How Should We Teach Economics?

Over the weekend, Mike Konczal argued in Wonkblog that introductory economics courses are being taught backwards. The details are a bit too expansive to summarize well, but basically he wants to teach the problems first (particularly those relevant to economic policy) and teach the abstract hypothetical markets stuff second. Konczal concern is that people leave the classes that are currently provided with so inadequate an understanding of the actual economy that they have no idea how to engage actual policy discussions. Given the goal of rectifying that current defect, his idea is hard to quibble with.

There are other defects to these courses and economics education on top of this one though. The one that haunts me the most is that individuals leaving these introductory courses (and even full-fledged economist academics) have absolutely no exposure to the normative side of economics, e.g. the literature regarding what makes an economy just. Now, you do often see some handwaving that goes on to say economics is some kind of science that deals with description rather than prescription. But that's not serious. Normativity is coursing through most real world discussions of economics and people absolutely do leave these courses thinking it tells them things about what we should be doing.

I think the cause of this problem is two-fold. First, the courses are taught normatively. It is not clear if the professors do this on purporse or if they, also ignorant of all things economic normativity, have no idea that they are making normative suggestions and assumptions in the way that they teach the content. Second, even if the course is not taught normatively, pupils cannot help but think about the subjective normatively. If you are not looking to be some econometric technician, the question of what we should be doing is the only thing that's actually interesting about economics. So of course this is what survey students think about.

Given all of this, I think it could make sense to present a very brief survey of theories of economic justice at the very top. If you want to make sure you are successfully distinguishing between pure description and normative theorizing, the best way to do that is to actually get the normative theories out in front of people so they know which is which.

So you could have a survey course that taught a very cursory introduction to desert theory, utilitarianism, just processes, and egalitarianism at the beginning of the course. Then, those normative approaches could be called upon when relevant to discuss which normative framework the economic phenomenon being discussed later actually conforms to, if any.

More importantly, at points in the introductory course where simplified abstract economies generate one normative conclusion, but real-life economies generate another, that should be noted. The more complicated reality should be discussed with a nod to the way it changes the normative calculation.

Noah Smith inadvertantly gave a fantastic example of what I am talking about recently:

According to Econ 101, people are supposed to get paid for the exact value they create. There's a certain simple, compelling logic to this: If you weren't producing at least $50,000 for your employer, why would your employer pay $50,000 to keep you around? More sophisticated economics allow for you to get paid a little more or a little less, but never too far off.

Under a particular desert theory view, the simple model appears to show that this free market hypothetical world satisfies desert theory. But under the more sophisticated model, it is clear that it does not. Given that, for example, inframarginality is a real thing that is just riddled throughout a real market economy (and is not even some kind of market failure), a real blow is struck against the idea that desert theory is actually capable of being satisfied within a capitalist market economy. Yet if you only ever saw the Econ 101 presentation of things, you'd think (as Greg Mankiw still does for some reason) that these institutions are satisfying the demands of the desert theory approach to economic justice.

If we are going to continue to look to economists to answer normative questions  that they have no demonstrated competence to answer, we really should start thinking about letting them in on how to begin to think about those questions. And if people are going to keep coming out of economics courses believing they have some insight into what we should and shouldn't do, we should actually provide them that insight in the course. In both cases, that will require we actually get normativity into the curriculum.