Recorded lectures and the 'laundry test'

Last month I wrote a post about new meta-analytic research that showed some positive effects of using video recordings as part of teaching, especially if they are supplementary to in-class learning. I noted towards the end of that post that:

The takeaway from this is that, at the minimum, once face-to-face teaching returns we should be routinely recording our existing lectures and making those recordings available to students. Teachers need to get over their fear that making recorded lectures available somehow makes students worse off, because it clearly is not the case.

However, some anxiety remains among teachers, that recording lecture material would lead class attendance to fall. I know that some are even more worried about that, now that students have had a taste of learning by video (although, I'd be inclined to argue exactly the opposite case!). What can you do to make students want to come to class?

I had meant to follow up that earlier post, because I had recently read this pretty insightful article by Dan Levy. In the article, Levy talks about the 'laundry test':

Where I teach, online classes generally get recorded; students can watch the recorded videos if they cannot attend the live session. I recently asked a student how she decided whether to engage in the live class or watch the recording later. Her answer was revealing. She said, “When I am trying to decide, I ask myself, ‘Is this a class I could attend while folding my laundry?’ If the answer is yes, I watch the recording. If the answer is no, I attend the live session.”

While I think that, in general, we should design both synchronous and asynchronous experiences that students find so engaging that they cannot fold the laundry at the same time, I think the spirit of this question might help inform your decision of what to reserve for asynchronous learning.

While Levy is writing about teaching online, I believe the same principles apply to teaching face-to-face. If a lecture session is not interactive and the students could basically be sitting in class folding laundry, then it's probably time to reconsider your approach. I break my lectures up with exercises that make the students put into practice what they are learning immediately. I run short illustrative experiments or collect data from the class to illustrate points in my ECONS102 class. It would be difficult for students to participate in the exercises or experiments effectively and fold laundry at the same time. And it provides a clear value-added benefit over a static lecture recording (and that's why I was so dismayed at the decision not to have face-to-face lectures this trimester).

Anyway, Levy's article provides some great advice for those who are considering taking a blended learning approach. With lessons also for those who are not doing so.

What's behind the decrease in support for free trade?

In my ECONS102 class, we cover international trade and globalisation, but we don't really go into the globalisation debate any more (a consequence of squeezing more cool content into the paper, is that some things get squeezed out). However, we do still cover the arguments for and against free trade. And it would appear, based on recent experience, that the (increasingly populist) arguments against free trade are getting louder. A reasonable question then, is, what is behind the decrease in support for free trade?

In a new article published in the European Journal of Political Economy (ungated earlier version here), Philipp Harms (Johannes Gutenberg University Mainz) and Jakob Schwab (German Development Institute) try to answer that question. They use data from the International Social Survey Programme (ISSP) waves in 2003 and 2013, i.e. before and after the Global Financial Crisis. The data they use covers 21 countries, and includes over 37,000 observations. The key variable is based on the answer to the following question:

“How much do you agree or disagree with the following statement? ‘[My country] should limit the import of foreign products in order to protect its national economy.’”

Respondents were asked to answer on a scale from “Agree strongly” (=1) to “Disagree strongly” (=5). We capture this answer in the variable IMP_PHIL, which takes a value of 1 if a respondent disagrees or strongly disagrees with the statement (i.e. if he or she gives the answer 4 or 5). Over the entire sample, this applies to roughly 40% of the population.

So, given that 40% of people disagree or disagree strongly with that statement, there is substantial (but not majority) support for international trade in the sample. Harms and Schwab then use a regression model to find individual-level and country-level factors associated with support for international trade, and find that:

...a lower Age, higher education (Degree), a more successful career (WrkSup), as well as individual prosperity (RelIncome) induce respondents to support international trade, since all these features enable individuals to reap the benefits of globalization...

On top of these preconditions for economic success, a generally open attitude towards other countries (Cosmopol) is also positively correlated with the likelihood that an individual welcomes foreign goods imports... Moreover... in most economies, the average attitude towards international trade changed significantly between 2003 and 2013. More specifically, we observe that the average support for international trade decreased in twelve out of 21 countries, while it increased in six countries – interestingly, including the United Kingdom and the United States – and did not exhibit significant changes in three countries.

They then go on to tease out the factors associated with the change in support at the country level, and find that:

...a higher (lower) GDP growth rate significantly raised (reduced) support for international trade. The second variable we use to capture countries’ experience during the global financial crisis is the change in a country’s stock market index between its peak (usually June 2008) and its trough (usually March 2009). We expect larger collapses to drag down the support for trade, i.e. a positive sign of the variable StockMarket. The results... support this hypothesis. The third variable we used for Crisis-Experience... was the change in a country’s unemployment rate between 2008 and 2009... the coefficient of CrisisUnemp has the expected negative sign, but that the effect is not statistically significant. By contrast, the duration of the crisis (CrisisDuration) has a significantly negative effect... the change of a country’s Gini coefficient between 2003 and 2013 (ChangeGini, in percentage points) had a significantly negative effect on the support for international trade...

In other words, countries that generally had a worse experience of the Global Financial Crisis (lower GDP growth rate, larger falls in the stock market, and greater increases in inequality, but not changes in the unemployment rate) experienced greater reductions in support for international trade.

Finally, allowing the effects of various characteristics to change over time in their analysis, Harms and Schwab conclude that:

...our findings contradict the standard narrative that the increasing sentiment against international trade predominantly reflects the anger of those groups whose wages and jobs were negatively affected by international competition. By contrast, it is rather the eroding enthusiasm of the elites than the depression of the deprived, which contributed to the declining support for international trade: in 2013, youth, education and income were less likely to make individuals respond explicitly in favor of international trade than in 2003.

Those results are the most surprising aspect of the paper. As Harms and Schwab note, it contradicts the standard narrative.

It feels like there is more important work to be done in this space. Especially, I wouldn't be surprised if there was a common explanation for both the higher-inequality-lower-support relationship and the decline in elite support for trade. Hopefully, further research will help us understand this a bit more.

Rationing access to beaches, in a time of physical distancing

Last week, my ECONS102 class covered common resources and the Tragedy of the Commons. Common resources are rival (one person's consumption reduces the amount of the good available for everyone else), and non-excludable (if the good is available to anyone, it is available to everyone, and you can't easily prevent people from having access to it). The problem with common resources is that, because they are non-excludable (and therefore open access), they are over-consumed relative to the socially efficient quantity. Essentially, there is a difference between the private incentives (to consume as much of the good as you want to), and the social incentives (to ensure that the good is shared in some fair and equitable way).

Now consider public parks and beaches. In normal times, parks and beaches are non-rival (and non-excludable), because there is plenty of space available for everyone. However, in peak season they are clearly rival, and because they are non-excludable as well, they are common resources and so they are subject to the common resource problem outlined above. Everyone wants to be at the beach (the private incentive), but by everyone being at the beach, the beach becomes overcrowded and everyone's experience is all the worse for it. Fortunately, this is only a problem at times of peak demand.

However, what constitutes peak demand at beaches is redefined when physical distancing is important, as Time reported back in May:

Last weekend, images and reports of glutted beaches and parks have spurred several governors to roll back access to parks and shorelines for fear of a surge in new COVID-19 infections. At a certain point, it becomes physically impossible to pack so many people into six-foot intervals.

As summer approaches, and demand for outdoor recreation skyrockets even further, public space stands to become what economists call a “common resource” — something that belongs to no one, like fish in a lake, but can be depleted without a form of rationing. Already, New York City Mayor Bill de Blasio said Thursday that the virus-stricken city may limit entry to some parks.

“Space is now a resource that, in the foreseeable future, we’re going to have to ration in a way we’ve never had to ration before,” says Clemson University economist Michael D. Makowsky. “The outdoors used to be an inexhaustible resource. Human beings now require a lot more volume than they used to.”

The solution to a common resource problem is to make the good excludable, rather than non-excludable - essentially, to move from a resources that is open access, to one that is closed access (or where access is restricted). In the case of parks or beaches, the government can achieve this by rationing access to the resource. In the case of parks and beaches, the Time article notes three potential options:

The first and simplest approach would be to limit access to public places, like parks and beaches, based on some form of lottery. On Mondays, for example, Yosemite National Park might be closed to families in which the head of household had a driver’s license number ending in a 1 or a 2. On Tuesdays, on 3 or 4, and so forth — effectively reducing the potential crowd by 20%...

A second strategy could involve issuing permits for controlled spaces with discrete access points that can be sold or exchanged. It’s another idea that has already been tested in environmental policy — specifically, the “cap and trade” system, which created a marketplace for companies to buy and sell emissions permits while attempting to incentivize emissions reductions.

In the case of space rationing, an analogous policy would aspire less to incentivize isolation than to fairly distribute the limited resource of open areas. Under such a framework, cities would issue free permits to all residents to be used for access to the most popular parks, beaches and other coveted public areas. A person could choose to sell unwanted permits, or trade them for a different kind of permit (to a different park, or for a different day, and so forth.)...

A third option would be to impose new taxes on certain privileges that are currently shut down in many parts of the country, like dining in at a restaurant. “If ever there was a time for a dine-in tax, it’s now,” Makowsky says. Such a tax could be proportional to demand, with higher levies on weekends and other peak times, he says.

The first option is clearly open to abuse, since households with multiple vehicles (with difference licence plates) could skirt around the restriction quite easily. The third option doesn't regulate the number of people going to the beach directly, but simply makes it more expensive to do so (in essence, this potential solution isn't about making the good excludable, but about making it non-rival). Unless the tax varies based on beach-going demand, the tax would be too high on bad weather days, discouraging beach-going on days when people don't want to go to the beach, while simultaneously being too low on good weather days, where people would be more willing to pay the tax and still go to the beach. It likely wouldn't solve the common property problem at all.

The second option seems most feasible from an economic standpoint, and is quite similar to the tradeable quotas that are used to manage fisheries (another common resource). It encodes a property right for everyone (the right to go to the beach on a particular day), and then lets people trade between themselves to determine who actually takes up the right. The number of permits can easily be limited to ensure the 'right' number are available to ensure physical distancing can be maintained each day.

To be efficient (welfare-maximising), a property rights system needs to have four features:

1. Universal - In this case, everyone who wants to go to the beach must have a permit;
2. Exclusive - Only permit-holders are allowed to go to the beach, and all the costs and benefits of beach-going must accrue to the permit-holder;
3. Transferable - Permits must be able to be transferred in a voluntary exchange; and
4. Enforceable - There must be penalties in place that are sufficient to deter people without permits from attempting to go to the beach.

If those four features are in place, then the permit-based system is an efficient solution to the common property problem of how to make the beach (or park) closed access. The big problem then becomes, how do you allocate the permits in the first place? And of course, how do you administer the system? Those problems would first need to be solved in order for this system to be workable.

[HT: Marginal Revolution]

Coronavirus and the market for oranges

Last week, the New Zealand Herald reported:

Kiwis desperate to stay healthy in the midst of the Covid 19 pandemic have been buying up vitamin C in whatever form they can get it.

Since the virus hit our shores in early March, sales of oranges, kiwifruit and vitamin C supplements have surged.

Citrus New Zealand domestic market lead James Williams said sales of New Zealand navel oranges were 10-20 per cent higher than in previous years meaning Kiwis gobbled between 800,000 and 1.6 million kilograms of extra oranges.

He said pre-packed bags of the fruit had proved especially popular during the peak of the outbreak in New Zealand because there was less human interaction involved...

The popularity of the fruit this season meant consumers would have seen the price of the fruit go up in the last seven-10 days as the supply of the fruit dwindled, Williams said.

Consumer tastes and preferences are one of the factors underlying the demand curve. As consumers' preferences shift towards oranges, they demand more of them at each and every price. As shown in the diagram below, the market for oranges was initially in equilibrium where demand (D0) met supply (S0), at a price of P0, and Q0 oranges were traded. The increase in demand to D1 increases the quantity of oranges traded to Q1, and increases the price to P1.

The same effect is happening in other markets mentioned in the article, including kiwifruit (also increased demand because of high Vitamin C content) and avocados (because people have more time for cooking their own meals, they seem to be demanding more avocados).