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Rethinking the teaching of economics

Girol Karacaoglu & Julienne Molineaux

In the wake of the Global Financial Crisis, some students of economics in countries as diverse as Chile, the UK and the US asked why the curriculum they were studying at University did not deal with contemporary issues such as debt and finance, or the shortcomings of markets. Some academic economists, too, were unhappy with a curriculum they judged as lacking in relevance, history and challenging ideas.

One attempt to address these problems is the CORE project – Curriculum Open-Access Resources in Economics. A collaborative project with economists from India, Chile, Colombia, Turkey, the UK and the US, the CORE curriculum and textbook puts more emphasis on real world problems and less emphasis on free-market doctrines.

The project has received some funding from the Institute for New Economic Thinking, and is coordinated by Sam Bowles of the Santa Fe Institute, Wendy Carlin of University College London, and Margaret Stevens of Oxford University. It has received some favourable media coverage, for example here, here, and here.

The Economist described the approach of the textbook, The Economy, thus:

It begins with the biggest of big pictures, explaining how capitalism and industrialisation transformed the world, inviting students to contemplate how it arrived at where it is today. Messy complications, from environmental damage to inequality, are placed firmly in the foreground. It explains cost curves, as other introductory texts do, but in the context of the Industrial Revolution, thus exposing students to debates about why industrialisation kicked off when and where it did. Thomas Malthus’s ideas are used to teach students the uses and limitations of economic models, combining technical instruction with a valuable lesson from the history of economic thought. “The Economy” does not dumb down economics; it uses maths readily, keeping students engaged through the topicality of the material. Quite early on, students have lessons in the weirdness in economics—from game theory to power dynamics within firms—that makes the subject fascinating and useful but are skimmed over in most introductory courses.

The CORE curriculum does not reserve complexity until high level study. Too often introductory courses in economics involve assumptions – about individuals, firms, markets and governments – that perceptive students know are just not true. Individuals are not always rational, firms do not always aim for profit maximisation, markets are not always efficient allocators of resources, and government activity doesn’t always crowd out the private sector. With CORE, complexity is present at the beginning. As one teacher of CORE writes,

…[E]conomics has within it an extremely effective language that helps us explain the social world. But much of it is hidden behind a wall of mathematical formalism, reserved for graduate students and the energetic junior faculty who want to teach it.

An example is the question of incomplete contracts in the labour market: what happens, for example, when someone hires you, but can’t monitor you 24/7, and so has to trust you’ll do the job? This is a ubiquitous problem: for most of us, it’s a basic experience of making a life. But introductory [economics] courses pretend it doesn’t exist and then, understandably, perceptive students feel cheated. As far as the standard presentations go, it’s too advanced to cover.

CORE flips this. Incomplete contracts in the labour market appear in CORE’s Unit 6. There’s a huge amount of effort and rethinking to get this material in ways that newcomers can understand.

Contrary to initial concerns that students who are introduced to economics through this method may be disadvantaged if they then decide to pursue an economics degree, there is some (early) evidence from University College London (UCL), that students who took the CORE course did better in subsequent economics classes than earlier cohorts who took a more traditional introductory course. In addition, anecdotally at least, students seem more engaged in CORE courses.

 

Critique and an Alternative

 CORE is not “the only game in town”, and it has been criticised. CORE and other recent curriculum initiatives were assessed in a 2016 working paper, which claimed their reforms were ‘minor and superficial’. The criticisms seem to centre on the following question. Are the proposed changes focused on making economics teaching more relevant, by showing that economics concepts and methods are helpful in analysing real world problems, or is it instead about taking a deliberately multi-disciplinary and integrated approach to analysing, and trying to find solutions to, the world’s “wicked problems”? It could be both, of course, but criticisms of approaches such as CORE and its counterparts appear to accuse them of adopting the first approach, which the working paper authors deem inadequate and insufficient.

 But of course, most students studying economics in New Zealand are not training to be economists, merely doing a compulsory course or two in the subject as part of a business or commerce degree. For those students, their one or two economics papers are their only exposure to the discipline, and in this respect, CORE’s application of economics tools to real-world problems fulfils the education and engagement criteria in a way some current approaches do not.

 

New Zealand

 Sam Bowles and Wendy Carlin were invited to New Zealand by The Treasury and the Victoria University of Wellington. In December 2016 they ran workshops in Auckland and Wellington to which academics from all New Zealand University Economics Departments were invited. Sam and Wendy also met with some public sector officials. This was followed up with an invitation to Sam and Wendy, to join (via Skype) a special session on CORE at the New Zealand Association of Economists Conference in July 2017 in Wellington. They did, and provided an update on CORE.

Some at Victoria University, including Professors Arthur Grimes, Adrian Slack, and Girol Karacaoglu, have either started using, or are considering using, CORE material in Public Policy and Economics courses. In our view, there is potentially significant benefits for our students and for New Zealand at large in pursuing this and extending the use of CORE across New Zealand universities. These benefits could accrue, by way of example, through improvements in the quality of our graduates and, through them, in the quality of analysis in the public sector. An additional, extremely valuable, by-product of this effort would be more and better collaboration across New Zealand universities towards serving the best interests of New Zealand.

 

 

 

 

 

 

Categories: Economic policy, Education
Girol Karacaoglu & Julienne Molineaux
About the author

Girol Karacaoglu & Julienne Molineaux

Girol Karacaoglu is the recently appointed Head of School of Government at Victoria University Wellington. Prior to that he was chief economist at the New Zealand Treasury, Chief Executive of the Co-operative Bank of New Zealand, General Manager at Westpac NZ, Chief Economist at the National Bank of NZ, and lecturer in Economics at Victoria University of Wellington. His academic fields of specialisation were in Monetary and Financial Economics, International Finance, Econometrics, Corporate Accounting and Finance. His current research interest is in public policy – an integrated approach to economic, environmental and social policies towards improving intergenerational well-being.
Julienne Molineaux studied economics for her B.A. and as part of her M.A. She is the Director of The Policy Observatory.