Lesson 5: Are Disasters “A Disaster” for Lesson Planning?

The concepts, models, and analytical skills developed in Lessons 1-4 comprise an economic reasoning toolkit students can use to investigate the impact of a variety of disasters that occurred from as long ago as the Black Death of the Middle Ages to Hurricane Katrina of recent memory. The toolkit is also valuable to teachers as a framework for building lessons that continue to teach economics when the next disaster captures headlines and students’ attention.

The first two columns of the chart below list the economic reasoning tools developed in each lesson. Diagnostic questions in the third column can be used to sort out which tools are most useful in understanding the impact of the headline events. This is the first step in designing lesson plans that address compelling current events and also develop or practice targeted content knowledge and skills.

Lesson Topics Economic Reasoning Tools Diagnostic Questions

Economic effect of resource destruction

Production Possibilities Frontier

Capital to Labor Ratio

GDP vs. GDP per capita

  • What has happened to the economy’s ability to produce goods and services?
  • In what ways has the productive capacity of the economy been reduced?
    • Which type(s) of resources were damaged or destroyed?
  • How will is future economic growth likely to be affected by the changes from the natural disaster?

Market response

Supply and demand analysis

  • Changes in the determinants of supply
  • Law of supply: price & quantity supplied
  • Incentives: price (profit)

Supply and demand analysis

  • Changes in the determinants of demand (prices of substitutes and complements)
  • Law of demand: price & quantity demanded
  • Incentives: price

Market Signals

  • Price controls
  • Price gouging legislation
  • Regulatory changes
  • Were supply shocks created by the disaster?
    • Has the market reduced or eliminated the supply shock? How do you know?
    • How did the market address the supply shock? (Or, If the supply shock persists, why has the market not been able to address it?)
  • Were consumption shocks created by the disaster?
    • Has the market reduced or eliminated the demand shock? How do you know?
    • How did the market address the consumption shock? (Or, If the consumption shock persists, why has the market not been able to address it?)
  • Have limits or constraints been imposed on markets’ abilities to provide goods and services in response to the disaster?
  • Have limits or constraints on markets been removed or reduced in the aftermath of the disaster?
  • What types of disaster response tasks do private businesses seem not to be willing to undertake or to do well?

Government response

  • Public goods
  • Public Choice Theory
    • Incentives for elected officials
    • Incentives in bureaucracies
    • Information problems
    • Moral hazards
  • What roles has the government undertaken in response to the disaster? For each role listed:
    • If the government had not taken on this role, would private businesses have done so? Why or why not?
    • Is the government doing an effective job in this role? How do you know?
  • What was the outcome of the various government efforts after the disaster?
    • Which government programs/activities have been successful or have been praised?
    • Have problems with government response surfaced? In what areas?
Non-profit response
  • Incentives
  • Competition: “market-like” atmosphere
  • Specialization and comparative advantage
  • What competition does this non-profit face?
  • Is there evidence that the non-profit is aware that it faces competition?
  • Is there evidence that the non-profit has developed a comparative advantage in producing a good or service?

Here is a suggested procedure for using the chart to guide the creation of a new lesson:

1. Based on what you read, hear, and see in the news, review the questions in the last column to identify the salient features of the current disaster. Look for similarities and differences in the current event and the historic events analyzed in Lessons 1-4. Once you’ve identified the appropriate economic reasoning tools, compare the national content standards (identified at the beginning of Lessons 1-4) with the content targeted by your district’s curriculum.

  • For example, an outbreak of the avian flu may, like the Black Death, produce a situation where capital is relatively untouched, but population is decimated. Might the survivors experience increases in standard of living? Tools and examples from Lesson 1 will be relevant in teaching about this disaster.

2. Refer back to the examples in the lessons and decide whether to provide instruction in or review of the identified economic reasoning tools.

  • For example, a massive earthquake that destroys a large city may create a housing shock. To understand supply shock and to discuss alternative policy responses, students must first understand supply, demand, and equilibrium price – the tools developed in Lesson 2. If the class has already practiced market analysis, the current disaster can be used as an application problem. If they have not, the earthquake provides a compelling context in which to develop that knowledge.

3. Develop problem-solving exercises or mystery challenges from news coverage of the current disaster to give students the opportunity to practice using the economic reasoning tools. The sequence of 1) analyzing a past episode under your direction and then 2) analyzing the current event on their own or in small groups develops their ability to transfer from one context to another, an important component of critical thinking.

  • For example, when people are angry and calling for the resignation of the governor after a blizzard paralyzes a major city, the tools in Lesson 3 can serve as a diagnostic checklist: What incentives were the governor and his staff responding to? Did bureaucratic procedures play a role? Why were non-profit agencies able to get supplies to stranded citizens when the state government couldn’t?

4. Go back to the news. Look for stories and data to provide contemporary illustrations and to give students practice using the economic reasoning tool(s) you have targeted. Document-interpretation exercises, mystery challenges, role playing activities, or policy debates are quick to set up and effective in engaging students’ interest.

  • For example, as the FTE was preparing to post the Economics of Disasters in the fall of 2007, wildfires were burning throughout southern California. The results of a quick Internet search for fire stories and data are shown in the third column of the chart below.
Lessons Economic Reasoning Tools

Example: California Wildfires, 2007

Economic effect of resource destruction

Production Possibilities Frontier

Capital to Labor Ratio

The major short-term economic loss in the California wildfires were losses of labor time when businesses and offices closed and people were evacuated. Longer term destruction included burned homes and farms, and damage to infrastructure.

New stories:

Capital destruction: 100 miles of state highway damaged LINK (12-05-07)

fire damage statistics: LINK (12-05-07)

estimates: $893 million in lost productivity LINK (12-05-07)

home-owners lose, construction companies win LINK (12-05-07) LINK (12-05-07)

Market response

Supply and demand analysis

Supply Shocks:

  • 1/3 of avocado crop destroyed: http://www.msnbc.msn.com/id/21457172/ (12-05-07)
  • List of agricultural damage by crop: LINK (12-05-07)
  • Consumption shocks:
  • Hotel rooms: Several articles praise hotel owners for offering rooms at below-normal rates, while also noting that many people could not find hotels with available rooms: LINK LINK(12-05-07)
  • Who knew that filter masks would be a hot item?:LINK (12-05-07)

Government response

  • Public goods
  • Public Choice Theory

San Diego officials were praised for keeping the peace, notifying residents and helping them evacuate, directing traffic, and maintaining order at evacuation sites.

  • Looting arrests: LINK (12-05-07)
  • reverse 911: LINK (12-05-07)

The San Diego wildfire blog followed the tangle of bureaucratic red tape that delayed government firefighting efforts: LINK (12-05-07)

Non-profit response
  • Competition
  • Comparative advantage
Note the list of supplies the animal evacuation experts wanted. Would you have known what to ask for?

LINK (12-05-07)

LINK (12-05-07)

Volunteer workers: LINK (12-05-07)

Disasters are disasters at least partly because they are so unpredictable. The crowded environment of prescribed curriculum and mandated testing raises the cost of deviating from the planned lesson sequence and the benefits of ignoring students’ interest in the interest of “covering” the curriculum. The economic reasoning toolkit changes that cost/benefit equation, transforming a distraction into a teachable moment.

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