Expectations and Graduate Teaching Fellowship

This past week has been a very exciting week for me. I finished Math Camp, went to orientation activities and had the chance to meet some of the first year faculty and other graduate students as well.

By far the most exciting event of the week is that I was offered a Graduate Teaching Fellowship. Along with a stipend, I also receive a tuition waiver. I can also sign up for health insurance for me and the family, which is a better deal than at my last job. Another great aspect of the GTF is that I have an office on campus. I’m really glad I don’t have to lug all of my books to campus every day especially during the rain. This quarter my only responsibility is grading for Intermediate Macroeconomics.


Expectations of the future have an impact on economic decisions. Expectations of our future income, expectations of future prices of goods, as well as other expectations all have an impact on the demand for goods. When expectations change, demand will change and when expectations change again, demand will also change again. An interesting principle can be demonstrated here. Up until the beginning of April (when schools usually make offers) we expected to receive funding for school. After April our expectations changed and we accepted the fact that we would not. When our expectations about funding changed once again this past week our ideas about our current and future consumption changed once again. Although we would be in the same financial situation as if we had been guaranteed this GTF in April I do not think that our demand for goods would be quite the same. Just through changes in our expectations we arrived at a different demand for goods although our expectations are where they were originally. I find the role of expectations in our decisions and their role in macroeconomics very intriguing. It is something I plan to study much more and part of the reason why I chose Oregon over other schools.

As an example of expectations think of what happens when you expect a recession. Thinking there are hard times ahead you would cut back on your spending now and try to have more savings in case you lose your job. This would lead to a loss of sales and profits by companies who would respond to this by cutting back production and a reduction in employment in the form of lay offs or hour reduction. Of course, the loss of income by those experiencing a loss of employment will further reduce spending, but losses by companies and slightly increasing rate of unemployment will further cement your expectations about an impending recession and lead to even more precautionary measures by you and the whole thing would start over again. Through this example you can see that just thinking there is a recession coming can actually cause a recession, though I doubt there has ever been or ever will be a recession where this is the main cause, I believe it can be a contributing factor.

Self-interest and the University of Oregon

On Wednesday I started school at the University of Oregon. I just have one class right now, technically it is still the summer term, fall term begins on the 29^th. The class I have right now is Mathematics for Economists or “Math Camp.” Most of the class will just be a review of calculus and linear algebra, though there will be a few new things. The class is a good introduction to the university and I can get a feel for campus without many people around.

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So there appears to be about 12 new Ph.D. student in the Economics program, which I believe is larger than usual. The picture above is the home of the Department of Economics, though I will only have one class here in the Fall.

Here's some more pictures!

While I am off at school, Heather is trying to get our house more organized and recover from our move. This place is finally starting to feel more like home. I guess that happens when you get everything out of boxes and into it's place.

Nathan just turned 5 months and is getting so much more grown up.

He is wearing mostly 6-9 months clothes and some 12 months as well.

Probably the reason is so big is that the kid will eat anything. We’ve been trying new foods the last couple of weeks and had yet to find anything he did not like, until a couple of nights ago. We bought some oatmeal cereal and tried to feed him some, but he hated it. Even then he still ate every little bit we gave him. I finally had to stop feeding him when he started gagging it down, but we still could have fed him more.

I got a bike!

So on Monday I bought a bike. I had wanted to buy a used one at some point to ride to campus every now and then but was having trouble finding one.

When I saw that it would cost over $350 to park on campus for the rest of this term and this upcoming school year I decided that I definitely needed to buy one before my class began Wednesday. Now I am planning to ride my bike every day and not buy a permit. We live about 5 miles from campus and I was surprised how well I did riding 10 miles a day for four straight days this week considering I had not done any kind of aerobic exercise in nearly five years.

One of the great benefits of living in the Eugene/Springfield area is all of the bike paths and bike lanes all around the area. I only have to ride on the street for about 6-7 blocks, the rest of the time I am on bike paths.

For most of the ride I am on a bike path that runs along the river. It is beautiful down there and makes for a relaxing ride to school, which I am sure will be very nice when classes become more intense.

I was thinking about how I plan on biking to school every day and how that fact coupled with the energy efficient light bulbs in every light in the house and how the 95 gallon recycling bin we have that will be pretty full each time it goes out, we have suddenly become eco-friendly! But to all the environmentalists out there I am sad to say it is not due to any increased awareness in the increasing number of landfills or our opinion on global warming. The energy efficient light bulbs reduce our power bill, the biking will save on gas and parking permits, and considering that the big recycling container is included in any trash service, recycling as much as we can allows us to have the smallest trash container picked up only every other week, which saves money on our trash bill.

So, entirely due to us acting in our own self-interest, we are helping to improve the world around us.

Adam Smith laid out the idea that when everyone in a society acts in their own self interest the society as a whole will achieve prosperity. Many people interpret this as when people act on their own selfish and greedy desires with out much regard to others, everybody will be richer and happier. This however is not true. The opening sentence in The Theory of Moral Sentiments by Adam Smith states:

How selfish so ever a man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.

In this book Adam Smith goes on to lay the foundation of a system of morals, which I found to be quite interesting. When Adam Smith talks of self-interest it is not selfishness. He believed that for capitalism to succeed the society must have a strong moral foundation and justice system. A moral system would ensure that when people make their decisions they take into account the effect of their actions on others. A justice system would provide an answer to those who do not subscribe to such a moral system. With these things in place a free market would lead to increased prosperity. The next time you see a situation where you may ask “Did capitalism fail by bringing about this result?” ask first if there is a failure in either the moral system or the justice system. I think many of the problems experienced in a capitalistic economy can be solved with a stronger moral foundation. I think I'll stop here for now. One of my favorite papers I wrote during college was about capitalism and morals, for the most part because I was able to combine some of my religious beliefs with economics. If you would like to hear more let me know.

Assumptions and Bryce Canyon

This weekend my family and I will be moving to Oregon where I will be starting the Economics Ph.D. program at the University of Oregon. Some people ask me why I am studying economics. The simple answer is that economics is fun. I like to have fun so it seems like a good match. I also have a lot of fun with my wife and 4 month old son. That's what this blog is about: economics and my family's life. At first you might think that these two subjects would not really fit together in the same blog, but we see economics everyday. Although we may not see it, it's still there.

When I tell people that I study economics usually their first comment is something like, "Oh, so when do you think the recession will end?" or "Do you think the national debt is too large?" If you were looking for a blog about these issues you will be disappointed. I always think it is a little funny when people ask these questions. These questions only concern one part of economics, macroeconomics. There is another side of economics, microeconomics. This is the more "fun" side of economics and my posts here will usually contain some principle from microeconomics. The ironic thing about those questions is that some economists don't even study macroeconomics and some even hate it. Although the do have a better understanding of those topics, they're probably not as qualified to answer those questions as much as people think.

This past weekend we went down to Bryce Canyon in southern Utah. My parents came down from Idaho along with my sister and brother-in-law (who is also studying econ). My other sister and her family came up from Arizona. With me moving to Oregon and my brother-in-law going to grad school next year this may be the last time that we are all together for a long time. I loved seeing my family, especially my sister from Arizona. Janelle remarried last year and I had not met her husband yet.

This was our first camping trip with Nathan. We were thinking it was going to be fun, but little did we know it was going to be one of the worst nights of our lives. As it got dark we huddled around the fire waiting for Nathan to go to sleep. Finally after the fire had almost gone out, he fell asleep. We went to our tent and put him in a bassinet that we had borrowed. A few minutes later he woke up. After some time he fell asleep again and she put him back in. He woke up again. This went on and on and on. He just would not fall asleep. Finally Heather turned to me and said were are going to the car and driving until he falls asleep. Nathan always falls asleep in the car, so I grabbed all of our blankets and threw them in the car. After about ten minutes of driving we pulled back into the camp site and tried to fall asleep in our car. About a minute later there was a flashlight shining in our windshield so I put up our sunshades. My dad had woken up and thought someone was messing with our stuff. After a few more minutes my dad went back to bed and so did we. I don't think we will go camping again for a while.

And now for a little bit of economics. My mom had stopped by my house on the way down to Bryce Canyon to borrow a game called Mind Trap to keep my dad awake. When I got there my mom shared a question that had stumped everybody even my brother-in-law Michael who thinks he's pretty smart. I blurted out some answer and got it wrong. The question was a trick question, but I will share a "non-trick question" version with you. "If it takes 6 men 6 days to paint 6 houses, how long does it take 1 man to paint 1 house?" What do you think, 1 day, 3 days, 6 days? If you answer was something like that you are wrong.

I admit I did the same thing. You have probably seen this type of question before and know that there is a way to solve it and come up with a correct finite answer, but I the people who write those questions and put them on IQ tests are mistaken. When we were driving home my mind drifted back to that question. It was then that I realized that I had been out of school and away from economics for too long.

The correct answer is that there is no way to tell with out more information. The only way to actually arrive at a finite conclusion is to make assumptions which may or may not be true. In fact they most likely are not true. First you would need to assume that the marginal product of labor is constant. What that means is that each extra worker increases that total production exactly as much as the previous. This is most likely not the case. Also we would need to assume something about the capital. It is possible that the six men were using some sort of new fangled painting devise that takes two men to operate, but paints houses at an alarming speed and one man alone can't do it. Of course that would mean that our previous assumption is false unless we define a unit of labor as two men.

The point of this story is that everyone should have a little understanding of economics. Many times, as in this example, people make incorrect economic assumptions without realizing it. This can be especially problematic when those people are in positions of power such as business leaders or politicians. Hopefully as you stay updated on my family you can learn a little about economics and I can why I enjoy economics so much.