A Barter Game To Teach The Value Of Money As A Medium Of Exchange (and maybe spontaneous order?)

I created a barter game that I use in class. Each student gets a handout that lists 10 items that they own and ten items they need to get. Every trade has to be one item for one item. The students also get a sheet to record each trade they make. I set the time limit at around 20 minutes and they get extra credit for each item on their want list that they end up getting.

The table at the end of this post first shows the items they each own at the start of the game and then shows the items they need to get. What every player has and needs to get is different. There are only 12 unique players. So if more than12 students show up, I start giving out player sheets that duplicate some that are already being used. Those students are probably in competition with each other and so may have a harder time than others. But I am not sure how to avoid this since I don't know ahead of time for sure how many students will show up. The game is set up for 12 players and, theoretically, they should all be able to trade for what is on their want list. If I set it up for more players, say 20, and not enough students showed up, then some students will have a hard time finding items on their list since the player sheet that has the items they need will not be in the game.

One issue is how hard to make the game. In the real world, if you had to rely on barter, you would probably have to make several trades before you got what you wanted (like trading good A to get good B, then trade B to get C, and finally trade good C to get good D). So I tried to set things up so that it would be hard to get some goods on your want list (requiring several trades) while others would need fewer trades to get.

For example, using the information from the table below, player #1 could make the following trades

Apple for Blender with player #11
Blender for Belt with player #9
Belt for Bed with player #7
Bed for Baseball with player #5
Baseball for Bag with player #3

Bag is on the want list for player #1. This takes 5 trades, quite alot of work (one issue in setting up these tables is that I have to make sure some of the other goods that each player has or wants can't be used-for example, in the case above, what if player #3 wanted a bottle-then he could trade is bag to player #1 for the bottle and only one trade needs to take place-this would make the game too easy).

In this example, player #1 has to make 5 trades. But the other players don't only make one trade, getting an item they want from player #1, so the game won't always be that hard. The story above involving player #1 finally getting his bag works for him getting his bottle and checkers. He would make 5 trades with those same five players involving other goods.

In this next case, player #1 only has to make three trades

Desk for Drums with player #4
Drums for Folder with player #7
Folder for Fries with player #10

Something similar would happen with the glove and lock.

In this next case, player #1 only has to make two trades

Organ for Phone with player #5
Phone for Plates with player #9

Something similar would happen with the radio and socks.

In the last case, only one trade has to be made. Player #1 trades his turkey to player #2 for his TV. Then players #3 & #4 can make just one trade to get a good. The same is true for the rest of the pairs of players.

So some trades are easy and others harder. Students have to walk around and find people to trade with. It does not take them long to realize that they have to form little groups and discuss what everyone has and wants. Then someone starts saying things like "if you trade me A for my B then you can trade B to get C from this other guy, which is on your list." This happens spontaneously, without me, the teacher, telling them to do this. What at first glance seems like it would be very disorganized or chaotic, ends up going fairly smoothly with quite a bit of cooperation. Often if someone says "I need good A" another student will say "that guy Joe over there has good A" or "you have good C? that woman over there needs it." Again, that is done voluntarily, without any direction from me. So an orderly process emerges without my directing it (I've see scalpers at sporting events try to find other scalpers who might have what you want if they don't).

I do tell them at the beginning that they will often have to make several trades to get what they want, but that is it. Then I just say "start trading" and give them a five minute warning before time is up. I might remind them during the game that if they trade for a good that they now own it and can trade it for something they want.

Once the game is over, I ask them questions such as "how would you like to do something like this every time you go to the store?" No one says yes because they just experienced how hard that would really be. It is much easier getting what you want with money.

1	Apple	Bottle	Checkers	Desk	Glove	Lock	Organ	Radio	Socks	Turkey
2	Backpack	Bread	Cheese	Dog	Guitar	Magazine	Pen	Raisins	Soda	TV
3	Bag	Burger	Chicken	Door	Hammer	Map	Pencil	Rake	Spoons	Umbrella
4	Banana	Cake	Coat	Drums	Hat	Matches	Pepper	Rope	Straws	Vase
5	Baseball	Candles	Coffee	Fish	Honey	Milk	Phone	Rug	Sugar	Violin
6	Basketball	Candy	Comb	Flute	Ice Cream	Mirror	Piano	Ruler	Syrup	Vitamins
7	Bed	Car	Compass	Folder	Iron	Mustard	Pie	Salt	Table	Wagon
8	Beer	Carrot	Computer	Football	Jelly	Napkins	Pillow	Screwdriver	Tape	Wallet
9	Belt	Cat	Corn	Forks	Juice	Newspaper	Plates	Shirt	Tea	Watch
10	Bike	Cereal	Couch	Fries	Ketchup	Notebook	Popcorn	Shoes	Toothbrush	Wine
11	Blender	Chain	Crackers	Frisbee	Knives	Nuts	Printer	Shorts	Towel	Wrench
12	Book	Chair	Cups	Glasses	Light Bulbs	Oranges	Puzzle	Shovel	Trumpet	Yogurt
1	Bag	Burger	Chicken	Fries	Ketchup	Notebook	Plates	Shirt	Tea	TV
2	Banana	Cake	Coat	Frisbee	Knives	Nuts	Popcorn	Shoes	Toothbrush	Turkey
3	Baseball	Candles	Coffee	Glasses	Light Bulbs	Oranges	Printer	Shorts	Towel	Vase
4	Basketball	Candy	Comb	Desk	Glove	Lock	Puzzle	Shovel	Trumpet	Umbrella
5	Bed	Car	Compass	Dog	Guitar	Magazine	Organ	Radio	Socks	Vitamins
6	Beer	Carrot	Computer	Door	Hammer	Map	Pen	Raisins	Soda	Violin
7	Belt	Cat	Corn	Drums	Hat	Matches	Pencil	Rake	Spoons	Wallet
8	Bike	Cereal	Couch	Fish	Honey	Milk	Pepper	Rope	Straws	Wagon
9	Blender	Chain	Crackers	Flute	Ice Cream	Mirror	Phone	Rug	Sugar	Wine
10	Book	Chair	Cups	Folder	Iron	Mustard	Piano	Ruler	Syrup	Watch
11	Apple	Bottle	Checkers	Football	Jelly	Napkins	Pie	Salt	Table	Yogurt
12	Backpack	Bread	Cheese	Forks	Juice	Newspaper	Pillow	Screwdriver	Tape	Wrench

Automation Can Actually Create More Jobs

Evidence shows increased productivity leads to more wealth, cheaper goods, greater spending power and ultimately, more jobs

By Christopher Mims of the WSJ.

There are four types of unemployment: seasonal, structural, frictional and cyclical.

Structural unemployment is unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs.

One example of this is when you are replaced by a machine, like bank tellers who were replaced by ATMs. Another example is when there is a fall in demand for your product, so you get laid off, like with typewriters since people now use computers. A third example is geographical, when the jobs are not in your region of the country.

But automation may not be a problem, even in the case of ATMs. Excerpts from the article:

"Since the 1970s, when automated teller machines arrived, the number of bank tellers in America has more than doubled. James Bessen, an economist who teaches at Boston University School of Law, points to that seeming paradox amid new concerns that automation is “stealing” human jobs. To the contrary, he says, jobs and automation often grow hand in hand."

"Sometimes, of course, machines really do replace humans, as in agriculture and manufacturing"

"a long trail of empirical evidence shows that the increased productivity brought about by automation and invention ultimately leads to more wealth, cheaper goods, increased consumer spending power and ultimately, more jobs.

In the case of bank tellers, the spread of ATMs meant bank branches could be smaller, and therefore, cheaper. Banks opened more branches, and in total employed more tellers, Mr. Bessen says.

Some individuals are uprooted and suffer. In 1900, 40% of U.S. workers toiled in agriculture; today, that figure is less than 2%. Manufacturing employment in industrialized countries has declined in recent decades, as fewer people make more goods. But society, on the whole, has come out ahead.

It’s true that technology alters the quality, as well as the quantity, of jobs"

[a study] "found big increases in both low-paying and high-paying jobs. There are more barbers and barkeepers. But there also are more accountants and nurses, reflecting the rising complexity of the modern economy.

Paradoxically, says Mr. Stewart, many of the fields most transformed by technology have produced the biggest increases in employment, from medicine to management consulting. “What we saw was that machines and people were highly complementary,” he says.

Such bifurcated labor markets have ill effects. Disappearing factory jobs have largely been replaced by jobs in the service sector, where highly skilled workers, like doctors and computer programmers, are paid more, while many others see to the comfort and health of the affluent. In the middle, wages have stagnated, helping spawn our current age of populism.

“The era of mass manufacturing employment in the 1960s and 1970s was a good thing,” says Dr. Autor. “It created a lot of good jobs, it needed a lot of hands and eyes, and required some skills but not an enormous skill set. The work was relatively high value added.” But, he adds, that era is for the most part behind us."

"For all the recent advances in artificial intelligence, such techniques are largely applied to narrow areas, such as recognizing images and processing speech. Humans can do all these things and more, which allows us to transition to new kinds of work."

"the problem is not “mass unemployment, it’s transitioning people from one job to another.”"

"Near the end of the 19th century, America’s agricultural states faced the prospect of mass unemployment as farms automated.

In response, they created the “high school movement,” which required everyone to stay in school until age 16. It was hugely expensive, both because of the new schools and teachers, but also because these young people could no longer work on the farm. But it better prepared workers for 20th century factory jobs"

Is Christmas Gift Giving Inefficient?

In 1993, Yale economics professor Joel Waldfogel published an article titled The deadweight loss of Christmas. The idea is that gift recipients often place a lower dollar value on the item than its actual price. Maybe someone buys you a tie for $20 that you would pay no more than $5 for. So the inefficiency or deadweight loss is $15. Waldfogel estimated that in 1992, the inefficiency or deadweight loss in the United States from Christmas was anywhere between $4 billion and $13 billion.

Not everyone agrees with this. The article Christmas gift giving: a deadweight loss? from Business World mentions:

"the process of gift giving adds value to a gift over and above its retail price. Giving a gift instead of cash says the giver bothered to know what the receiver might want. There are times, in fact, when gifts that weren’t wished for turn out to be most valued. A thing one would not have thought of buying himself might end up a pleasant surprise. Or, an item the recipient might have had money to spend on but never bought for frugal reasons could also turn out to be a gift valued more than its price."

An article from the Economist magazine, "Is Santa a deadweight loss?: Are all those Christmas gifts just a waste of resources?, raised the question "So should economists advocate an end to gift-giving?" Here is the answer they provided:

"There are a number of reasons to think not. First, recipients may not know their own preferences very well. Some of the best gifts, after all, are the unexpected items that you would never have thought of buying, but which turn out to be especially well picked. And preferences can change. So by giving a jazz CD, for example, the giver may be encouraging the recipient to enjoy something that was shunned before. This, and a desire to build skills, is presumably the hope held by the many parents who ignore their children's pleas for video games and buy them books instead.

Second, the giver may have access to items—because of travel or an employee discount, for example—that the recipient does not know existed, cannot buy, or can only buy at a higher price. Finally, there are items that a recipient would like to receive but not purchase. If someone else buys them, however, they can be enjoyed guilt-free. This might explain the high volume of chocolate that changes hands over the holidays.

But there is a more powerful argument for gift-giving, deliberately ignored by most surveys. Gift-giving, some economists think, is a process that adds value to an item over and above what it would otherwise be worth to the recipient. Intuition backs this up, of course. A gift's worth is not only a function of its price, but also of the giver and the circumstances in which it is given.

Hence a wedding ring is more valuable to its owner than to a jeweller, and the imprint of a child's hand on dried clay is priceless to a loving grandparent. Moreover, not only can gift-giving add value for the recipient, but it can be fun for the giver too. It is good, in other words, to give as well as to receive."

See also

Are Homemade Gifts Better Or More Special?

What Melvin Anthropologist Konner Fails To See When He Criticizes Economists And Their Views On Gift Giving 

Here is an old Dilbert strip