Saturday, January 23, 2016

Two Views On Introductory Economics

Recently, two bloggers have commented on what is taught in college classes for introduction to economics1. Noah Smith accepts simple partial equilibrium models of perfect competition as internally valid2. He argues, however, that "Economics 101" models should be complemented, especially in policy applications, with complications introduced in more advanced models. Robert Paul Wolff, on the other hand, uses introductory economics as an example of ideological bullshit, to use Frankfort's technical term.

As far as I am concerned, simplistic supply-and-demand reasoning has been shown to be an incoherent mishmash decades ago. Like Prof. Wolff, I like to justify this view by referring to accepted findings of research literature. I particularly like to emphasize the supposed market for labor. Why do economists not revise their teaching3 so it is not susceptible to being criticized as ideology? I offer three suggestions to complement Wolff's treatment.

First, perhaps economists who teach outdated nonsense are just doing their job. Introductory courses are followed by later courses. And teachers of later courses expect students who have satisfied the prerequisites to have been exposed to graphs of supply and demand functions, the theory of utility maximization, marginal cost, marginal revenue, the First Order Conditions for maximization, consumer and producer surplus, etc. You might hope for teachers who introduce a bit of pluralism. But even economists who agree with me might find it challenging for the students to be both exposed to critiques and alternatives, and yet gain a command over the conventional material.

Second, perhaps the situation might be thought of as a type of coordination game, as in modeling a totalitarian society. Maybe the majority of economists privately think that they are being asked to teach balderdash. But, with the profession being the way it is, they see little benefit in saying so. Each sees others as publicly accepting what is being taught. So they put their doubts aside. If all were to be forthright at once, the situation would be different. But how could teaching transverse from the current equilibrium to that new one?

Third, maybe many economists come to accept what they are teaching as a way of managing cognitive dissonance. It must be an uncomfortable feeling to know one is spouting nonsense and, if one wants to advance in the profession, to be impotent to change it. Better come to accept the nonsense4.

  1. Both bloggers seem to be concentrating on microeconomics.
  2. Is Noah's conflation of elasticity with the slope of a function an acceptable simplification for a mass audience? Or just muddle?
  3. I do not teach.
  4. I guess this is related to the just world fallacy.

1 comment:

Blissex said...

«Why do economists not revise their teaching so it is not susceptible to being criticized as ideology? I offer three suggestions»

Your three suggestions relate only to forces operating *within the field itself*.

But there are powerful forces that operates from outside the field. There have been obvious ones like the campaign against the teaching of Keynesianism and Tarshi's book a few decades ago, or similar ones earlier one, or the current one in many angloamerican countries to replace departments of political economy in universities with departments of business education.

But less obviously but rather powerfully it is easy to observer for people starting in the field that those who teach, are implicated in, and do research based on some ideology stand a chance of becoming much richer than the others, by getting very well compensated consultancy contracts, or big donations for establishing chairs and even whole institutes.

When people on minimum wage will be able to offer $1,200/hour consultancy contracts to Economists like BoA did to G Hubbard or to fund 35 endowed chairs like K Lay did in various universities perhaps many ambitious Economists will consider alternative approaches.