Hi Alex,
     It seems to me that you do want your students to know that demand
curves don't have to slope down and that lowering taxes on a good
doesn't have to cause more of the good to be consumed. Even if you don't
teach your students the details of income and substitution effects you
want them to know that these special cases exist. You might also want to
discuss the relative insensitivity of prime age male labor supply to
changes in wages in terms of income and substitution effects. That has
important implications for tax policy. - - Bill Dickens

William T. Dickens
The Brookings Institution
1775 Massachusetts Avenue, NW
Washington, DC 20036
Phone: (202) 797-6113
FAX:     (202) 797-6181
AOL IM: wtdickens

>>> [EMAIL PROTECTED] 02/12/03 09:34AM >>>
   So far we have that i. and s. effects are useful to

a) teach Marshallian demand
b) teach difference between nominal and real income
c) students going on to graduate school
d) useful but for reasons that can't be remembered! :)
e)  useful as a hurdle/signal
f) not useful at the intermediate/mba level

    Regarding Marshallian demand this is true but just raises the 
question what is the use of Marshallian demand at an intermediate
 (Note almost all textbooks discuss i. and s. effects but most do not 
teach M. demand.)  As I said in my post, for welfare analysis, income 
and substitution effects become important but this is not taught at the

I. level.

    I don't see how i. and s. effects teach nominal and real income but

am willing to be enlightened.

      c) is possible but it means that teaching i. and s. effects is a

waste for most students.

Surely there are enough useful things to teach that are also difficult?

 thus i. and s. effects is not needed for the hurdle.

    Thus the bulk of the posts, and a number I have received offlist, 
increase in my mind the hypothesis that this material is a waste of
(relative to other things that could be taught).


Alexander Tabarrok 
Department of Economics, MSN 1D3 
George Mason University 
Fairfax, VA, 22030 
Tel. 703-993-2314

Web Page: http://mason.gmu.edu/~atabarro/ 


Director of Research 
The Independent Institute 
100 Swan Way 
Oakland, CA, 94621 
Tel. 510-632-1366 

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