In the third of our articles on the reform of the economics curriculum, the Post-Crash Economics
Society outlines its proposals.
Other items related to this theme, published in the Newsletter, include:
Necessary pluralism in economics: the case for heterodoxy (October 2014)
New teaching for economics: the INET-CORE project (July 2014)
Changing the subject (July 2014)
Can economics be evidence based? (April 2014)
Letter to the editor - evidence-based economics (January 2014)
Teaching evidence-based economics (October 2013)
The Rediscovery of Classical economics (July 2013)
Teaching economics after the crisis (April 2013)
What’s the use of economics (October 2012)
ESRC international benchmarking review (April 2008)
Evidence on the future of economics (July 2007)
Economics should look eastward (October 2006)
Jochen Runde replies (October 2006)
Last year we published a report which provided evidence-based analysis of the shortcomings of economics education at the University of Manchester with a foreword by Andy Haldane, Chief Economist at the Bank of England (2014). In it we demonstrated that economics education at the University of Manchester fails to provide graduates with the skills and qualities the University publicly states it will provide. It has never been our argument that Manchester has special problems — on the contrary, our argument is that the problems we have identified are widespread across universities.1 We are now in the process of carrying out a curriculum review of economics education at universities across the UK.2 A key part of the Post-Crash Economic Society’s mission is to go beyond criticism and to put forward well thought out proposals for reform. We aim to engage constructively with our economics department and economists in general. In this article we will sketch out a vision for economics education reform based on the principles of pluralism and liberal education. There is much detail that we do not have space to include: the importance of economic history, history of economic thought, philosophy of economics and interdisciplinary learning. We will expand upon these topics in other settings.
The need for pluralism
Introducing students to multiple perspectives is vital because it reframes the way they think about economics. It goes from being about applying one universally established way of doing economics to recognising that different perspectives can give you different, valid answers. Within this framework students are asked to think actively about how to evaluate good or bad theory and how to come to reasoned judgements about the best answer. Politics, philosophy, sociology and even some economics courses manage to teach students a number of different approaches to analysing their subject matter. Students are examined on their ability to argue a particular position against the others, demonstrating a critical understanding of the issue and of more than one relevant perspective. Why would economics students be unable to do this?
Pluralist economics education doesn’t have to be ‘anything goes’ (Coyle, 2013) or ‘more partisan economics’ (Wren-Lewis, 2014). Examples of courses that successfully incorporate pluralist approaches to teaching economics already exist. For instance, the second year macroeconomics course at Glasgow University acknowledges the existence of alternative perspectives within economics and gives students the tools to contrast the standard macroeconomic theory with post-Keynesian economics. Students are made aware of how different perspectives employ different approaches and reach different conclusions, and asks them to evaluate critically how well theories explain empirical evidence. Figure 1 contrasts Glasgow’s learning objectives with those from an intermediate macroeconomics course which is broadly typical of similar courses across the UK. In contrast to Glasgow, most macroeconomics courses teach from a single textbook and teach students to solve problems within models as opposed to comparing different types of models and seeing which generate more credible conclusions.
This module introduces just one perspective of the many we would like to see taught — including feminist, institutional (new and old), evolutionary, ecological, Austrian and Marxist — but it clearly shows how alternative perspectives can be introduced to core courses in a structured manner.3 Schools of thought present just one way of delineating alternative perspectives. Another approach looks at positions on key methodological questions such as choices between static or dynamic modelling, inductive or deductive theory construction, individualism or emergence, different conceptions of welfare/well-being, the role of agency and structure and epistemological limitations. Alternatively, perspectives can be understood in terms of how they define economics, what they deem to be the primary subject matter of economics and what they deem to be the purposes of economics. Economic perspectives evolve and so do the location and rigidity of the boundaries between them. Mainstream and heterodox labels can be harmful because they imply fixed black and white categories and devalue what is not mainstream.4
Pluralist education does not begin and end by simply telling students multiple perspectives exist in economics. The next step is guiding (but not telling) students towards developing reasoned judgements about which theories work best for certain questions or problems. Theory choice is an essential part of all academic practice and deciding the criteria on which to evaluate economic theory is also contestable. Empirical accuracy, logical consistency, generality, realism, explanatory power, predictive power, simplicity, heuristic value and research potential are all potentially valid ways to evaluate a theory (Caldwell, 1991, p231-235). Consequently, economist Simon Wren-Lewis creates a false dichotomy when he claims that he would rather ‘a future Chancellor, Prime Minister, or advisor to either, remembered from their undergraduate degree that mainstream theory said austerity was contractionary, rather than “well it all depends on whether you are a Keynesian or an Austrian”’(2014). Such a person would be best equipped if they were able to articulate which explanation of austerity was superior, with reference to the counterarguments put forward by other perspectives, thus illustrating a deeper understanding of the possible policy choices and a more informed judgement behind their own.
CORE, the latest attempt to redevelop the economics curriculum,5 explicitly rejects this understanding of pluralism.6 Whilst there is some discussion of whether or not homo economicus is plausible and some short and underdeveloped references and insights from other thinkers, CORE still only teaches students one way of doing economics. In chapter 3 we are introduced to such staple tools as indifference curves, marginal product and opportunity costs which are then widely utilised throughout the next chapters without reference to alternative perspectives which criticise them or theorise differently. CORE remains firmly within the methodological and theoretical bounds of mainstream economics.
It seems that pluralism is rejected, even by reformers, because of a belief that the economics which is taught is the right economics and has won the ‘battle of ideas’. At one of our student events our former head of economics likened alternative perspectives to outdated forms of medicine such as the use of leeches and the tobacco enema. Wren-Lewis attributes the monopoly of mainstream economics to the fact that ‘it has proved far more useful than all of its heterodox alternatives put together’ (2014). This idea is manifest in CORE’s claim that ‘economics explains our world — but economics degrees don’t’ and that as a result the only reform needed is to bring economic research into the classroom (Carlin, 2013).
CORE and others claim that there are already alternative and competing ideas within the mainstream. Recent examples might include behavioural economics, which criticises rationality assumptions, or Hyman Minsky’s insights into the causes of financial instability. However, when these ideas are incorporated into the mainstream they are made to conform to certain assumptions (optimising behaviour, microfoundations, regression analysis and equilibrium) which alternative perspectives reject. For example, Paul Krugman labelled one of his recent macro models ‘A Fisher-Minsky-Koo Approach’ in a clear attempt to incorporate heterodox economic ideas (2012). Yet the paper relies on equilibrium analysis, explicitly rejected by both Fisher and Minsky, and does not include endogenous money, the financial instability hypothesis, or even a real financial sector (agents simply borrow from each other in the form of riskless bonds), all of which are central to Minsky’s theories. The fact that competing ideas have to be adapted into this kind of framework before they are accepted narrows the parameters of debate and the scope for progress. When there are only competing ideas but not competing frameworks most methodological questions are taken as axiomatic. As a result we aren't able to understand how the tools we use shape the questions we ask and the scope of the results we can obtain, or to evaluate our framework’s strengths and weaknesses.
We at PCES saw the Financial Crisis as an event which clearly illustrated that mainstream economics could not claim it had all the answers: the dominant theories did not even allow for the possibility of financial crisis or sustained depression, while most of those who foresaw such a possibility practiced heterodox economics (Bezemer, 2009). This is not the only area in which mainstream economics has been questioned. A few examples include the widespread use of cost-plus pricing, as opposed to marginalist pricing (Lee, 1999); the endogenous creation of money, recently acknowledged by the Bank of England (McLeay et al, 2014) and the masses of evidence against utility maximisation and standard game theory results (Zaman and Karacuka, 2011). On this basis, it seems to us quite clear that mainstream economics cannot legitimately claim to be the only economic perspective worth teaching or researching at the UK’s top universities.
We do not deny that there is valuable research within the parameters of mainstream economics but we question those who suggest that what is taught and researched is there because it has proved beyond reasonable doubt that other approaches are objectively lacking rigour, relevance and value. Even if what is now the mainstream became dominant because it was objectively better than other perspectives it is now using its power to enforce a closed shop in economics. The difficulty of getting published in top journals if one incorporates alternative perspectives or frameworks,7 in turn makes it very difficult for non-mainstream economists to get jobs in top departments8 and means that there is less capacity to teach alternative perspectives at top universities. Together these factors combine to ensure the reproduction of the core of the mainstream.
We suggest that alternative perspectives are often excluded from economic journals not because they are objectively inferior but because they utilise different and unacceptable methodological frameworks. For example, Minsky, the value of whose insights are now widely acknowledged, was not able to publish in top journals because he did do not utilise the mainstream’s methodological framework. Even if other perspectives are weaker at this moment in time the current status quo creates an academic environment highly unfavourable to the growth and development of alternative perspectives. It stunts the growth of the discipline and prevents the possibility of disruptive innovation which is in our view a necessary part of intellectual renewal.
Pluralism and Maths
Our commitment to pluralism must not be equated with being anti-maths; far from it, we advocate economics students be taught new forms of maths. The subject nature of economics can clearly benefit from quantitative analysis and mathematical modelling but mathematics on its own does not lend theory credibility, so the question is to which kinds of mathematics students should be introduced. We believe that the current focus on constrained maximisation, linear regression and (implicitly or explicitly) set theory is necessarily limited and can be improved upon. We therefore encourage economics departments to collaborate with mathematics departments to teach ordinary differential equations so that students can gain a better understanding of dynamic systems, rather than simply using comparative statics with unique equilibrium solutions.
Some economics students get a glimpse of this type of mathematics, but it is typically focused on long-term term tendencies and equilibrium solutions over analysing immediate dynamics, and remains far more basic than the kind of mathematics taught in other complex sciences such as meteorology or in chaos theory (Keen, 2011). Economics students could also be taught basic programming packages such as MATLAB — as mathematics and engineering students currently are — or the techniques used in Agent-Based Computational Economics. The result of all this is that students would be able to work with or at least prepare for various comprehensive dynamic models that currently lie outside of the mainstream: Steve Keen’s Minsky Model (Keen, 1995; Grasselli and Lima, 2012); the kinds of simulations suggested by Evolutionary and Complexity Theory (Potts, 2000) and Stock Flow-Consistent models in the vein of Godley and Lavoie (2007).
There is still a place for evaluation within maths and econometrics. For example, one thoughtful lecturer at Manchester introduced Bayesian econometrics into the last two lectures of his econometrics module in response to our campaign. This was the first time students realised that they were learning frequentist econometrics and that there was fundamental disagreement in econometrics. As a student, that realisation is quite extraordinary because you suddenly have to engage a different part of your brain and start thinking about which approach makes more sense. We feel that this process gave us a deeper knowledge of the frequentist approach than we would have had if we had learnt it believing that it was the only way to study econometrics. Students can and should be exposed to different forms of mathematics and be encouraged to think about when one type will be superior to another for capturing specific economic phenomena and relationships.
We accept there are limitations on how much students can be taught, and different pathways should be made available for different groups including those who want to continue studying economics, those who want to go into employment or those who want a rounded interdisciplinary education. However, we do not endorse the streaming of economics so that more mathematically able students do a totally different degree to others. The danger of this is that the more mathematical degree simply ignores all of our other concerns and tries to solve the problem by simply creating new degrees that take abstract modelling to a new level of complexity. No matter how many new forms of maths and modelling are incorporated into degrees, there must be retention of other key principles such as real world application and alternative perspectives because these should be at
the core of all economics. Otherwise there is no reason for students not just to study mathematics.
We define liberal education as an education which emphasises broad knowledge of the wider world covered in topics such as politics, history and philosophy as well as an indepth knowledge in a specific field of study. It focuses on developing a sense of social responsibility; strong transferrable intellectual and practical skills such as communication, analytical, and problem-solving skills; and the ability to apply knowledge and skills in real-world settings (AACU, 2014).
We recognise that the idea of liberal education may seem anachronistic and unfeasible in the wider context of mass higher education with hundreds of students in lectures, personal and institutional incentives to prioritise research over teaching and the growing influence of a more instrumental understanding of university education as a private investment to improve employment prospects. However, liberal education is not all or nothing and we have developed (and borrowed) a number of practical, viable suggestions for reform to economics courses which promote a liberal education model of teaching.
Modules which utilised an inductive, problem first approach to economics would almost by definition require engagement with other disciplines such as politics, history and philosophy. Core modules can be used to introduce the complex, major issues in economics such as development, business cycles and financial markets and then go on to show how different approaches can be used to understand these issues, how policies can (or can’t) influence them, and introduce students to possible benefits and drawbacks of different approaches. Different perspectives have different ethical values and evaluating approaches leads on to discussion about the ethical implications of theory and policy and also about the ethics of being an economist.
Our macroeconomics lectures in Manchester have 500+ students and it is hard to envisage how discussions can be facilitated in such an environment. However, peer to peer learning can be used alongside Problem Based Learning (PBL) which is widely used in medicine.9 PBL is centred on students being given an economics-related problem such as ‘How should, if at all, the UK respond to falling oil prices?’ or ‘Examine 3 historical economic events and analyse how agents a) made decisions b) how decisions were influenced by market structure and c) what, if anything, this illustrates about incentives, behaviour and preferences’, along with a number of readings and some structured questions. A problem can be completed over different timescales depending on length and can include both group discussion and independent research. Exercises can be assessed by a portfolio detailing research carried out, answers to the questions and reflections on the process e.g. methodology and limitations. Working effectively in a team and having to deal with the complexity and messiness of difficult economic problems is excellent training for professional work and life.
In this essay we have sketched our vision for reform and tried to show that we are engaging seriously with the constraints on teaching and resources by putting forward practical suggestions. However, constraints are not an excuse for inaction and we are very clear that the primary barrier to reform is the belief among a large number of economists today that their version of economics is the right way to do it. This position may be defensible as an individual view.
However, on a collective disciplinary level it does great damage because it narrows education and research to fit within certain theoretical and methodological parameters and defines everything outside as bad or non-economics. This is a grave mistake because it closes off further disciplinary advances in a whole range of areas that would otherwise be open. Economics must be a discipline that is debated. Contestation isn’t a sign of weakness and it certainly isn’t unscientific. It doesn’t mean that all answers are the right answers or equally valuable but it does mean that one answer can’t claim a monopoly on the truth. Economics must move away from strictly adhering to narrow methodological frameworks and become a discipline that embraces a plurality of methodological and theoretical perspectives. The way to start this transformation is to embrace a pluralist,
liberal education in undergraduate degrees.
1. See also an Institute of New Economic Thinking survey of 12UK university economics syllabuses (Wigstrom).
2.We are developing our critique of economics education and vision for reform in a book which will be published in June 2015.
3. More ambitious curriculum reform is taking place at Greenwich University (Gorgoni 2014), Kingston University and Goldsmiths University.
4. A Manchester Undergraduate Curriculum Review presentation for student focus groups states very clearly ‘What the UG Review will not do: Introduce heterodox economics to the economics core courses taught at Manchester’ as if the label heterodox signifies wrong or bad economics.
5. For more information on CORE see: http://core-econ.org/
6. In presentations of CORE Wendy Carlin has equated pluralism to a ‘horse race between paradigms’ and suggested it ‘will never make inroads into the core curriculum’.
7. The Association for Heterodox Economics website outlines the difficulties non-mainstream economists face publishing in the top ranking mainstream journals: http://hetecon.net/division.php?page=resources&side=research_assessment
8. In the early 1990s, after large proportions of research funding became dependent on results of the early REA, the economics faculty at Manchester in 1994 stated that an application had to have ‘an established research record, or clear research potential, in some area of mainstream economics’ to be eligible (Lee, 2007).
9. There is an unpluralist guide to PBL and designing exercises on the Economics Network website: http://www.economicsnetwork.ac.uk/handbook/pbl
Association of American Colleges and Universities AACU. (2014) ‘What is a liberal education?’. Available at:
https://www.aacu.org/leap/what-is-a-liberal-education (Accessed on 16/12/14).
Bezemer, Dirk. (2009) ‘No one saw this coming. Understanding financial crisis through accounting models,’ Research Report 09002, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
Caldwell, Bruce. (1991) Beyond Positivism. London: Unwin Hyman.
Carlin, W. (2013) ‘Economics explains our world — but economics degrees don’t’, The Financial Times, November 17th. Available at: http://www.ft.com/cms/s/0/74cd0b94-4de6-11e3-8fa5-00144feabdc0.html#axzz3M4wH2qpW (Accessed on 16/12/14).
Coyle, D. (2013) ‘Teaching Economics After the Crisis: Report from the Steering Group’, The Royal Economics Society Newsletter, April 7th. Available at: http://www.res.org.uk/
view/article7Apr13Features.html (Accessed on 16/12/14).
Coyle, D. (2014) "The mainstream economics curriculum needs an overhaul", Vox CEPR's Policy Portal, May 4th. Available at: http://www.voxeu.org/article/mainstream-economics-curriculumneeds-overhaul (Accessed on 16/12/14).
Godley, W, and M. Lavoie. (2007) Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. Basingstoke: Palgrave Macmillan.
Gorgoni, S. (2014) ‘University of Greenwich revises its economics programmes to enhance pluralism and real world economics’, Rethinking Economics, December 14th. Available at: http://www.rethinkeconomics.org/#!blog/c1sgu (Accessed on 16/12/14).
Grasselli, M.R and Lima, B. Costa. (2012) ‘An analysis of the Keen model for credit expansion, asset price bubbles and financial fragility’, Mathematics and Financial Economics, Vol. 6 (3), pp. 191-210.
Karacuka, M and Zaman, A. (2012) ‘The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature’, International Journal of Pluralism and Economics Education, Vol.3 (4), pp. 366-414.
Keen, Steve. (2011) Debunking Economics: Revised and Expanded Editions: The Naked Emperor Dethroned?. London: Zed Books.
Keen, S. (1995) ‘Finance and economic breakdown: modelling Minsky's “financial instability hypothesis”’. Available at: http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/Keen1995FinanceEconomicBreakdown_JPKE_OCRed.pdf (Accessed on 16/12/14).
Krugman, P. (2012) ‘Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach’, The Quarterly Journal of Economics, Vol. 127 (3), pp. 1469-1513.
Lee, Frederic S. (1999) Post Keynesian Price Theory. Cambridge: Cambridge University Press.
Lee, F S. (2007) ‘The Research Assessment Exercise, the State and the Dominance of Mainstream Economics in British Universities’. Cambridge Journal of Economics, Vol. 31, pp. 309-325
McLeay M, Radia A and Thomas, R. (2014) ‘Money Creation in the Modern Economy’, Bank of England Quarterly Bulletin 2014 Q1. Available at SSRN: http://ssrn.com/abstract=2416234
(Accessed on 16/12/14).
Post-Crash Economics Society. (2014) ‘Economics, Education and Unlearning’. Available at: http://www.postcrasheconomics.com/economics-education-and-unlearning/ (Accessed on 28/11/14).
Potts, Jason. (2000) The New Evolutionary Microeconomics: Complexity, Competence, and Adaptive Behaviour. Cheltenham, UK: Edward Elgar.
Wigstrom, Christian Westerlind. (2010) ‘A survey of undergraduate economics programmes in the UK’, The Institute of New Economic Thinking. Available at: http://ineteconomics.org/sites/
inet.civicactions.net/files/existing_undergrad_econ_curriculum_UK.pdf (Accessed on 22/09/14).
Wren-Lewis, Simon, (2014), ‘When economics students rebel’. Available at: http://mainlymacro.blogspot.co.uk/2014/04/wheneconomics-students-rebel.html (Accessed on 16/12/14).
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