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Posts Tagged ‘microeconomics

Microeconomic life lessons: Is handraising a race to the bottom?

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Imagine a race where everyone is trying to lose. Races to the bottom are a bit more complex than this scenario but the outcome is the same: instead of competition yielding the best outcomes, competition clamors around second-rate outcomes. Races to the bottom occur when the perception is that sub-par outcomes can yield benefits or when the voices of those who experience costs are left out of decision-making.

Most economics and political science textbooks give examples from competition surrounding international workers rights or environmental laws. When one country eliminates or decreases the penalties for violations of these laws, a competition ensues between countries to do the same, because business flows to countries with less regulations, transaction costs, and taxes. This leads to a situation where countries are vying to have less protections for the environment and their workers – they are racing to the bottom.

There are many school-based examples of races to the bottom I could talk about in this post (No Child Left Behind, Teach for America, etc). I’m going to focus on handraising because I’ve been thinking about it for awhile.

A few days ago, I was sitting in a class about policies and practices of English language learners. We were having a discussion about equitable participation in class. My instructor asked “what is the definition of engagement you use in your classroom?”. One of my colleagues had a brilliant (and slightly terrifying) answer. She said: “Engagement is when students care about the direction and process of their own learning“. I believe her definition because I’m a constructivist: I think that children construct their own knowledge when they encounter experiences that intrigue and challenge them. My colleague’s idea is brilliant and terrifying because of the standards many of us use to measure engagement and learning in our classrooms. We ask questions and look for raised hands. I’ve observed many elementary classrooms over the past few months. Teachers are nervous when no one raises their hand to answer questions and satisfied when students do. I’m not entirely sure how raised hands and spoken answers correlate to learning. Did the student already know the answer? Does it help students to listen to the answers of their peers when the teacher determines truth? It seems like there is a dual race to the bottom happening. Many teachers settle for raised hands at the expense of allowing learning processes to occur that are less teacher-controlled and have less “obvious” evidence of outcomes. Students create norms and power structures of their own. Some try to have the right answer to please the teacher. Many assign “smart” and “dumb” labels based on their peers’ handraising. They see handraising as part of the game of school rather than part of their learning process.

I’m not saying we should eliminate all questioning and handraising from our classrooms. Of course there are provocative questions, student-centered discussion formats, and other tools of our trade that resemble traditional handraising but have different outcomes.

Do you think handraising is a race to the bottom? How do you define engagement in your classroom?

Handraiser

Written by TeacherC

28 February 2009 at 1:41 pm

An Educator’s Guide to Opportunity Cost and Rational Choice Theory, or “How I Learned to Continue Worrying but Advocate for TFA Reform (Instead of Total Dissolution)”

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This post is inspired by every blog post, newspaper article, peer reviewed journal, nonprofit organization, website, message board post, speech, coalition, informal conversation, formal debate, radio show, expose, and TV news hour that advocates or opposes an education policy. The issues of opportunity cost and mutual exclusivity are either ignored or misunderstood.

I attempt to answer these questions:

  • How should our understanding opportunity cost influence our decision-making about education policies?
  • How do we define mutual exclusivity in education?
  • How do these issues apply to our debates about TFA?

Opportunity Cost and Cost-Benefit Analysis

The concept of opportunity cost is important to all decision-making processes The opportunity cost of a course of action is the forgone benefit from an alternative action. In order for a benefit to be forgone, the chosen and alternative actions have to be mutually exclusive. This means that one cannot do both actions act the same time. Our lives are made up of choices about mutually exclusive actions, from deciding to go to college instead of working full-time for four years, to choosing between coffee and tea during a quick break. Opportunity cost can be computed in terms of anything – including money, ice cream cones, love, life experience, friendship, and “achievement”. The concept of opportunity cost reflects the scarcity of our resources – especially time and money. When we integrate opportunity cost into our decision-making, we ensure the most efficient use of our scarce resources.

In order to figure out the true value of any decision, a decision-maker does a cost-benefit analysis (often subconsciously). We must account for the “up front benefits” of an action and factor in forgone benefit. The forgone benefit is subtracted from the “up front benefit”. I define “up front benefit” as the difference between the value of an action and its price: the tangible value that a decision-maker receives from their choice. Although this is most often computed in monetary terms, it can be computed in terms of anything: from nutrition to abstract feelings of happiness. To find the true value of any action, subtract forgone benefits from “up front benefits”:

Computing the True Value of an Action

Here is a more complex example:

Maggie can choose between working at a job that pays a $30,000 salary or raising her initial income potential 60% (to $50,000) by attending a 4 year institution. In her case, maximum earnings potential without a college degree is $35,000, and $75,000 with a degree.  The institution costs $10,000 per year to attend (after scholarships and aid).

From these examples, we see:

  • We can maximize the true value of an action by minimizing costs (both “up front” and forgone).
  • Cost-benefit analysis are influenced by time. Time can add value (example: appreciation of the value of antiques, interest from the bank, job promotions) or decrease the value (example: depreciation of a car).
  • It is not easy to calculate cost and value. Maggie might have had non-monetary value or costs. For example, the university might be far from home and prevent her from seeing family. Most of the time, forgone costs is are not monetary. There are also issues of commensurability: how do we weigh the monetary versus the social costs of an action? (My former debate coach asks “Which is larger? A horse head or a furlong?” to help debaters understand this issue.)

Applying Opportunity Cost to Education Policy Debates

During a debate about TFA JR Atwood and I had on his playthink blog, we discussed the opportunity cost argument against TFA:

Educatorblog: The cost of the TFA program is so high that there is a huge opportunity cost. TFA is not cheap to run (I read an article that said that when you calculate finders fees, the recruitment process, salaries, etc – it costs more than $125,000 per year for each placement). I’m tired of the ‘what we’re doing is better than doing nothing’ argument – if we took the money that the government and private donors send to TFA each year and invested it in programs that help veteran teachers adapt to new populations, other recruitment programs (like Oakland Teaching Fellows, New York Teaching Fellows, etc), reforming teacher preparation programs, etc – we could get more bang for our buck. In education, getting more bank for our buck translates into better education experiences for underserved students.

JR Atwood: …..I do not agree, however, that if we were to take the money from TFA and invest it into other teacher prep programs that we — or our children — would necessarily be better off. First, the money spread among various educational initiatives is not zero-sum. Just because TFA gets some money does not mean that, absent their existence, another program would. This is like saying, “Instead of spending all this money on the Iraq war, we should spend it at home.” Sounds good and I agree with the spirit of the argument. But if we stopped funding the war, its current budget would not necessarily be distributed among domestic social service agencies.

Touche, JR. A successful argument about opportunity cost has two components:

A. An explanation of why actions are mutually exclusive.

B. An explanation of how one alternative is better than the other (this is the subject of our debate and my (obligatory edublogger) TFA post).

Showing the negatives of TFA isn’t enough. I have to explain how dedicating resources to TFA forfeits the supreme benefit of other policy solutions.

Mutual Exclusivity in the World of Education Policy

The world of education is not like a child with $5 in a candy store – opportunity costs are not clear. Although the scarcity of resources is a primary factor in decision-making and there are tangible consequences, it is hard to figure out how the adoption of one policy precludes the implementation of other policies. We’ve erected the concept of “achievement” to help us quantify how students experience the consequences of our policies – but there are many other ways to understand costs and values (the list goes from concrete to abstract):

  • Time (could go at the top or bottom of the list)
  • Money
  • Physical safety
  • Achievement
  • Social services (health care, sex education, college and career consulting, etc)
  • Learning
  • Fair distribution of social and economic opportunity
  • Rights promotion
  • Community-building and local support
  • Emotional and mental stability
  • Happiness and fulfillment

None of the items on this list are mutually exclusive. Physical safety goes hand in hand with emotional stability. Students aren’t happy unless they feel like they are apart of a larger community that values their perspective. It takes money and time to achieve all of these goals.  Policies – both nuanced (example: a school’s decision about uniforms) to sweeping (example: No Child Left Behind) – influence each other’s execution, benefits, and costs. For example, clauses about science-based researched reading interventions in NCLB have precluded the adoption of interventions that are not scripted (as of now, the only interventions that are deemed “well-researched” by the government are scripted learning programs). NCLB’s requirements have changed the dynamics of instruction – from time spent on subjects to how students are taught. A nuanced policy can also impact other policies: a teacher’s behavior management style influences physical safety, achievement, learning, and community-building.

JR is right about money – although money and time represent large costs, it is nearly impossible to say that taking funds away from one program will automatically lead to the funding of a better program.  Revolution has a substantial failure rate. Lawmakers and voters might not understand how to spend the money more effectively. Also, there is the issue of private money in education. Private donors can call into the same traps as lawmakers – especially when dealing with the distribution of public goods.

Most of the time, the question of mutual exclusivity is really about how a particular policy disrupts the implementation of policies that are already in action and have proven results. When people think of “failing” schools, they imagine a situation where everything is wrong – the teaching methods, environment, curriculum, etc. In reality, there are things that work  and things that don’t. In troubled schools, the consequences of models that don’t work outweigh the consequences of models that work. Sometimes, it is a wise policy decision to expand or fully-fund working elements instead of trying to create a whole new paradigm (this argument is used for NCLB). Also, it is rare for lawmakers to dismantle programs and more likely that new interventions will exist on top of old ones. There is also political mutual exclusivity: does the presence of TFA stop lawmakers and schools from undertaking better reforms?

Dismantling TFA is not a direct path to the reforms we want to see (better pay, institutional support, better teacher education programs, etc). We need to ask ourselves: how can a reformed TFA help us meet our  education reform goals?

Since before TFA’s inception, at-risk students have been subjected to an endless stream of substitute teachers and emergency certified teachers. Most of the time, these teachers have little experience or preparation. lf these substitutes and emergency certs have less experience with children than the average TFA recruit, is it a sound policy to place TFA teachers with these students? In studies where the uncertified teacher pool had less experience  than TFAers, TFAers outperformed their uncertified counterparts. Many make the argument that TFA increases the propensity of school districts to choose uncertified teachers over certified ones – if this is true, then TFA must be dissolved (we should do studies about how budget cuts and shifts in the availability of ‘cheap teachers’ influences hiring and firing). TFA should meet the same fate if it is a ploy by lobbyists to decrease public spending in education (no matter the true cost).

Can a reformed TFA make the transition from stop-gap measure to adaptable reform model? A reformed TFA could function alongside teacher education, certification, and incentive reforms. In fact, it could even lead reforms (adopting a the best training models, creating a new paradigm for institutional support of teachers, etc). Not all teacher recruitment programs should focus on “elite college students” – what if positive elements of the reformed TFA model spread to other programs? For example, all teacher education/certification programs would benefit from high levels of institutional support for teachers. TFA has the support of the public, private donors, and schools. TFA should harness the political and economic support it already has and change the terms of agreements it has with schools and recruits in unity with broader reform goals.

This may all be a pipe dream. What are your thoughts? Is there mutual exclusivity in this situation: Can TFA coexist with other models of reform? How should we assess mutual exclusivity and determine the opportunity costs of education programs? Does the very presence of TFA eliminate the positive consequences of existing policies or make decision-makers less likely to undertake reforms? Political, economic, and social models for revolution are (always) welcome.

Dr. Strangelove cover

(Image from Wikipedia)

Microeconomic Life Lessons: Sunk Cost

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Imagine: My friends and I are at an all-you-can-eat Japanese restaurant celebrating a tournament win. We are stuffed to capacity and cringe at the thought of putting another piece of food in our mouths. An uneaten roll taunts us from the table. The sushi can’t be wrapped up and taken home. We do what the average American would do -the ladies are spared as the big guys at the table eat themselves to near-sickness. Their argument for eating the last roll is that they would not get the full value of their initial payment if they didn’t. To my surprise – they finish the roll on the table and order a few more. Then dessert. Then someone throws up.

This episode occurred before I took my first economics course. An understanding of sunk cost may have helped our over-eaters make better decisions.

Wikipedia entry on sunk cost:

In economics and in business decision-making, sunk costs are costs that have been incurred and which cannot be recovered to any significant degree…Economics proposes that a rational actor does not let sunk costs influence one’s decisions, because doing so would not be assessing a decision exclusively on its own merits….For example, when one pre-orders a non-refundable movie ticket, the price of the ticket becomes a sunk cost. Even if the ticket-buyer decides that he would rather not go to the movie, there is no way to get back the money he originally paid.

When we saw the roll on the dinner table we had two options:

1. Eat the roll – causing discomfort.

2. Let the roll go (and learn not to waste food in the future by ordering smaller portions).

No matter which option is chosen – we have already incurred the cost of the meal. Therefore, the information about the price we have already paid is irrelevant. A rational actor would choose the option that provides the greatest happiness (utility). In our case, leaving the roll on the table with a big tip and going home with a “I just ate sushi” glow on our faces, would have been a much better alternative to leaving an even bigger tip after a watching friend throw up in a restaurant.

I’ve been taught never to waste anything (especially food) – I’ve been known to use questionable bread for French Toast, pick brown pieces of lettuce off out of the bag, and prefer information from a “smell test” to to written expiration dates. My knowledge of sunk costs has helped me realize that I should buy less and order smaller portion sizes to avoid these situations altogether. Sunk costs should be barriers to entry – people should think about costs that cannot be recovered no matter what course of action is taken and factor that into their decision-making. In situations where I have to make the choice to suffer or let it go – I’ve learned to just let it go.

This concept can be applied to other situations:

- Choosing whether or not to go to a lame party after you’ve bought the non-refundable tickets and attire.

- Deciding to downgrade to Windows XP after buying Vista (I offer my sympathy to Windows users who have to make these tough decisions…).

- Exiting the Iraq War

Written by TeacherC

16 June 2008 at 2:39 pm

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