When the American Economic Association meets next week in Washington D.C., two of the most interesting stories there won’t be in the exhibition hall.
Princeton University professor Paul Krugman is finishing an introductory principles textbook. But even if the controversial economist/newspaper columnist turns up to do a little on-scene promotion, the book itself won’t arrive until this time next year.
When it does, Krugman’s entry will pose a challenge to N. Gregory Mankiw’s highly successful introductory text, which rolled out amid great hoopla in 1997. (The Economist magazine ran a cover story about it!)
Starting in the early 1990s, economists and their publishers were gripped by the conviction that things had changed enough to warrant a new approach. Thanks especially to advances in game theory, the understanding of industrial organization had raced ahead. In macroeconomics, the primacy of political economy had been restored.
A successful first-mover with a distinctive product might enjoy a great advantage selling textbooks to the next generation of students.
Harvard professor Mankiw, an influential macroeconomist, was the first to market. He differentiated his book by sharply cutting back its size and reducing its level of difficulty somewhat. Whereas other texts routinely weighed in at more than a thousand pages, Mankiw told his stripped-down story in barely 750 pages — and managed to include much that was new at that.
True, what he left out cost him a certain number of adoptions. Every professor has his own view of the ins-and-outs he wants to teach. But enough instructors were impressed by Mankiw’s lucid exposition of new and old material that the book swiftly became one of the introductory market’s best sellers for Harcourt’s Dryden Press.
Krugman, a trade economist, also is a gifted expositor and an influential thinker. But the quality that commended him most when he agreed several years ago to write a text for Worth Publishers may have been his competitive zeal. Krugman does not like to lose.
Before long, he defied tradition to become a regular columnist for The New York Times. Then he moved from Massachusetts Institute of Technology to Princeton’s Woodrow Wilson School. Finally he added his wife, finance economist Robin Wells, as co-author of the book. The project fell behind.
On his Princeton website, Krugman reports that Krugman/Wells “is moving closer to physical reality” — to the point that its publisher has established a website for it designed to build a mailing list. “This, by the way, is how I spend most of my time these days. The current state of affairs is that the micro chapters exist in something quite close to final form; the macro chapters are much rawer.” The actual books are expected to arrive in December 2003, he reports.
There are, of course, many other excellent introductory texts on the market: Michael Parkin of the University of Western Ontario, Karl Case of Wellesley College and Ray Fair of Yale, Ben Bernanke of Princeton and Robert Frank of Cornell, David Colander of Middlebury College, Joseph Stiglitz of Columbia, John Taylor of Stanford to name several of the most obvious.
And don’t forget the grand old classic by Paul Samuelson of MIT, still selling steadily in its 17th edition, its authorship now all but taken over by William Nordhaus of Yale, plus its less-demanding (but equally profitable) doppelganger, by Campbell McConnell of the University of Nebraska and Stan Brue of Pacific Lutheran University. (A text for every purse and sensibility is the motto that publisher McGraw Hill learned from General Motors).
But none of these books constitutes the kind of standard in today’s market that was set for nearly fifty years by the Samuelson text. Nor, in truth, are any of them likely to turn into that kind of a blockbuster at this point. For that, something new will be required.
College publishing today is big business — really big business. The Mankiw and Krugman entries are supported by tightly-focused multinational companies that can afford to spend heavily and cleverly to promote their entries around the world — Mankiw by Thomson Corp., a $7.2 billion Canadian education conglomerate, Krugman by the giant Holtzbrinck Group of Stuttgart, Germany. There will be plenty of maneuvering for advantage during the coming year — most of it behind the scenes.
But then, more than money is involved — ultimately. Paul Samuelson is famous for having said, “I don’t care who writes a nation’s laws…, if I can write its economics textbooks.” Unless you write the right textbook, however, not all the money in the world can make you triumph.
So the other interesting story that won’t be in the exhibition this year is a little high-tech start-up called Aplia Inc. The company is too new to take a booth. Besides, it has no stack of books to show. Instead, it will be running demonstrations for professors with a network of laptop computers in a suite. Founded by Stanford University economist Paul Romer three years ago, Aplia has entered the introductory market from the other end — supplementals.
Supplementals are the problem sets, tutorials, selected readings and other study aids that publishers roll out in support of their best-selling texts. Students who pay $75 for a text can pay as much again for these workbooks, making them a potent source of profit — insight for the student and, for the publisher, pecuniary gain.
Like Mankiw and Krugman, Romer is one of the leading lights of the new generation in economics — he just won the premier German award in economics, the Recktenwald Prize. But Aplia grew out of his experience as a teacher at Stanford’s graduate business school in the ’90s.
“I wanted to assign more homework,” he writes in a letter posted on the company website, “but I could not manage the paper flow and grading. I wanted to use experiments to get students involved, but I could not spare time from lectures.”
He found that even among his highly-motivated MBA candidates, learning was largely passive. The future executives did not retain the economics he was teaching them, nor fully understand it.
Gradually, Romer developed software and developed teaching material to address these problems. Using his savings, he hired a wizard programmer and began passing out computer-graded problem sets before each class. Students came to class better prepared. He began cold-calling on students to check on whether they had done the work. They participated more fully. He created on-line experiments, put up student discussion groups, built remediation tutorials for those whose math was rusty.
All the new tools were designed to elicit more effort by students without any corresponding increase in the burden on the instructor. Meanwhile, course-management software kept Romer abreast of his students’ progress, and thus involved in what they learned and did not learn.
Greater student effort brought improved confidence; improved confidence brought greater student success. Lines formed outside his classroom. Stanford students voted him their distinguished teaching award in 1999.
On a speaking trip to Sweden, Romer persuaded the Skandia group of companies to finance an experimental startup. The giant Swedish money management firm, which began life in the mid-19th century as an insurance company, was seeking to become a “global savings company.” The new learning technologies were a natural investment for a company involved in teaching its staff and customers how to think about complicated financial instruments.
So Romer took leave from Stanford and began building a company, picking executives from among several failed Silicon Valley training and development start-ups, notably Pensare, Inc. An academic advisory board was assembled, some 125 test colleges and universities across the country recruited, and high-gloss Romer-style tools were developed to support an introductory microeconomics course.
In October, Skandia invested another $11.2 million in the company, whereupon Aplia abandoned the “stealth mode” in which it had been operating and began its current sprint.
Today, some 10,000 college students are using the full battery of Aplia tools — auto-graded problem sets, experiments, tutorials, readings, news analyses. The supplemental materials have been designed to work with any text, or even without one. Some professors rely on course packs, or even their own lecture notes. The entire system is web-based, without so much as a CD to buy, much less a book. Students pay on a subscription basis, currently $28 per term.
In time, a low-priced Aplia text by Romer himself presumably will follow.
Support packages for an introductory macro course and intermediate microeconomics are scheduled to roll out next winter in time for the AEA meetings. Material for college-level courses in other disciplines is planned.
Aplia makes an interesting claim — that its students do better on standardized exams. This amounts to a challenge to measure educational output. It is a little like the typing contests that manufacturers sponsored back in the 19th century when the typewriter was new.
Designed as a marketing ploy to boost particular designs at the expense of rivals, the typing contests helped usher in “the universal” — meaning the QWERTY keyboard that we use today. Wouldn’t it be interesting if the ultimate winner in the economics textbook derby came in through the back door?