Jessica Holmes injects her economics courses with a dose of reality.
By Melissa Pasanen
It was the first week of spring semester, and room 506 in Warner was filling up. "Which class is this?" asked a student peering into the room. "Public Finance," someone responded. The student in the doorway backed out with a grimace, "As fascinating as that sounds ..."
That same student wandering into class just a week later might have been tempted to stay, if only to find out why assistant professor of economics Jessica Holmes was dealing out a deck of cards. On her curriculum vitae, Holmes still lists a long-ago summer job as a casino pit boss, but this was no game of blackjack. For seven rounds, every student received two black and two red cards and had to donate two, face down, to a central pot. Black cards held no value. Students could keep the red cards for earnings of up to $4 each, or contribute red cards to the pot, where they were worth just $1, but every player also earned the value of the pot. A final prize went to the player with the highest total earnings, a student who had chosen to keep every red card he was dealt. "I'm rewarding the free-rider," Holmes observed dryly as she launched a Pez candy
dispenser to his corner seat.
"This is the social dilemma of public goods," Holmes summarized briefly. "There is a conflict between the incentive to free-ride and the social incentive to contribute towards the public good. In the game, an individual maximized his personal earnings by not contributing, but total earnings for the class would have been maximized had everyone contributed fully." You cannot prevent people from receiving the benefits of public goods, Holmes continued, even if they don't pay their share. "That is why the government typically provides goods like national defense and police protection, and finances them through taxes."
The card game is an example of how Holmes works to bring economic theory to life. Tongue firmly in cheek, she has dubbed her approach, "reality economics." "I like to integrate the real world into the classroom as much as I can, as often as I can," she says. Whether she's teaching introductory microeconomics, the economics of social issues, or health economics and policy, Holmes uses every opportunity to get students directly involved and invested in how economics relates to real people facing real issues. "It's just another way to study human behavior," she explains.
Holmes sends students out to do field interviews with those on the front lines: teen mothers, pharmaceutical sales reps, the director of a local homeless shelter. She welcomes guest speakers whose work demonstrates theories in action. On a recent plane trip, she drafted her seatmate, the director of research and development for Ben & Jerry's, to come speak to her microeconomics class. She assigns op-ed pieces on high-profile topics, awarding extra credit to students whose letters are published.
Holmes also stages "town meetings" in class, in which students discuss and debate topics such as school vouchers, drug legalization, and universal health care. Each student is assigned a role to play and will conduct research based on the character. For a debate on importing drugs from Canada, for example, the roles included a Canadian pharmacist, an elderly U.S. resident, economist Milton Friedman, and Vermont congressman Bernie Sanders. "Some students even dress up and get into it," says Carrie Nazzaro '05, who played a spokesperson for a pharmaceutical trade group in last semester's debate. "It helps you understand the different points of view."
Holmes is writing a chapter for a book on undergraduate research in economics in which she encourages professors to assign economic research projects that have been solicited from the greater college or university community. In other words, Holmes says, let students become economic consultants for these external clients.
"Good teachers go beyond the textbooks, and Jessica does that well," says economics department chair David Colander. "She makes the analysis come alive."
Lisa Trebino '05 has taken five classes with Holmes and says that with Holmes "it's never just a graph on the board. She applies every fact and every figure to the real world. For instance, she'll bring in an article from today's newspaper and explain how it relates to what we've been studying that week."
Holmes returned to academia from the private sector because she missed teaching and also because she wanted to pursue her own research interests. Her dissertation had explored factors that influenced the years of schooling completed by children in Pakistan, following the "human capital" approach of Nobel Prize-winner Gary S. Becker. Becker assigned value to human competence and investments in that competence, and built models that addressed realms previously considered beyond the sphere of economic analysis, such as racial discrimination. The results of such research, Holmes saw, could help build better public policy. "I'm interested in economics," she says, "but I'm even more interested in how economics can inform policymakers."
Health care economics is an area in which Holmes sees many opportunities to affect policy. The health care market does not conform to standard economic models, she explains. Providers possess a huge amount of expertise, which creates an exceptionally asymmetric relationship with consumers (a situation in which one party has far more information than the other). There's also an unparalleled level of trust and risk, she says, because the stakes are so high. "It's just like taking your car in," she acknowledges, "but you can buy a new car."
Holmes has researched factors influencing childhood health outcomes in Pakistan and will undertake a comprehensive analysis of free health care clinics during a sabbatical next year. "I'm interested in safety nets," she says, "in figuring out what policies can be most efficient and cost-effective, what are the best uses of society's resources."
A few weeks into the public finance course, students divided into groups to debate the efficiency of one such safety net. "You can't open the paper these days without seeing something on the privatization of Social Security," Holmes said by way of introduction.
During a spirited discussion, students spouted statistics, argued if England's and Chile's privatization experiences could be compared to the U.S., and disagreed about whether Alan Greenspan's opinion was really bipartisan. "I frankly see that people at the bottom of the income spectrum could get hurt the most," one student challenged. "How does this plan make sure they can take advantage of these new investment options?" "If someone asks you if privatization is safer than the current system, what do you say?" asked another. The debate ended with a split decision. What could be more real life than that?
Melissa Pasanen is a freelance writer in Burlington, Vermont.