Teaching the principles of economics

Posted: 2 December 2015 in Uncategorized
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Clearly, introductory economics courses are a shambles. The courses were a problem before the crash of 2008, but few if any mainstream economists were willing to admit it, and they still are now, long after the crash, since little has changed.

The question is, how should we teach the principles of economics?

Noah Smith has put forward his proposal: teach microeconomic theory in the first class, and replace macroeconomic theory with a “data/econometrics class.”

As I see it, Smith’s intuition may be right but his solution is completely wrong. As I’ve argued before, Smith’s initial idea, that much of what is taught in neoclassical microeconomics—that minimum wages create unemployment, that immigration depresses the wages of native-born workers, that social norms don’t matters, and so on—is simply wrong.

And introductory macroeconomics is often just as bad, since the basic aggregate supply-aggregate demand models lead to price stability and full employment (and, in open-economy models, balance of payments equilibrium)—and only generate economic downturns based on some kind of exogenous shock (on either the supply side or the demand side).

But you can’t solve the problem by continuing to focus on neoclassical microeconomics in one course and then teaching students how to do econometrics in the next. What are they supposed to be learning to measure?*

Better, it seems to me, to teach the debate—so that students can learn (a) the methods, assumptions, and conclusions of the mainstream debates in both microeconomics and macroeconomics and (b) that there are theories of economics other than those of mainstream (neoclassical and Keynesian) economics. That way, students would be prepared to critically think about economics—either as they move on to other studies (whether philosophy or business), having taken a two-course sequence in economics, or to other courses in economics (if they decide to major in economics). Either way, they’d learn that economics is an agonistic field defined by intense theoretical and empirical debates (about everything, from what determines prices and profits to the effects of minimum wages and social norms), and not a single theoretical method with an empirical “tool kit.”

That, in my view, is how we should approach the teaching of the principles of economics.


*I’m certainly not against teaching statistics and econometrics. It was literally the first course I ever offered on my first job as a professor of economics. But I taught it, not as Smith would like to see, as a way of doing empirical economics, but rather as a course in applied epistemology, focusing on the assumptions underlying econometrics and on how to critical read the kinds of statistics students might be expected to see in reading the media and, perhaps later, in the published literature in economics.

  1. BRF says:

    It is as if current main stream economic thought is acting like some useful idiot to the world’s power elites. It is my belief that Steve Keen comes closest to being able to model and predict how our current “capitalist market” economy functions but that the complexity of the subject will still be adding input to the point of almost a “butterfly’s beating wings” having to be extrapolated for ultimate accuracy.

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