispute resolution
  3. productivity is increased by means of the division of labour
  4. prices of goods and services (changing relative prices) transmit information which producers, buyers, and sellers need in order to make economic decisions about what and where to produce
  5. freely determined prices allow the coordination of economic activity on a large scale because prices provide both the information and the incentives without which coordination could not occur
  6. the economic coordination of suppliers and demanders allows for a multiplicity of diverse and incommensurable projects to be undertaken
  7. both parties to a voluntary trade benefit because of their different individual preferences and valuation of the things exchanged
  8. the seen and the unseen: the idea that there are always immediate and obvious consequences of economic activity (what Bastiat called “the seen”) as well as longer term, indirect or less visible consequences which “good economists” should expect to be there (what FB called “the unseen”)
  9. government interventions in the economy often have unintended consequences
  10. politicians and bureaucrats also have goals and preferences which they pursue/attempt to achieve (public choice) by political means - they also work within institutions with certain constraints and incentives which affect their behaviour


12 Key Elements of Economics

From Dwight Lee’s Commonsense Economics: 12 Key Elements of Economics (pp. 3–4)

  1. Incentives matter
  2. There is no such thing as a free lunch
  3. Decisions are made at the margin
  4. Trade promotes economic progress
  5. Transactions costs are an obstacle to trade
  6. Prices bring the choices of buyers and sellers into balance
  7. Profits direct businesses toward activities that increase wealth
  8. People earn income by helping others
  9. Production of goods and services people value, not just jobs, provides the source of high living standards
  10. Economic progress comes primarily through trade, investment, better ways of doing things, and sound economic institutions
  11. “The invisible hand” of market prices directs buyers and sellers toward activities that promote the general welfare
  12. Too often the long-term consequences or the secondary effects of an action are ignored

The “Top Ten” most common Economic Fallacies (Sophisms)

These have been draw up from FBastiat’s collection of Economic Sophisms

  1. Taxes are a Good Investment
  2. Government provides Society with lots of Useful Services
  3. Sacking Large Numbers of Government Employees will cause Economic Chaos
  4. Protectionism allows high wages to be paid to workers
  5. The Over-Production Fallacy
  6. Only Specialists in an Industry know what is best for that Industry" Fallacy
  7. Real Wealth is measured by the Amount of Labor/Effort expended to Create Goods and Services, not the Total Amount of Goods and Services made available to Consumers
  8. Free Trade harms the Interests of Ordinary Working People
  9. the Balance of Trade fallacy
  10. The National needs to be Economically Independent from other Nations
  11. Only Government can provide Theatres, Museums, and Roads fallacy
  12. Middlemen are Unproductive and Wasteful
  13. Profit, Interest, and Rent are Unjust

Econ in film and fiction

  • movies: is there time to show a full length movie?
  • literature: extracts pro and con - Dickens, Shakespeare, Zola

See: The Literary Book of Economics. Including Readings from Literature and Drama on Economic Concepts, Issues, and Themes. Edited, with Commentary, by Michael Watts (Wilmington, Delaware: ISI Books, 2003.)

Great Defenders and Critics of Capitalism/the Free Market

To show that “nothing is new”, that current debates have parallels to debates in the past

Critics of Capitalism and the free market

  • Marx and Engels
  • Saint Simon, Fourier
  • visions of a socialist future
  • Bernie Sanders
  • Upton Sinclair, Dickens
  • Paul Ehrlich and doomsayers
  • Th. Picketty and inequality
  • idea that econ is exciting because has been and still is Contested and Debated

Famous Defenders of Capitalism and FM

  • to do??

Showing how markets have made us all better off

building an understanding of how much better off we are today because of markets:

  • Don Boudreaux and the Sears Catalog price comparison project
  • graphs and stats on life expectancy, food consumption, infant mortality, etc.

Showing how intervention has made people worse off

showing disastrous consequence of government interference

  • current examples of shortages etc because of price controls: Venezuela, N. Korea
  • historical examples, Soviet Union, cigarettes used as currency in prisoner of war camps, currency in prisons today
  • history of black markets: prohibition of alcohol, drugs, human trafficking across borders
  • get students to find in press latest examples and discuss in class