St. Louis, Missouri
June 18, 2000
June 18, 2000
June 21, 2000
5.726.1 - 5.726.6
Where is the Engineering in Engineering Economy? Karen E. Schmahl, Christine D. Noble, Beth Myers Miami University, Oxford OH
Many of the basic tenets of engineering economy are founded in the finance world. The concept of the time value of money is certainly financial and students appreciate that they are learning tools that they can apply to their personal finances. Does typical coverage in an Engineering Economy course emphasize financial or engineering applications? This paper looks at three leading Engineering Economy textbooks and assesses the level of financial versus engineering applications within the chapters that are typically covered in a one-semester course. End of chapter problems are categorized according to the level of and type of engineering content. Summary information from the study should be helpful in determining the appropriate balance of engineering and finance coverage to meet curricular objectives.
Successful teaching of engineering economy requires that, upon completion of the course, students are able to apply time value of money concepts in making engineering decisions. In order for students to reach a minimum level of competence, they must master the basics of techniques such as present worth, equivalency, and rate of return on an after-tax basis. They must also be able to apply correctly the techniques in an engineering decision-making context.
Engineering Economy textbooks typically use a mix of financial and engineering problems to help the students learn the basics of engineering economy. Financial examples, such as bank account savings, loans and bonds, are useful because they can be used to present time value of money concepts in a simplistic form. Problems using an engineering decision making context in real life tend to be more complex.
Arguments can be made that courses in Engineering Economy should provide more of an engineering decision-making focus than is currently emphasized in textbooks. In recent years several papers in the Engineering Economy Division at the ASEE National Conference have supported this view. Hartman strongly supported re-emphasizing the decision process in engineering economy courses. Wells proposed a revised approach for teaching engineering economy where “Case studies are used to teach the language and concepts of cost and the relationships between engineering decisions and economic performance of the firm.” A two- course sequence with the second emphasizing applications in the engineering student’s major was proposed by Mallik and Sarin.
An alternate viewpoint is that by putting more emphasis on the personal finance aspects, student motivation in learning the basic concepts will be enhanced. Martinazzi and Lavelle suggest that a series of exercises in personal finance be utilized in the first month of classes. The series focuses on personal planning issues such as purchasing automobiles or homes, investment
Noble, C. D., & Myers, B. M., & Schmahl, K. E. (2000, June), Where Is The Engineering In Engineering Economy? Paper presented at 2000 Annual Conference, St. Louis, Missouri. https://peer.asee.org/8850
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