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Everyday Economics: A Discussion with Professor Charity-Joy Revere

Nigel Thompson

Merion West

Everyday Economics

“We try to take away the value judgments because economics is not designed to make a value judgment—that’s not the tools that we have in this discipline.”

When Charity-Joy Revere stepped into her first economics course at Middlebury College, she had no idea it would permanently change her perspective on life. As she says on her website: “Seeing the world through eyes of an economist was like wearing a pair of those incredible recon glasses from Mission Impossible.” Now, she seeks to inspire the same realization in all of her students as the director of economic education at the University of Arizona. On August 8th, Professor Revere joined Merion West‘s Nigel Thompson to discuss the field’s many misunderstandings in the public eye, it’s everyday applications, and political capabilities.

Let’s start with your journey to economics. For you it started with your first class on the subject. On your website, you mention your fascination when you watched a professor break down the subject and apply it to everyday tasks. Can you expand upon that first experience with economics and describe your path forward since then?

Yes, it was completely unexpected. I was thinking that economics was going to be one of the most boring classes I took that semester. It was required as a business student, and I thought it was going to be Wall Street and finance. And I wasn’t really into that sort of thing. But he started out with these crazy questions. For someone who didn’t know what economics was at the time, I asked: what is the connection here? I don’t know what he’s saying, but it’s intriguing and he wouldn’t ever tell us the answers. He’d let us wrestle with the questions for a really long time and maybe reveal the answer the next class period after we’d have come up with a million ideas.

One of my favorites was the one I have on my website, which is: why do people crowd around a luggage belt after they get off the airplane, and is there a better way? The answer is yes. There is a better way, but why don’t we do that? Well, economics can help explain that and other mysteries of why we behave the way we do. It’s understanding that economics is really a social science, and it’s about how people make choices in a social setting, which is really interesting.

Going off of that, you talked about your pre-conceived notions of economics being a drab, boring subject. How do you think it got this label?

That’s a good question. It does attract the geeky, nerdy types. They end up being your professors, and maybe not all of them are quite as enthusiastic as others. There’s probably a little of that perpetuated as for who is attracted to it. It’s certainly an analytical kind of a thing. You’ve probably heard it referred to as the dismal science, and it is a reality check on the idealistic mind.

I teach university-level students, so when you’re 18, 19 years old, you’re pretty idealistic. You want the world to be a better place and when your professor comes along and says: “That’s great, but we do have some reality we have to check-in with, and economics can help you do that.” You may think it’s really interesting, but others may not want to hear that.

Money I think is probably the number one thing people associate with economics. When they find out it’s so much more than that—I hear from my students all the time—they say: “I had no idea. You told me I was going to love this by the time I was done your course. I didn’t believe you then, but now I do.”

When I read some of your work and about your approach, I couldn’t help but think of Freakonomics and its application of economics as more of a social science rather than anything to do with money. It considers the human element of economics. That being said, what do you think is the importance of that human element?

Personally, I think it’s very important. We have a lot of models in economics and a lot of mathematics. They help us understand the nuts and bolts of how things work together, but they are limited by an extreme rationality.

Some of that is changing, and we now take into account some of the newer fields such as behavioral economics. I always go through that in my principles-level courses. I think it’s really important because it brings in the human element. It’s the blend of economics and psychology. We’re maybe not 100% rational in everything we do—not in the way we define rationality anyway—and that’s really important.

If you tell a student that you always make a decision in a particular way according to this model that we have—consumer theory for instance in economics—and they look at their own lives and go: “Well no, I can point out some examples where I don’t do that.” Then you have to say maybe there’s something else we can bring in here. There’s something else that’s influencing that choice they make. I think it’s really important to bring those elements in so students can relate to it and not dismiss it as something that doesn’t verify their own experience.

Would you say there’s enough of that consideration across where it’s being taught in higher education?

As I said, I’m a big proponent of behavioral economics because it brings in the human element. It’s only recently that mainstream textbooks have been bringing it into the spotlight. There are a couple textbooks out there. One I use for a principles-level course that’s here as a topic and as another lecture at the University of Arizona has an entire chapter dedicated to behavioral economics.

That is not as common. It’s becoming more common as instructors are starting to realize this is a way to connect with your students and say we are not disconnected from the real world. You are witnessing these things and we have a pretty rational explanation for the irrational way you’re making choices—or at least what we would call irrational. It’s what Dan Ariely at Duke calls “rational irrationality.”

You’ve also created a website that analyzes the economics of the show “Shark Tank” and brings a lot of pop culture and current events into your teaching. How appealing is that approach to teaching economics to your students?

I hope it’s pretty effective. Another one of the things I tell my students, at the beginning of the semester, is that it’s my goal to ruin their social life. When they go out to a movie, I want their boyfriend or girlfriend to be like, “Oh not again, you’re relating this to economics.” I try very hard because I think that it reinforces their learning of the material.

If they’re driving down the road listening to a song and then going: “Wait a minute, she played this in class, and I know what this is about.” Even if I didn’t play it in class, they start to listen to it and realize: “Wait, there’s econ in that.” I’m starting to make those connections and I think that’s really important.

I do get a lot of feedback from students who really enjoy the clips that I show in class. It breaks up the lecture a little bit and adds a bit of humor. It reduces the cognitive load and all of these things are important in students’ learning. Nobody can do the high-level math for 75 minutes in a row; that’s not the way were learn best. All of these things help in making the experience more enjoyable and also in retaining the material and understanding it.

It also helps to be able to apply it in a way that makes sense to you. If you think about economics, we introduce all these terms that you’ve probably used in slightly different ways. With “marginal utility,” you think about “utility,” but you don’t think about it in a way that an economist does. There are lots of others such as “price ceiling.” You think about a ceiling, but not as our model shows it almost counterintuitive and actually below our equilibrium price.

If you can relate that to an everyday experience, then it’s much more able to be understood, remembered, and grasped onto. It becomes sticky. It’s much better than graphs and models, which come into play and definitely have their part, but if that’s all there is, then there’s no connection to the real world and how valuable economics can be.

I like what you said earlier about being able to apply economics to one’s own life in their own, unique way. Can I have an example of this in action?

If you’re looking at behavioral economics and something that’s really applicable to my students is dating. A lot of my students are dating right now and when you’re 19 and in a relationship for a year it seems like a really long time. You’ve been with him or her for a year, but all your friends think he or she stinks.

They’re trying to say: “Don’t go out with this person. They’re really not good for you, and you’re not your best around them.” When you respond: “But we’ve been together for a whole year!” that is something called the sunk cost fallacy. Those are costs that cannot be recovered. They’re in the past.

That year is gone, and there’s nothing else you can do with it. An economist would look at the opportunity cost of staying with this guy or girl for another year. That’s really what we should be paying attention to, even though the human side of us wants to look at the past and something that we can’t recover. It wants to look at that sunk cost instead.

I bring that into my class and almost every single time I’ve got some poor gal or guy who looks sad. “Yeah, that’s the reason I’m with this person, and you’re right.”

At Merion West, a lot of our commentary focuses on combating political polarization on issues. When it comes to economics, it is often an issue where the right and left think very differently. Do you see a reason for this divide in opinion?

I love talking politics in one sense and not in another. I do not want to alienate my students that come across as very much on one side or the other. I say economics allows us to look at some situations very objectively and remove our own sense of what should be. That’s the reality check. It may be that we don’t want to hear what economics tells us. But, by looking at the way people respond to incentives, we can predict that they’re going to behave in a certain way. With that prediction, if we change a rule about the way they can behave or a policy, we can then make some pretty good predictions about what’s going to happen.

Now what economics shouldn’t say is that: this is the way it should be, or we should want a particular outcome. All an economist says is if you want that outcome, this is how you can get there. This is the policy you want to implement? This is the outcome you can expect.

We try to take away the value judgments from it because economics is not designed to make a value judgment—that’s not the tools that we have in this discipline. Of course, we’re humans, so we’re going to make some of those. But I ask my students to open up their minds, put aside their pre-conceived notions, and just analyze a particular policy and see what some of the effects are going to be. They’re really shocking sometimes. You get the complete opposite effect of what you would expect, and it’s really, really interesting.

There are basic things like an election we had here a couple years ago. The local county animal shelter did an amazing campaign that said we needed a new animal shelter. It had all these cute cats and dogs and it was amazing. You’d be a monster not to vote for the new shelter.

If you’re looking at this in terms of economics, what’s the opportunity cost of that? Think about that. That’s a lot of money we’re spending towards the shelter, and we could have put it towards a hospital instead. If you start to look at it in that manner it’s not so cut-and-dry like it’s coming from nowhere. It’s fun.

The week before Trump was elected, we did a fun little experiment of predicting who was going to be elected. Our model predicted that Trump would win. This is the same model that’s been used for many presidential elections in the past, and all my students were completely shocked when they came to class two days later, and he had won. We definitely had some different variables that the model didn’t account for, so I wasn’t 100% sure myself, but it was fun and interesting. Whether or not you like him or not, this was the truth of the matter in the econ part.

To end, you mentioned before how economics is not meant to pick a side. Is that role being carried out in the world today?

I think that economists, in general, probably think certain things are desired. For instance, having a higher GDP per capita is something that’s desirable, and most economists would probably agree with that, though not all.

If they had that mindset of the majority, knowing certain policies are going to help achieve that end would be more of a proponent politically for them. If you ask an economist on a personal level—for instance—what they think about the tariffs that are all over the news right now. You’re going to probably get a pretty similar answer from most of them. Some might go into a little more detail than others, but every president puts up tariffs. You could be on any side of the political spectrum there, but as an economist, you understand what the effects of those are.

They’re predictable in fact. Even in the short-term, we see those happening almost immediately as they’re put into effect. For that reason, they might say this is maybe not such a good idea.

If what we want to do is actually accomplish this goal over here—and it is a big assumption if we want to accomplish that goal over there—it is certainly not something that should be brought into the classroom of trying to persuade students to bend a certain way politically. You give them the tools to analyze. They can make those choices for themselves.

Thank you for your time today, Professor Revere.

You’re welcome. Thanks for speaking with me.
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Originally published by Merion West.

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