Generative AI in Economics: Teaching Economics and AI Literacy

1. Introduction and Rationale

The development and rollout of generative AI (GenAI) applications, such as ChatGPT (Chat Generative Pre-Trained Transformer), have caused significant turmoil in higher education. While GenAI is seen as a major technological advancement, educational institutions and educators are divided on its use. Some choose to prohibit it due to concerns about its potential impact on academic integrity, while others embrace it as a valuable tool, exploring ways to integrate it into the learning process.

Many schools around the world were initially quick to limit or ban the use of GenAI. For example, New York City public schools (Roose, 2023) and many public schools in Australia (Deshpande and Szefer, 2023) banned GenAI in order to protect educational quality. Other institutions have embraced it, integrating it into the curriculum to enhance students’ learning experiences, rather than suppressing it and viewing it solely as a “cheating” tool (Rose, 2023). These schools argue that GenAI can foster creativity, enhance critical thinking, and facilitate engagement and collaboration among students. Kevin Roose, a technology columnist for the New York Times, spoke with dozens of educators who believe that prohibiting the use of GenAI in the classroom is misguided. Instead, they suggested, schools should cautiously adopt GenAI as a teaching aid, allowing students to quickly obtain basic answers and freeing up class time for discussions that develop critical thinking skills, thus keeping students ahead of generative AI technology (Roose, 2023).

Additionally, experts recommend that educators should teach GenAI literacy and develop better guidelines and policies related to GenAI use, as “students are using GenAI and will continue to do so with or without educator guidance” (Prothero, 2024, para 18). Teaching students about safe and ethical GenAI use is part of educators’ responsibility to help them become responsible and contributing digital citizens (Prothero, 2024).

We believe that the use of GenAI is inevitable, as it represents another level of technological advancement. Students are expected to use GenAI tools beyond the classroom, underscoring the necessity for educators to integrate these GenAI tools to prepare students for an AI-driven future. This paper presents ideas for incorporating GenAI in existing classroom activities to teach AI literacy along with economics concepts.

Integrating ChatGPT in the classroom encouraged students to critically evaluate the responses generated by AI

2. Learning Goals, Overview, and Use of the Activity

We have incorporated GenAI in several activities across various economics courses with the following learning goals:

• To improve analytical and critical thinking skills in an engaging and collaborative way.
• To explore and evaluate GenAI output while fostering creativity along with analytical and critical thinking.
• To develop GenAI literacy through understanding GenAI’s benefits and limitations.

With these goals in mind, we aim to teach GenAI literacy alongside applications of economic concepts and critical thinking skills. Incorporating AI in class discussions will give students experience using GenAI, so that they can recognize its limitations while simultaneously practicing economic concepts and developing critical thinking skills.

We have incorporated GenAI in activities that explore various topics. Generally, students begin by reviewing theories relevant to the main question, ensuring a solid understanding of the foundational concepts. Then they answer the questions based on their understanding of these theories. Next, students use a common prompt to input the same question into ChatGPT, producing an AI-generated response. They critically evaluate the similarities and differences between their answers and those generated by ChatGPT, considering factors such as accuracy, depth, and clarity. Finally, students reflect on the advantages and limitations of using ChatGPT. This reflection helps them refine and formulate their final answers, while also discussing GenAI’s applications, benefits, and drawbacks.

3. Sample Activity and Discussion: Learning Price Elasticity of Demand

In an activity on price elasticity of demand in Principles of Microeconomics classes, students are guided to recognize the concept in the lyrics of a song that tells the story of a young man who is willing to give up his job and his home in order to be with his girlfriend in another city. Then students use GenAI to answer the questions and critically analyze AI’s output. We ask the following questions:

This activity starts out with the students reviewing a concept they are already familiar with, opportunity cost, and how it relates to the song at hand. The questions then turn to the new concept of price elasticity of demand the students are trying to learn. The probing questions about elasticity of demand for spending time with her will lead some students to the right answer on their own. Then we direct the students to use ChatGPT and analyze the answers provided. Some responses generated by ChatGPT described the price elasticity of demand for the person’s partner as “perfectly elastic,” “extremely high or elastic,” or “very elastic.” Such answers are incorrect as the correct answer is (perfectly) inelastic demand. As we review the exercise in class, students can see that even though ChatGPT may sound convincingly sophisticated, its answers could be incorrect, so they need to critically evaluate them. This exercise allows for an engaging discussion through a popular song about the students’ responses and AI’s strengths and shortcomings.

4. Students’ Feedback and Lessons Learned

We have used this activity in several sections of introductory microeconomics classes. Students had various levels of familiarity and experience with GenAI—some students had never used it, while others were using it regularly. Students’ feedback was positive about the opportunity to use and explore further ChatGPT, although some students were concerned about its potential as a cheating tool. Students commented that they found it valuable to understand GenAI’s potential for error, its tendency to provide vague answers, and its potential to assist in gaining a deeper understanding of economic concepts.

Both authors observed that the use of GenAI increased student engagement and collaboration. The activity was conducted as a group activity with low pressure and all students were willing and happy to participate. Integrating ChatGPT in our Principles of Economics classes has provided valuable insights, including:

• Improve student engagement
• Develop critical thinking skills
• Enhance GenAI literacy
• Improve overall learning outcomes
• Promote adaptability and innovation.

5. Conclusion

Taking small steps to incorporate GenAI while teaching economic concepts can significantly benefit our students in preparing them for an AI-driven future. This approach allows students to practice responsible use of GenAI, observe its shortcomings, and develop critical thinking skills while learning how to evaluate and refine AI-generated solutions. We found that using ChatGPT increased student engagement, a key factor in effective learning. Moreover, integrating ChatGPT in the classroom encouraged students to critically evaluate the responses generated by AI, prompting them to reflect on their own use of ChatGPT and devise strategies for future use and applications of such tools.

References

Deshpande, S., & Szefer, J. (2023). Analyzing GenAI’s aptitude in an introductory computer engineering course. ArXiv: 2304.06122. doi: 10.48550/arXiv.2304.06122

Prothero, A. (25 April 2024). New Data Reveal How Many Students Are Using AI to Cheat. Education Week.. https://www.edweek.org/technology/new-data-reveal-how-many-students-are-using-ai-to-cheat/2024/04

Roose, K. (12 January 2023). Don’t Ban ChatGPT in Schools. Teach With It. New York Times. https://www.nytimes.com/2023/01/12/technology/chatgpt-schools-teachers.html

Rose, J. (21 February 2023). ChatGPT as a teaching tool, not a cheating tool. Times Higher Education. https://www.timeshighereducation.com/campus/chatgpt-teaching-tool-not-cheating-tool