The following excerpt is from Eugen Weber’s Peasants into Frenchmen (1976), in which the author describes the modernization of France between 1870 and 1914:
“By 1919 even the high mountains had been won over. At Bêne, near Tour-de-Carol, the ruins of an unfinished oven still stood a few years ago where the owner of Esteva’s farm began to build one in that year and left it uncompleted: mute witness to one of the great revolutions of our century. By that time, only 7 or 8 percent of the family budget went for bread, against nearly 40 percent in 1800 and 20 percent in 1850.”
Discuss the above excerpt in light of our discussion of food and nutrition in developing countries.
Refer to the figure above, and consider the unitary agricultural model and the case where the Separation Property (Singh et al., 1986) holds, which we discussed in lecture.
The household produces a quantity [math]q=F(L,E^A)[/math] of a staple crop, where [math]L[/math] denotes a household’s labor allocation and [math]E^A[/math] denotes its endowment of land, which we assume fixed in this case. The household consumes a quantity [math]c[/math] of the staple crop. The household also has an endowment of labor time [math]E^L[/math], which it allocates among on-farm labor [math]L[/math], leisure [math]\ell[/math], and market labor [math]L^m[/math], though do note that the household can also hire in labor if it needs to, and that hired labor is denoted [math]L^h[/math]. The household faces wage [math]w[/math] and staple price [math]p[/math].
Pick one of the following three changes in the household’s economic circumstances:
An increase in the household’s labor endowment, possibly as a result of one of the household’s children attaining adulthood. In other words, the household’s preference structure for consumption and labor remains the same, but the household simply has more labor time,
An increase in the price of the staple paired with a decrease in the prevailing wage, or
The adoption of better soil fertility management practices.
Illustrate the change you choose in a graph, and discuss its consequences for the household. Make sure your answer completely describes what happens to the economic circumstances of the household and provides some intuition (or brief explanations) as to why variables change the way they do as a consequence of the change you pick.
I was not planning on blogging about this, but an email last week from my colleague Nicholas Magnan telling me he wanted to run the Trading Game — a simple in-class experiment I run with the students in my principles of microeconomics class every year to show them that trade leaves no one worse off — in his own classes and asking me whether I had written anything about this made me realize I should probably share this with other teachers of economics.
Protocol
The Trading Game is pretty simple. Before the start of every semester I have to teach principles of microeconomics, I look at the number of students enrolled in my class, and I head out to the nearest dollar store to buy an equal amounts of trinkets.
As luck would have it, WikiMedia Commons has a picture of the very place in Durham where I buy all of my Trading Game trinkets:
(Source: WikiMedia Commons.)
The trinkets I buy are all in the $1-to-$3 range, and they consist largely of toys. This year’s trinket harvest yielded a Toys (as in the movie) puzzle, glow sticks, Donald Duck stickers, fake tattoos, miniature plastic animals, toy dinosaurs, etc. For a group of 50 student, I usually spend no more than $100 of the allocation I receive for my course.
Then, when I want to run the Trading Game in the wake of teaching students about how trade can make everyone better off in context of chapter 1 of Mankiw’s Principles of Microeconomics, I go around allocating trinkets to students at random.
I then ask students to assign a value to the trinket they have just received ranging from 0 to 10, with higher values meaning cooler trinkets.
We then go around the room recording those values. Because students often bring their laptops to lecture, it is easy to find a volunteer to record those values, but you can have a teaching assistant do it. Once all values are recorded, total welfare (i.e., the sum total of the values students assign to their trinkets) is announced.
I then tell students that they have five minutes to trade voluntarily between themselves, insisting on the fact that trades must be voluntary (i.e., no stealing) and cannot involve dynamic aspects, or credit (i.e., no “I’ll give you my cool dinosaur if you give me your awful trinket and you buy drinks on Friday night.”)
Once students are done trading, we once again go around the room recording the values they assign to their trinkets. Once all values are recorded, total welfare is announced once again.
And that’s usually where the magic happens. When I ran the Trading Game last week, my class’ “aggregate welfare” went from 128 to about 180, if I recall correctly, and you could just see that it had become obvious to students that (in this context of well enforced property rights) trade not only left no one worse off, but it increased aggregate welfare.
If I’d wanted to do things more convincingly, I would’ve asked the student who recorded values in a spreadsheet to test whether the two values were statistically different from one another.
I cannot take credit for the Trading Game, as I first learned about it in 1999, when I played it at a colloquium for student leaders organized by a Canadian free-market think-tank (yes, those actually exist).
