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The Economic Naturalist: In Search of Explanations for Everyday Enigmas Paperback – April 8, 2008

• Print length 240 pages
• Language English
• Publication date April 8, 2008
• Dimensions 5.25 x 0.6 x 8 inches
• ISBN-10 0465003575
• ISBN-13 978-0465003570
• See all details

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• Publisher ‏ : ‎ Basic Books; 60425th edition (April 8, 2008)
• Language ‏ : ‎ English
• Paperback ‏ : ‎ 240 pages
• ISBN-10 ‏ : ‎ 0465003575
• ISBN-13 ‏ : ‎ 978-0465003570
• Item Weight ‏ : ‎ 8 ounces
• Dimensions ‏ : ‎ 5.25 x 0.6 x 8 inches
• #606 in Sociology of Social Theory
• #1,142 in Theory of Economics
• #3,765 in Popular Culture in Social Sciences

About the author

Robert h. frank.

Robert H. Frank received his M.A. in statistics from the University of California at Berkeley in 1971, and his Ph.D. in economics in 1972, also from U.C. Berkeley. He is the Goldwin Smith Professor of Economics at Cornell University, where he has taught since 1972 and where he currently holds a joint appointment in the department of economics and the Johnson Graduate School of Management. He has published on a variety of subjects, including price and wage discrimination, public utility pricing, the measurement of unemployment spell lengths, and the distributional consequences of direct foreign investment. For the past several years, his research has focused on rivalry and cooperation in economic and social behaviour.

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Improving economics teaching and learning for over 20 years

Economic Naturalist Writing Assignment

Wayne Geerling , LaTrobe University Published June 2011

https://doi.org/10.53593/n1301a

Introduction

Dismal science, the economic naturalist, final remarks, selected student essays.

“Most students who take introductory economics seem to leave the course without really having learned even the most important basic economic principles”, laments Robert Frank in “The Economic Naturalist Writing Assignment” , published in the Journal of Economic Education (2006). In fact, “when students are given tests designed to probe their knowledge of basic economics 6 months after taking the course, they do not perform significantly better than others who never took an introductory course” (Hansen, Salemi and Siegfried, 2002). Wherein lies the problem? How do instructors or lecturers overcome this? This case study will evaluate a pedagogical device pioneered by Robert Frank: “The Economic Naturalist Writing Assignment”, in which students are asked to pose an interesting question about some pattern of events or behaviour they have personally observed (a real life event) and to use basic economic principles to solve the question in no more than 500 words (Frank, 2006, 2007). In addition to being a useful means for teaching economics at a principles/introductory level, this writing assignment has practical benefits for teaching economics through real world examples and/or to students who are non-specialists. I will conclude with a series of questions (and answers) posed by students when I piloted this writing assignment in my own teaching in 2010.

Introductory economics classes have limited impact on economic understanding (Walstad and Rebeck, 2002, 2008). One cause of this is that most courses try to cover too many concepts, with the result that not enough attention or time is devoted to mastering the important (threshold) concepts (Frank, 2007). The idea that less is better in teaching economics is not new (Becker, 2004). Getting Economists to agree on a list of threshold concepts which should be mandatory in an introductory course creates a new dilemma (Frank, 2007). The most important thing, according to Frank, is that lecturers begin with a well articulated short list of principles, and then illustrate and apply each principle in the context of simple examples drawn from familiar settings (Frank, 2006). These principles will be revisited in different contexts later in the course. Students should then practice the principle by using it to solve simple problems taken from their own observations, and ultimately, to pose original questions which are then answered by the same basic principles (Frank, 2006). 

Another related problem is the image of Economics as a dry, uninspiring, abstract subject. Scottish writer, essayist and historian, Thomas Carlyle, once described the discipline of Economics as the “Dismal Science”. This pejorative term reflects the widely held view that this science is boring, inaccurate and gloomy (or, in line with Malthus, has gloomy predictions). As a discipline, Economics has been slow to adopt innovative approaches to teaching (Becker, 2001, 2003; Becker and Watts, 1996, 2001). Traditionally, most learning in the discipline is based on “chalk and talk” and teacher-centred, passive student learning. Ben Stein’s character from Ferris Bueller’s Day Off is a popular caricature of this “dismal science” in the classroom: highly abstract concepts delivered in a monotonous voice, which ultimately sends the students to sleep.

Most Economics programs are designed with graduates and PhD students in mind, even though they make up a miniscule number of students studying Economics: according to Frank, only 2% of American students who take an introductory economics subject major in economics (Frank, 2007). The comparable figure in the UK is 10–15% for students taking an economics module in a non-economics program. The heterogeneous makeup of the student body in any introductory class requires an approach to teaching economics which can embed threshold concepts (Sloman and Wride, 2009: see also ) in both students studying specialist economics degrees and non-specialists ( Embedding Threshold Concepts Project, Staffordshire University ). A point raised by Gary Becker in the mid 1990s is sadly still pertinent: “Students have unnecessary difficulty learning economics because textbooks generally do not have enough good examples of real-world applications.” (Becker, 1996).

Frank uses the economic naturalist writing assignment in his introductory economics courses. Students formulate their own question based on a real life observation and are encouraged to write free of algebra, graphs and complex terminology, in a manner understandable by a relative who has never studied economics (the so-called Grandma test) (Frank, 2007: see also ).

The term “economic naturalist” comes from an analogy Frank makes with someone who has taken an introductory course in biology: what types of questions would they be able to answer afterwards? “If you know a little evolutionary theory, you can see things you didn’t notice before. The theory identifies texture and pattern in the world that is stimulating to recognise and think about” (Frank, 2007).

Individual students may prefer particular learning styles, such as visual, aural or conceptual. Frank adopts the “narrative theory of learning”, which claims that the human brain absorbs information in narrative (story telling) form easier than in abstract form (equations, graphs and theory). This can be traced to the evolution of our species as storytellers and the importance of narrative in a child’s learning experience (Carter, 1993, Carter and Doyle, 1996, Doyle, 1997). His writing assignment, therefore, is a practical application of this approach. Students who come up with an interesting question are more likely to have fun and devote energy to the task, and talk to others about it, which reinforces the practical aspects of what they learned. The learning is now internalised and great stories are usually remembered forever (Frank, 2007).

The economic naturalist writing assignment can be seen as a means of reorientating introductory classes: giving students more opportunities to practice Economics (Hansen, Salemi & Siegfried 2002). I adopted this assignment as part of a new 2 nd year elective I introduced at La Trobe University in Melbourne, Australia, in 2010: “Economics of Everyday Life”. The aims of the assignment were shamelessly borrowed from Frank and encouraged students to:

• Think like an Economist
• Explain the intuitive logic of Economics
• Apply economic reasoning to comprehend and solve problems in everyday life
• Better understand the complexities of human behaviour

“Economics of Everyday Life” was aimed at different streams of students: those undertaking a degree or considering a major in Economics, as well as non-specialists from different Faculties opting for an elective. All students studying Business at La Trobe University (or any of its derivates) take “Introductory Microeconomics” in their first year, yet as we know from the work of Frank, their understanding of threshold concepts cannot be taken for granted. I provided a simple theory refresher at the start of the subject, and organised parallel workshops in week 1 of the semester for students who felt they needed additional help, to ensure that all students understood the basic microeconomic concepts upon which the subject is built.

All students were required to write at least one reflective essay for the semester along the guidelines set by Frank with one slight modification: the essay length was extended to a maximum of 750 words. Getting students to come up with an interesting question is easy for some but hard for most at the beginning. This form of assessment is not used in other subjects and students would typically ask me to “give them a question”. I experimented by getting students to submit an essay proposal, so I could check that they were on the right path (appropriate question, understanding of concepts involved, etc), but in hindsight this was too time-consuming and led to over-reliance on me. Next time I will limit my input to validating the question and encourage greater peer reflection in tutorials: students work in groups of 4–5 and give feedback on each other’s essay proposal.

The most immediate benefit from this writing assignment is getting the students to see the relevance of studying economics. “The essays allowed me to make real-life connections between daily problems and economics.” (subject evaluation, student 1) Once the learning becomes personal, students learn instinctively and naturally, which promotes critical thinking skills and deeper learning. “The essay contributed to my learning in that I was able to independently research and apply economic concepts to real world observed situations. This enabled me to use my individual economic thought to try and decipher human behaviour in given circumstances.” (subject evaluation, student 2)

The writing assignment is also a counter to the more prevalent means of assessment, which often rely on formalism and encourage rote learning of key concepts. “Rarely have I been asked to write an essay in an economics subject. I found essay writing to be a particularly effective way for me to convey economic concepts. Using mathematics and formulas is effective to an extent, however, having the opportunity to describe and critically analyse economic concepts in conjunction with real world scenarios extends the study of economics to a whole new level.” (subject evaluation, student 3).

The emphasis is not on teaching students the right way of thinking but to consider various hypotheses (rather than simple black/white dichotomies) and to apply economic principles in a consistent, logical and rational manner to arrive at the most plausible answer. The best questions, to paraphrase the subtitle of “Freakonomics”, explore the “hidden side of everything”, i.e. contain an element of counter-intuition. These essays “teach the student to develop the mind of an Economist and provide meaning to social phenomena through the primary principles of incentives, rationality, logic and other classical economic concepts. While, from the outset, a particular social phenomenon may seem an absurd, irrational proposition, it is only through a clear concise economic method that we see results can be deducted in a very logical manner. Thus economic principles become the lens through which we can view the world and make sense of it.” (subject evaluation, student 4)

And finally, a few words about the essays actually chosen for this case study. This sample of 15 represents just over 10% of the total essays written in the subject. The topics are quite varied: thinking at the margin and the rationality/irrationality dichotomy are explored through the purchase of fixed-gear bikes, decision to exceed speed limits and search for a place to rent. How markets work and what happens when they don’t was investigated through the conventional – the decision whether to purchase the last can of coke on the shelf – and price discrimination or gouging, a popular topic among Generation Y: the purchase of environmentally-friendly eggs, sale of soft drink on aeroplanes and designer denim shorts. A variance on the theme of markets is the informal market for personal relationships, a topic which, on the surface, appears to have little in common with Economics, but the essays on online dating and the contraceptive pill prove otherwise.

One of the most important lessons in Economics is that incentives matter. Students soon learn that incentives sometimes have perverse or unintended consequences. Does McDonald’s three-minute Drive Thru service promote better customer service? Will the new P plate rules introduced in Victoria reduce road safety?

It goes without saying that preference was given to essays which were interesting, illustrated the most important principles of Economics and were well written. Editing, when used, was applied judiciously: to fix typos and improve the general syntax, not to change the overall argument. These are essays from undergraduate students, not PhD students. To quote Frank (for the final time), they “should be viewed as intelligent hypotheses suitable for further refinement and testing” (Frank, 2007).

You may choose to disagree with some of these hypotheses but if you discover something interesting about the explanatory power of Economics, the decision to read this case study has been a wise one. Take a chance, use this form of assessment in your teaching, and you might be pleasantly surprised by what you and your students discover.

• Why would a consumer spend up to $4,000 on a fixie bike when a standard one is much cheaper?
• How should one overcome the perils of online dating?
• Why does steroid usage lead to an inefficient outcome for society?
• Eggspensive Taste: Why do eggs that cost 95c a dozen to produce sell for up to $9.00?
• The Market is Amoral: Should you buy the last can of Coke on the shelf?
• "Why are motorbikes exempt from paying fees on toll roads in Victoria?"
• Why are designer denim shorts so expensive?
• Does McDonald’s three minute Drive-Thru Service lead to better outcomes for society?
• How has the contraceptive pill contributed to the split in the relationship market in Western societies?
• Why are soft drink cans sold on aeroplanes half the size yet double the price of those sold in supermarkets?
• Why are mobile phone calls more expensive than landline calls?
• Why do some people choose to exceed speed limits whilst others do not?
• Was my decision to live in Reservoir rational?
• Will the new red P-plate driver restrictions decrease or increase road safety?

Becker, Gary (1996) “Not-so-dismal scientist”, Business Week , 21 October, p. 19.

Becker, William E. (2001) “How to Make Economics the Sexy Social Science” , Chronicle of Higher Education , 7 December, pp. B10–B11.

Becker, William E. (2003) “Undergraduate Choice: Sexy or non-Sexy”, Southern Economic Journal , volume 70, number 1, pp. 219–23. https://doi.org/10.2307/1061646

Becker, William E. (2004) “Economics for a Higher Education” , International Review of Economics Education , volume 3, issue 1, pp. 52–62. https://doi.org/10.1016/S1477-3880(15)30145-6

Becker, William E. And Watts, Michael (1996) “Chalk and Talk: A National Survey of Teaching Undergraduate Economics”, American Economic Review: Paper and Proceedings , volume 86, May, pp. 448–54. JSTOR: 2118168

Becker, William E. And Watts, Michael (2001) “Teaching Economics at the Start of the 21 st Century: Still Chalk and Talk”, American Economic Review Paper and Proceedings , volume 91, May, pp. 446–51. JSTOR: 2677806

Bray, Dr Margaret and Leape, Dr Jonathan (2008) “Writing for Economists: Embedding the Development of Writing Skills in Economics Courses” , London School of Economics and Political Science.

Carter, Kathy (1993) “The Place of Story in the Study of Teaching and Teacher Education”, Educational Researcher , volume 22, number 1, pp. 5–18. JSTOR: 1177300

Carter, Kathy and Doyle, Walter (1996) “Personal Narrative and Life History in Learning to Teach”, in J. Sikula, T. J. Buttery and E. Guyton (eds), Handbook of Research on Teacher Education , 2nd edition, New York: Macmillan, pp. 120–142. ISBN: 9780028971940

Davies, Peter and Mangan, Jean, (2008) “Threshold Concepts in Economics: Implications for Teaching, Learning and Assessment” , The Handbook for Economics Lecturers , The Economics Network.

Doyle, Walter (1997) “Heard any really good stories lately? A Critique of the Critics of Narrative in Educational Research” in Teaching and Teacher Education , volume 13, issue 1, pp. 93–99. https://doi.org/10.1016/S0742-051X(96)00039-X

Frank, Robert (2007) The Economic Naturalist: In Search of Explanations for Everyday Enigmas , New York: Basic Books. ISBN: 9780465002177

Frank, Robert (2006) “The Economic Naturalist Writing Assignment”, Journal of Economic Education , Winter 2006, pp. 58–67. https://doi.org/10.3200/JECE.37.1.58-67

Hansen, W. Lee, Salemi, Michael K. and Siegfried, John J. (2002) “Use It or Lose It: Teaching Literacy in the Economics Principles Course”, American Economic Review , volume 92, number 2, May, pp. 473–77. JSTOR: 3083452

Sloman, John and Wride, Alison (2009) Economics (7th edition), Harlow: FT Prentice Hall, pp. 8, 23, 24, 44, etc. ISBN: 9780273721307

Sloman, John and Garratt, Dean (2010) Essentials of Economics (5th edition), Harlow: FT Prentice Hall. ISBN: 9780273722410

Walstad, William B. and Rebeck, Ken (2002) “Assessing the Economic Knowledge and Economic Opinions of Adults”, Quarterly Review of Economics and Finance , volume 42, pp. 921–35. https://doi.org/10.1016/S1062-9769(01)00120-X

Walstad, William B. and Rebeck, Ken (2008) “The Test of Understanding of College Economics”, American Economic Review: Papers and Proceedings , volume 98:2, pp. 547–51. JSTOR: 29730079

“Embedding the Development of Writing Skills in Economics Courses”: http://www.economicsnetwork.ac.uk/projects/mini/bray_writing.htm

“The Economic Naturalist Writing Assignment”: http://www.siue.edu/~wrichar/economic%20naturalist%20writing%20assignment.pdf

“Threshold Concepts: Index”: http://media.pearsoncmg.com/intl/ema/ema_uk_he_sloman_esseconlr_5/thresholdconcepts/index.html

“Threshold Concepts in Economics”: http://www.economicsnetwork.ac.uk/handbook/printable/threshold_concepts.pdf

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Economic Naturalist, Essay Example

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Introduction

Different People face various circumstances and situations when making decisions (Wayne 48). Decisions usually have implications under most of these circumstances (Fallis 379). Over time, Studies have revealed a significant difference in regards to how economic naturalists and non-naturalists make decisions (Robert 194). The explanation offered is that an economic naturalist can see the expression of economic principles in their everyday life. Studying economics changes how people see things from an economic point of view. Economics courses focus on ensuring that students realize economic principles in all aspects of life, and utilize economic theories in decision-making processes. The course focuses on two questions that are an excellent example, as they are everyday occurrences that the population often overlooks as they are used to them. The Braille on drive-by ATMs though strange from our perspective is another great example that has a logical answer. Economists tend to discuss simple terms in a complicated manner, something that this paper avoids when answering the questions presented below. The paper starts by discussing the link between social and economic theories, explaining how social economists regard gifting with products and services as opposed to money. After the discussions, the study delves into explaining the concepts of growth and income in economic terms. This discussion focuses on expressing how changes in outdoor appliances are being experienced with regards to the quality of the products becoming more advanced each time. Furthermore, there is continual improvement in the type of products being used, and when the products are introduced, they only serve the high end market. However, over time, they become available to the middle and lower level classes, as new appliances are introduced for the luxury market. After discussions on outdoor appliances, the paper provides a rationale behind the availability of taxis during rainy seasons and the changes in price. All of the explanations that the paper presents focus on how economic principles apply in everyday life, but often go unnoticed.

This question on why human beings choose to give gifts of items rather than the most usable tangible object, money, is an economist’s favorite riddle. Many have analyzed the question, and each social economist has a different response to it. The problem that many economists face is their inability to apply economic decision making, to social events that can be easily explained. Giving cash is only socially acceptable in certain circumstances, for instance in weddings, birthday parties or during Christmas. The reason for this is simply that gifts mean something to both the receiver and the giver. The only significance of monetary cash is that it can be used to purchase anything.

Humans are social creatures and gifts are given for a variety of reasons. They help to build relationships with other people. However, there is an economic loss in present giving, at least according to economist Joel Waldfogel (Waldfogel 319-324). Gift giving results in a deadweight loss that is one-tenth to one-third of the gift’s value. These estimates are wide, as it depends on the nature of the present. According to Waldfogel, gifts given by immediate family members or significant others are more efficient than those given by the extended family are. The logical theory behind it is that in close relationships the giver and receiver know each other’s preferences, which reduces the deadweight loss. One of the most important and logical findings from this research is that cash gifts were more likely to come from givers that believed that any gift they give would have a lower utility than the cash itself through being unaware of the recipient’s preferences.

This research is out of the ordinary as it is logical and rational. While it does not always explain every gift, such as grandparents’ preferences for giving sweaters or other unwanted gifts, it is interesting as it provides some economic rules behind how people should offer gifts. However, a clear gap is evident between the research and its application, as Waldfogel’s theory only applies to specific situations. This approach does not explain how someone would provide another with a gift for a housewarming party, or what an excellent gift for a baby shower would be. The society dictates that cash while being the most useful, is not a recommendable gift. People would be looked down on in these circumstances; one only needs to think about him/ herself in a similar circumstance to know this is true. Many economists ignore the utility in receiving as well as giving a gift. For example, it would be embarrassing to wear a sweater that a grandmother has knit with tangible reindeer on it in public. Regardless, the grandmother gains a significant amount of utility in hand knitting the sweater and giving it to her loved ones. However, the recipient may derive no pleasure from wearing it but may receive utility from knowing that someone cares about them enough to spend so much time making a sweater. Thus, the main problem with this line of research is that the anthropological perspective fails to take into account the utility arguments of economics (Swanson). Besides, the economic perspective fails to take into account the anthropological assumptions on why certain gifts and actions provide more utility to certain individuals than others. Researchers need to carry out additional research, as it is clear that economists need to consider the utility provided to the gift givers as well.

The fact that rapid income growth among people with a high income has been present throughout the years is a concept that has made the demand for high-quality appliances and products rise. The higher the demand for these types of products, the more their prices reduces. Economically, this attributes to the fact that when more people can afford the costs of goods and services, which are abundantly available, the businesses get to charge lower costs so that they can enjoy the benefits of economies of scale. Due to the rapid income growth, middle-class consumers can get their hands on appliances and products. However, some products and appliances are usually affordable only to the high-end spectrum of an economic market in terms of income. This market, according to many researchers is usually reserved for top-level managers of corporations such as CEOs and business owners. In the recent past, entertainers and celebrities have also become an integral part of this class.

According to economic principles, a majority of different types of goods and services normally have their prices reduce after a certain period. This, according to economists insinuates that the people with high income are usually the first ones to access products and appliances whereas the middle class can only afford them after the prices reduce. This has been going on for years, especially after the industrial age. For example, when the first few computers were released to the public, only the rich could afford them. The computers were not many and thus could not meet the demand, which led to their increase in price. After the evolvement in technology, companies spent less on building the computers and sold them for a more reasonable price. Among other similar examples, include cell phones and TVs where only a few people could afford them back in the 80’s. As the cell phones evolved past the pager era, more people were able to afford them for personal use. Regardless of the appliance or product being released to the public, most of the first generation ones are always at such a high cost that only people with high incomes can afford them. Once the second and third-generation are produced in large quantities, their cost significantly reduces.

Most of the recent growth and income in the United States occurred among the nation’s highest earners. For example, although median inflation adjusted, family income grew by less than 14% between 1979 and 2007. The corresponding growth for the top 1 percent of earners was over 200 percent. Later, the income growth was even more dramatic. The CEOs of the largest US corporations earned 42 times as much as the average worker in 1980, 531 times as much in 2000. Rapid income growth among those with already high incomes spawned an increase in demand for not only costly outdoor cooking appliances but also a broad spectrum of other luxury goods as well. The quote is from the Economic Naturalist 4.1 and it explains that the more Rapid Growth Income increases, the more demand increases for higher products. This is economically healthy for the middle class, as all the companies that create these products will start to compete with one another, to create the highest luxury good for the price. Eventually, old products begin to fall out from the market making way for the new products. In regards to cell phones, and especially the iPhone, when comparing the first generation phone to the newest, it is clear that iPhone has evolved while maintaining the cost price since consumers willing to pay the high price for the device to expect a more luxury phone to be released every year. When a new phone is released every year, the price of the older model drops significantly such that those in, the lower class can afford them. This is a perfect example of the term income effect , which means, “the change in quantity demanded that results from the change in real purchasing power are caused by the price change.” The creation of luxury goods will always be constant as long as there is a demand, but its price will always change. Whether it is available in the present moment or years from now, the quality of products will become more affordable as we evolve.

In line with the economic principles discussed above, it is evident that growth and income usually result in product and appliances prices reduction eventually. Therefore, what is not affordable to the majority today may be affordable within a certain period. This has the potential of resulting in improved quality of products and services over time. Furthermore, it has the capability of resulting in the growth of the middle class over a long period. In the end, it will also ensure that the population will at one point in time access and afford appliances and products that during their inception was only affordable to the affluent in the society.

Another interesting economic aspect with regards to economic naturalist can be expressed through the phenomena of finding a taxi in the rain in New York. In New York, it is difficult to find a taxi on rainy days, which is troubling considering the precipitation in the city on average 121 days of the year. However, explaining the phenomenon may be a little difficult, as it does not make rational sense. People are more likely to use a taxi on a rainy day to avoid being rained on, which means demand would naturally increase. The classical economic theory would hold that demand increases too rapidly for supply to meet it, and a new equilibrium to establish itself, which would make it difficult to find a taxi when one needs it most.

There are two competing theories that challenge the traditional economic model. The first maintains that taxi drivers are target earners, and force themselves to meet a specific income level. This was proposed in a seminal paper delivered by economists Colin Camerer, Linda Babcock, George Loewenstein, and Richard Thaler. The primary findings revealed that taxi drivers make labor decisions one day at a time instead of planning their working hours over multiple days (Camerer et al. 407-441). These economists also found that taxi drivers tend to work until the target income is met. This research also utilized a literature review that helped demonstrate that similar studies had been conducted before with similar results, though problems in their methodology prevented them from being conclusive.

The second theory regarding the supply of taxis stems from Faber’s research. He found that only a fraction of taxi drivers’ wages is unanticipated and that they do not make large changes to their labor supplies on a daily basis. The research also discovered that taxi drivers increase their labor supply during peak seasons, such as holidays and rainy days, which directly contradicts previous studies. According to Faber, the reason taxi drivers are difficult to find on rainy days is that demand has simply increased by an exponential amount and the supply cannot keep up, despite taxi drivers increasing their labor supply. Faber attributes the different findings to previous work using poor methodologies and not conducting accurate research.

The labor supplies of taxi drivers during rainy days and sunny days are therefore different but increase during rainy days. Earlier studies simply assumed that because drivers have target incomes that they try to meet on most days, they would not shift their labor supply curves during rainy days. The economists did not seem to consider one of the most basic elements of labor economics; namely, the extension of the income and substitution effects. Taxi drivers are more inclined to work during rainy days because they maximize their incomes as demand soars since people do not want to walk to their destinations no matter how short distance is. One needs to wonder, though, whether the type of demand has changed as a result of rain. For example, it would theoretically be possible for economists to study how far a taxi driver takes the average customer, and then compare those findings to whether they change during rainy days. It would also be interesting to examine whether Uber and Lyft have upset this stereotype.

However, the personal experience of many implies of fewer cabs on the streets on rainy days. It is possible that the income effect overrides the substitution effect, assuming it is true. Drivers would then minimize their work, as they will make more during a shorter amount of time. However, there is a more rational argument as to why drivers would decrease their amount of time on the road. New York is a busy place to drive in, and during the rain, the traffic increases and is made considerably more dangerous. While it is subjective to say that it is more miserable of a time to drive, let us assume for a moment that this is true. Drivers make the rational decision to end their shifts early because they choose to protect their vehicles from experiencing a wreck or causing an accident. The Economist reported this in an article that examined the relevance of these studies and whether they are far off the mark or not (The Economist). The article featured conversations the author had with taxi drivers, and while it was not a scientific study, it is still important to continue with the discussion. This matter is more related to game theory than it is related to labor economics.

If drivers make the rational decision to reduce labor supply to reduce their exposure to risk, it makes this decision more akin to a game theory decision. Therefore, drivers are changing the decision to drive into a composite indicator that determines the likelihood of remaining on the road. If the risk grows to a certain level, or conditions become unfavorable or unpleasant, then more drivers are likely to reduce their supply of labor. This also suggests that labor supply for taxi drivers is relatively elastic, though it depends on the driver. Further research is needed, but it is safe to assume that taxi drivers belong to a similar socioeconomic class based on similar income levels; the only thing that would determine whether they fight the trend during the rain is if they have specific consumption needs or random events that require income. This discussion is important because it shows that often, the most logical solution is the simplest and does not involve a complicated set of equations to prove. Intuition is enough to determine that driver preferences are dictated by more variables than just supply and demand functions. It is difficult to model this, but future studies should be conducted. As was mentioned earlier, it would be important to compare the findings of Lyft and Uber labor hours during the rain with taxi drivers to see if there is a difference in preferences.

The biggest take away from the two examples that have been discussed in this study is that economists often try to explain everyday events and things that the public takes for granted. They also appear to arrive at different results when studies are compared. As clearly shown in the paper, economic tenets exist in all aspects of life and that economic theories can be effectively used to deduce the best decisions that can be made in everyday occurrences. The inability to arrive at simple explanations for simple occurrences is ironic when one considers that the highly trained professionals are expected to formulate economic policies on a macro-economic level. The two questions are similar in the sense that they provide an economic rationality for why observable phenomena in the US are a certain way, but both differ for a variety of reasons. Firstly, the question about gift giving is related to anthropology as well as economics and is deeply concerned with utility. There is also the issue about outdoor appliances varying due to changing times where new products and appliances are only available to the luxury market until new and improved versions, or alternative outdoor appliances are developed. The issue of taxi drivers focuses solely on them balancing the risk and negative utility of staying on the job during poor weather conditions while still considering their need for income. Thus, the explanations are much simpler than economists pose them, which have led to over exaggeration as to why they occur. Therefore, it is safe to include that with an appropriate level of exposure, everyone would apply economic principles in their decision-making and not just economic naturalists.

Camerer, C. et al. “Labor Supply of New York City Cabdrivers: One Day at a Time.” The Quarterly Journal of Economics 112.2 (1997): 407-441. Web

Fallis, Don. “The Economic Naturalist: In Search of Explanations for Everyday Enigmas.” Library Quarterly , no. 3, 2009, p. 379. EBSCO host , 165.193.178.96/login?url=http%3a%2f%2fsearch.ebscohost.com%2flogin.aspx%3fdirect%3dtrue%26db%3dedsgao%26AN%3dedsgcl.206074504%26site%3deds-live.

Frank, Robert H. “A Less-Is-More Approach to Introductory Economics.” Journal of Economic Methodology , vol. 19, no. 3, Sept. 2012, pp. 193-198. EBSCO host , doi:10.1080/1350178X.2012.714148.

Geerling, Wayne. “An Exploration of Robert Frank’s ‘The Economic Naturalist’ in the Classroom.” International Review of Economics Education , vol. 12, 01 Jan. 2013, pp. 48-59. EBSCO host , doi:10.1016/j.iree.2013.04.008.

Swanson, Ana. “Why Cash Is The Worst Gift.” Washington Post . N.P., 2015. Web. 18 Nov. 2017

The Economist. “Cruising For Dollars.” Economist.com . Web. 18 Nov. 2017

Waldfogel, Joel. “The Deadweight Loss of Christmas: Comment.” American Economic Review 90.1 (1993): 319-324. Web

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THE ECONOMIC NATURALIST

In Search of Explanations for Everyday Enigmas

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By Robert H. Frank

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Robert H. Frank

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Bob Frank’s legacy as a teacher, behavioral economist, economic naturalist, and author

Robert H. Frank in his office in 2015 (photo by Jason Koski)

In 1966, when Cornell economist Robert H. Frank arrived in Nepal to teach high school math and science as a Peace Corps volunteer, he was surprised at how quickly he felt comfortable in his modest new home, even though conditions of life were dramatically different from what he was used to. “What was astonishing to me was that within a day or two, everything seemed normal,” Frank says. “You get up, you have things you want to get done that day, there are people you interact with … the day-to-day flow of life was really not in any meaningful way different.”

That experience was a defining moment for Frank that informed his outlook on life. “Knowing that when life is lived on a radically different material scale, it doesn’t much matter, is knowing something in a way that’s different from believing it to be true,” he says. “It’s sort of who you are, then.”

Frank, the Henrietta Johnson Louis Professor of Management and professor of economics in the Samuel Curtis Johnson Graduate School of Management, has written and spoken extensively about positional goods, cascading expenditures, inequality, and the ever-growing income gap in our society—all prevalent themes in his many books, essays, op-eds, media interviews, and podcasts. “Everybody knows that when the mansions get bigger, rich people probably aren’t much happier as a result,” he says. “Ordinary material conditions don’t do much to improve people’s lives when they happen across the board for everyone. We just get used to the new gadgets and bigger houses and more expensive wedding receptions. And they don’t have any lasting impact on our health or wellbeing or how happy we are.”

Many of Frank’s award-winning books, including Luxury Fever: Money and Happiness in an Era of Excess and The Winner-Take-All Society , co-authored with Philip J. Cook, are continually cited in both mainstream and business media outlets. Luck and the role it plays in people’s lives and the power of behavioral contagion are themes Frank expounds on in his most recent books, Under the Influence: Putting Peer Pressure to Work and Success and Luck: Good Fortune and the Myth of Meritocracy . (See Books by Robert H. Frank, below, for a complete list of his books.)

A Cornell professor since 1972, an influential teacher of economics, and a thought leader who played a central role in bringing legitimacy to the study of behavioral economics at Cornell, Frank retired from the university on July 1, 2020.

An affinity for teaching

As a mathematics major at Georgia Tech, Frank, then an undergrad himself, had an unprecedented opportunity to teach an undergraduate math class and discovered he really enjoyed the experience. In fact, he liked it enough to shed the “stereotypical life history ambitious students at Georgia Tech envisioned to become president of a company before you were 40,” as he put it. “Being a teacher rose right to the top of my list,” he says, after “an advisor in the math department talked to me about it and said that his family lived quite comfortably; it didn’t mean signing an oath of poverty to become a teacher,” recalls Frank.

So following two years of service in the Peace Corps, Frank studied micro, macro, and labor economics at the University of California at Berkeley, where he earned his MA in statistics and graduated with his PhD in economics in 1972, then interviewed for an assistant professor position in the Department of Economics in Cornell’s College of Arts and Sciences. “I was lucky to get that job,” says Frank. “They hired seven people that year and I was number seven.”

  A maverick economist

Although he remained an economics professor in Arts and Sciences for nearly two decades—becoming a full professor in 1986 and a chaired professor in 1991—intellectually, it wasn’t the best fit from Frank’s perspective. “Economics departments vary from being overly concerned about mathematical formalism at one end of the distribution to obsessively overly concerned at the other extreme. Cornell’s department was near the obsessively concerned end of that distribution,” he says.

  “I was able to do that kind of work; having been a mathematics major, that was not something that was daunting to me,” Frank says. “But the culture at Berkeley, where I’d studied as a graduate student, was quite different. There, they were concerned mainly with trying to get the right answer to whatever question they were posing. It wasn’t a matter of trying to prove how mathematically sophisticated they were; the ethos of that department was to use the simplest model that would get the job done was.

  “ The Cornell department was not quite to my liking and my own career evolved in reaction to that,” Frank says. “I did what I had to do to get promoted; I published technical papers in the leading journals in sufficient quantity. But once I was freed from that, I spent the lion’s share of my energy working in a much more discursive mode, writing books. And I’ve been lucky to get away with that. That’s not the standard way that economists make any headway in the profession.”

Frank focused his work more and more on behavioral issues and continued to publish in untraditional ways. And he found an intellectual ally in Richard Thaler , who joined Johnson as a professor of economics in 1978. Frank says he and Thaler “spent a lot of time talking to one another about how the conventional economic models didn’t seem to describe the world we knew and experienced.” In 1990, when the Kellogg School at Northwestern offered Frank a chaired professorship, Thaler advised Frank to first take a half-time appointment at Johnson to find out how he liked teaching MBAs.

“I took the half-time appointment at the Johnson School and it was, in fact, a more congenial environment for me,” says Frank. “It was much more behaviorally oriented, and so I think it was a comfortable fit.” In 2001, he decided to join Johnson full time, while continuing to teach introductory economics in Arts and Sciences once every two years for many years. In 2002, Frank became Johnson’s Henrietta Johnson Louis Professor of Management and professor of economics.

A champion for behavioral economics

In 1989, Thaler, a professor of economics at Cornell for nearly two decades who later became a Nobel laureate in economics (2017), founded the Behavioral Economics and Decision Research Center (BEDR), an interdisciplinary center co-directed by Frank, among others , that “unites Cornell scholars who share a common interest in judgment, decision making, and behavioral economics.” The center is often cited as the birthplace of behavioral economics.

Behavioral economics challenges the “rational actor” model of human behavior, which forms a big part of the core traditional economics curriculum, says Thomas D. Gilovich , Irene Blecker Rosenfeld Chair of Psychology and a co-director at BEDR. “The ‘rational actor’ model is based on the idea that people are perfectly rational and perfectly selfish, neither of which strikes a psychologist or strikes a behavioral economist as realistic,” says Gilovich, who became friends with both Frank and Thaler after joining Cornell’s faculty in the 1980s.  “Bob was concerned that the focus on the rational actor as a description of human behavior just seemed inaccurate.

“Behavioral economics is an effort to draw upon psychological insights about how the mind works and what people are like to inform models of economics that often left out those considerations,” says Gilovich. “So it’s a way to build a more realistic and therefore effective economics.”

“As an economist, Bob is a big thinker and intellectual leader,” says longtime colleague and friend Michael Waldman , the Charles H. Dyson Professor of Management and professor of economics at Johnson. “He tries to re-orient the profession to be more realistic about how economies behave. Bob and Richard Thaler built behavioral economics at Cornell and created fertile ground for behavioral economics champions like Ted O’Donoghue .” O’Donoghue, the Zubrow Professor of Economics and senior associate dean for social sciences in the College of Arts and Sciences, is also a co-director at BEDR. “Young behavioral economists at Johnson like Ori Heffetz and Marcel Preuss are part of Bob’s legacy in terms of the strength of behavioral economics on campus,” adds Waldman.

“I also think of Bob’s legacy in terms of the strength of behavioral economics in the profession,” says Waldman. “When I first started, there wasn’t really anything called behavioral economics; it wasn’t a field. In a sense, Richard and Bob created the field. And it’s not going away. Bob was an important contributor in making it a big part of economics, and it clearly fits in with what Bob was trying to do: Make economics more real.”

The genesis of the Economic Naturalist writing assignment

Most people don’t think of storytelling as a key, integral component to an introductory economics course. Frank does.

He describes the conundrum he sought to address in reforming the course: “Most students take only one economics course; mostly they don’t like it, and they don’t take any other [economics] courses. But more troubling is that six months afterwards, we give them tests that probe their understanding of basic economic principles and they don’t score any better than students who never took the course.”

Why? In Frank’s view, the reason was partly because introductory economics courses are overly mathematical, an approach he says is “not the best pathway” for students to understand basic economic principles. “Most people can absorb ideas most readily and efficiently if ideas are couched in a narrative, where there are actors, people with interests, a problem, a question to be answered, and a resolution,” he says. So he developed an assignment designed to get students to tell stories focused on applying economic principles in their answers to interesting questions.

“The title of the paper has to be a question—an interesting question based on something you’ve come up against in your own experience and that you’re curious about,” Frank would tell his students. “How do you know whether your question is interesting? Ask one of your classmates and see if they react in a way that signals interest. Do they want to know, ‘Yeah, why is that?’ Or do they blink dully and change the subject?”

Launched in 1987 with support from Cornell’s John S. Knight Institute for Writing in the Disciplines , over the years the assignment shrank from 20-page papers to narratives of no longer than 500 words. And Frank dubbed it the Economic Naturalist Writing Assignment.

“The reform for the course was to make a judgement up front about which six or seven ideas were the most important,” says Frank. “And in economics, at least, it’s fortunate that just a few ideas do most of the heavy work. Put those on display in as many contexts as possible and students can master them at a very high level in just a single semester.”

The proof is in the pudding, and hundreds of alumni have validated Frank’s approach by presenting him with the Stephen Russell Distinguished Teaching Award (established by Stephen Russell ’60, MBA ’61), which is given by fifth-year reunion classes to the Johnson faculty member whose teaching has most influenced them during their post-graduation years. “I’ve won that award four times,” says Frank, “and it’s by far the award I’m most proud of.”

“A lot of us try to teach everything, every detail is so important—‘what if I didn’t tell the students this? They won’t get the full picture,’” relates Ori Heffetz , associate professor of economics, whom Frank and Waldman interviewed and hired in 2005. “Bob was the opposite. Bob always said, ‘Less is more. Focus on a few core ideas and just keep hammering them in with more examples and more applications.’

“This was really influential for me,” says Heffetz.

When alumni honored Heffetz with the Stephen Russell Award in 2015, he says, “I thought, ‘This is Bob!’ The fact that five years later they still remembered insights from my course was because ‘less is more.’”

Why do kids need safety seats in cars but not planes?

Frank describes one of his all-time favorite economic naturalist essays, written by Greg Bellinger ’93, MBA ’99, MEng ’00: “Why do regulators have you strap your toddler into a car safety seat to drive two blocks to Wegmans but then let you fly with your toddler loose on your lap when you fly from New York to Los Angeles?” As Frank says, “Greg reasoned that it had to be on the cost side of the cost-benefit test. And sure enough, if you have a safety seat in the back seat of your car, there’s no extra charge for strapping your kid in other than the few seconds it takes to do it. If you need to strap your kid in a safety seat on a flight from New York to L.A. and it’s full, you have to buy a seat—that’s a thousand bucks. So the cost of strapping your kid in a plane is much, much higher than the cost of strapping your kid in a car, and that’s why we see this difference.

“When you talk about that example with people,” Frank says, “then you understand the cost-benefit principle—which is probably the most important principle we have in economics—just a little better each time you do it.”

Frank compiled some of the best examples of students’ questions and answers into a book, The Economic Naturalist: In Search of Explanations for Everyday Enigmas (2007). It quickly became a bestseller in many countries, and sales around the world remain brisk more than a dozen years later. And as Frank wrote in the book’s introduction, he donated half his royalties from the book to the John S. Knight Institute for Writing in the Disciplines, “in grateful acknowledgement of my former students’ contributions … with full confidence that … no gift could more enhance the learning experience of future Cornell students.”

Thousands of economic naturalists

Ori Heffetz , associate professor of economics at Johnson, points out that Frank’s textbook, Principles of Economics, co-authored with Ben S. Bernanke and first published in 2001, is full of economic naturalist examples. In fact, as a co-author of the textbook since 2016 (it’s revised with new data and examples every year or two), Heffetz himself has written many economic naturalist question-and-answer summaries. Most recently, he’s been writing several about the corona virus and its effects on the economy and unemployment for the eighth edition of the book, which will come out in 2021.

“There are now thousands of economic naturalists out there,” says Heffetz. “First of all, thousands of our alumni took Bob’s course and turned in two one-page economic naturalist summaries. Plus [there are] tens of thousands of users of the textbook.”

Frank’s ideas continue to gain currency partly because he is a master not only of writing about them in a way that’s clear, direct, and accessible to the layperson; he’s also adept at broadcasting his ideas in a variety of media. “Bob has had several big ideas in recent decades and he just hammered them in, like in his teaching,” says Heffetz. “He would write a book about them, then he would write about them in his New York Times column, then he would give interviews about them everywhere.”

Recently, Bob pushed for the next edition of Principles of Economics to include ten short, animated videos that illustrate the best of the economic naturalist examples, says Heffetz. “So the publisher hired animators and they are making a high-quality production of short videos that you can tweet and that can go viral.”

Context matters and relative wealth

“Speaking selfishly as a social psychologist, I will say that Bob is a social psychologist masquerading as an economist,” quips Gilovich, who is Frank’s longtime friend, research collaborator, and tennis partner. “The biggest lesson of social psychology is that everybody’s behavior is very finely tuned to the environment in which they find themselves. We’re very sophisticated beings with very sophisticated brains that pay attention to the tiniest details of our surrounding circumstances.

“That is to say, context really matters,” Gilovich says. “And almost all of Bob’s work has illustrated the importance of that idea in various ways.”

As an example, Gilovich points to one theme in Frank’s research: the idea that absolute wealth is important, but nowhere near as important as relative wealth. “How you’re doing relative to the people around you is more important to your happiness and is a more important driver of your behavior,” says Gilovich. “Bob illustrated this in his first and absolutely delightful book, Choosing the Right Pond . It continues through Luxury Fever and many of his New York Times columns. And it’s in his most recent book on context, Under the Influence.

“Someone who thinks about human behavior as attuned to the social context is a social psychologist,” says Gilovich jokes, summing up. “So for my field, I’m just going to claim Bob Frank.”

On a personal note, Gilovich adds, “Bob’s got a delightful, self-deprecating sense of humor, he’s tuned into all the amusing things that life offers, doesn’t miss a beat, and has a great wit in commenting on everything going on around him. He’s always giving other people credit, and he’s just a magnificent human being.”

Post-retirement plans include lectures, podcasts, and essays

While he may be retired from Cornell, Frank has “enthusiastically signed up” says Gilovich, to teach a BEDR class on decision making — a class that he and other BEDR co-directors have taught above and beyond their regular teaching load over the last two years.

Frank fully plans to continue publishing his ideas in The New York Times, the Washington Post, The Atlantic, and other outlets. He’s continuing to speak in video and podcast interviews. And he’ll continue to post to Twitter ( @econnaturalist ), a venue he has found to be effective for developing ideas that he later polishes and publishes as essays.

“A couple of pieces I published recently grew out of threads I first posed on Twitter,” Frank says, “just because that’s a place for getting started. The hardest part of any project is to get started. Once I get started on a book it’s all I can do to keep from working obsessively on it. The first thing I want to do in the morning is read what I wrote yesterday and then get going on it again.”

So stay tuned.

Books by Robert H. Frank

Many of Robert H. Frank’s books are best-sellers around the world. Translated into 24 different languages, they are approachable and understandable for a general audience and have won multiple best book and notable book awards. They underscore the inequality inherent in our society and propose new tax structures that would address this. They clearly and vividly illustrate terms like expenditure cascades, positional goods, and behavioral contagion. And they discuss the role sheer luck plays in people’s lives. Here’s a list.

Under the Influence: Putting Peer Pressure to Work (Princeton University Press, 2020)

Success and Luck: Good Fortune and the Myth of Meritocracy (Princeton University Press, 2016)

The Darwin Economy: Liberty, Competition, and the Common Good (Princeton University Press, 2012)

  The Economic Naturalist’s Field Guide: Common-Sense Principles for Troubled Times (Basic Books, 2009)

  Falling Behind: How Rising Inequality Harms the Middle Class (University of California Press, 2007)

  The Economic Naturalist: In Search of Explanations for Everyday Enigmas (New York: Basic Books, 2007)

What Price The Moral High Ground? How to Succeed without Selling Your Soul (Princeton University Press, 2004)

  Principles of Economics , with Ben S. Bernanke, and with Kate Antonovics and Ori Heffetz in later editions (McGraw-Hill, first edition, 2001; eighth edition, 2021; brief edition, 2008; fourth brief edition, 2021)

  Luxury Fever: Money and Happiness in an Era of Excess (The Free Press, 1999; Princeton University Press paperback edition, 2000)

  The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us , with Philip J. Cook (Martin Kessler Books at The Free Press, 1995)

  Microeconomics and Behavior (First Edition, McGraw-Hill, 1991; Tenth Edition, 2021)

  Passions Within Reason: The Strategic Role of the Emotions (W. W. Norton, 1988)

  Choosing the Right Pond: Human Behavior and the Quest for Status (Oxford University Press, 1985)

  The Distributional Consequences of Direct Foreign Investment , with Richard T. Freeman (Academic Press, 1978)

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More from the “economic naturalist” robert frank.

We recently posted a series of excerpts from The Economic Naturalist , a new book by the Cornell economist Robert Frank (who has another new book out this week, Falling Behind , a brief treatise on income inequality). Because the Economic Naturalist excerpts were well received and vigorously debated , we asked Frank if he would reply to some of the feedback. Kindly, he has obliged:

Guest Blog: Robert H. Frank

When I describe my “economic naturalist” writing assignment to students, I stress that it is not important that the answers to the questions they pose be correct beyond doubt. Far more important is that the questions themselves be interesting and the proposed answers economically plausible. The learning stimulated by this assignment stems less, I think, from the writing of the papers themselves than from the animated discussions provoked by the questions.

I was therefore extremely encouraged by the lively reader responses to the examples from The Economic Naturalist on this blog recently . I was encouraged, too, that a Google search a few days after the post ran turned up over 100 other web sites that had linked to it. To my eye, that’s the real beauty of the writing assignment: Once students manage to pose an interesting question, they immediately want to discuss it with others. And in the process, they find endless opportunities to refine their thinking about what a sensible answer might look like. In short, they learn a lot from these conversations, just as I did from reading your comments.

Such exchanges also provide valuable opportunities to push back, to probe the power of opposing views. So I am pleased to take advantage of an invitation to respond to some of the criticisms of my students’ explanations.

McMansions for Retirees : Several respondents objected that the phenomenon to be explained – that retirees are increasingly buying large houses close to home rather than smaller condominiums in the Sun Belt – was a statistical artifact. In the book, I cited studies purporting to confirm the trend in question, but I’m quick to concede that the practice may not be widespread in many areas. It does seem clear, however, that supply and demand in the retirees’ housing market have shifted in precisely the way my student Tobin Schilke described. Because the number of births per adult American woman has remained roughly the same for several decades, the number of children is no greater now than in the past. Yet because of the secular rise in divorce and remarriage, each child now has more grandparents than in the past (on the plausible assumption that we count the parents of step-parents as grandparents).

The upshot is that the demand for visits by grandchildren has increased relative to the supply of such visits. If we grant Mr. Schilke’s plausible assumption that having a large, conveniently located house makes visits more likely, it follows that retirees are more likely to demand such houses.

Of course, there may have been other offsetting changes in the retirees’ housing market. Rising energy costs, for example, may have reduced the demand for large houses. But that wouldn’t challenge Mr. Shilke’s interesting observations about how demographic changes appear to have altered the demand for grandchild visits.

Square Milk Containers : Regarding the proposed explanation that milk containers have square cross-sections in order to minimize the amount of costly shelf space they occupy in refrigerated storage units (in contrast to the cylindrical containers of soft drinks, which are typically stored on unrefrigerated shelves), several respondents pointed out that containers with square cross-sections could not contain the pressurized contents of carbonated soft drinks unless their walls were so thick as to make them prohibitively costly. It’s a fair point.

But a milk container of given volume could also be produced at lower cost if it were cylindrical in cross-section rather than square. Relative to a container with square cross-section, however, a cylindrical design would definitely increase the cost of storing milk on refrigerated shelves. So it seems fair to conclude that the cross-section of milk containers is dictated at least in part by a desire to minimize the cost of refrigerated storage.

Premium Prices for Black MacBooks : When its newly introduced black iPods quickly sold out in 2005, Apple discovered that customers would be willing to pay premium prices for a machine in a previously unavailable color. So when it brought out its new MacBook models the next year, it posted a higher price for the black version and had no difficulty selling them.

Many respondents apparently mistook me to be saying that Apple was somehow exploiting its customers by charging the premium. But the central point of the example was exactly the contrary. Whenever a seller produces under economies of scale, it is always possible to create additional economic surplus for all parties -buyers and seller alike – by using what I call the “hurdle” method of price discrimination.

The basic idea is that the seller offers a discount only to buyers who are willing to jump some sort of hurdle, such as mailing in a rebate coupon or settling for a machine in a less desired color. These discounts increase the number of units sold, in the process reducing the average production cost per unit. The resulting cost savings often make it possible for even buyers who pay full list price to end up paying less than they would have if the product were sold to the same price to everyone.

Although some complain that it is unfair to charge some buyers more than others for essentially the same product, in The Economic Naturalist I argue that Apple’s pricing scheme actually appears to mete out a certain rough economic justice. This will be true if, as appears plausible, the buyers who are willing to pay extra for the black machines are also the ones who value the company’s innovative design features most highly. After all, somebody has to pay for Apple’s prodigious research and development costs. Why shouldn’t these costs fall more heavily on those consumers who care most about cutting edge design?

Gas Caps on the Right and Left Side of Cars: In response to her question about why fuel filler doors are sometimes on the left, sometimes on the right (causing confusion for rental car drivers), my student Patty Yu argued that if filler doors were all on the same side (say, the driver’s side), lines at the gas pumps would be much longer during peak periods. Numerous respondents suggested other possible reasons for filler door placement. One pointed out, for example, that manufacturers tend to put the filler door on the side opposite the muffler and tail pipe, perhaps to minimize the odds of gasoline spilling onto a hot pipe during an accident. Click and Clack discussed this hypothesis on Car Talk recently, noting that, although the correlation exists, it is far from perfect.

They also mentioned a variant of another respondent’s observation that European manufacturers tend to put the filler door on the passenger’s side, perhaps to minimize the danger to a driver who runs out of gas and must add fuel to his tank while stopped at the side of a highway. Their variant was that manufacturers in countries that drive on the right tend to put filler doors on the passenger’s side, thereby to keep them farther away from shearing forces in head-on collisions. And indeed, Japanese cars do tend to have their filler doors on the left (drivers in Japan, like those in the U.K. and Australia, drive on the left side of the road). Here again, though, there are many exceptions. (My Miata’s filler door is on the left, but my son’s Subaru’s is on the right.)

By far the most common objection to Ms. Yu’s explanation was that it seemed to presume a conscious attempt on the part of manufacturers to coordinate their fuel-filler door placements – something for which there is no evidence. It is this objection that I find most interesting from a methodological perspective. Suppose manufacturers had not, in fact, coordinated their efforts in an explicit attempt to minimize the queues at gas pumps. Would that make Ms. Yu’s explanation any less plausible?

If one views product design features in an evolutionary perspective, the answer is clearly no. Darwinians argue that useful features evolve from random mutations. The eye, for example, developed from a sequence of random mutations because light-sensitive organisms were better able to locate valued objects and avoid harmful ones. The whole point of the theory is to explain how eyes came to exist without anyone having consciously planned them.

A similar point applies to evolutionary explanations in economics. If all manufacturers had happened to place fuel filler doors on, say, the left side of the car, one consequence would have been long gas lines during peak hours, because drivers in most countries would pull up on the right side of the pump. And in that case, manufacturers would have had a problem worth addressing. Ms. Yu’s explanation thus helps explain why the observed distribution of filler door placements is evolutionarily stable. Evolution, as Richard Dawkins once observed, is less aptly described as “the survival of the fittest” than as “the survival of the stable.”

In Summary: In telling my students that their answers don’t have to be the final word, I’m not saying that it’s not a good thing to be right. Rather, my point is that students are more likely to engage with our subject if we demonstrate that it can stimulate them to think about the world in interesting new ways.

I’ll mention another piece of evidence that the questions they pose meet that test with flying colors. Several hours after I had discussed a couple of examples from The Economic Naturalist in a brief interview on NPR earlier this week (“ Econo-reasoning behind everyday things ,” Marketplace Morning Report) a listener copied me on this e-mail in which he posed a long list of economic naturalist questions of his own. Some examples:

1. Why do phones and calculators/computers have different number pads? To wit: Phone: 123 456 789 0 Calculator/Computer: 789 456 123 0 2. Why do hockey games have 3 periods rather than 2 halves or 4 quarters? And why are points used to determine standings, rather than straight won-loss percentages? 3. How are railroads able to use freight cars that belong to other railroads? United doesn’t fly jets belonging to Southwest — so why should Burlington Northern let Norfolk Southern use its freight cars? 4. Why is whiskey sold in fifths? 5. There’s a metric scale for measuring just about everything — weight, distance, volume, even temperature (Celsius is derived from the metric system) — except for one thing — time. How come there’s never been a metric calendar/time system, with, say, 10 metric months of 10 metric days each, each metric day composed of 10 metric hours, each metric hour composed of 100 metric minutes, and each metric minute composed of 100 metric seconds (which would be different from the seconds currently used)? (I’m surprised that countries that use the metric system have no problem with the “non-metric” way we measure time). 6. Why is Newfoundland a half hour different from other time zones? 7. Why don’t doctors dispense medicine or employ pharmacists in their offices, so we can have one-stop health care and save a trip to the drugstore? 8. Why don’t cell phones have dial tones?

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The economic naturalist : in search of explanations for everyday enigmas

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• 1. Rectangular milk cartons and cylindrical soda cans : the economics of product design
• 2. Free peanuts and expensive batteries : supply and demand in action
• 3. Why equally talented workers often earn different salaries and other mysteries of the world of work
• 4. Why some buyers pay more than others : the economics of discount pricing
• 5. Arms races and the tragedy of the commons
• 6. The myth of ownership
• 7. Decoding marketplace signals
• 8. The economic naturalist hits the road
• 9. Psychology meets economics
• 10. The informal market for personal relationships
• 11. Two originals.

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The Economic Naturalist

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Economic Naturalist Essay Resources for Economics! (Distance Learning!)

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If you love Economics as much as I do, you'll love including this eye-opening essay for your Econ students! It's based off the book The Economic Naturalist by Robert H. Frank (and created with his permission) where he asks his students to look at the world around them, ask a compelling question, and answer it using economics. I ask my students to also include a (very) small amount of research to supplement their arguments. However, the point is for students to explore the question on their own and deepen their understanding of economics at work in the world around them.

I ask my students to read Ch. 1 of the book first. More on that in this blog post . However, there are plenty of examples of this process online and I include a real student example in this resource if you don't have the resources or time to have your students read this awesome book.

The essay is meant to be short yet demonstrate students' critical thinking and ability to think as an economist does! And the grading process is not only enjoyable when you get a variety of student questions, but it's easy with the (editable) rubric I've included.

The best part is that you can use this entire lesson for distance or digital learning! Student Instructions & Rubric come in a printable PDF version AND a Google Docs version. Students can write their essays on their own Google Doc and submit it digitally.

What to Expect:

• Student Instructions (PDF, Editable in MS Word & Google Docs)
• Student Sample (PDF)
• Rubric (PDF, Editable in MS Word & Google Docs)
• MLA Works Cited Instructions (PDF)
• Lesson Plan (PDF)

To reduce tech issues, please be sure to have the most recent free version of Adobe Reader downloaded. More help linked here .

Materials Needed:

• Suggested: Ch. 1 of the Economic Naturalist
• Student access to computers for typing the essay and researching

You might enjoy:

• Economics Shark Tank Project for the Supply and Demand Unit
• Supply and Demand Unit Bundle including Shark Tank Project
• The Economics Personal Finance Budgeting Project
• Consumerism & Ethics Economics Lesson
• Socratic Seminar Materials for the Econ Classroom

For freebies, teaching tips, and more, check out my blog and sign up for my weekly newsletter ! When you sign up, your first email will come with FREE supply and demand warm ups!