ATLANTA – A well-designed game can show students how policymakers use complex economic theory in the real world while teaching foundational economic concepts, according to research by Georgia State economist Stefano Carattini and his colleagues.
The article was released in time for this week’s opening of the United Nation’s 25th Conference of the Parties, the comprehensive annual global event for climate negotiations, in Madrid, Spain. Article 6 from the Paris Agreement, which relates to carbon trading, will be a topic of discussion during the two-week conference.
Earlier this year, ninth graders in Germany were seen on Twitter using the “cap and trade” game that Carattini, Eli P. Fenichel of Yale, graduate student Alexander Gordan (Ph.D. in Economics) and Patrick Gourley of the University of New Haven describe in “For want of a chair: Teaching price formation using a cap and trade game,” published in The Journal of Economic Education.
This carbon trading teaching tool simulates the process of policymakers placing a limit, or cap, on some negative outcome of product production. A certain number of permits allowing the undesirable outcome are made available through a game of musical chairs, and companies (students) are forced to buy, sell and trade the permits.
“The game has actually been around for a while,” said Carattini, an assistant professor in the Andrew Young School of Policy Studies. “One of my co-authors on the paper, Eli Fenichel, taught with it at Yale for many years. But the purpose of our paper is to publish it so that anyone could read it and play the game.”
Likewise, the economic strategy of cap and trade has been around for decades, but it is becoming more relevant amid the rising public concern with environmental issues. Gameplay closely parallels the way this strategy is implemented in the real world.
“This is a very concrete way for students to understand a complex concept,” said Carattini. “And it gets them out of their seats and actively engaged.”
Gordan has helped develop a free online app that streamlines this gameplay and allows students to play in a more comfortable medium.
Carattini and Gordan feel the German example shows even more exciting prospects for its use. Nils aus dem Moore, the head of the German research group, “Sustainability and Governance,” caught their attention when he shared a photograph of students engaged in the cap and trade game and cited their article on Twitter.
“The ninth graders ended up with fascination for the elegance and efficiency of a well-designed market for CO2 emissions,” Moore tweeted. “They realized that ‘market’ is not synonymous for the jungle or the merciless law of the fittest. Why can’t politicians embrace this insight more fully?”
It appears this teaching tool is making ripples far wider than Carattini and Gordan had originally imagined. They hope future generations will live better because of it.
By Sumar Deen (M.S. Clinical Mental Health Counseling, ‘21)
Department of Economics
Stefano Carattini is an Assistant Professor in Economics in the Andrew Young School of Policy Studies at Georgia State University. He is also affiliated with the London School of Economics and Political Science.
He studies energy and environmental policy, behavioral economics, public economics, and political economy. His research combines policy evaluation, to examine how policies work, with empirical analyses of their political economy. He has also been working on cooperative (pro-social) behavior and the diffusion of green behaviors, practices, and technologies.