This summer will see the publication of a revised and extended version of my 2010 book, Economyths: 10 Ways That Economics Gets It Wrong. The subtitle is now 11 Ways That Economics Gets It Wrong (because I thought of another economyth), and there is more than 30 percent new material, in large part because so much has changed in the intervening years.
When the first edition came out seven years ago, it was hardly alone in criticising economics, but at the time I still felt like a bit of a minority voice. There was a general impression that economists knew what they were doing, the same experts were providing the analysis in the media, and most in the profession seemed to be in denial about the failure of their models during the crisis.
However, it soon turned out that not everyone took such a charitable view – including students in economics departments around the world, who thought there was a strange disconnect between the dry content of their courses and what was going on in the real world. As Joe Earle, Cahal Moral and Zach Ward-Perkins wrote in their book The Econocracy: The Perils of Leaving Economics to the Experts: “While we were memorising and regurgitating abstract economic models for multiple choice exams, the eurozone crisis was at its peak, with Greece and Italy on the brink of disaster. This wasn’t mentioned in our lectures, and what we were learning didn’t seem to have any relevance to it.”
In 2013, they and other Manchester University economics students set up the Post-Crash Economics Society, with the aim of reforming the economics curriculum. One of their demands was for a more pluralistic approach that would allow for different viewpoints on important topics. They soon discovered that they weren’t alone, as numerous groups around the world had sprung up with similar aims. The umbrella organisation, known as Rethinking Economics, which they helped establish, now represents more than 40 groups in 13 countries.
The maths doesn’t work
One of the main critiques of these organisations is that university students are forced to spend too much time using mathematical models, rather than asking broader questions about the economy. While they might start off with an “urge to learn about society”, according to The Econocracy, this difficult tendency “must be suppressed as they are confronted with a series of abstract concepts and ideas that have little to do with the actual economy. Students may wonder why it is necessary to detach the study of economics from reality in this way, but they must also learn to inhabit this parallel universe if they want any hope of passing their exams”.
The same problem was identified in 1990 by economists Arjo Klamer and David Colander, when they asked students at top US graduate programmes to identify which qualities were most important in order to succeed as an economist. Deemed very important by 65 percent was ‘being smart in the sense of being good at problem solving’, closely followed by ‘excellence in mathematics’ at 57 percent. Least important, it seemed, was ‘having a thorough knowledge of the economy’, at only three percent. This is a bit like favouring a doctor because she is good at passing calculus exams.
Economics has turned into an elitist subject with a specialised language that outsiders struggle to understand
When Colander revisited the topic in 2007, he found the numbers had changed a little, with nine percent agreeing that knowledge of the economy was important – although theory was still firmly on top. Today, professional economists are beginning to make better use of data, but it seems the student experience has not changed much.
One can certainly argue that mathematical modelling is an important part of economics. It is a difficult skill to obtain, so it makes sense to concentrate on it, at least during introductory courses. But as Earle et al pointed out, the emphasis on maths actually conceals an ideological bias, because it implies complex social problems can be reduced to mathematical exercises.
Furthermore, the way the subject is taught means students come to think that only a particular approach is correct, which amounts to “nothing less than the dictionary definition of indoctrination”.
Economics has therefore turned into a narrow, elitist subject with a specialised language that outsiders struggle to understand. At the same time, the importance of economics to society means economists have a privileged position, and are relied upon to make all sorts of critical decisions. This is why the authors say we live in an ‘econocracy’ – a society managed in an unaccountable fashion by expert economists.
Reprogramming the econocracy
As discussed in the revised Economyths, in some respects a lot has changed in economics over the past few years. Plenty of people are now discussing the need to reform economics (in fact, Cahal Moran from Rethinking Economics is kindly supplying a foreword), including some mainstream economists. But the economists of tomorrow are being trained right now – so, until the textbooks catch up, I might suggest students supplement their courses with some extracurricular reading, and open their minds to other subjects.
When I attended university in Canada back in the 1980s, I recall having a similar feeling, as a first-year physics student, that my courses were indoctrinating me into a particular scientific way of thinking about the world, without giving much room for critical contemplation. I therefore decided to switch from physics to the honours programme in mathematics, which could be taken either as a science or an arts subject.
Half of the courses were required to be in difficult mathematics subjects, but the other half could be basically anything you wanted. Along with topology and abstract algebra, I took courses in psychology, art history, philosophy, Shakespeare, and so on. I didn’t study economics, but I was a teaching assistant for a finance course. I learned a lot of mathematics – but, just as importantly, I learned about areas where mathematics is of no use at all.
That type of broader exposure to ideas sounds like it is decidedly missing from the making of modern economists. If as a species we are going to succeed at economics, perhaps the best way to train the next generation will be to make sure they study something else as well.