Teaching tools: should we teach microeconomic principles before macroeconomic principles.

Lopus, Jane S. ; Maxwell, Nan L.

Economics departments offering courses in both microeconomic and macroeconomic principles must make decisions relating to the sequencing of these courses. Although many economists have strong opinions on this subject, no broad consensus exists on the efficacy of teaching one course before the other. While many departments stipulate that one course must (or should) serve as a prerequisite for the other, other departments do not specify an ordering. As well, little research exists on whether student learning is influenced by the order in which micro and macro principles are presented.

In this paper we report the current sequencing requirements of 25 top-ranked research universities, 25 top-ranked liberal arts colleges, and 20 comprehensive universities. We also report the current sequencing patterns in 20 principles textbooks. We then empirically address the issue of whether student learning is affected by the ordering of the two-course principles of economics sequence using a new nationwide economic education data base. Specifically, we ask whether students learn more in macroeconomic principles courses if they have already taken a course in micro principles and/or whether they learn more in microeconomic principles courses if they have already taken a course in macro principles.

We find that although most of the colleges and universities in our study require microeconomics before macroeconomics when specifying an ordering, most textbooks present macroeconomic topics before microeconomic topics. Our regression results indicate that students score significantly higher on a post test in principles of microeconomics if they have a prior course in principles of macroeconomics. In contrast, students who have a prior course in principles of microeconomics do not score significantly higher on a post test in their macroeconomic principles class.

I. BACKGROUND

Since student learning of economics is clearly a goal of the principles course, one relevant dimension to the sequencing question is the "intellectual" basis for sequencing decisions provided by learning theory. Saunders [1990, 67-72] has identified four generally accepted propositions of the basic learning process that have implications for learning college economics: (1) students have a limited capacity to process information; (2) prior experiences are important; (3) motivation is important; and (4) visual information dominates verbal information.

While propositions 2, 3, and 4 have implications for the micro/macro sequencing decision,(1) the implications are conflicting. That is, these propositions could be interpreted to justify requiring no specific ordering of economic principles, or teaching either macro first or micro first. For example, if micro and macro principles overlap, the "importance of prior experience" suggests that sequencing is irrelevant because students who already know some micro will perform better in macro, and vice versa. However, if macroeconomics creates greater motivation than microeconomics by focusing on current events, proposition 3 implies that macroeconomics should be placed first. Alternatively, if microeconomics includes more visual aids or "pictorial representations" than macroeconomics, student learning may be enhanced by teaching microeconomics first. Thus, learning theory does not appear to provide concrete conclusions about the optimal sequencing of microeconomic and macroeconomic principles, unless unambiguous assumptions can be made about propositions 2, 3, and 4. This comports with Saunders's assessment [1990, 62] that there is no "single, generally accepted theory of learning that can be used as an infallible guide to teaching."

The ambiguity in learning theory is probably not a major issue in the sequencing decision since it is probably safe to assume that few economists examine learning theory prior to structuring their classes. Economists may, however, examine the theoretical underpinnings of microeconomics and macroeconomics that have implications for sequencing. Once again, we find that arguments can be made on both sides of the sequencing issue.

Academics who favor teaching micro before macro point to theoretical and conceptual foundations of microeconomics in macroeconomics. For example, understanding price theory and supply and demand models from microeconomics may facilitate learning aggregate macroeconomic models of price levels and output. In keeping with this point of view, Michael Boskin [1988, 157] comments that "(h)ow anyone can be serious about teaching macro to students who have not had micro, and simultaneously avoid repeating much of what is taught in the micro half of the course, is becoming increasingly incomprehensible."(2) This line of reasoning implies that prior knowledge of microeconomics is essential to learning macroeconomics.

The grounding of macroeconomics in microeconomic theory is also addressed by Weintraub [1979] in his book Microfoundations: The Compatibility of Microeconomics and Macroeconomics. Although the book focuses on the consistency of the two disciplines rather than sequencing, by showing that macroeconomics has microeconomic foundations Weintraub perhaps implies that micro should precede macro, or that the two subjects should be melded together. He concludes that "(t)here is not now any model which successfully integrates micro and macro theory" [159-160] and that relevant microfoundations of macro "would look different to different kinds of economists" [157].

Alternatively, it is argued that microeconomics has macrofoundations, rather than the other way around. A recent paper by David Colander contends that from a New Keynesian perspective, "...talking about a micro foundation of macro, independent of institutional context, is meaningless... (B)efore there is any hope of undertaking meaningful micro analysis, one must first determine the macro context within which that micro decision is made... Thus establishing appropriate macrofoundations of micro must logically be done before one establishes any microfoundations of macro and any micro analysis independent of a macrofoundation is irrelevant game-playing" [1993, 451; Colander's italics]. This line of reasoning provides a theoretical argument for teaching macro before micro. An understanding of macroeconomic institutions and models would motivate students to learn microeconomics by providing a relevant framework for understanding microeconomic models based on individual choice. Since students are constantly bombarded with macroeconomic issues in the news, they may be aware of its pertinence to their lives. By emphasizing institutions and understanding the "big picture," macroeconomics could give students a working economics vocabulary and insights that would lead to a better understanding of microeconomics.

If macroeconomics is more relevant to students than microeconomics, teaching macro first may increase enrollment in economics classes as well as facilitate learning. To quote Blinder,

(s)uppose teaching micro first is sounder but macroeconomics brings in the crowds. Then putting micro first would mean that fewer students would be getting a slightly better education. Teachers of economics believe that some exposure to economics is good for students. So which is better: giving more students less, or giving fewer students more? The answer is not obvious, but it is obvious that we need quantitative information even to begin to make an intelligent decision [1991, 253].

We begin our quantitative assessment by examining how economics departments actually sequence their principles courses. Using the Carnegie Foundation categories to classify schools,(3) we investigated the sequencing requirements in twenty-five highly ranked "research" economics departments following Golden et al. [1987], twenty-five highly ranked "liberal arts" colleges following Morse [1990], and the twenty "comprehensive" schools in the California State University (CSU). There are essentially four options in sequencing principles. Departments could offer two courses and not specify an ordering, offer two courses and require micro first or macro first, or offer a one-course principles class. Our determination of which course sequencing scheme existed was made by examining current university catalogs when available, or by calling the economics departments.

As Table IA shows, 40 percent of the research departments do not specify an ordering for micro/macro principles while another 40 percent require micro first. A slightly different story unfolds when examining liberal arts schools (Table IB). Although "no ordering" and "micro first" still dominate, 44 percent of the schools do not specify an ordering while only 24 percent require microeconomics [TABULAR DATA FOR TABLE I OMITTED] first. Also, more liberal arts colleges than research departments require macroeconomics first (12 percent as opposed to 4 percent). Most comprehensive universities in the CSU (Table IC) do not require a specific course sequencing (55 percent), although when an ordering is specified twice as many require micro before macro (30 versus 15 percent), the same ratio as liberal arts colleges.

Because Stiglitz points out [1988, 177] that there may be a simultaneous determination of course content and text content, we also examined the sequencing of subject matter in twenty principles of economics textbooks.(4) In contrast to the ordering by academic departments but consistent with Stiglitz [1988, 171], Table II shows that most textbooks (65 percent) place macroeconomic topics before microeconomic topics. This was the content order chosen by Samuelson in the first edition of his best-selling text, which served as a model for subsequent textbooks. It may appear puzzling that the content ordering in textbooks (Table II) does not reflect the content ordering in practice (Table I).(5) Walstad and Watts [1990, 146-7] suggest that textbook publishers may lag behind departments in the sequencing debate. They report that "the micro first proponents have been gaining ground in recent years" but most textbooks "have yet to change to a micro-than-macro format..."

The inconsistencies and ambiguities in both theory and practice point to a need for empirical analysis on the effects of sequencing. Somewhat surprisingly, only two recent quantitative studies have examined this issue and, unfortunately, were both done at single universities. One study was conducted by Brasfield et al. [1993] from fall 1987 to spring 1990 with 1119 students at Murray State University. Using grades as the learning measure, sequencing was found to be insignificant in increasing learning. Specifically, students who took micro before macro or macro before micro performed better than students who had no prior college economics courses. However, in another study conducted at the University of Wisconsin, Eau Claire, using a version of the Revised Test of Economic Understanding (RTUCE)(6) as the measure of learning, Fizel and Johnson [1986] found that students who took micro before macro out performed those who took macro before micro. Results of this study, which involved a total of 328 freshmen randomly assigned to take either micro first or macro first, appear robust with respect to model specification and measurements of learning.

As indicated in Becker et al. [1991], these one-university studies must be replicated before economics departments use the findings to determine their course sequencing. Fizel and Johnson note [1986, 94-97] that there is a specific need to study the effects of micro/macro sequencing using a multi-university sample. Siegfried and Fels [1979, 955] emphasize that one-university studies may lack the variability necessary to sort out complicated economic education relationships. Our study circumvents this problem by using a broad-based national data set.

[TABULAR DATA FOR TABLE II OMITTED]

II. DATA AND ESTIMATION MODEL

To empirically assess the effect of sequencing on student learning we use a database developed by Saunders [1994] from the national norming sample of the Third Edition of the Test of Understanding in College Economics (TUCE III). TUCE III is a standardized multiple choice test consisting of a 30-question microeconomics test and a 30-question macroeconomics test (with three optional international questions) designed to test learning in college principles classes. Both sets of questions may be administered as pretests to assess initial knowledge and as post tests to examine achievement during the class. Saunders [1991] provides a thorough discussion of TUCE III.

The TUCE III data were collected from 53 colleges and universities during the 1989-90 academic year with a total of 2,888 students taking both a pretest and post test in macroeconomics, and 3,052 students taking both a pretest and post test in microeconomics.(7) In addition to test scores, the data include over 200 variables with background information on students and their professors.

To assess the effect of different combinations of sequencing on learning, we adopt a standard ordinary least squares (OLS) regression model of economic achievement. For both macroeconomics and microeconomics, we use the macro or micro 30-question TUCE III as a pretest to estimate the effect of the alternative principles course on students' knowledge when they enter their current principles class. We then use the same TUCE III as a post test (controlling for the pretest score) to estimate the effect of the alternative principles course on the learning that takes place in the current principles class.(8)

In the questionnaire accompanying TUCE III, students were asked whether they had taken courses in economics prior to the current course. Students who indicated that they had taken prior courses were asked to identify the course content of the prior course.(9) If having a prior course in macroeconomics increases initial knowledge and/or learning in micro, or if having a prior course in microeconomics increases initial knowledge and/or learning in macro, we would conclude that sequencing makes a difference. If, however, having a prior principles course increases initial knowledge and learning in the current course regardless of whether it is micro or macro, we would conclude that sequencing is irrelevant.

Thus, we estimate the following ordinary least squares (OLS) regression models:

(1) MICRO PRETEST = [f.sub.1](MACRO, PREPARATION and ABILITY, UNIVERSITY, GENDER and ETHNICITY)

(2) MICRO POST TEST = [f.sub.2](MACRO, PREPARATION and ABILITY, ENVIRONMENT and UNIVERSITY, TIME USE, GENDER and ETHNICITY, INTEREST)

(3) MACRO PRETEST = [f.sub.3](MICRO, PREPARATION and ABILITY, UNIVERSITY, GENDER and ETHNICITY)

(4) MACRO POST TEST = [f.sub.4](MICRO, PREPARATION and ABILITY, ENVIRONMENT and UNIVERSITY, TIME USE, GENDER and ETHNICITY, INTEREST).

In addition to the sequencing variables (MACRO, MICRO), we include control variables for the student's academic preparation and ability, type of university, gender and ethnicity, and, in the post test model, for the class environment, the student's time use, and interest in economics. We measure preparation and ability for economics courses by the number of quarter hours of calculus.(10) grade point average (GPA), and by the TUCE III pre-test score in the post test model. The type of university is captured by a series of dummies, consistent with Carnegie classifications, for a research institution, a liberal arts college, and a two-year college. (The comprehensive university is the omitted category). Class environment is measured by class size and the percentage of time the instructor spent lecturing. We measure student time use by the number of course hours the student is currently undertaking and the number of hours per week spent in study and at work. Interest is measured by student response to a survey question that ranks the "interest of subject matter" from 1 (lowest) to 5 (highest). All variables are defined in Appendix Table I.

III. RESULTS

Table IIIA reports the OLS regression results from Equations 1 and 2, which test for the effects of prior macroeconomics on initial knowledge (pretest) and learning (post test, controlling for pretest) in microeconomic principles classes. Table IIIB reports results from Equations 3 and 4, which test for effects of prior micro on initial knowledge and learning in macro principles classes. Results (Table IIIA) show that there is a positive, statistically significant association between a prior course in principles of macroeconomics and both pretest scores and post test scores in the principles of microeconomics course. However, a prior course in principles of microeconomics is not statistically associated with either the macro pretest score or the macro post test score, ceteris paribus, as shown by the insignificant coefficient on the micro variable in Table IIIB.(11)

These results indicate that, within the TUCE III sample, student learning is enhanced by teaching macroeconomics before microeconomics. Perhaps, at the principles level, instructors emphasize concrete, institutional macro foundations of micro more than theoretical microfoundations of macro. Another possible explanation may be found in the quotation from Michael Boskin that was cited earlier. When a course in macro principles is taught before a course in micro principles, instructors may teach core micro concepts such as supply and demand in the macro course. That is, perhaps instructors who teach macro first do not "avoid repeating much of what is taught in the micro half of the course..." If microeconomic principles are taught in macro courses, this could explain why micro pretest and post test scores are higher for students who have had a prior macro course.(12) As well, because many students take only one of the courses in the principles sequence, the integration of micro principles into macro may present a further rationale for teaching macro first. Students who take only a macro course may be taught core micro concepts, whereas students who take only a micro course may not have been taught core macro concepts. Assuming that some exposure to both micro and macro is desirable, non-continuing students may be better [TABULAR DATA FOR TABLE III OMITTED] off taking only macro if it also includes some micro.

For the most part, the signs and significance of other variables in Equations 1-4 are as expected. A possible exception is that the class size variable (Number Students) is positive and significant in both macro and micro classes. This could indicate that large classes are efficient, that higher quality institutions in the TUCE III sample offer larger classes, or that higher quality instructors are assigned to teach larger classes.(13) It is perhaps noteworthy that the percentage of class time the instructor spends lecturing (Percent Lecture) has a significantly negative effect on the microeconomics post test. Instructors may be advised to investigate alternative pedagogical techniques to lecturing. It is also interesting that gender and ethnicity both significantly affect the TUCE III score. Further research in each of these areas is warranted.

IV. SUMMARY AND CONCLUSION

Because most academic economics departments must make decisions about micro/macro sequencing, this study empirically estimates the effects of sequencing on learning principles of economics using the recently established TUCE III database. We find that students in microeconomic principles classes score significantly higher on both a pretest (initial knowledge) and post test (learning) if they first take a course in macro principles. In contrast, students in macroeconomic principles classes do not score significantly higher on a pretest or a post test if they first take a course in micro principles. These results indicate that, ceteris paribus, macro principles should precede micro principles if student learning is a goal of the course. While this is the sequencing format adopted by most textbooks, top-ranked academic departments that mandate sequencing tend to place microeconomics before macroeconomics.

The suggestion that we should teach macro first may appear counter-intuitive, if, as Blinder suggests (1991, 253), most economists believe that teaching micro first is better "intellectually." It may well be that at more advanced levels (i.e., intermediate or graduate theory) the microfoundations of macroeconomics are more relevant and that transferral of knowledge between micro and macro may best be served by offering micro first. At the principles level, however, macro instructors may focus on institutions or an overview of the economy rather than on underlying theory relating to individual choice. This conceivably renders the microfoundations less important in learning macro principles, and may render the macrofoundations more important for learning micro principles. Students, especially foreign students, may gain familiarity with economic institutions and vocabulary in macroeconomic courses. This familiarity, enhanced by the emphasis on macroeconomic events in the media, may facilitate learning microeconomic principles and may argue toward teaching macro first.

[TABULAR DATA FOR APPENDIX TABLE I OMITTED]

1. The proposition that humans have a limited capacity to process information has implications for the principles of economics class, but probably not for the sequencing decision specifically. According to Saunders [1990, 67-68], this proposition implies that instructors should attempt to reduce the content of the principles course to "settle for a few things done well" rather than trying to cover the entire field.

2. Boskin also comments that the "traditional micro/macro division... is becoming decreasingly sensible in teaching principles..." [1988, 157]. Thus he should probably not be characterized as a strong "micro first" advocate.

3. Boyer [1990] discusses teaching and scholarship differences at each type of higher education institution and his appendix provides a detailed description of the classifications used here.

4. Our sample of textbooks is not random and is, no doubt, incomplete. We do, however, include a sampling of textbooks from different perspectives and at different levels, consistent with the approach used in Walstad and Watts [1990].

5. Reviewers of this paper have offered several explanations for the content ordering in textbooks, most of which relate to the motives of profit maximizing publishers. The reasons behind textbook content ordering decisions, along with an historical investigation tracing trends in sequencing decisions in both textbooks and departments, would be interesting topics for future research.

6. See Saunders [1981] for a detailed description of the test. RTUCE contained two macro tests, two micro tests, and two tests containing both micro and macro questions. Fizel and Johnson used the "hybrid" forms. As an aside, it is interesting to note that in the RTUCE manual and on the "hybrid" tests, macro questions precede micro questions.

7. Missing data on the student questionnaire reduced the original matched sample to 1489 (micro) and 1397 (macro) for our analysis. However, when compared to the original sample, the subsamples used here do not appear to contain any systematic bias that affects the reported results.

8. We use the post test score as the dependent variable and control for the pretest score rather than using the difference between these scores as the dependent variable, as recommended in Hanushek [1986, 1157n].

9. Since most students take principles before any other economics classes, we make the assumption that a prior economics class covering micro (macro) was a course in principles of microeconomics (macroeconomics).

10. Although math classes other than calculus may be more relevant for principles of economics students, no other data are available.

11. It should be noted that the coefficient on Microeconomics from Equation 3 has a t-score of 1.913. Also, this variable appears to be somewhat sensitive to changes in sample size and model specification with respect to the macro pretest score.

12. Thanks to Phil Saunders for insights here.

13. The positive association between class size and TUCE III scores may also indicate that students in large classes have more experience taking multiple-choice exams, such as TUCE III. Students in smaller classes may have more practice with essay and other types of non-objective exams. This additional practice may affect test scores.

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JANE S. LOPUS and NAN L. MAXWELL, California State University, Hayward. An earlier version of this paper was presented at the June 1993 Western Economic Association Meetings in Lake Tahoe. We would like to thank Scott Campbell for research assistance and participants in the Research in Economic Education session at the WEA meetings, an anonymous referee, and Phil Saunders for helpful comments. We would also like to thank Phil Saunders for providing the TUCE III data.