Peri Yavash, Coventry University
‘Are government budget deficits always bad?’ is one of the threshold network exercises which was used on the first year Introductory Macroeconomics course at Coventry University, following teaching on the Keynesian model. The exercise was used with three separate seminar groups. At the beginning of each seminar, the students were allocated to groups of 4–6 students. The discussions which took place within each group of students as they completed the exercise were recorded. The discussions for two groups from each seminar, chosen at random, were transcribed and analysed. Although the lecturer was in attendance for the duration of the seminar, help was only offered when students got ‘stuck’ and only by asking students questions as opposed to giving answers.
The scenario is thus: ‘The country is currently in recession and this has led to lower tax revenue and higher expenditure. The result is a large budget deficit. The government decides to raise taxes and lower government expenditure. Is the government’s decision a good idea?’ (This exercise is given in full in Appendix 3). Students were asked to identify, from a list, which threshold concepts might be useful in answering this question. The list consisted of the following concepts: inflation, interaction between markets, the multiplier (cumulative causation), investment, withdrawals, injections, social costs, scarcity, consumption and oligopoly. The students were also required to ‘Draw an appropriate diagram to illustrate the above scenario and comment’.
Analysis of the discussions demonstrated that the difficulties students encountered and their progress could be categorised under two headings: (i) misconceptions and (ii) problems with modelling.
There were also confusions with regard to Government Spending (G) and Taxation (T). Some groups assumed G = T, whilst another group initially equated Government Spending with unemployment pay!
By the end of the seminar, all the groups had reached the correct conclusions, i.e. that it would be a bad idea to increase taxes and reduce government spending in a recession – some with a greater depth of understanding than others. After the students had completed the exercise, there was some class discussion and feedback. All students were also given a feedback sheet which identified the appropriate concepts and included a relevant diagram.
In conclusion, the concepts which students had the most difficulty with were Investment/Government Spending, Social Costs, Scarcity, Injections/Withdrawals and the multiplier. However, although students encountered misconceptions and followed the wrong path at various points, all the groups had some idea of the necessary concepts and the consequences of particular actions by the end of the seminar. The exercise exposed misconceptions that would otherwise have remained hidden and allowed incorrect understanding to be explored and rejected.
With regard to the modelling, there was far too much reliance on memory rather than understanding. However, it was definitely the case that students learnt by getting it wrong initially and then working out why it was wrong. It was good to make mistakes. One of the strengths was using this exercise as a group exercise. Members of the group often explained to each other why a particular line of thinking was right or wrong. It was very heartening to hear students talking about Economics problems to each other.
This particular exercise helped in understanding where students were having difficulties and what appeared to be the most prevalent misconceptions. It will certainly be used again along with many of the other exercises that have been developed as part of the Embedding Threshold Concepts project.