Using Spreadsheets to Teach Economics

Initial Publication Date: October 14, 2010

Classroom shot
Because much of economics is quantitative and model-driven, spreadsheets are a natural tool to use in teaching economics.

What can Spreadsheets Do for Economics Teachers?

Spreadsheets not only speed calculation so more examples may be covered, they allow students to explore models that are too complex for undergraduates to solve analytically. As such, using spreadsheets increases the breadth and depth of what a course can cover.

Find more information about what is means to teach with spreadsheets
Find more information about advantages of teaching with spreadsheets

Useful tools for economists

Spreadsheet programs may be used to assist with such core learning activities as:

  • Exploring and analyzing data
    The advanced plotting and statistical features make it easy to create data charts and calculate summary statistics.
  • Estimating and plotting regression lines
    The time trend of any series may be estimated and plotted easily by inserting a "trendline" (regression line) on a chart, estimating a trend using the Fill command, or using basic regression functions of Excel.
  • Solving complex systems of equations numerically
    Models with several equations or non-linear equations may be explored numerically by Excel. The most straightforward way to do this is to assign cells to left-hand variable names (e.g., Q, C, I) and enter the right-hand side of the equation in the cell, referring to other cells as appropriate. Excel reports this as a "circular reference" error but when the "Iteration" Excel option is activated, Excel will solve the system numerically. See instructions on solving equations.
  • Creating large tables of simulation data
    Because spreadsheets can make many calculations quickly, they can be used for generating large data sets for analysis and plotting. For example, data for generating three dimensional plots of utility and production functions may be generated through the Data Table command. The Data Table command can be difficult to use at first, but detailed instructions are available. Another useful application for large amounts of data is to solve dynamic macroeconomic models over many periods to allow for exploratory analysis.
  • Solving optimization problems
    Numerical examples of constrained and unconstrained optimization models are relatively easy to program using Solver or Goal Seek in Excel.
  • Conducting statistical analysis A full range of statistical functions may be used to calculate summary statistics, statistically test hypotheses, and calculate p-values.

Furthermore, spreadsheets can be integrated with a a variety of assignments and settings and may be tailored to support or replace technical skills. However, implementing a spreadsheet activity may take some care. Find more information about how to teach with spreadsheets Furthermore, while some spreadsheet tools are straightforward to find and use, others are hidden or take some know-how. The spreadsheet tools page provides and overview of some spreadsheet tools and gives instructions on how to use these tools in Excel. Basic information on how to use Excel can be found on the What is Excel page of the Mathematics and Statistical Models SERC module.

Economics Examples

Nearly any topic in economics can be approached using spreadsheets, as suggested by the examples above. A large number of examples have already been developed for use by instructors:
If you have examples you would like to share, a submission would be much appreciated. SERC does not claim any copyright for submitted materials, though if an example is published elsewhere, it is your responsibility to gain permission to repost it here. Submit an example for review