Teaching Economics? Start with Key Contested Ideas

How economics is taught has been the subject of a lot of debate recently. Although there have been a lot of good points made, in my opinion Andrew Lainton‘s recent blog post hits the nail on the head: we need to begin economics education with a discussion of key, contested ideas.

Starting with contested ideas has a few major benefits. First, it immediately shows students what economics is: a subject where there is a lot of disagreement, and where key ideas are often not well understood, even by the best. Second, it allows students to grapple with the kinds of critical questions that, in my experience, people generally have in mind when they think of ‘economics': where do growth, profits come from? How do things ‘work’? Third, it allows us to intertwine the teaching of these concepts with economic history and the history of thought.

Lainton’s key contested idea is savings: how naive national accounting might make you believe that saving instantly create investment; how Kalecki and Keynes showed that it’s closer to the other way around; and onto modern debates that add nuances to these simplified expositions. Naturally, this would also tie in with debates about the banking system, loanable funds and endogenous versus exogenous money. On top of ‘savings’, I can think of quite a few other important economic ideas that are not agreed upon, but are central to the discipline:

Decision making and expectations

How do people make decisions? This question is clearly central to economics, as any economic model that explicitly includes agents must make some assumption about what drives these agents’ decisions. In modern economics, an agent’s decision rule generally rests on seeking some form of ‘gain’, whether subjective satisfaction or simply units of money. Economists themselves have also, to their credit, pushed behavioural and even neurological investigations into decision making. However, much of this has yet to filter down to the main models/courses, even though it should really be at the forefront of economic modelling.

All too often, the most mathematically tractable models such as utility maximisation and rational expectations are simply assumed, perhaps with caveats, but not with any real discussion of whether they represent human behaviour. Well established psychological characteristics and behavioural heuristics/biases are ignored, even though they may alter the analysis of choice in fundamental ways. Public officials are often assumed to follow behaviour that creates their personally preferred outcome, despite important evidence to the contrary. It is assumed the public understands the fundamentals of the economy, even though a lot of evidence suggests this is way, way off. Decisions in the workplace that concern morale, hierarchy and norms are often disregarded, despite evidence that they are of utmost importance.

However, my point isn’t necessarily about which models are right or wrong. It’s that these debates about how people act, and based on which motives and expectations, are not only incredibly interesting but are incredibly important. Such debates could also tie in with a comprehensive discussion of the Lucas Critique – not as a binary phenomenon that can be solved with microfoundations, but as an ongoing problem that requires us to evaluate the way the parameters of the economy change over time and with policy, culture and so forth. This would allow students to see how the economy evolves, and how its behaviour depends on fundamental questions about human behaviour.

Value

Theories of value underlie economic theories, whether economists like it or not –  in fact, it’s pretty difficult (impossible?) to judge the “performance” of the economy without a theory of value. Classical economics was built on the Labour Theory of Value (LTV), and distinguished between the price of an object (exchange-value) and its value to whomever used it (use-value). Marginalist economics is built on the Subjective Theory of Value (STV), which tends to combine use and exchange value into mathematically ordered preferences. GDP calculations simply measure ‘value added’ as a monetary quantity. There are also other, albeit less popular, theories of value, such as those based on agriculture and energy.

A crucial point here is that the concept of ‘value’ is not necessarily well-defined, and each theory of value generally has something slightly different in mind when they use it. For the (Marxist) LTV,value refers to an objective quality: the total productive ‘value’ in the economy, which is expressed as an exchange relationship between commodities, and originates solely from labour. For the STV , value refers to the subjective ‘surplus’ gained from transactions, which neoclassical theory seeks to optimise to maximise social welfare. For theories of value based on the natural sciences, value refers to more physical qualities, such as how energy is transformed in production and the limits to this process. However, the common ground between theories is the question of how we create more than we had – and what to do about it.

I expect a lot of economists would regard the STV as largely obvious and not up for debate, but if it’s so obvious and important that’s even more reason to study it explicitly – after all, Newton’s Law’s are not tucked away underneath classical physics: they are explicit, and their empirical relevance is frequently demonstrated to students. Clearly, we can’t demonstrate the empirical relevance of a theory of value (hey, it’s almost as if economics is not a science!) but we can discuss it in depth and how it is  a relevant and necessary backdrop to formulating theories about utility, surplus and profit.

What is economics?

It’s a testament to how contested the field of economics is that even the definition is not agreed upon. Open a ‘pop‘ economics book and you’ll find a definition such as “the study of how people respond to incentives”. Another popular mainstream definition is “the allocation of scarce resources” or even “satisfying unlimited wants with scarce resources“. Classical economics – and more recently, Sraffians – considers economics the study of how society reproduces itself. Austrians might give you a definition that says something about human action and the market system.  The definition given by Wikipedia is “the study of production, distribution and consumption”. I’m sure there are many more out there.

Agreeing on a definition of economics would put the discipline on surer footing. Right now it occupies a space where it is simultaneously used as an all encompassing worldview, and as a very narrow toolkit that only investigates one or two things at a time (I expect many economists would basically consider themselves applied statisticians or econometricians). I sometimes even find that economists fall back on defining economics by “what economists do”, which is a rather weak (and circular) definition. Given that we are not even sure which problems economic theories are designed to understand and solve, is it any wonder people can’t agree on which ones to use?

This post is by no means exhaustive. Off the top of my head, some other relevant contested ideas might be: capital; money; how to measure the economy; different economic systems; institutions; policy and economists’ relationship with it. This kind of approach is surely better for furthering students’ understanding than simply teaching a set of abstract theories which are labelled ‘economics’, often with little critical engagement. It would open students’ minds to the kinds of difficult and relevant questions that are currently either shied away from, or only open to those who have completed an Economics PHD. I expect many would also leave with an understanding of economics closer to what students currently expect (and do not really get) from an economics education.

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  1. #1 by Dave Marsay on January 21, 2014 - 7:20 pm

    Oops – that didn’t parse as I expected. Try:

    I would say “All too often, the most mathematically tractable models such as expected utility maximisation and rational expectations are simply assumed, perhaps with caveats, but not with any real discussion of whether they represent human behaviour or lead to undesirable consequences, such as financial crashes.” At least, this is my reading of both Keynes and recent history.

    • #2 by Unlearningecon on January 22, 2014 - 3:27 pm

      Well, utility is almost as bad as expected utility! But yes, clearly the consequences of these assumptions need to be discussed on top of the assumptions themselves.

  2. #3 by BB on January 21, 2014 - 7:45 pm

    I TA’d for a class exactly like this and it was a mess. I am firmly in the walk before you run camp now.

    I think just changing the language of principles classes to clarify that most properties taught in them are not absolute.

    • #4 by Unlearningecon on January 21, 2014 - 7:53 pm

      I see what you mean – but I wouldn’t say a class called “contested ideas” is the kind of thing I’m looking for. It’s more that the relevant contested ideas should be discussed in the relevant classes. In my opinion, discussing contested ideas is the “walking”. Building models is running.

  3. #5 by brettmullga on January 21, 2014 - 8:47 pm

    It seems to me that ‘principles’ level courses are not the appropriate place for such discussions. There are two reasons to support this claim. Pragmatically, many students who take economics courses are not economics majors; nearly every business school requires principles micro and macro for undergraduate programs. Additionally, students need an idea of what’s going on before they can engage in methodological discussion, just as it is difficult to discuss a result in the philosophy of probability without have some ‘background knowledge’ of applied probability.

    With this being said, a course of the nature described in the article would fit as an excellent bridge from ‘principles’ to ‘intermediate theory’ courses. I imagine something like ‘Intro Seminar in Economic Methods’ would be an appropriate name.

    • #6 by Unlearningecon on January 22, 2014 - 3:26 pm

      You’re probably right. ‘Principles’ courses need to teach people what economists know and what they don’t know, while beyond that needs to delve into what economists partially know. This is close to the approach taken now: introductory classes just teach demand-supply, “people respond to incentives”, perhaps a couple of theories of the firm etc. Intermediate and advanced classes then go on to build more in depth models.

      However, I would charge that what is currently taught in the principles is far from being established fact, while what is taught beyond that is not held up under sufficient scrutiny.

  4. #7 by AgroEcoDoc on January 21, 2014 - 10:18 pm

    Reblogged this on AgroEcoPeople.

  5. #8 by Lord on January 22, 2014 - 1:52 am

    I could see this from the stand point of how science works, how to think economically, how we think things should work, how our thinking can be led astray, model building, critiquing, design of experiments, analysis of data, as being very useful as an economics for non economists course.

  6. #9 by Min on January 22, 2014 - 4:12 am

    I don’t know about the college level, but I think that I was served pretty well in secondary school with learning some things that are, I believe, uncontested. This was in the social studies classes.

    1) The ultimate source of money is the gov’t.
    2) The law of diminishing returns.
    3) Basics of supply and demand.
    4) Banks also create money by making loans.
    5) Corporations and Robber Barons will engage in unfair competition and screw you over if they can.
    6) The national debt is mainly what we owe ourselves.

    Something I was not taught but think I should have been is that a trade in general is mutually beneficial for both buyer and seller. I think that it would also have been good to learn something about flows, such as the balance between incomes and outgoes. And about the general notion of balance in the economy, because so many errors come from looking only at one side of things.

    • #10 by Unlearningecon on January 22, 2014 - 3:20 pm

      Well, I’d partially disagree with (2) and (3) for the same reason: decreasing returns to production are pretty rare in the real world. However if you were referring to diminishing utility, I’d agree with (2).

      I also think this requires debate:

      Something I was not taught but think I should have been is that a trade in general is mutually beneficial for both buyer and seller.

      I think this is true to an extent but I have quibbles:

      (a) I think there is almost always an asymmetry in favour of the seller, in that they have the “stuff”, while the buyer (or worker) does not.

      (b) Sometimes one of the parties goes on to regret the transaction.

      (c) The libertarian reasoning that springs from this tends to take social reality as a given. So yes, maybe somebody engaged in a trade because it made them better of from where they were. But political movements are about changing the set of choices people have, which can never be ‘neutral’ (as discussed in the book I linked to in the post, Nudge).

      I think that it would also have been good to learn something about flows, such as the balance between incomes and outgoes. And about the general notion of balance in the economy, because so many errors come from looking only at one side of things.

      This is definitely true. Stock-flow consistent models and accounting are excellent tools for people to fit things together, as blogger ‘Ramanan’ has recently noted.

      • #11 by BB on January 22, 2014 - 4:27 pm

        This is exactly why we walk before we run. In labor markets labor is the seller, not the buyer.

      • #12 by Unlearningecon on January 22, 2014 - 4:38 pm

        If you’re suggesting I don’t understand that basic point, I can assure you I do. I was just pointing out that the asymmetry exists between workers and employers as well.

      • #13 by notsneaky on January 27, 2014 - 9:37 am

        “decreasing returns to production are pretty rare in the real world. ”

        Oh really? So my local McDonalds restaurant could produce all them billions of burgers in their single building if it chose to? There’s no need to worry about any kind of resource constraints? You’re confusing “firms operate at point of constant returns” with “decreasing returns are rare”. Also, you’re reading way too much into sloppy responses to sloppy surveys (though you’re not alone in this)

        Also:

        “Marginalist economics is built on the Subjective Theory of Value (STV), which tends to combine use and exchange value into mathematically ordered preferences. ”

        No, no, no. Preference orderings are NOT defined in terms of exchange values (prices). They are defined in terms of use values. The “subjective” in STV refers to the fact that value depends on the person – unlike in LTV, and independently of particular institutional arrangements which govern exchange values.

        “GDP calculations simply measure ‘value added’ as a monetary quantity.”

        What would terms would you measure it in? Bushels of corn?

        “For the STV , value refers to the subjective ‘surplus’ gained from transactions”

        What?

        All the above sort of highlight why an approach which seeks to make sure that the students get the basics right first is probably preferable – albeit not perfect – to one which goes for the attention grabbing “controversy” and “contested ideas”. You can’t argue and think about crap unless you actually have some understanding of it.
        (and yes, you do sound a lot like the Intelligent Design folks who coyly claim that they don’t really object to teaching Evolution they just want to teach “the controversy”)

      • #14 by Unlearningecon on January 27, 2014 - 11:42 am

        Oh really? So my local McDonalds restaurant could produce all them billions of burgers in their single building if it chose to? There’s no need to worry about any kind of resource constraints?

        I can only assume this comment is deliberately disingenuous. The point about increasing or constant returns is that firms are generally able to vary their quantity at any reasonable level of demand without having to increase price, contrary to what the upward sloping supply curve would suggest. In the long run firms benefit from specialisation and economies of scale, so they don’t have to increase prices when they, say, open new branches either. Why do you think the price of McDonalds burgers stays so low even as McDonalds grows?

        Also, you’re reading way too much into sloppy responses to sloppy surveys (though you’re not alone in this)

        Other than calling them “sloppy” because they don’t fit your pet theories, do you have any substantive objections to the overwhelming amount of survey evidence suggesting firms rarely have increasing costs?

        No, no, no. Preference orderings are NOT defined in terms of exchange values (prices). They are defined in terms of use values. The “subjective” in STV refers to the fact that value depends on the person – unlike in LTV, and independently of particular institutional arrangements which govern exchange values.

        I didn’t say preferences were “defined in terms of exchange values”. I said that ‘value’ was mathematically defined, which allows us to build up consumer theory and the demand curve and translate it into exchange values more easily.

        What would terms would you measure it in? Bushels of corn?

        Erm, no? I was just listing different ways we can measure ‘value’.

        What?

        A exchanges an apple for a banana with B because B prefers the apple and A prefers the banana. They both ‘profit’ from the transaction due to their subjective preferences.

        All the above sort of highlight why an approach which seeks to make sure that the students get the basics right first is probably preferable – albeit not perfect – to one which goes for the attention grabbing “controversy” and “contested ideas”. You can’t argue and think about crap unless you actually have some understanding of it.

        You have misread me, built up straw men and used a lot of silly rhetorical tactics such as reductios to make what I’ve said sound sillier than it is. But sure, convince yourself I just don’t understand stuff as well as you, or I’m ideological, or something. I’ve argued with you before and I know that kind of mental framing makes things easier for you.

        (and yes, you do sound a lot like the Intelligent Design folks who coyly claim that they don’t really object to teaching Evolution they just want to teach “the controversy”)

        Aw, guilt by association. When economics has as many uncontested key insights as evolution, with something as concrete as the gene underpinning it, get back to me.

      • #15 by notsneaky on January 28, 2014 - 12:24 am

        Why do you think the price of McDonalds burgers stays so low even as McDonalds grows?

        Let me ask a different question then. Could McDonalds open up a billion new restaurants just like that, without increasing its average cost per unit, or raising its price? If so (it can’t), why don’t they? Step three, profit! Like I already said, in the part you omitted from the quote, you’re confusing “firms operate at a level close to constant returns” (which is what a lot of standard theory predicts anyway) with “there is no increasing costs of production”.

        This isn’t an area where there’s any meaningful controversy. It’s just a meme in certain parts of the econoblogosphere based on what someone told someone told someone that someone told Alan Blinder when he asked them about sticky prices. Any instructor who wastes time “teaching” this, outside a class in Industrial Organization (even there it would be presented differently) isn’t a very good instructor.

        Other than calling them “sloppy” because they don’t fit your pet theories, do you have any substantive objections to the overwhelming amount of survey evidence suggesting firms rarely have increasing costs?

        What is this “overwhelming amount of survey evidence”? As I recall even Blinder and co-authors themselves pretty much said that the it was quite likely that the respondents didn’t understand the question they were being asked. Or are you talking about that one study by Somebody & The Other Guy (19thirtysomething) that Keen brought up in his book, and which has since become endlessly repeated in certain places as if it was gospel truth on the subject.

        I didn’t say preferences were “defined in terms of exchange values”. I said that ‘value’ was mathematically defined, which allows us to build up consumer theory and the demand curve and translate it into exchange values more easily.

        That’s not what you said. You said “Subjective Theory of Value (STV), … tends to combine use and exchange value into mathematically ordered preferences” This is wrong. “Mathematically ordered preferences” (the radical claim that a person might like something more than they like something else) which capture the equivalent of “use-value” are independent of “exchange values”.

        The way you phrase it now is more correct (though, really there is no such thing as “value” in STV, just preferences. STV being a misleading “outside” name/designation), thought it lacks the “bite” and doesn’t make STV sound so “crazy”. Glad to see you backing off and correcting your earlier statement.

        Erm, no? I was just listing different ways we can measure ‘value’.

        But GDP isn’t a measure of “value”. It’s a measure of production, which was my point. Confusing the idea of “value” from the classical economists and the word “value” in “value added” is a simple mistake of false equivocation. Anyone who teaches you that GDP measures “value” is not doing a good job as a teacher.

        A exchanges an apple for a banana with B because B prefers the apple and A prefers the banana. They both ‘profit’ from the transaction due to their subjective preferences.

        Yes, yes, I know there are gains from mutually beneficial trades (tautologically). What does this have to do with how “STV” measures value.

        Part of the problem here is that to describe marginal utility theory as “Subjective Theory of Value” is already somewhat misleading. And it’s an attempt to control the discourse. By pretending that the two competing theories are “Subjective Theory of Value” and “Labor Theory of Value” one has sneakily ensured that the game is played on the home field of “Labor Theory of Value”. You know, handicapping a lousy team with a long loosing streak.

        Aw, guilt by association. When economics has as many uncontested key insights as evolution, with something as concrete as the gene underpinning it, get back to me

        Okay, sure, economics doesn’t have as many uncontested key insights as the theory of evolution. How does it follow from that, that we should revive and teach confused arguments from 130 years ago? It’s like as if someone before 1940’s said “we don’t really know what these “genes” are so we should go back to teaching the “contested idea” of creation by design”.

        By all means, teach the controversy. But teach the current and relevant controversies, not waste students’ time with invented “contests” or muddled archaic conversations (outside of course on History of Economic Thought of course) I’d say that applies as much to things like Say’s Law, as it does to LTV.

      • #16 by Unlearningecon on January 28, 2014 - 8:52 am

        Let me ask a different question then. Could McDonalds open up a billion new restaurants just like that, without increasing its average cost per unit, or raising its price? If so (it can’t), why don’t they?

        Again, I’m confused as to why you think this is a good question. Of course no firm could just instantaneously expand their production by any amount they pleased! But nobody has ever argued that.

        Like I already said, in the part you omitted from the quote, you’re confusing “firms operate at a level close to constant returns” (which is what a lot of standard theory predicts anyway) with “there is no increasing costs of production”.

        I’m saying that, at reasonable levels of demand, there’s no reason to expect price to increase as production increases in any run. In the ‘short run’, firms will just use their excess capacity to vary quantity but not price; in the ‘long run’, they open more branches etc. and generally there’s no reason this increases price. We simply do not see the kinds of price changes due to demand that standard economic theory implies in the real world. Which theory are you referring to, anyway?

        What is this “overwhelming amount of survey evidence”?

        Books like Lee’s and Downward’s review a large amount of survey evidence and find a lot of support for constant/increasing returns with mark up pricing. I only have the former, but this blog has been covering them both.

        But GDP isn’t a measure of “value”. It’s a measure of production, which was my point. Confusing the idea of “value” from the classical economists and the word “value” in “value added” is a simple mistake of false equivocation. Anyone who teaches you that GDP measures “value” is not doing a good job as a teacher.

        Yes, this point is well taken. However I do think value is something that’s used to interpret and make judgments about the economy, which GDP is one way of doing.

        The way you phrase it now is more correct (though, really there is no such thing as “value” in STV, just preferences. STV being a misleading “outside” name/designation), thought it lacks the “bite” and doesn’t make STV sound so “crazy”. Glad to see you backing off and correcting your earlier statement.

        Well, I’m quite happy with that definition as I never meant anything else. Saying I was initially trying to make the STV sound “crazy” just sounds like projection to me, but there you go.

        Yes, yes, I know there are gains from mutually beneficial trades (tautologically). What does this have to do with how “STV” measures value.

        Well, it’s intertwined with the whole notion of Pareto optimality and how economists (often) measure ‘welfare’ – to maximise the subjective satisfaction gained by each person in trade.

        By all means, teach the controversy. But teach the current and relevant controversies, not waste students’ time with invented “contests” or muddled archaic conversations (outside of course on History of Economic Thought of course) I’d say that applies as much to things like Say’s Law, as it does to LTV.

        As I said, anything that’s as apparently obvious as the STV should not be hard to convince students of. Key ideas need to be at the forefront of teaching, rather than tucked away. In my opinion the “contested” part would come when students started asking difficult questions, seeing as a lot of these ideas aren’t that obvious or easy to demonstrate. But maybe that wouldn’t be the case – who knows? I’m just saying key ideas need a lot more coverage in economics.

  7. #17 by Talbert on January 22, 2014 - 6:48 am

    I want to say that it’s not just econ, every modern field needs to try and model their pedagogy on introducing all concepts in terms of the contested outliers, the antinomies that exist within all fields.

    • #18 by Unlearningecon on January 22, 2014 - 3:23 pm

      I agree with this to an extent but to use the example of Newtonian Physics again, I think it’s pretty fair to say that is an important empirical regularity that introductory students need to be exposed to. I’m fine with introducing students to ideas that are largely uncontested – if they exist. But in economics there are so fewer ideas like this than in the natural sciences.

      Also, I’d like to see this Strauss link please!

  8. #19 by Talbert on January 22, 2014 - 7:12 am

    Also, I STRONGLY suggest you consider what the ancients (and Leo Strauss) have to say on this which is that Economics is the proper management of the household. I’ll post the link to Strauss’ comments on economics, essentially his point is that any economy is at it’s core a moral economy and any questions of efficiency ultimately will have moral starting points directing what is and isn’t efficient. Very much worth the read.

  9. #20 by Blue Aurora on January 22, 2014 - 1:46 pm

    No mention of the Ellsberg Paradox, Unlearningecon?

    • #21 by Unlearningecon on January 22, 2014 - 3:28 pm

      I agree – all the paradoxes with EU theory are fair game and very important for decision making.

  10. #22 by colin on January 24, 2014 - 12:14 am

    I love this idea. It’s how we (usually) teach philosophy at the undergrad level. Of course, teaching contested ideas doesn’t prevent the professor from having their hands on the scale, but it’s still better than the text book model in which a series of claims are presented as being completely settled when the claims are in fact hotly debated among experts. Even when textbooks do present the disagreement, in my experience they frequently do so in a way that manages to minimize disagreement and emphasize the status quo. Presenting economics as a series of contested ideas would have the further benefit that, even if a professor was assigning deeply biased literature (and that happens, and it’s not the worst thing), students would at least understand that competing views are possible such that if they encounter a (lets say) heterodox position, they are are already open to the conception of economics as a field of positions that need analyzing on their own terms.

    • #23 by Unlearningecon on January 27, 2014 - 12:58 pm

      Even when textbooks do present the disagreement, in my experience they frequently do so in a way that manages to minimize disagreement and emphasize the status quo.

      This has been called the “note and forget” approach. One of the textbooks I used frequently digressed into (what I considered) fairly damaging critiques of the theories, before…carrying on as if nothing had happened! There’s also an example of this in Mankiw’s textbook with the NAIRU: he admits it’s pretty weak, makes a bad analogy to astrophysics then just proceeds with the analysis – all tucked away in a box in the top corner of a page.

  11. #24 by Roman P. on January 24, 2014 - 8:12 am

    I believe that it is better to not teach any economic models at all, and teach all and any economic theories as late as possible. I think that mainstream (neoclassical) economics places too much emphasis on building ‘modls’ that might take some seriously high-level math and conceptions to disprove. A young student has, what, four-five years to get an education? Unwise to waste that time learning theorems about existence of general equilibrium. Realistically it is possible to teach the most important math skills (calculus, linear algebra, ODEs) in about two years, and after that it becomes possible to really talk about and build models that are more relevant than estimation of equilibrium prices in horse markets. I think that not being introduced to the undergrad economics textbooks in the meantime is actually a huge boon to those who wish to study economics. Better to spend that time reading about institutional setups and empirical facts of how things happen in the domains of production and exchange.

    • #25 by Unlearningecon on January 27, 2014 - 1:01 pm

      I agree with you in many ways. Economists currently learn ugly mathematics in an ugly way. There’s a case to be made just to stick ‘em in with the maths students so they can learn maths properly, and teach them some history too so they get some perspective, and some business classes so they understand how things actually work. However, this would sort of ruin the very idea of an ‘economics’ degree. You might say that’s a good thing, but I think there is room for a discipline called ‘economics’ – it just needs to be different to the way it is now.

      • #26 by notsneaky on January 30, 2014 - 10:30 pm

        “Ugly maths” are not taught at the undergraduate level, certainly not in lower intro courses. Unless you consider asking students to solve two linear equations in two unknowns “ugly math”. In upper level courses, maybe, depending on the program, a student may be asked to take a derivative of a simple function. Basic knowledge of statistics shows up in econometric, as it should.

        Students’ time is not “wasted” with theorems about existence of general equilibrium. No fixed points theorems at the undergrad level (usually, perhaps there is some exceptions I’m unaware of). The first two fundamental theorems – on efficiency and redistribution – are usually presented heuristically.

        Again, it would really help things if those spouting off actually had a modicum of familiarity with what they’re criticizing (that’s directed at Roman P, not UE).

      • #27 by Dave Marsay on January 31, 2014 - 10:44 am

        The ugliness of or otherwise of mathematics is surely irrelevant. There’s been a lot of very attractive maths used in economics and finance. Even the notion of utility has some aesthetic appeal. But so what? (Think of someone using a Ferrari to run someone over – does it make the car ugly?)

      • #28 by Unlearningecon on January 31, 2014 - 11:35 am

        I do think Lagrangians, constrained optimisation – not to mention all those f***ing summations – makes for pretty ugly and convoluted maths when compared with ODEs, PDEs etc. The latter are both more difficult and conceptually quite straightforward.

      • #29 by Dave Marsay on January 31, 2014 - 11:47 am

        Ferraris are traditionally hard to drive, and that is a part of their appeal. But very few people are needed to ‘drive’ mathematics: the important thing is to understand what the results mean. Sometimes Ferraris and mathematics are owned by people who are useless drivers and just want them as status symbols. It sometimes helps to be able to tell the difference.

        (I’m beginning to like this analogy ;0)

      • #30 by BB on January 31, 2014 - 2:45 pm

        Wait what!? Lagrangians are ugly math? How bad at math do you have to be to consider lagrangians ugly (not to mention to consider PDEs somehow not ugly). They’re really quite elegant.

      • #31 by Unlearningecon on January 31, 2014 - 3:55 pm

        Aside from the silly dig (and I can assure you, my marks in maths are far from “bad”), ‘ugly’ does not mean ‘simple’. It just means ugly. Constrained optimisation problems with large amounts of variables and summations are pretty ugly.

      • #32 by BB on January 31, 2014 - 4:53 pm

        So to you OLS is ugly?

      • #33 by Unlearningecon on January 31, 2014 - 5:27 pm

        Well, depends which method you use to derive it. MoM isn’t particularly ugly, but minimising the SSR certainly is!

        However, even if deriving it is ugly, using it usually isn’t. Get the computers to do the ugly bits.

      • #34 by Roman P. on January 31, 2014 - 10:30 am

        I’d have answered you, but I feel too apathetic.
        (That’s directed at notsneaky)

  12. #35 by David Sinclair on January 26, 2014 - 9:49 am

    I agree entirely with your post. I have despaired at the ideological pseudoscience of standard economics courses and texts like the Mankiw variants we get here, tautology disguised with a few specious diagrams and equations. My lecturer in public policy economics used to get v frustrated that by the time students got to her postgraduate course they already were, with few exceptions, true believers, with a life mission to achieve market perfection (this was New Zealand in the 1990s)…
    There is at least one introductory text which actually does what you suggest, at least in part, which is Hugh Stetton’s “Economics: A New Introduction” ISBN-13: 978-0745315317. The first chapters are on “what you can know and what you can’t know” in economics, perspectives on causes and effects, differing explanations in economics, controversial language, different concepts of efficiency, welfare and the scope of economics, and critical skills and values. There is a chapter on economic history which doesn’t present the Whig view you find elsewhere.
    Standard market theory isn’t described until chapter 40 (accurately but seemingly reluctantly – you need to know this to pass your exams…) with some critical perspective. If this could be replaced by realistic economic theory, add ecological economics and sections which connect economics to the real world through other disciplines, the text would be near perfect. Stretton incorporates a lot of institutional and sociological perspectives, but for people coming to economics from the real world it makes so much more sense. Surely a thoughtful economics course must exist somewhere rather than mere indoctrination which people then have to be disabused of at a later stage!

    • #36 by Unlearningecon on January 27, 2014 - 1:04 pm

      Yeah, ‘perfect’ competition is a great example of a value-laden idea in a discipline that often purports to be neutral on political ideas.

      Thanks for the HT on the textbook. There’s are a couple of others I know of that are supposedly better than the standard ones: Samuel Bowles’ & Yanis Varoufakis’. There’s also the CORE project (which I linked to at the start of the post), but from what I’ve seen that leaves a lot to be desired.

  13. #37 by stifler on January 30, 2014 - 1:20 pm

    In economics, the impact of a teacher on learners and their future choices is huge: in many cases it is the teacher who motivates to excavate dipper into the topic, to question existing models, to accomplish own research, and later on to push to gain gratitude in the field, or to make a profession as a successful economic policy-maker.

  1. Enlaces [24-1-2014] | Caótica Economía
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