Saturday, November 11, 2006

What We Learn When We Learn About Economics

Christopher Hayes sat in on the University of Chicago's introductory economics class. He recounts his experiences in "What We Learn When We Learn About Economics", an article in the November issue of In These Times, a progressive or soft-left American publication.

One can quibble with aspects of Hayes articles. The Chicago school is only a subset of neoclassical economics, not all of neoclassical economics. (Compare and contrast the role of the "Chicago boys" in Chile and the "Harvard boys" in Russia. Does Hayes' error matter?) I'm not at all sure Hayes understands "efficiency" as "Pareto efficiency". (But wouldn't that be Allen Sanderson's fault?) In general, Allen Sanderson comes off as an ignoramus, I think. Does he really suggest to the kids that who gets what is a matter of who is willing to "work hard"? Whatever happened to Hayek's understanding of abstract rules and entrepreneurship? I doubt Sanderson has ever read Gunnar Myrdal's The Political Element in the Development of Economic Theory. As I understand it, whatever the label, Steve Forbes is not an advocate of a flat tax; he doesn’t want to tax property income.

(Hat tip toMark Thoma and Ezra Klein.)

Update: Hayes' article is the subject of a post with many comments at Crooked Timber.


Anonymous said...

I enjoyed that article as well. But yeah the identification of "neoclassical economics" with "Chicago School" did irk me - I think it's a quite common confusion though among the lay people. The fact that there's "New Classical Economics" (Chicago + Minnesota) doesn't help any.
One interesting aspect was that even at an ideological place like UC, the professor tried to remain balanced (though I guess you could quibble about where the center is) in all but two of his classes. Think of how it would play out in an econ dept. that doesn't have the UC rep. In fact looking back on my own experience I still have no idea what the politics of most of my profs were.
The article also illustrates the point I tried to make before, that most of what you're teaching at principles level is just basic 'economic literacy'. What is GDP. What is inflation. How is the unemployment rate calculated. What is the difference between a stock and a flow. What is the difference between a real and a nominal variable. That's about 40% of the course. Then another 50% is just Hicks style Keynesianism watered down for freshmen. Then 10% of doing your favorite subjects (I do either development or history of economic thought). There isn't much room left for indoctrination into the beauty and justice of the free market system (a shame, really).

Anonymous said...

Oh yeah and when Steve Forbes ran for president way back when he did run on the platform of the flat income tax. Never made it past the primary though.

Anonymous said...

radek says "The article also illustrates the point I tried to make before, that most of what you're teaching at principles level is just basic 'economic literacy'."

I would agree on the 40% point, as far as macroeconomics goes. In fact, when teaching this course, one has considerable opportunities to critize the utility of GDP as a measure of welfare and economic growth as a moral imperative. I also find discussions of real variables useful in presenting abridged versions of the Cambridge Controversies, since one can illustrate that rankings of quantity based on values are suseptible to the prices (weights) being used (of course, for firms making actual investment decisions, real prices are inconsequential, though expectations about changes in relative prices may be critical). Of course, one can question the validity of teaching the Hicksian version of Keynesianism, without reference to either its roots or its connection to contemporaneous thought. But you've already referred to the course as something along the lines of 101 Lies (I'm too lazy to look your exact quote).

Introductory Microeconomics (which generally consists of supply and demand and possibly the Prisoner's Dilemma) is something quite different, as the emphasis is on methodology rather than on everyday economic measures and institutions. Certain issues (rent controls and minimum wage come to mind as leading candidates) are mentioned superficially to "illustrate" the applicability of the theory. The common treatment of identifying efficiency with the outcome that maximizes total surplus becomes central in subsequent treatments of monopoly and externalities. Unfortunately what typically beomes lost in all of this is that the "right" (efficient) outcome hinges critically on the status quo distribution of income, since this is a crucial determinant of consumer demand. Even if your assertion that the neoclassical model that dominates the undergraduate microeconomics curriculums is highly contested at the research frontier, it still plays a role in selecting those students that carry on in the discipline. I also suspect it serves a subtle cast economics as a methodology rather than a discipline that is defined by the domain under study.

Anonymous said...

To Radek: Why you think that the ability of mainstream economics to house both Democrats and Republicans makes it non-ideological? As far as I can tell, much of the mainstream, with its emphasis on individual choice, is firmly grounded in Anglo-Saxon liberalism. Liberalism may well be the dominant ideology of our times, but it is still an ideology...

Anonymous said...

To second anonymous: That was my comment that "you could quibble about where the center is". And in the end it's a introductory course in economics not a global and historical survey of world political thought through the ages and eons. You gotta pick an anchor somewhere.

Robert Vienneau said...

I don't see how "You gotta pick an anchor somewhere" justifies Radek in his refusal to acknowledge that Sanderson, according to Hayes, preaches ideology in more than two classes a term. And Radek misses my point that Forbes, despite the name, does not advocate a flat tax; as far as I know he excludes taxation on certain forms of income. My point is analogous to Dean Baker's claim that "free trade agreements" generally aren't.

By the way, as I see it, Harvard's intro economics class is explicitly ideological. They wouldn't let Marglin teach a section for credit when the students asked for such.

One could go on and on with such stories. And some mainstream economists, who refuse to let themselves understand, will pretend each and every is just an isolated story.

Anonymous said...

Well, Robert, you've probably seen this one before, but in case any of your other readers are interested:

Anonymous said...


Herb Thompson (1997) "Ignorance and Ideological Hegemony: A Critique of Neoclassical Economics", Journal of Interdisciplinary Economics, 8(4): 291-305.

The full links is:

Anonymous said...

Robert, you're right, I missed your point on Forbes and the flat tax.
As to the other thing, there's basically no way that you can teach economics in a ideology-free way (and hey, some would say that teaching evolution in biology class is ideological. Which it is, but that's beside the point). And given finite amount of time one cannot present all the diverse and opposing views outthere. Going the Democrat vs. Republican (or more generally does state intervention improve or hurt things) is probably a good way to minimize bias.

anon - The 101 Lies comment in its context referred to the result of dumbing down the curriculum rather than to any ideological bias. I think the textbook publishing might be to blame here - at least that's the sense I get by talking to people who's written, tried, or reviewed Intro Books. Someone writes a book that's original, interesting, precise and presents more update results is often told by the publisher "but this is different than all the other texts out there, cut it out". Which is why there's really no good Intro Macro text outthere. But this goes both ways ideologically. For example you can't find a textbook that deals with Austrian theories of the business cycle or even that takes RBC seriously (whether that theory is right or not it should at least be presented).

Robert Vienneau said...

Thanks for the comments. I think Radek clarifies his point.

Anonymous said...

Radek - I'm generally more interested in the isssue of ideology as it pertains to first-year microeconomics. The "implicit" ideology of first year micro is something along the lines of "Leave the outcome to the market unless there is a market failure." (For first-year macor, the equivalent is "Intervene if you trust the government and leave the market alone if you don't, since government intervention will only make matters worse.") I would suggest that discussions about government interventions in the economy are discussed in broader terms than these...efficieny is the primary agenda of economists and a secondary agenda for pretty much everyone else. Methodological individualism involves framing issues in a certain way, and it is this world-view that forms the ideology of mainstream economists.

Anonymous said...

Generally, I'm uncomfortable with using the term "ideology" with respect to economics, because I'm not sure I have a solid understanding of how to use the term.

I like the following quote by David Colander, which I suspect applies to the author of this blog, " My view of the majority of the heterodox critics is that they want economics to reflect their ideology, not that they want economics to be nonideological. I would feel much better about heterodox charges of mainstream ideological bias if they weren't associated with a particular political position. (1)"

(1) quoted from David Collander (2004) "Economics of an Ideologically Challanged Science", Middlebury College Working Paper. Available at:

Robert Vienneau said...

I've been busy with work and trying to follow threads on Crooked Timber and Unfogged.

Colander has clearly decided to try to persuade mainstream economists to change from a position within mainstream economics. The connection between some views on economic theory and political ideology often do not seem to be one of logic. I often present arguments as matters of mathematics and logic. How ideology enters is not clear.

I understand Colander's point about the critics (other than Austrians) being on the left. But that is still a wide range. I do not think of Paul Davidson, a former oil executive, as particularly radical. Jamie Galbraith's father was in the convention hall in Chicago in 1968, not outside on the streets (not that the rioting cops cared about that distinction).