A dozen years ago, I discussed in these pages the economic content of The Dictionary of Cultural Literacy: What Every American Needs to Know. That much heralded reference has since been revised twice and just recently went online ( http://www.bartleby.com/59/). Given economic developments since the book first appeared and given the praise heaped on it over the years (The New York Times called it “an excellent piece of work…stimulating and enlightening.”), let's catch up with the latest edition.

The New Dictionary of Cultural Literacy: What Every American Needs to Know , third ed. (Houghton Mifflin, 2002) by E.D. Hirsch, Jr., Joseph F. Kett, and James Trefil, attempts to pull together "that shifting body of information that our culture has found useful, and therefore worth preserving." The latest edition still contains 23 sections, one of which again covers "Business and Economics." This section still defines about 400 terms and is still written by Joseph F. Kett, a history professor at the University of Virginia.

In the section's opener, Kett continues to assure readers they need not become professors of economics to know what's going on. He says, however, that people should understand the difference between stocks and bonds and why the stock market declines when interest rates rise. I disagree. I think it's more important, for example, to learn something about the benefits of specialization and exchange based on comparative advantage. Regardless, neither his nugget of cultural literacy nor mine gets covered. Readers are told that bonds, unlike stocks, have a definite yield, but that's about it. The interest rate gets one sentence, and there is no cross reference between the interest rate and the stock market.

The terms that Kett does select seem oddly negative. For example, recession and depression are defined but recovery, expansion, and economic growth are not listed. Individuals profiled are primarily those whose contributions focus on some sort of market failure or economic pathology, such as Thomas Malthus , Karl Marx , Cesar Chavez , Ralph Nader , and robber barons , such as Cornelius Vanderbilt . Each of these gets at least twice the coverage accorded Adam Smith, arguably the most important economic figure ever. Consumers in Kett's economy face a grim marketplace of caveat emptor , planned obsolescence, boycott, monopoly , oligopoly , cartel , trust, and OPEC . Competition, market competition, and perfect competition apparently are not significant enough to make the list; only destructive competition is included. There is no mention of the gains from exchange, utility, consumer surplus, innovation, or any other way that consumers might actually benefit from market activity.

In Kett's accentuate-the-negative mode, tax avoidance gets prime coverage, with tax break , tax haven , tax loophole , tax shelter, investment tax credit, itemized deduction, and depletion allowance . Labor unions also get more coverage than seem warranted given their dwindling claim on the work force. More generally, some included terms seem dated, even archaic, such as absenteeism , journeyman, peonage , and organization man .

Readers may grow more literate about economic pathologies, tax dodges, labor unions, and some dated expressions, but they will learn nothing about the missing terms already mentioned or other missing terms such as opportunity cost, economies of scale, specialization, comparative advantage, public goods, externalities, aggregate demand, and aggregate supply.

Some definitions are still fuzzy. For example, elasticity is defined as "A shift in either demand or supply of a good or service depending on its price. Demand is said to be elastic when it responds quickly to changes in prices, and inelastic when it responds sluggishly.” This tangle remains word-for-word as it appeared in the first edition.

A handful of new terms has been added since the first edition, including dot-coms , Enron , euro , information economy and the Family and Medical Leave Act of 1993. Missing still are such timely developments as welfare reform, earned income tax credit, federal funds rate, outsourcing, privatization, emerging market economies, and the World Trade Organization. Although promoted as “completely revised and updated,” the biggest change since the first edition, at least based on my reading of “Business and Economics,” seems to be the addition of the word “New” to the book's title.

As I argued a dozen years ago, Professor Kett has drained the life from the subject, dissected the cadaver, and put some of the vital organs in jars. He then describes what's in the jars. To be sure, the market economy is far from perfect, but he presents a truly dismal science. This history professor is a poor guide to the vitality and relevance of the discipline. That's what happens when specialization and comparative advantage are ignored.

CAMPUS CULTURE AND CLASS ATTENDANCE

When I arrived years ago at the University of Connecticut, I was informed that class attendance, in itself, could not count towards a student's final grade (this was fresh after campus protests about the war in Vietnam and student freedom). As a teacher of large principles classes, I found the policy administratively easier than keeping attendance in a class of hundreds. I realized I could still pop quizzes to capture some attendance measure in the final grade, but I had my hands full as it was.

Anyway, attendance in my large classes typically would start out strong for the first several weeks of the semester, but would slip some after the first exam. It's not that the first exam was easy, or that I am a poor teacher (my course evaluations have been good and I won the University's Excellence in Teaching Award). I asked around and concluded that others, especially those teaching large classes, also faced some empty seats.

I was reminded of all this recently when I visited the University of Virginia to talk to a giant class of principles students. I was stunned by the packed house. I asked the instructor about it and he said that attendance has not been a problem, even though it's not explicitly part of the course grade. After the talk, a student came up and told me she had transferred from UConn. I remarked about how UVa's attendance was better than UConn's, and she said “Oh yeah, at UConn we didn't go to class.” I asked her why not. She had no specifics, saying only that it was a UConn thing, and that UVa had more of go-to-class thing.

No doubt class attendance differs across instructors, courses, and departments. But do patterns differ across campuses, even those with the same attendance policies? Is there, in a sense, a culture of class attendance? New students may develop habits by observing more senior students, and in this way the culture perpetuates itself. Have any of you who have taught at different institutions observed different attendance cultures across campuses?

I carried out a brief online survey of class attendance policies by institution. Most colleges leave it up to the instructor, and some, like UConn, note that poor attendance per se cannot reduce the course grade. A minority of colleges have tight requirements. For example, Baylor University, Bluefield College, and the University of Richmond's School of Business, require that a student must attend at least 75 percent of classes to earn credit in the course.

CHANNELING ADAM SMITH

The list of novels written by economists to deliver economic lessons is growing. In Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue (Financial Times/Prentice Hall, 2002), Jonathan Wight of the University of Richmond creates a dialogue between Adam Smith and a current-day economics instructor to deliver lessons in both economics and ethics.

Rich Burns has just finished his second year of teaching at mythical Hearst College in Virginia. He has been putting off the final chapter of his dissertation, the chapter containing a privatization formula that could be worth a billion dollars to a multinational. Burns gets a visit from a Harold Timms, an engine mechanic, who claims that a voice has been “babbling” in his head nonstop for two weeks. It seems that Timms is channeling the thoughts of Adam Smith. Once Burns is satisfied that Timms, or Smith, is the real deal, the novel moves forward on two related tracks, the Smith-Burns dialogue and a string of events that drive the narrative, including rekindling an old flame, a cross-country road trip, attempted murder, corporate greed, and a combination channel-fest and poker game in Nevada involving Smith, Voltaire, Rousseau, Quesnay, and Hume (what are the odds?).

Smith says he has come back to set the record straight. He claims that undue focus on his invisible-hand metaphor has turned him into a “caricature.” This distortion has shortchanged the human and ethical aspects of his writing, especially as reflected in The Theory of Moral Sentiments . Turns out that Smith has channeled “many young minds” over the years, including Burns himself in high school and early college. But once Burns began parroting his professors, Burns turned a deaf ear on Smith and hardened up. “It's a tragedy,” Smith laments, “young minds set so quickly, and older minds are like rusted iron fortresses.” (p. 29).

After a hundred pages of dialogue, however, Burns begins to soften. His first epiphany is the insight that “love is real.” After another hundred pages, he sees Smith not just as the father of economics but the founder of “a moral way of living” as expressed by “superior prudence.” Superior prudence combines narrow prudence “with valor, with extensive benevolence, with a sacred regard for the rules of justice, and with a proper degree of self command” (p. 236).

An economist writing a novel is like a dog dancing on its hind legs. The fact that it's done at all is remarkable. It seems unsporting to grade the performance. But the whole point of stuffing economics inside a novel is to engage the reader enough to swallow the lessons that go with the narrative.

Many students may find the channeling approach attractive. Paranormal TV shows such as Crossing Over with John Edwards and a growing occult section of bookstores attract a young audience. What better way to convey the thoughts of Smith than using his own words. But some of the Smith-Burns dialogue may prove heavy going for students. Smith's language is a throwback, and the subject is often abstract, such as the description of “superior prudence.” Still, the Smith-Burns exchange has a certain rhythm and even nuance. In contrast, the action narrative seems forced, melodramatic (“Kill me, if you must, but let him go” p. 241), and more prone to clichés. But the ultimate test of a narrative is whether one wants to continue reading, and I guess I did want to see how things turned out.

Finally, I understand that the book's central vehicle of channeling must appear at least conceivable for the novel to work. So we might expect channeling to be presented in a plausible light. I felt, however, that the author pushed an acceptance of channeling a little too hard, especially in the “source notes,” which are meant to provide explanations and source material that are clearly matter-of-fact, not part of the fiction. A source note, for example, in a matter-of-fact way, points to a Web site that “carefully catalogued” channeler Edgar Cayce's thousands of psychic healings. Another source note explains that the “insistent inner voice” that inspired the book A Course in Miracles was identified by the channeler as Jesus Christ. I looked up this book on the Religious Movements Homepage at the University of Virginia ( http://religiousmovements.lib.virginia.edu/nrms/course.html ) and learned that the estimated two million followers of A Course in Miracles “believe that only love is real,” an insight reminiscent of Burns's first epiphany. And a source note refers the reader to “an excellent discussion of channeling:” With the Tongues of Men and Angels: A Study of Channeling by Arthur Hastings. I Googled Hastings and learned that he is former Dean and now Professor at the Institute of Transpersonal Psychology in Palo Alto, California. In the “Acknowledgements” for Saving Adam Smith , Professor Wight notes: “During my sabbatical, office support and a stimulating environment were provided by the Institute of Transpersonal Psychology (ITP) in Palo Alto, California, a graduate school in psychology (including moral psychology)” (p. 321).

THE GRAPEVINE

In the Fall 2003 issue of The Teaching Economist, I related an exam excuse from a student who broke his leg running to get to my quiz, then two weeks later he was out of sorts during my exam because of medication he took for leg pain. I invited other notable exam excuses and published one in the Spring 2004 issue. Melissa Wiseman of Houston Baptist University reports that she received a phone call from a student a few hours before the exam. The student asked if she had seen the morning news. At 2:30 that morning the student and her 13 month-old daughter were trapped on their third floor balcony by a fire in the apartment complex. “With flames at her back, she called a young man running from the fire to come help her, and she dropped her baby over the balcony into his arms and then leapt over herself. Her baby was safe but she hit the fence and tore up her leg.  She was calling me from the gurney in the emergency room waiting for emergency surgery to repair her leg. I share this with my students and tell them that if they can't make it, they had better have a better excuse than this if they don't call to let me know.  By the way, she lost everything, but came back to school and is doing fine.”

In the Spring 2004 issue of The Teaching Economist , I wondered how a college coach could get away with berating players in front of a national audience whereas a teacher who challenged a student's drive, even in a private setting, might be considered insensitive. Terry Liska of the University of Wisconsin-Platteville offers his insights on coaching and teaching. He tells “The Grapevine” that the most important coaching function is to assess player strengths and weaknesses. Coaches usually spend more time with players than teachers spend with students, so coaches have an assessment advantage. Both coaches and teachers should stick to the fundamentals. Identify the keys to success in a sport or a profession and focus on those skills for the season or the term. Both on the field and in the classroom less is often more. Coaches will seldom lecture on an important skill and then move on to something else. Practical applications drill the point home. Fundamentals must be demonstrated and applied repeatedly. Professor Liska notes that athletes are highly motivated, and as a group they are more receptive than is a typical class. Anger and emotion can be effective motivators, but you have to know with whom you are dealing.

Örn Bodvarsson of the University of Nebraska-Lincoln and Rosemary Walker of Washburn University in Kansas explore whether parental funding of college affects a student's incentive to do well. After controlling for a wide variety of factors influencing college performance, they find through a sample of 1,300 undergraduates that those students receiving at least partial financing from their parents for tuition and books (1) failed courses more often than self-financed students, (2) were at greater risk for academic probation, and (3) earned lower GPAs. “Do Parental Cash Transfers Weaken Performance in College?” will appear in the October 2004 issue of the Economics of Education Review .

In large lecture principle courses, Mary Ellen Benedict and John Hoag of Bowling Green State find that individuals who prefer to sit near the front of the classroom had a higher probability of receiving A's. A preference for sitting in the back, regardless of whether the student did so, increased the probability of receiving a D or F. Those students unable to sit in their preferred locations and forced forward tended to receive higher grades, despite their preferences for back seats. This last finding is important because it gets around the self-selection problem that better students prefer sitting closer to the front. “Are Seating Preferences or Location in Large Lectures Related to Course Performance?” was scheduled to appear in the Summer 2004 issue of the Journal of Economic Education , which is available at http://www.indiana.edu/~econed/.

ODDS AND ENDS

In the last issue, I wrote about UConn's hothead coaches, Geno Auriemma and Jim Calhoun, two months before they won the women's and men's NCAA basketball championships, the first such double win in NCAA history. Just before the tournament, CBS's Morley Safer on 60 Minutes asked Auriemma: “You're very tough on the players. To what extent is it an act?” Auriemma responded: “It's not an act. Because if it was an act, I think they'd read through it. So it's real. It's absolutely, positively real. Players and people break down mentally before they break down physically, I believe. So you're not just training them to run and jump—you're training them hopefully to think under pressure. And to do that, you must practice a certain kind of psychology.…. First you win it in your head. Then you win it on the court with your body. First, you see it, then you do it. So Yogi was right. Ninety percent of the game is half mental.” So Auriemma claims his anger is real even though it appears calculated to prepare his players for game pressure. But why add to that pressure during the game? He has won four of the last five national titles, so what do I know.

Groups that administer standardized tests, such as the Educational Testing Service, try to stay on top of the latest technology to prevent cheating. In a number of cases, a video camera roughly the size of a quarter was hidden in the test taker's tie or watch or jacket and used to send information to an outside ringer, who quickly compiled answers and called them back into a silent pager. Using palm-size devices and cell phones with text messaging, students can also send answers to each or even access files on their PCs.

Each year, American Heritage magazine picks the most overrated and underrated in a variety of categories, with the categories changing from year to year. In their most recent listings, the Wizard of Menlo Park, Thomas Edison, was deemed the most overrated inventor. Although he came up with the first functional incandescent light bulb, he clung to the last to his technically inferior direct-current electricity. He ended up losing his company in the battle with alternating current. The most underrated inventors were the two men and six women who, in the 1940s, developed and programmed the first electronic computer—the 30 ton, 18,000 vacuum tubed, Electronic Numerical Integrator and Computer (ENIAC), nicknamed “the Beast.”

Periodicals are still trying to figure out how to price their products on the Internet. The New York Times is mostly free except for a few items such as crossword puzzles, which cost $35 annually, and articles more than seven days old, which cost $2.95 each. The Wall Street Journal charges $79 annually for online only and $39 online for those who also pay $198 for the print edition (articles more than 30 days old cost $2.95 each). And the Chronicle of Higher Education charges $82.50 for the hard copy, which includes online access, but online access by itself also costs $82.50. The marginal cost of another online subscriber must be close to zero, whereas the marginal cost of paper, printing, and postage for the 49 issues of the Chronicle published each year must be far north of zero. But advertising revenue from the online edition is probably much lower than from the print edition.

Eastman Kodak stopped making slide projectors last June, the victim of digital imaging. Kodak, once the mighty Dow component, has been laid low by the digital revolution, with a share price only a third its 1998 level.

“Being a free trader in an election year is like being a turkey a month before Thanksgiving.” --Arnold Kling

“It's like Lenin said: You look for the person who'll benefit.” --Jeff “The Dude” Lebowski in The Big Lebowski

 Return to Contents of Issue 27, Fall 2004