Robert Frank, an author and economist known for exploring everyday enigmas through economic principles, dives into intriguing questions in this discussion. He highlights why drive-up ATMs have Braille dots, connecting it to cost efficiency. Frank critiques traditional economics education, emphasizing genuine understanding over rote learning. He also discusses how individual consumer choices shape market dynamics, illustrating concepts like opportunity cost and emotional factors in decision-making, plus how evolutionary principles apply to human behavior.
Everyday observations, like Braille dots on ATMs, can be explained through economic principles such as cost-effectiveness and design efficiency.
Traditional economics education often fails due to poor retention, highlighting the need for a focus on core principles and practical examples.
Storytelling and relatable narratives in economic education enhance understanding, making complex concepts more accessible and engaging for students.
Deep dives
Understanding Everyday Economic Mysteries
The conversation emphasizes how everyday questions, like the presence of Braille dots on ATM keypads, can be explained through basic economic principles. Frank illustrates that the design choice results from cost-effectiveness; producing one kind of machine saves money rather than creating separate models for different locations. Similarly, the difference in airfare pricing between round trips starting in Kansas City versus Orlando is attributed to the nature of travelers: Kansas City passengers are often vacationing and have alternatives, while Orlando travelers are typically less price-sensitive and seeking specific connections. This showcases how economic reasoning can demystify common observations in consumer choices.
Reevaluating Economics Education
Frank candidly discusses the ineffectiveness of traditional economics education, particularly at the introductory level. He refers to a study indicating that students retain little to no knowledge six months after completing the course, raising concerns about teaching methods that focus on covering excessive material rather than facilitating comprehension. To combat this, he suggests focusing on a handful of core principles, such as opportunity cost, and reinforcing them through practical examples and thoughtful discussions to deepen understanding. This approach encourages engaging students in a way that transcends rote memorization and promotes critical thinking.
Opportunity Cost in Real-Life Decisions
An engaging example illustrates the opportunity cost of attending concerts when presented with two options, Clapton and Dylan. Students struggled to identify the correct opportunity cost, demonstrating how deeply understanding economic concepts can be challenging yet crucial for decision-making. The exercise shows that even seemingly simple economic ideas require clarification and can be misleading when context is not thoroughly discussed. Ultimately, Frank's aim is to foster a clear grasp of such concepts, making students more adept at applying economic reasoning in their lives.
Applying Cost-Benefit Analysis
Cost-benefit analysis is presented as a fundamental economic principle that can guide purchasing decisions in various scenarios. Frank provides an example of buying a clock or a laptop, where students initially fail to weigh the same cost-benefit logic due to the price disparity. This discrepancy highlights common irrationalities in consumer behavior, urging a consistent framework for evaluating decisions regardless of item value. By re-emphasizing the importance of logical reasoning in everyday purchases, he seeks to instill a habit of economic thinking in students.
Narrative Techniques in Learning Economics
Frank underscores the power of storytelling within economic education as a means to enhance understanding and retention of concepts. He relies on narratives and engaging questions to make the material more accessible and relatable, encouraging students to see practical applications of economic principles. Examples drawn from real-life situations and personal anecdotes resonate more strongly with students, which makes learning a more enjoyable process. This narrative approach not only fosters interest in economics but also cultivates a culture of inquiry among students, ensuring that they continue to explore and question the world around them.
Author Robert Frank visits Google to discuss his book "The Economic Naturalist: In Search of Explanations for Everyday Enigmas".
Why do the keypads on drive-up cash machines have Braille dots? Why are round-trip fares from Orlando to Kansas City higher than those from Kansas City to Orlando? For decades, Robert Frank has been asking his economics students to pose and answer questions like these as a way of learning how economic principles operate in the real world - which they do everywhere, all the time.
Once you learn to think like an economist, all kinds of puzzling observations start to make sense. Drive-up ATM keypads have Braille dots because it's cheaper to make the same machine for both drive-up and walk-up locations. Travelers from Kansas City to Orlando pay less because they are usually price-sensitive tourists with many choices of destination, whereas travelers originating from Orlando typically choose Kansas City for specific family or business reasons. The Economic Naturalist employs basic economic principles to answer scores of intriguing questions from everyday life, and along the way, introduces key ideas such as the cost-benefit principle, the "no cash on the table" principle, and the law of one price. This is as delightful and painless a way to learn fundamental economics as there is!