Crime, Poverty and Anti-globalization in a Simulation of International Trade and Relations

Contact: Brian Peterson, Ph.D. and Suzanne Wallace, Ph.D.
Respectively Assistant Professor, Department of Economics, Manchester College, USA and Associate Professor, Department of Accounting, Economics and Business, Central College, USA
BJPeterson@manchester.edu
WallaceS@central.edu
Published February 2002

A simulation in international trade and relations provides an opportunity for a lesson in the use of the scientific method within economic analysis. It is designed for use in a typical principles of economics course. The simulation can be conducted for groups of from 30 to 200 students. Participants are placed into countries, and are given the goal of increasing national wealth (by producing geometric shapes and selling them through an international banking system). Countries are endowed with differential amounts of resources with which to produce (paper, pencils, scissors, etc), as well as an environment that can be damaged during production. Countries are required to maintain a minimum level of environmental quality, as well as minimum per capita production requirements based on population levels. Participants realize after this simulation that initial endowments matters, and that actions seen during the simulation, such as evidence of nationalism and discrimination, mimic those seen in "reality."

One interesting aspect of the simulation is the extensive theft that occurs. In discussions following the simulation, the students who engaged in such theft are asked to identify themselves and the countries of which they were citizens. Inevitably, the vast majority of the "criminals" will be young males who were citizens of the poorest countries. This allows for a quantitative analysis of the relationship between crime, demographics, and poverty.

Based upon the simulation experience, students can begin to develop experience in quantitative models of economic behavior - in this case, specifically related to the crime that occurred in the simulation in which they participated. The students in (guided) discussions consider the role of opportunity cost in decision-making related to criminal behavior. They build a model of criminal decision-making, which posits that two important determinants of crime levels are population demographics and income levels. They hypothesize that there will be a positive correlation between the levels of criminal activity, the percentage of young males within a population, and the levels of poverty. This hypothesis can be tested for the US by obtaining data from the Bureau of Labor Statistics, the Census Bureau, and the Federal Bureau of Investigation. The data is analyzed through simple graphical techniques and examined for correlation. While this is a simplistic model, it is valuable for students to see the insights developed by economists when examining observed behavior.

This simulation technique has generated a number of positive outcomes for us as faculty as well as for our students. We have enlisted the assistance of colleagues from other fields - sociologists and criminologists in particular - to participate in the class discussions. This collaboration with colleagues across disciplines has been stimulating and educational for everyone involved and has increased our institutions' commitments to cross-disciplinary efforts. Our students thoroughly enjoy the simulations and gain genuine comprehension of the issues involved; i.e., they gain understanding of economic problems by actually becoming a part of the problems. The analytical work enables them to make concrete distinctions between fact and opinion. In particular, the subsequent discussions expand the context in which they perceive the basic issues and encourage them to make insightful connections among the different ways of seeking out "truth". The interdisciplinary sessions educate them further and usually convince them that there is relevance to "real stuff" in the concepts they are studying. In fact, the simulation can produce a variety of different qualitative discussions, from nationalism and discrimination to the benefits from economic cooperation (countries share resources) to anti-globalization sentiment (developing countries may individually refuse to participate in the game, and create a self-sustaining economy with their own shapes).

Student feedback has been quite positive regarding the simulation. They comment favorably about the "real world application" of the simulation, and the benefits from discussing social science-related topics that they can take back to other classes.

For more information and detailed instructions on conducting the simulation, see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=414606 .