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
E-MAIL: [EMAIL PROTECTED]
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
level?
(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
time
(relative to other things that could be taught).
Alex
--
Alexander Tabarrok
Department of Economics, MSN 1D3
George Mason University
Fairfax, VA, 22030
Tel. 703-993-2314
Web Page: http://mason.gmu.edu/~atabarro/
and
Director of Research
The Independent Institute
100 Swan Way
Oakland, CA, 94621
Tel. 510-632-1366
