Economics

Integrating Ignatian Values into Principles of Economics

Nancy Bertaux, Ph.D.
Mentor: Ed Cueva, Ph.D. (Classics)

Over the course of the Fall 2006 semester, through conversations with Ed Cueva, readings on Ignatian pedagogy/Jesuit education, and through personal reflection, I have both made a number of changes to my approach to principles of economics courses taught during the semester, and planned further changes for the next semester.

While the majority of class time and energy in a principles of economics class must be spent on standard, basic theory, there is always an opportunity for instructors to personalize and energize these courses through their use of optional materials and illustrative examples. In my two honors' sections of principles of microeconomics, I have used three major supplemental readings and some in-class and homework activities to focus students' attention on social and ethical issues that are either implicit in the methodology of economics, or serve as applications of the theory learned by students. The supplemental readings were Robert Layard's Happiness and Economics, Barbara Ehrenreich's Nickel and Dimed, and Vandana Shiva's Stolen Harvest. The activities included simulations of market dynamics and analysis of students' own spending patterns to explore market structures. I believe these changes were significantly effective at both enhancing student learning of the "basics" as well as students achieving a more sophisticated understanding of the advantages and disadvantages of free markets. This more sophisticated understanding included an expanded awareness of the many important ethical dimensions of economic theories and economic activities.

During the spring semester, I expanded this basic approach, in a modified fashion, to both principles of micro and macroeconomics, this time for non-honors students. To accommodate student time limitations, I had each class divided into two or three groups, each of which read one of the supplementary books. Discussions in class acquainted all students with the general arguments in each book. I added another reading, Paul Farmer's Pathologies of Power: Health, Human Rights and the New War on the Poor, which was especially appropriate since Farmer came to speak at Xavier during that semester. As time permitted, I also continued and extended the in-class and homework activities.

Student-Devised Cost of Living Comparisons (Economics 201: Macroeconomic Principles [2 sections, 25 students each], Winter 2007)

Michael Rimler, Ph.D.
Mentor: Sarah Melcher, Ph.D. (Theology)

Macroeconomic examines how the economy-wide average price level and the economy-wide output level are determined as well as what, if any, relationship exists between the two. We identify and analyze the forces which influence the overall stability of the economy. Specifically, we look at the causes of inflation, cyclical swings
in total production, and economic growth. The goal of characterizing macroeconomic theory is to apply that understanding to policy decisions for the purposes of stabilizing the growth of an economy.

This course satisfies the social science requirement in the University Core and is required of all undergraduate business students through the business core. As such, this course is taken by a wide range of students, most of which are classified as sophomores. Microeconomic Principles is a prerequisite for this course, thus students have prior knowledge of economic thinking.

Course Component:

In this course, I added a component to guide students toward creating their own cost-of-living index for familiar geographical areas. The average price level in the economy is measured by the Consumer Price Index (CPI) which compares the cost of a specific basket of goods in two different time periods. The CPI is often used to measure the average cost of living for the area from where prices are collected. The project has two main objectives:

• To develop an appreciation for the tremendous undertaking of the Bureau of Labor Statistics when calculating and reporting the CPI each month.
  The CPI samples hundreds of thousands of prices on over 80,000 products, compiles the data, and produces a single number, the Consumer Price Index for that month. The percent change in this piece of data is precisely what CNN, MSNBC, the Wall Street Journal, etc. report as inflation in the U.S. economy. This project asks the students to gather prices on only 38 products and for only two locations per student, yet it required almost a full semester to complete.
• To help students develop an awareness of their surrounding communities and the costs of living in those communities.
  The entire project was student defined, as will be explained below. Students selected the communities from which they would gather their prices. The only restriction placed on their selection was that the communities had an ex ante perceived difference in affluence. The purpose of this restriction was to allow the data collected to either support or reject the perceived differences. Either result proved to stimulate conversation about the various neighborhoods. In addition, students are asked to reflect on their experiences with the project.

Sub-Components:

In order to complete the project and ensure that students did not procrastinate, I partitioned the project into successive stages through the semester. These sub-components are outlined below.

Sub-Component 1: Generate a list of commonly purchased products.
Students were required, on an individual basis, to submit a list of 5-7 products that they believed the average person consumed. This could be frequently-consumed items such as apples or bath soap, or less frequently consumed such as a car. Excluded items were 'obvious' choices such as bread, milk, and eggs. As a class, we
discussed the entire list of submitted products and reduced it to a final list of 38 products. These products can be found in Table 1. Ultimately, students will gather prices for this listing of products which, in their minds, are representative of products that consumers typically purchase.

Sub-Component 2: Select neighborhoods from which prices will be gathered.
In self-formed groups of 1-4, students will choose at least two neighborhoods from which they will sample prices. There are two restrictions on their selection. First, the neighborhood must be accessible to at least one group member. Second, students are asked to select neighborhoods with at least a perception of different costs-of-living. The data collection stage was scheduled over Easter Break to facilitate a student collecting prices from neighborhoods other than Cincinnati. Examples of cities chosen can be found in Table 2. In addition, students were required to submit a short essay justifying the differences in perceived affluence.

Sub-Component 3: Identify retail locations where the products are sold.
For this component, each group was required to identify two locations in each of their neighborhoods from which they would eventually gather prices on the list of products that was developed. Groups submitted a spreadsheet containing the name, address, and phone number for each retail location in each neighborhood for each product on the product list. Selected retail locations are listed in Table 3.

Sub-Component 4: Collect and record price information.
For a two-week period over Easter Break, students visited the locations selected in Sub-Component 3 and recorded the retail price for each product as well as the date that the price was recorded. Students were instructed that if the product was unavailable, to find the next closest product and provide an explanation of what substitution was made.

Sub-Component 5: Analyze collected data.
When all the data was submitted, I compiled and presented it from various cross-sectional perspectives. Almost an entire class session was devoted to looking at the collected data across products, across neighborhoods, etc. We found various data collection errors such as a $1.98 per night hotel room and a 3-pack of men's undershirts for $59. We discussed weaknesses and strengths of the process vis-à-vis the Bureau of Labor Statistics' measurement of the CPI. In addition, we discussed differences in costs-of-living in Chicago, New York, and Cincinnati, as well as Norwood, Hyde Park, and other surrounding Cincinnati communities. Tables 4 and 5 present average prices by state and around Cincinnati, respectively.

Sub-Component 6: Reflection on project.
The final aspect of this project required students to submit, individually, a reflection paper on the semester project. I asked them to reflect on what they learned from the project, what surprised them, and what didn't.

Many of the reflection papers comment on how students did not foresee the benefit of this project at the beginning of the semester. They perceived the project would be a time-consuming load of work that would not be at all interesting. By the end of the semester, they found the project to be quite worthwhile and fun. They enjoyed actually visiting stores to collect prices. Many commented on their interactions with customers and store personnel who inquired about their activity. Most of the learning from this project was achieved through Objective I. However, I knew at the outset that this was an acceptable risk. Students do not have data from other semesters for comparison. In addition, the identification of differences in cost-of-living is dependent upon the data collected. We identified enough errors in the data to help with Objective I, but too may to trust any conclusions with respect to Objective II. However, some students did comment on price variability (hence cost-of-living variability), especially in and around Cincinnati.

Table 1. Final Product Listing

Table 2. Final Neighborhood Listing

Table 3. Selected List of Locations

Table 4. Pricing Data By State

Table 5. Pricing Data for Cincinnati

Back to Top