Exploring Easter Island Economics with Excel

This page is authored by R. Morris Coats, Nicholls State University, based on a paper about the activity presented at the 2011 Annual Conference Southern Economic Association in Washington, D.C. The paper was authored by Thomas R. Dalton, University of Arizona, R. Morris Coats, Nicholls State University, and R. Andrew Luccasen, Mississippi University for Women.
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Summary

Students learn far more from doing than from viewing. By seeing relationships that they have developed themselves, by diagraming those relationships themselves, students learn far more than merely reading over what someone else has done. It is argued that especially for the dynamic problems encountered in environmental and resource economics, Excel has a comparative advantage as a learning aid. We develop a simple, flexible Excel assignment to illustrate the Brander and Taylor (1998) model of the Easter Island economy. Brander and Taylor argue that on Easter Island a crucial natural resource, the island's palm forest, was an open-access (res nullius) resource, leading to over harvesting and eventual societal collapse. Brander and Taylor's simple model showing the interaction of human population with a renewable resource, a forest, mimics what is known about the human population and forest from archaeological evidence.

The open access institutional protection of renewable resources is illustrated by a simple diagram of population and resource stock over centuries, a model much like ordinary predator-prey models in biology. Variations on the basic Brander and Taylor model, such as changes in propoerty rights institutions and/or changes in technology, based on published work in the literature, can be explored and compared to the original Brander and Taylor results of boom and eventual collapse.

Brander, J.A. and M.S. Taylor (1998). The simple economics of Easter Island: A Ricardo–Malthus model of renewable resource use. American Economic Review

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Learning Goals

Students should learn about feast and famine cycles and open-access vs. private property rights and their roles in resource use over time. Students should learn some basic modeling skills, including the use of difference equations, largely through replicating the models already in the literature. Students should also gain additional familiarity with the use of spreadsheets. By extending the model, as Dalton and I did in "Could institutional reform have save Easter Island?" Journal of Evolutionary Economics (2000), students can see how the human institution of property rights helps to provide a substantial incentive to conserve resources for future use, smoothing out the use of a renewable natural resource, by creating a cost to use beyond the growth of the resource base.

Context for Use

To understand sustainability, it often helps to begin with a state of nature where resources have little or no institutional protection, which is what we see in the Brander and Taylor (1998) model. This activity is meant for college students who have already had an introductory course in economics. This activity is mearnt for use in a course on resource or environmental economics. This could be done early in the course, as the Easter Island story and the Brander and Taylor article are mentioned in the introduction of a leading text (Tietenberg and Lewis, Environmental Economics & Natural Resource Economics, 2011.

Description and Teaching Materials

The basic description of this activity is described in the unpublished paper, "Exploring Easter Island Economics with Excel," (Acrobat (PDF) 1MB Jun20 12) by Thomas R. Dalton, R. Morris Coats and R. Andrew Luccasen (2011), presented at the 2011 Annual Conference of the Southern Economic Association.


Teaching Notes and Tips

This is mostly an out-of-class or homework assignment.
Students sometimes are less familiar with the use of spreadsheets than we might think. You might find that the activity requires a bit of your time in going over the basics of spreadsheets, from creating formulas to copying cells. Some of these are noted in the text.

Also, not all students are willing to do their own work. Two approaches to this are a) give in and make it a group assignment and b) individualize the assignment, especially by offering specific variations from the basic model for comparitive purposes. Even group assignments will not avoid possibly unwanted collaboration among groups. This can be handled with individualizaiton of the assignment.

The assignment should be spread out over a large part of the term, with first reading and discussing sections 2 and 3 of the "Exploring Easter Island..." paper. Section 4 of the paper provides instructions for simulating the basic model and some discussion of variations.

Assessment

Assessment of learning should be through a short paper (or series of papers) in which the student writes about what they did and what they found or can surmize from the diagrams that they created from the assignment.

References and Resources

Also see http://serc.carleton.edu/econ/spreadsheets/index.html for a module on teaching economics with spreadsheets at the "Starting Point" Project. The main contributors to this "Starting Point" project are listed as

Miles B. Cahill (College of the Holy Cross)

Humberto Barreto (Depauw University)

Semra Kilic-Bahi (Colby-Sawyer College) and

David Schodt (St. Olaf College)

Significant material on these pages are attributed to Cahill's work with George Kosicki.