Course Meeting Times
Lectures: 2 sessions/week, 1.5 hours/session
Recitations: 1 session/week, 1 hour/session
Prerequisites
14.01 Principles of Microeconomics
Course Description
14.03/003 is a fast-paced, interactive introduction to modern applied economics as it is lived, breathed, and practiced by academic researchers and policy analysts. You will master core tools of applied theory while learning how to frame and test causal relationships using research design, experimentation, and data analysis. In class and in the problem sets, you will read and we will discuss classic and contemporary research studies that put these pieces together.
Some of the policy challenges we will analyze include the following:
- The consequences of minimum wage regulations for earnings and employment
- The willingness of consumers to pay for healthcare
- The power and limitations of unregulated free markets
- The benefits and costs of international trade
- The causes and remedies of externalities, the problems of adverse selection and moral hazard in markets for insurance, loans, and everyday goods
- The detection and correction of discrimination in labor markets
- The application and misapplication of AI and machine learning to supplement (or subvert) decision-making
Attendance
Class attendance is mandatory, and your participation will be elicited.
14.03/14.003 is a participatory class. Fully one-third of the class will focus on applications from empirical and theoretical papers from leading journals that will feature in lectures but do not appear in textbooks. (Moreover, there is no textbook!) It is not possible to master the core material without attending lectures. We do keep track of attendance and do penalize unexcused absences (beyond a couple of lectures).
To overcome your natural shyness and ward off your natural sleepiness, I regularly call on students during class using a randomizer. If you don’t know the answer to a question, it’s entirely fine to guess an answer or to say, “I don’t know.” I do not penalize (or reward) students for knowing the answers. But I do reward engagement and participation. If you’re not there when you’re called upon, this is also recorded.
I may occasionally give in-class quizzes at the start of lecture. These will be brief, non-technical checkups on your knowledge of what’s going on in the class (readings, lectures, problem sets).
Tablets are permitted for in class for notetaking, but laptops and phones are not permitted.
Published evidence from randomized controlled trials performed in military classrooms by Lieutenant Colonel Kyle Greenberg (one of my former MIT Ph.D. students) and coauthors demonstrates that when students are randomly assigned permission to use laptops and tablets in class, they uniformly learn less. Nevertheless, I leave the tablet decision to you. Because laptops are distracting to others, they may not be used. Phones have no legitimate in-class uses.
Recitations
During the ten Friday recitations, your TAs will cover material that is complementary to material discussed in class and presented on problem sets. These recitations will not review problem sets (you can check the solution sets for that) or repeat the lectures. The first recitation will cover some math tools for 14.03/003 with which you may be unfamiliar.
Grading
Here’s the grading rubric:
- Best four of five problem set grades: 20%
- Class attendance, participation, and in-class quizzes: 20%
- Three exams: 20% each (60% total)
The grade distribution is not allocated by quota (e.g., this many A’s, B’s, C’s, and Q’s). It’s possible for everyone to do well, and I’d be happy to have a reason to assign mostly A’s. In recent years, most students have received excellent grades. If you make minimal effort, however, you will probably receive a C. If I fear that you may be headed for a D or F, I will try to warn you before the drop date. (This has not actually happened in recent years.)
Problem Sets
I will assign five problem sets. Problem sets typically include a set of pure theory questions and a set of application questions, often based on readings. To receive credit, you must submit your problem sets in PDF form online and on time. To accommodate unanticipated events, illness, and conflicts in your schedule, the problem set with the lowest score will be automatically dropped. This means that you don’t need to ask for an extension or permission to miss a problem set. It also means that I don’t need to grant extensions. So you need to get at least four problem sets over the line on time.
Exams
There will be two in-class, closed-book exams of 80 minutes in length. There will also be a closed-book final exam during the finals period. You will have two full hours to complete the final, but it won’t have more material (or count for more) than the prior two exams. The extra time is only to help you to relax. The date of the final exam is set by the MIT Registrar’s office, which strategically withholds the schedule until late in the semester so that you cannot pick your classes based on final exam schedules.
Each exam will focus on the new material since the previous exam, although of course you will need to understand the older material to apply the new material. The exams will be based on the lecture notes, problem sets, assigned readings, and classroom discussion. No notes, books, or phones are allowed (or needed) during exams. To support your study, I will share practice exams (with solutions) from prior years.
If you miss an exam for an excused reason, I will offer a written makeup or an oral exam on the blackboard. Students typically find oral exams painful. I will not write a new exam for only one or two students—so an oral exam is reasonably likely.
Recommended Books
These two recommended books are not self-contained textbooks, but they are great references—well written, occasionally amusing (only the Angrist-Pischke book, to be honest!), and available in paperback.
Angrist, Joshua D., and Jörn-Steffen Pischke. Mastering ‘Metrics: The Path from Cause to Effect. Princeton: Princeton University Press, 2014.
Banerjee, Samiran. Intermediate Microeconomics: A Tool-Building Approach, 2nd edition. New York: Routledge, 2021.
Required Readings
Each lecture has an associated set of readings listed on the class schedule. These readings will feature in lectures, quizzes, exams, and problem sets. If a reading is marked required, you are responsible for preparing the paper prior to class. This means reading the abstract, introduction and conclusions (not necessarily the body of the paper) so that you’re ready to answer the following questions:
- What is the paper’s research question?
- What is the methodology for answering the question (e.g., an experiment, a quasi-experiment, a set of correlations, etc.)?
- What is the headline result(s)?
I do not expect you to master the technical details of every paper, particularly not ahead of time. But I do expect you to familiarize yourself with the paper to get the conversation started.
Recommended Readings
You will find several recommended readings on the syllabus for your education and entertainment. These papers should be useful—and in many cases fun—but you will not be tested on their content.
