Economics and business teachers in secondary education aim at improving the economic literacy of their pupils. Economic literacy encompasses knowledge of economic concepts, the ability to set up economic reasoning and the transferability of these across contexts (Grol, 2015). In the Netherlands teachers have been trying to do this by using, amongst other things, economics classroom experiments for almost a decade now. These experiments can be considered interactive teaching and learning exercises that allow students to gain knowledge principles in a bottom-up or inductive way. They are commonly used to allow pupils to experience specific economic phenomena, and to encourage them to identify these economical phenomena in daily life. These classroom experiments are constructs or models resembling only parts of a real life phenomenon. By decomposing complex phenomena into parts in this way, teachers support their students to understand what would otherwise overwhelm them.
In economic science, too, experiments are used to gain further insights into the origins and nature of people’s economic behaviour. Broadly speaking, a distinction can be made between laboratory experiments and field experiments. In a laboratory experiment, a (part of) the real world is simulated. Rules and reward structures induce and control the behaviour of the test subjects to ensure a high internal validity, which means that the experiment can be replicated easily (Guala, 2005). In a field experiment, people are observed in manipulated everyday situations. These ‘participants’ are often unaware that they are under observation and / or that they are participating in an experiment at all (Harrison & List, 2004). Field experiments have a high level of external validity, in other words: experimental findings can also be observed in and applied to real life situations.
In his book “The Honest Truth about Dishonesty”, Dan Ariely, professor at Duke University in the USA, describes a large number of laboratory and field experiments conducted between 2002 and 2012 to shed light on the economic behaviour of people. According to him, the focus of these experiments is to identify the extent to which people are “honest” in their (economic) behaviour and the factors that promote or undermine this honesty. Instead of presenting experimental outcomes as fixed facts, Ariely lets the reader discover these insights for themself.
While reading, we came up with a number of ideas of how to use laboratory and field experiments in the economics classroom. For example: To what extent are people inclined to cheat? The first idea is a laboratory experiment that Ariely describes in his book: a group of economics students set up in a classroom sitting at a table individually. Each student receives a sheet with 20 puzzles that they have to solve. They are given exactly 5 minutes to do so. The goal is to provide as many correct answers as possible and each correct answer yields $0.50. After completion, the students hand in their results to the teacher. The latter checks the answers and pays them the amount of money accordingly (e.g., a student with 4 correct answers earns 4 x $0.50 = $2). Another group of economics students receives exactly the same number of puzzles, except that they receive a slightly different instruction: they know in advance that they can self-correct their answers, inform their teacher of their number of correct responses, and discard their results in a shredder. The question now is: what do you think will happen? Do participants in the first setting behave different from the second setting? Would you cheat when you were in the second setting? How many so-called ‘correct’ answers would you report additionally? The results of the research Ariely conducted shows that students in the first setting solved an average of 4 out of 20 puzzles, whereas the number of correct answers reported in the second setting was 6 out of 20. This is interesting in multiple ways: students in the second setting did cheat a little bit, but there were no large outliers, for example 20 correct answers. No one was optimally unfair. Ariely describes that “our sense of our own morality is connected to the amount of cheating we feel comfortable with” (2012, p. 23).
The next question is how to use this for teaching in your own classroom. You could describe both settings to your pupils and ask them to come up with a hypothesis as to whether and how the behaviour of participants would differ amongst these two settings. That is an exercise in economic reasoning. You could also play the experiment in two classes and compare and discuss the results. Another follow up could be to elaborate on questions such as: would the level of cheating be related to how much money can be earned per correct answer? Or with the chance of being caught if you cheat? Or by swearing an oath beforehand that you promise to be honest? In his book, Ariely reveals a number of answers to these questions. Finally, in the context of a practical assignment, you could instruct a number of pupils to test one or more of these hypotheses themselves in laboratory settings with real test subjects. Their observations can then form the basis for reading literature that could help them to explain the observed behaviour from an behavioural economics perspective.
As mentioned, in addition to laboratory experiments Ariely also describes a number of field experiments in his book. One of the many examples can be found on page 194. This field experiment takes place at Duke University. Ariely manipulated a vending machine in such a way that after the someone put in the necessary amount of money for obtaining a chocolate bar, both the requested treat and the money initially thrown in were paid out. There was also a clearly visible sign indicating a telephone number in case of malfunction of the machine. The behaviour of the test subjects (who were unaware of participating in an experiment) was observed and recorded from a distance. What do you think happened? How did students behave when they got back both the chocolate and their money? And what would you do? How many times would you try obtaining another chocolate bar and a refund of your money? The results of Ariely’s research showed that on average students threw in money three times. However, three other observations were made as well: none of the students called the breakdown service number, and none of the students tried more than three times. This can be considered odd, as emptying the machine for free would be a utility-optimizing choice for the real homo-economicus. Lastly, most students handed out their chocolate to fellow students. Insights from behavioural economics based on social psychology provides explanation for this behaviour.
Using this case in your classroom could be done in several ways didactically. You could describe the story of this study to your own pupils and ask them to come up with a hypothesis about the outcome of this vending machine field experiment. This is an exercise in economic reasoning. You may also be able to simulate the experiment (after proper consultation with your management) in the school canteen and then discuss your observations with the pupils.
The two experiments highlighted in this book review are just a selection of the many examples that Ariely describes in his book. If you want to practise with your pupils formulating and testing hypotheses about economic behaviour, the many examples in this book can certainly be inspiring.
Coen Oosterbroek and Roel Grol are teacher educators within the fields of business and economics at the Faculty of Education at HAN University of Applied Sciences, Nijmegen, the Netherlands. The authors would like to thank Polly Glegg for her useful comments on an earlier version of this manuscript. They would like to mention as well that a version of this article appeared in a Dutch journal for teaching learning methods in economics.
Ariely, D. (2012). The (Honest) Truth about Dishonesty. New York: HarperCollins Publishers.
Grol, R. (2015). Investigating Economic Classroom Experiments (Doctoral dissertation). Nijmegen: Radboud University.
Harrison, G., & List, J. (2004). Field Experiments. The Journal of Economic Literature, 42 (4), 1009-1055.
Guala, F. (2005). The Methodology of Experimental Economics. New York: Cambridge University Press.