The rich get richer, the poor stay poor

11.18.2006

I came up w/ this little simulation & tried it w/ my Friday comparative politics students. It was a great success (and lots of fun for the students). So. I thought I'd share this simple little in-class simulation on economic development.

The purpose of the activity is to show how "early" developers (e.g. the USA) have a remarkable advantage over "later" developers (e.g. Brazil) — and how some countries may only end up poorer (e.g. Bangladesh), for all their efforts.

The only materials you (the instructor) need is a stack of scrap paper, some monopoly money, and a hula hoop (I own a hula hoop, I suppose you can improvise).

Divide the class up into teams of two & write their names on the chalkboard. Each team then gets $200 in monopoly money. At the start of each round, each team can determine whether it will buy paper (at a cost of $50). If they buy paper, they can make a paper airplane & try to put it through the hoop (one throws, the other holds the hoop). The hoop should be placed about 30-35 feet away (about the length of my classroom) from the thrower (trust me, it's hard to put a paper airplane through a hoop from that distance).

If the team successfully puts the airplane through the hoop, it gets its $50 back. Place a check mark next to the team's name. If a team doesn't put its airplane through the hoop, it gets nothing.

And they must actually fold the paper into something resembling a plane; they can't just mash it up into a ball.

Each round continues like this, but w/ special exceptions for the previously successful teams. A team that has put one airplane through the hoop takes one step (about a yard, it's a "step" as measured by the students) forward closer to the hoop, this time the reward for successfully putting the airplane through the hoop is $100. A team that has put two airplanes through the hoop takes two steps closer to the hoop; this time they'll earn $200 if they succeed. A team that has put three airplanes through the hoop takes three steps closer; this time they'll earn $500 if they succeed. The reward maxes out at $500 (by this time the thrower is almost standing right in front of the hoop). Paper always costs $50.

If a team runs out of money, it can still throw paper airplanes (the "bank" can give loans), but they earn nothing & take no steps forward until they've put two airplanes through the hoop in two consecutive turns (which is almost impossible). Once they do that, they get $50 and start from the beginning (if their next attempt fails, they're back to zero & must borrow from the bank).

Teams don't have to throw airplanes, they can sit on their money & save it (some of my students did that, even though I never specified it in the rules).

What happened in the end? I had 12 teams, and two of them made it to $1250 after five rounds. Each of those two teams had more money than the poorest eight teams (two thirds of the total) combined — most of the teams had about $50-100 left after five rounds. To give a sense of this: The total wealth of the "world" (all twelve teams combined) more than doubled in only five turns; but two thirds of the population was poorer (at least twice as poor) than they were at the beginning. Those who were successful early (for whatever reason), had an easier time increasing their wealth. Those who were unsuccessful early (for whatever reason), were unable to increase their wealth.

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Posted by Miguel at 04:25 PM

Comments

That's a great idea I might try it with my students.

Do you have any way I can explain how the US is so rich, even though we borrow money from everyone and are still in debt? They have trouble with that concept.

Posted by: Kara at November 18, 2006 10:24 PM

I'm not sure what the best way to explain it is. But I'd think of it like credit cards. Poor people can't get credit cards, because the banks worry they won't pay their creditors back. But rich people can get lots of credit, because they'll likely pay their bills.

If you have a large balance on your account, but can keep paying your monthly bills, the credit companies will keep lending you money. Why? Because you have a track record of paying your bills, and they'll make lots of profit on the interest. If you stopy paying your bills (you default), they'll stop lending you money.

I think international loans to countries opperate on similar principles. The US has never failed to pay its credit card bills. But poor countries have frequently had to borrow just to pay their debt payments ... which makes them very risky for future loans.

Posted by: mcentellas [TypeKey Profile Page] at November 19, 2006 12:36 AM

I think you got it on the credit cards...see DBD sunday...


And hello again, Miguel!

Posted by: chris Muir at November 19, 2006 09:36 PM

Chris Muir:

OMG, yes! And I'm so glad to see Day by Day picked up by more newspapers recently. Kudos!

Posted by: mcentellas [TypeKey Profile Page] at November 20, 2006 12:00 AM

Awesome idea Miguel! Might I suggest one little tweak that also might help people understand how this game relates to international economics.

For those teams that successfully get the paper airplane through the hoop say 3 times--not only does the price of paper go down from $50 to $25--instead of paying you they start paying each other for the next piece of paper to throw.

Also, those teams that are 3 or more steps behind have to pay $50 for the paper to one of the teams that are ahead 3 steps-who then just go over and get the paper for free from you and hand it to the country that actually paid for it.

Just a thought, have fun with the class wish I could take it.

Posted by: Patrick [TypeKey Profile Page] at November 20, 2006 09:21 AM