Syllabus: CDAE 61:
Principles of Community Development
Economics
Fall, 2014
|
Time, Place: |
Lectures, T, Th 2:30-3:45 in Marsh Life Science 235 |
|
Instructor: |
Joshua Farley |
|
Office: |
205B Morrill
Hall |
|
Office hours: |
W 10-12, Th 9-11 in
my office or by appointment. |
|
Telephone: |
656-2989 |
|
E-mail: |
If you have to send me an e-mail by regular mail,
begin the subject line with CDAE 61. |
|
Teaching
assistants: |
Daniel Feldman Danny Baker Ezra Mount-Finette Jack Braunstein Kayla Popik Lily Sargeant Madi Dell Nick Payne Nicole Duffy-Protentis Olivia Oldach Rhyce Erickson Robert Liu Sam Ghazey |
Course Summary
Course objectives
Potential Topics to Be Covered
Resources
Course Requirements
Grading
Tentative schedule
Course summary
This course is a general introduction to microeconomic
theory with specific applications to community development issues that will draw
heavily on the insights of ecological economics. Ecological economics differs
from conventional economics in assuming that the economic system is a subset of
the sustaining and containing global ecosystem, subject to the laws of physics and ecology.
Economics is frequently defined as the study of
the allocation of scarce resources among alternative desirable ends, within and
between generations. In contrast to traditional neoclassical economics,
we will not assume that the only desirable end is ever greater material
consumption, nor will we assume that the market is always the most efficient
institution for allocation. Markets are however one of the dominant
institutions guiding resource allocation. Therefore, understanding the
market mechanism - both positive and negative aspects - will be a
dominant focus of the course.
It is necessary to warn that economics is not a
hard science like physics or chemistry. While most physicists and
chemists agree on the fundamentals, there are many different schools of
economic theory. The currently dominant school is known as 'neoclassical
economics', or the 'neoclassical-Keynesian synthesis'. In spite of its
efforts to portray itself as a mathematically derived, value-free, 'positive'
science based on human nature, neoclassical economic theory is in fact every
bit as value laden and ideological as Marxist economics, for example.
Because it is the dominant school, a prerequisite for many more advanced
economics courses, and highly influential on policy makers, we will learn the
basics of neoclassical theory. However, this course will stress the fact
that neoclassical economic theory is an appropriate framework only when a
number of rigid assumptions are met, and these assumptions rarely hold in real
life.
The goal of this course will be to provide
enough background in both neoclassical and ecological economics that you can
apply these theories to real life situations in your community, in the
nation and in the world, and readily pursue higher level courses in either
field. There is of course a sacrifice inherent to this approach: By
covering both neoclassical and ecological economic theory, we must sacrifice
depth for breadth. In addition,
this course may be more confusing than a more straightforward course in
neoclassical economics. Neoclassical economics is a simple and elegant
model that provides very clear answers to very difficult questions.
Unfortunately, the empirical evidence - such as the current financial crisis - suggests that many of those simple
answers are completely wrong. Ecological economics recognizes that the global
ecological-economic system is highly complex, non-linear and continually
evolving, and simple answers to difficult questions rarely exist. This course operates on the assumption that
it is better to be vaguely right than precisely wrong.
Course objectives:
Our overall
objective for this course is to try and
answer the basic questions that arise from the definition of economics proposed
above, with an emphasis on their relevance to community development:
What are the desirable ends towards which
society should allocate its scarce resources?
What are
these scarce resources, and what are their characteristics relevant to
allocation?
Based on
the nature of the scarce resources and human nature, what allocative mechanisms
are best for achieving these desired ends?
Specific objectives required to achieve this
include:
1. Learn
how conventional economists think (i.e. how they answer the 3 questions), and
critically examine under what circumstances this type of thinking is
appropriate. This requires that we clearly understand microeconomic
theories associated with firms, consumers, and markets. Relating these
theories to current issues in agriculture, natural resources/environment, and
community development will provide case studies for our critical analysis;
2. Learn how ecological economists think, and how they
address some of the shortcomings of neoclassical economics. This requires that
we clearly understand the laws of thermodynamics, some basic ecological
principles, and the normative, ethical values that underly many of our
assumptions;
3. Learn something about how people behave. We are obviously
social animals that live together in a community. Neoclassical economists assume that people always act in
their own rational self interest.
Considerable empirical evidence from neuroscience and evolution suggests
however that we often exhibit 'other-interest' as well, doing things that help others
even if they are harmful to ourselves.
Our choice of suitable allocative mechanisms is greatly influenced by human behavior, so whether humans are selfish, pro-social, or both is important.
4. Understand
how markets can in theory utilize decentralized information and personal choice
to balance supply and demand, possibility with desirability.
5. Recognize the explicit and implicit assumptions of
conventional economic analysis required for (3), and assess their
validity. Specifically, we will examine the assumptions concerning market
structure, human nature, human values and the characteristics of scarce
resources that are required for markets to result in efficient allocation, and
ask whether they hold true for the resources that are most essential to community development.
6. Understand current policies related to resources of
critical importance to community development (e.g. resources that are essential
and have no good substitutes), assess those policies in the light of
neoclassical and ecological economic theory, and examine the implications of
(1)-(4) for designing new public policies that improve social welfare.
Topics to Be Covered
1. Introduction to Community Development Economics
2. Basic economic principles:
opportunity cost, comparative advantage, the cost-benefit principle (individual
and social), marginal analysis
3. The desired ends
4. The scarce resources, and their characteristics
o The laws of thermodynamics
o Stock-flow and fund-service resources
o Rivalness and excludability
o Substitutability
5. Market allocation
o Foundation of Microeconomics for Consumers
o Foundation of Microeconomics for Producers
o Elasticity of demand and its implications
6. General equilibrium and the basic market equation
7. Market failures
o Rivalness and Excludability in depth
o Externalities
o Monopolies
o Speculation, particularly in the financial sector
o Uncertainty, ignorance and asymmetric information
o Missing markets
8. Taxes and other policy
options
9. Applications
to current issues. We can decide which topics to cover as a class,
depending on what is happening in the world in this semester.
Possibilities include:
o Food crisis and ag policy
o Public health policy
o The energy crisis and energy issues
o Resource/Environmental Issues and Policies
10. Summary and conclusions
Resources:
Blackboard:
This course will use Blackboard to:
1. Post the syllabus and important announcements
2. Post required and recommended readings
3. Post, receive and return assignments. NOTE: In past semesters I have asked students to turn in assignments in class so that you would not have to learn how to do electronic graphs. However, in a class this size in which some students inevitably show up late, the simple logistics of turning in assignments and getting them back become difficult. I have therefore decided to use Blackboard for all assignments. I have posted pictures of all the graphs you will need, but you have to choose the correct one for each problem.
4. Post answer keys and review
sheets.
5. Keep track of grades for each assignment. THIS IS NOT THE SAME AS KEEPING TRACK OF YOUR COURSE GRADE, WHICH INCLUDES PARTICIPATION.
6. Communicate with all of you as necessary
Blackboard may be something of a nuisance to begin
with, but it can save a LOT of paper. MY GOAL FOR THIS COURSE IS TO USE
AS LITTLE PAPER AS POSSIBLE. COMPUTER TECHNOLOGY HAS MADE IT POSSIBLE TO
HAVE A NEARLY PAPERLESS UNIVERSITY. LET'S START TO TAKE ADVANTAGE OF IT. Do not
print the syllabus. It is a changing document.
You MUST get everything in by the due date. If for some
reason you are
unable to hand an assignment in on time, you must contact your assigned
TA to immediately to explain your problem (NOTE: You are free to see
any TA for office hours or review sessions, and different TAs will be
grading your assignments. Your assigned TA is only for questions of
late assignments, missing class for legitimate reasons, helping you to register your clicker, and failure of
your clicker to register attendance, quiz scores, etc.).
Clickers:
I hope that most of you have already purchased clickers for other classes. If not, you will be required to purchase one for this class. I hate making people buy more electronics, but am hoping I can use these to help you learn the material.
Course Texts:
Choosing a
textbook is difficult. Most textbooks in economics carry considerable
ideological bias. Do not assume that just because something is written in
a textbook, especially in an economics textbook, that it is true. For
example, one of the leading introductory microeconomics textbooks is written by
Gregory Mankiw, appointed by George Bush as chair of the Council of Economic
Advisors, and after his appointment, he revised his textbook to better reflect
the administration's viewpoints (specifically, he removed a negative reference
to supply side economics). Another consideration is cost.
REQUIRED: Ecological Economics: Principles and Applications, by Herman Daly and
Joshua Farley, Island Press, 2004 or 2nd edition, 2010
This textbook does not include all of the material I feel obliged to
cover in
this course, and includes quite a bit of material that I only cover in
CDAE 237. However, it costs less than most other economics
textbooks (it used to be considerably less, but they keep raising the
price). Either the first or second edition is acceptable for this course, though 237 requires the 2nd edition.
REQUIRED: All
the neoclassical economics textbooks I've seen are virtually identical
in content, with only minor differences in delivery. You therefore must
choose ONE OF THE FOLLOWING TWO TEXTBOOKS. Any edition is OK, but make
sure you get MICROECONOMICS. Both are reasonably well written and
clear. You should be able to get Frank and Bernanke used for about
$1.00 plus shipping. I recommend this to those who like to read hard
copies. Rittenberg and Tregarthen has the advantage that
you can
read it on-line for free, or pay a reasonable price to download PDF
files or purchase a print edition.
Selected chapters from
Principles of Microeconomics, by Robert Frank and Ben Bernanke, any edition
Ben
Bernanke was named head of the Federal Reserve
Bank by George Bush, and reappointed by Obama. Unfortunately, I could
not find any introductory textbooks
that include important recent findings in economics. This is ironic,
because
many of these recent findings have been made by Frank himself. I will
have one copy of the entire book and one copy of required chapters on
reserve in the library.
Principles of Microeconomics by Libby
Rittenberg and Timothy Tregarthen, Flatworld Knowledge, available
on-line at http://catalog.flatworldknowledge.com/catalog/editions/rittenmicro_2-0-principles-of-microeconomics-2-0
Additional readings
Various
articles/sections from newspapers, books and periodicals
These readings will posted to Blackboard. Due dates and links can be found at the end of the syllabus.
Review sessions:
Review sessions will be held prior to each exam. Time and place will be decided later in the semester. I will also hand out a series of review questions for each exam.
Teaching Assistants:
I choose teaching assistants from the best students of previous semesters, and they can really help you master the material. Each student will be assigned a TA for administrative purposes. This is the person you contact if you have to miss class or submit a late assignment for a legitimate reason, such as a death in the family or a religious holiday. You can go to see any TA however for help with the course. TAs will not know the answers to all your questions, but when they don't, they will let you know, find out the right answer from me or another TA, and get back to you (or send you to see me). The teaching assistants hold office hours and review sessions and help with grading. They will also help you register your clicker if you are unable to do so on your own. TAs will follow a rubric for grading, but inevitably, some TAs will be easier graders than others. Each assignment will therefore be graded by a different TA to keep things as fair as possible. I will post a list of TAs and the groups they are grading for each assignment under Syllabus and TA info. If you have questions about a particular assignment, please send it to the TA who graded it. However, you are free to go to any TA's office hours or review sessions. I will ask many of the best students from this year to TA for me in 2014. Let me know if you're interested at the end of the semester.
TA review sessions:
The TAs will hold review sessions for each homework
assignment. These sessions are strongly
recommended.
Lecture Notes:
Lecture notes will be posted on-line following each lecture. They cannot be considered a replacement for attending lecture.
Course Requirements:
Not
all material in the texts will be covered in lecture,
and not all lecture material will be in the books. In fact,
lectures will
at times critique material covered in some of the readings. You will be
responsible for all material presented in both lectures and texts.
CONCEPTS IN THIS CLASS BUILD ON EACH OTHER. IF YOU FAIL TO DO READINGS
AND ASSIGNMENTS OR MISS LECTURES, YOU ARE LIKELY TO GET LOST.
LECTURES MAY THEN MAKE LITTLE SENSE. YOU GET OUT OF THIS CLASS WHAT YOU PUT INTO IT!
LECTURES:
Attendance at lecture is required and counts towards your participation
grade.
Notify your TA if you will be missing class for any reason. Only
health, serious family matters, or travel for UVM sports teams are
justifiable absences. You will
be expected to arrive on time, and remain until class is over. I
usually miss 2-3 lectures owing to other professional obligations,
but will arrange guest lectures, exercises, films or exams during the
days
I am not there.
WEEKLY HOMEWORK ASSIGNMENTS: Many studies have shown
that students learn about 5% of what they hear in lecture, about 10% of what
they read, but up to 75% of what they practice by doing. There will
therefore be an almost weekly homework assignment that requires you to apply the
concepts you learned in class, which must be turned in ON-TIME via
Blackboard. Once
you have received your grade back (within one week) you can correct all
the answers you got wrong and re-submit the assignment to get back half
the points you missed. This must be done within 3 days of
receiving your graded assignment.
Usually, assignments will require you to apply theory to a real life problem, generally something taken from the
newspaper. Many of these assignments require graphs. If you don't know how to draw
digital graphs, I will be posting a library of graph images that you can cut
and paste into your assignment. You will need to choose the correct graph and
explain what it means. You can also draw a graph by hand and scan it to a file to submit with your assignment.
In my experience, students who are diligent in completing their homework assignments and go to review sessions do very well in the course. Assignments will total ~360 points. If you get 300 points, that counts as a perfect score. If you get over 300 points, it can boost you up to the next highest letter grade if you are very close. The most common reason for failing my course is failure to complete homework assignments.
QUIZZES:
Every class will include brief quizzes based on readings and on
lecture. These quizzes are intended to be very easy if you have done
the readings before class. You will use your clicker to respond
to quiz questions. This is the first semester I have done this,
but I am doing so based on research showing that it helps students
master the material even though they generally do not like the
approach. Because this is the first time I do this, the quizzes will be
worth less than a mid-term exam, but since they register your
attendance, it is very important to complete them. TAs will help you
register your clickers.
EXAMS: There will be two mid-terms and a comprehensive
final, based primarily on short answer and multiple choice questions. I think
multiple choice exams are generally pretty stupid, but I don't know how else to
grade so many students.
Note
that exams will generally not ask you to regurgitate what you heard in
class, but rather to apply concepts to real life events. Typically this
means a quote from a newspaper followed by a question. The entire
question can therefore be fairly long. You cannot memorize answers to
such questions, but rather must master the basic concepts from lectures, readings, and assignments. Many
students complain about this approach, but my goal is to teach you to apply
knowledge, not to memorize it.
o Mid-term exams take place during regular class time.
o All exams are closed books, but you will be allowed one page (two-sided) of hand written notes (NO PHOTOCOPIES) containing what you think is the most important material for the exam. My goal is to make you apply concepts, not memorize them.
o If a student misses a
mid-term exam for a verifiable and legitimate reason (health, death in the
family, etc. - NOT VACATION), your final exam grade will carry a
correspondingly greater weight.
I
do not actually like the approach to teaching in which the professor lectures
to you three times a week then asks you to regurgitate what you have learned in
a series of exams, but this is the largest course I have ever taught, and
unfortunately I do not know how to avoid this approach. Your suggestions are welcome.
Grading:
Grades in this course are based on homework assignments (30%), quiz scores (10%), two midterm exams (12.5% each), a final exam (20%), and class participation (10%). The class participation grade will be based on your class attendance, your attendance at review sessions, time spent visiting your TA, and your ability to ask and answer intelligent questions. Though it is a large class, I will frequently call on students at random and will expect them to know the answers. In general, those students who make a serious effort to contribute in class earn 100% for participation, those students who miss an inordinate number of classes receive very low grades, and for the remainder, I award the same participation grade as your overall course average.
PLEASE
NOTE THAT THE BLACKBOARD GRADE CENTER WILL GIVE A 'TOTAL' GRADE, BUT
THIS MAY NOT ACCURATELY AFFECT YOUR ACTUAL GRADE. For one thing,
Blackboard does account for the fact that homework assignments allow a
maximum of 300 points.
I am trying to avoid grade inflation. An "A"
will be awarded only for exceptional work, and a "C" for satisfactory work. A "C" is not a low grade. In my experience, students who do all of their
work do well in the course. Students who fail to do their homework assignments
invariably do poorly.
Grading scheme
Homework assignments...........................................................10-40 points each, total 300 points (30%)
Daily clicker Quizzes....................................................................................................................(7%)
Midterm
Exam
1.........................................................................................................................(13%)
Midterm Exam
2........................................................................................................................ (13%)
Class participation (including attendance).................................................................................... (12%)
Final Exam
(comprehensive)..............................................................
........................................ (25%)
Total Scores
............................................................................................................................ (100%)
The Official UVM grading scheme is:
|
Numerical
Range |
Letter
Grade |
Quality
Points per Credit Hour |
|
95 - 100 |
A |
4.00 |
|
92 - 94 |
A- |
3.67 |
|
89 - 91 |
B+ |
3.33 |
|
85 - 88 |
B |
3.00 |
|
82 - 84 |
B- |
2.67 |
|
79 - 81 |
C+ |
2.33 |
|
75 - 78 |
C |
2.00 |
|
72 - 74 |
C- |
1.67 |
|
69 - 71 |
D+ |
1.33 |
|
65 - 68 |
D |
1.00 |
|
60 - 64 |
D- |
0.67 |
|
<60 |
F |
0. |
Tentative Schedule
NOTE: F&B = Principles of Microeconomics by Frank and Bernanke; R&T = Principles of Microeconomics by Rittenberg and Tregarthen; D&F = Daly and Farley, Ecological Economics: Principles and Applications
Dates become increasingly tentative in the future, but I will update this periodically
NOTE: WHEN THERE IS MORE
THAN ONE READING AND MORE THAN ONE CLASS PERIOD IN THE UNIT, ASSUME
THAT THE FIRST READING LISTED IS FOR THE FIRST DAY OF CLASS IN THE
UNIT, THE 2ND FOR 2ND, AND SO ON. I-CLICKER QUIZZES WILL BE
BASED ON THIS (I.E. I WON'T QUIZ YOU ON THE SECOND READING ON THE FIRST
DAY OF A UNIT)
Unit 1: Introduction: (Aug. 26-Sept. 4)
Lectures will cover:
- Introduction to course
- Critical concepts in economics: What is economics? What
are the desired ends? What are the available means (i.e. what are the scarce
resources)? THIS MAY REQUIRE 2 LECTURES, IN WHICH CASE FUTURE DATES WILL BE OFF BY ONE DAY
- Why Ecological Economics?
Readings: All readings should be
completed before class.
1.
F&B Intro and Chapter 1 or R&T Chapter 1
2. D&F Intro and Chapter 1
Recommended: Telling
other stories, pp. 1-10
Assignment 1:
Opportunity cost and desirable ends.
Assignment 2:
Important concepts in economics
Unit 2: Comparative advantage (Sept. 4-11)
Lectures will cover:
- The economic problem: Comparative advantage, increasing
opportunity cost, macro-opportunity costs, producer choice. Allocative
efficiency, productive efficiency. Production possibility frontier. Cost-benefit (individual and
social).
Readings:
1.
F&B Chapter 2 or R&T Chapter 2
2. D&F Chapters 2-3
3. “What do
you mean, Fair?”
Assignment 3:
Comparative advantage and PPF
Unit 3: Supply, demand, and elasticity
(Sept. 11-30)
Lectures will cover:
1-2.
Intro to supply and demand
3. Elasticity; non-substitutable and essential resources
4. The nature of resources and the resources of nature
Readings:
F&B
3, 4 or R&T 3-5
D&F 4
Assignment 4:
Supply
and Demand.
Assignment 5:
Elasticity
Unit 4: Demand in depth (Sept 30- October 2)
Lectures will cover:
1-2.
The demand side: the consumer, the benefits side
Readings:
FB
Ch 5 or R&T Ch 6, sections 1-2, Ch. 7
Recommended: Telling
Other Stories, by Friday, October 1. pp. 10-14
Newspaper articles on impacts of inelastic energy demand (under Readings on
blackboard):
Tapes Show Enron Arranged Plant Shutdown and ChevronTexaco Profit
Nearly Doubles
Article on demand elasticity for agricultural commodities: Demand
for California Agricultural Commodities
Assignment 6:
Equimarginal Principle of Optimization (rational spending rule)
Mid-term exam through unit 3: October 7
Unit 5: Supply in depth (Oct. 9-Oct. 16)
Lectures will cover:
- The Supply side: the producer, the cost side
- Producer choice, advertising and demand, complements and substitutes
- Supply side: land, agriculture, natural resources.
Readings:
FB
CH 7, Supply or R&T Ch Ch 8, Production and Cost
DF selections from 8-9 These chapters are a very brief summary of
neoclassical market theory, and are worth reading in their entirety. You
should read at least pp. 125-133, and 148-54.
Michael Pollan—The
(Agri)Cultural Contradictions Of Obesity
Assignment 7:
Economics of supply
Unit 6: Efficiency and equilibrium (Oct. 21-Oct. 28)
Lectures will cover:
SPECIAL LECTURE BY HOWARD DEAN: The role of government in regulating the economy
Efficiency and exchange
The market equilibrium and the invisible hand
Readings:
FB
Ch 8-9 or R&T Ch 9 Competitive Markets for Goods and Services
Assignment 8:
The invisible hand-- pharmaceutical companies and Wall-marts
Assignment 9:
Letters to politicians
Unit 7: Market failures (Oct. 30-Nov 4)
Lectures will cover:
Market failures: the invisible foot
Monopolies
Readings:
DF
Chapter 10
FB Ch 9 Monopolies or R&T Ch 10 Monopolies
Assignment 10:
Market
failures
Assignment 11:
Monopolies
Mid-term exam (through market failures, not including monopolies): November 6
Unit 8: Taxation and Policy (Nov 11-18)
Lectures will cover
Taxation and efficiencySolutions to pressing problems
Readings:
F&B Chapter 7 (review section on taxes) or R&T Chapter 15
D&F (1st edition) pp. 359-370; 374-385 OR D&F 2nd edition 413-424; 427-439 (also important for Unit 9)
Assignment 12:
Taxes
Possible lecture topics include:
- Natural resource/environmental problems and policies
Readings:
First chapter in policy section of Daly and Farley (Ch 20 in first edition, Ch21 in second)- Food crisis, ag economics, ag policy, Dec. 2
Readings:
Pollan-review The (Agri)Cultural Contradictions Of ObesityRichard Manning THE OIL WE EAT: Following the food chain back to Iraq. From Harper's Magazine, February, 2004
- Health care, Dec. 7
Readings:
Liberal Benefits. Gonservative Spendingby StephanieWoolhandler M .D., M.P.H., and David U. Himmelstein M.D.
Oncology Issues Novernber/December 2002
Assignment 13:
TBA
Course summary (Nov. 20th)
Lectures will cover:
Course summary, revisiting desirable ends
Final Class (Dec. 2)
I
will be traveling to Brazil for a project and workshop over
Thanksgiving and into the first week of December. GUEST LECTURE GUARANTEED TO INCLUDE EXAM QUESTION.
Final Exam: 9-DEC-2013 07:30 1015 ML SCI 235