I cannot see that Lectures can do so much good as reading the Books from which the Lectures are taken.
• I know nothing that can be best taught by
Lectures except where experiments are to be shown . You may teach Chemistry by
Lectures. You cannot teach making of shoes by Lectures!
• Lectures were once useful; but now, when all can read, and
Books are so numerous, Lectures are unnecessary. If your attention fails, and you miss part of the Lecture, it is lost.
You cannot go back as you can upon a Book.
– Boswell’s Life of Samuel Johnson (1791)

These same criticisms with the lecture format have been repeated again and again over the past 200 years
• The pace is set by the lecturer, may be too fast or too slow
• Taking notes distracts from hearing the lecture, but if you do not take notes it is hard to remember what was said in the lecture
• You can’t go back and forth in a lecture
• You can’t stop to take a rest in the middle of a lecture
• Books give a more visual reinforcement than lectures

Yet the lecture format has had great staying power
• Smith (Glasgow), Faraday (Royal Institution), Wilson
(Princeton), Gurley (Stanford), Denslow (Florida) ,...
• Here is what an admiring Wilson said of Smith:
– “He constantly refreshed and rewarded his hearers...by bringing them to those clear streams of practical wisdom and happy illustration which everywhere irrigate his expositions.”

Some advantages of the lecture
Arthur Quillier-Couch (1927),
Lecture on Lectures
• Hearer comes in a state of excitement, anticipation, like the start of a sporting event
• People coming together with a common purpose can be a lifting experience
• Listening to a person with experience can be inspiring in and of itself
• There is a penetrating power in the human voice, as politicians know

Surprise side economics
• Lecture ideas to make economics
– Less abstract
– More intuitive
– More relevant
– More memorable
• Combine entertainment with education
– multimedia: animated slides, audio, video, internet
• Not for everybody!
• Designed for live lectures
– but there is a role for an online component

Ideas for teaching skiing:
No single way is best for all
OLD NEW

03_08A
PRICE
240
Equilibrium price rises
220
200
180
160
140
300
280
260
0
Equilibrium quantity rises
5 10
Supply curve
New intersection
New demand curve
15
Demand curve
20
QUANTITY

I bet you wonder how I knew about your plans to make me blue with some other guy you knew before.
Between the two of us guys you know I love you more.
It took me by surprise
(drive me crazy), when I found out yesterday.
Don’t you know that ...

I heard it through the grapevine.
How much longer would you be mine?
Oh I heard it through the grapevine, and I’m just about to lose my mind.
Honey, Honey, Yea.
Heard it through the grapevine, how much longer would you be mine, baby oooo oooo oo oo

08_05
AT C
QUANTITY

08_05
AL
QUANTITY

08_05
BE
QUANTITY

0
BE AT C AL
QUANTITY

Economies of Scale

Consider the Pin-Making Process
“One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations…I have seen a small manufactory of this kind where ten men only were employed.
Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins…. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations.”
-- Adam Smith, Wealth of Nations , Book I, Chapter I
Summary
With 10 persons working together in one large firm, output is 48,000 pins, or 4,800 pins per person .
With 10 persons working independently in ten small firms, output is 20
(or 1) pins per person ; that is only one 240th (or one 4, 800 th
) as much.

Let me tell you a story about William Swain
• He was a young man who traveled from
New York to California in 1849
– See map for the route
• His goal: Find gold and go back home
• Thousands just like him: the Forty-Niners
– Much like an army
– No “supply corps” but news, food, tools, entertainment was supplied
• The invisible hand at work

The story goes on. Let me tell you about hydraulic mining
• High pressure water from the Sierra mountains
• Break down the canyon walls to get more gold
– caused huge damage to landscape
– impeded navigation downstream
• An externality thwarting the invisible hand

To get a gut-feeling for the idea of comparative advantage, let’s imagine 2 people with 2 skills: lawyer economist

What are the possible remedies for externalities?
• Private Remedies
Let the individuals work it out themselves
– Need to define property rights
– But transaction costs and free rider problem might prevent the private remedy

IT’S MACRO
Put on your
Big Picture Glasses

Employment release on the internet

We will answer their demands for a gold standard by saying to them:
You shall not press down upon the brow of labor this crown of thorns.
You shall not crucify mankind upon a cross of gold.

A Lesson for Prospective
Central Bankers
• We want to suppose there is a shift in monetary policy
– This shift is a common tactical mistake
• What are the short run and the long run economic effects?
• What are the political implications?
• To learn this lesson let’s first observe some
“
Textbook Maneuvers
”

A school for central bankers.
Dedicated to teaching the science and art of monetary policy.

Key Dialogue
•
Tom Cruise
– You don’t have time to think up there. If you think your dead.
•
Kelly McGillis
– That’s a big gamble with a $30,000,000 plane
Lieutenant. Let me teach you about the “gain then pain scenario”. It starts with the Fed cutting interest rates when inflation is not too low and real GDP is just about equal to potential GDP.

“Gain then pain” scenario
• Start
: inflation rate = 2%, real GDP = potential GDP
– Fed cuts interest rate
• buys bonds
– Economy booms---the “gain”
• real GDP> potential GDP
– Inflation starts to rise
– Fed must raise interest rate
• End
: Economy returns to potential
– real GDP = potential GDP
– inflation is higher than 2%---the “pain”

Could you sketch the “pain then gain” scenario by hand?

A case where economic principles were ignored in the economic policy

Summary of survey results of the online lecture experiment
• survey designed to assess students usage and perceived value
– no direct assessment of effects on exam performance
• about 2/3 response rate
• may be biased against computer users because survey form was handed out in a lecture

How often did watch online lectures ?
• Once or more
45%
• 1 to 4 times
30%
• 5 to 9 times
8%
• 10 or more times
7%

How long in a typical single sitting?
• 30+ minutes
65%
• 15-30 minutes
20%
• 0-15 minutes
15%

Main purpose of watching Econ 1 online?
• To replace having to attend lectures in person
62%
• To review material from lectures attended
18%
• Both of above
9%
• Other
11%

Learn more going to live lecture or watching online?
(among online watchers)
• I learn more online
15%
• I learn the same online versus in lecture
42%
• I learn more by attending the lecture in person
44%

Would you feel comfortable taking a course for credit using
Stanford Online exclusively?
• Yes
• No

Typical pro “ live lecture
” remarks
• Going to the lecture live is part of the educational experience
• I get distracted when I watch in my own room
• It wouldn’t be worth the $30,000 tuition for a computer to teach me
• I wouldn’t have the discipline to sit down in front of a computer and watch it
• A fully on-line course would be insane
• I feel I learn better in person with others
• I am bad at computers

Typical pro “ online
” remarks
• I can stretch a one hour lecture into a two hour lecture, so I can better understand the material
• I feel I learned as much online as if I came to class
• Same things as large lectures
• I prefer the online system because you can view the lecture at your own pace and stop anywhere a difficult concept arises and spend time figuring it out

Preliminary Conclusions from Survey
• Online lectures are a good substitute for live lectures for some, but not most, students
• Even online students express a need for a teacher to ask questions to
• Indexed online lecture is a good study aid
– You can go back to that part you missed
• In sum, live lectures will not be driven out by the internet any more than they were driven out by books two hundred years ago
– But internet will be useful (like books) and may even enhance lectures (like books)