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It's just simple economics

9 November 2018

Associate Professor Michael Cameron.

Associate Professor Michael Cameron came to the University of Waikato as a student to wrap up an accounting degree, but it didn’t take him long to discover he liked economics better, and he went on to do a PhD in the subject.

He’s now a popular teacher and active researcher in population and health economics. (If you’re not happy about the Sale and Supply of Alcohol Act, then you can partly blame Michael for that!)

You teach two first-year economics papers, and one of them, Business Economics and the NZ Economy, is compulsory in the BMS and Bachelor of Business. Is that a hard sell?

Some students, probably about two-thirds of the class, come to university having little or no idea of what economics is, and they may have some anxiety, thinking it’s quite mathematical and very hard. They’re usually relieved to find out that it’s actually things people do every day.

Economics is all about making choices, and people make choices every day, so students and people in general know a lot more about economics than they realise. Even making a decision about coming to class. They may come or they may not. If they haven’t come to class it’s because there’s something else which they believe is providing them with a greater net benefit than class is. Believe it or not, that’s an economic decision. It involves a weighing up of the costs and benefits, it involves consideration of what we call opportunity costs ─ the next best thing you’ve given up in order to come to class. New students might not understand all the words but they understand the choice. They understand the underlying concepts because it’s something they are doing every day. And once explained, they say “oh yeah, that’s obvious”.

Do you set lots of assignments?

It varies between the two classes. For the ECONS101 class, it’s really about linking the concepts that we talk about in class to what’s happening in the real world of business. No assignments, but we have online and in-class tests, and that way I can find out relatively quickly whether or not people are “getting” it or not. In ECONS102 Economics and Society, we have short weekly assignments that require students to think about how the economics in class applies in the real world.

Remember the recent ‘needle in the strawberries’ incident. Well I used that as an example in class. I asked the students what they might expect to happen. You’d expect demand to go down and the price to drop. Yes, but then what then happens to all those unsold strawberries? That gets them thinking… they might get sold for jam, and if that’s the case, won’t there be a lot more strawberry jam on the market, and will the price of that go down too.

There’s that old joke about a group of economists never agreeing, so is there a right and wrong answer for any economic issue?

If you’re applying a particular model there is one answer you’ll get from a particular model, but with economics there’s often more or different models that you can use to explain the same phenomenon.

An economist will understand the application of those models, the different assumptions that are made on the basis of a particular model and the consequences of those. It takes a bit of time to develop an understanding of competing models and the assumptions that underlie them.

Economics answers the ‘why’ questions. Some students, having had a taste in ECONS101, decide to study ECONS102. It looks beyond business, and has a much stronger policy focus. Health economics, education, social security, intellectual property, pollution, climate change, externalities. It’s much broader, and gets down to understanding and answering the policy questions, so you see how models are applied in a range of areas. A lot of students take this paper because it’s a good survey of microeconomics in particular.

Where’s a degree in economics going to take you?

The job title ‘economist’ is not common. Analyst is more usual and most economics grads get jobs as analysts. Economics graduates have the tools to be able to analyse what’s going on in the world around them, whether that’s analysing a business, a market, prices, contracts, social costs, policy… just about anything that requires analysis.

So as an economist you can influence government policy and the formation of laws?

Absolutely and our grads have done that. I’ve done that. I had quite an input into the Sale and Supply of Alcohol Act. I researched where liquor outlets locate how they compete with each other, how they price, and how they influence communities around them in terms of whether they generate harm such as violence or property damage. Pretty relevant stuff.

My population and health economics research gives me good hands-on experience and I can take that experience to my classes. I’m very thoughtful about what and how I teach.

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