John Stossel 20/20 was great again last night, and he relied for his story on price gouging on my colleagues Russ Roberts and Vernon Smith (as well as Gary Becker and Milton Friedman). Russ, especially, gave a wonderful discussion of the smoothing of consumption brought about by price hikes and the signal to alternative suppliers to come to the market that results. Great job Russ!!! If I was teaching principles of economics this fall I would get a copy of this show and make sure that my students understood this basic point about price adjustments.
In fact, when I taught ‘Economics for the Citizen’ besides using Paul Heyne’s The Economic Way of Thinking, I also used the Stossel in the Classroom sets that were developed by Bob Chitester, as well as Milton and Rose Friedman’s PBS series Free to Choose (also developed by Bob Chitester). These teaching tools, in my opinion, do a much better job communicating the basic logic of economic analysis and its scope and its importance than Freakonomics (though I do appreciate Steve Levitt’s creativity and imagination).