Talk to Australasian Teaching Economics Conference, Sydney, Friday, July 7, 2017
When Justin Wolfers, the great white hope of Australian academic economists, spoke to the Australian Business Economists in February, he paid a special tribute to two of his economics teachers, whom he named, thanking them for instilling in him a “love of economics”. They were his school teachers at James Ruse High, not his lecturers at the University of Sydney.
There are two lessons from this. First, despite the contempt in which it is held by many economics lecturers, high school economics has long been the main recruiting ground for university economics. Some years ago in NSW, and much earlier in Victoria, the number of students studying economics at high school fell sharply, following the introduction of a more useful-sounding – and less intellectually demanding – course, business studies. If those of you from NSW are wondering why you’ve many fewer students wanting to study economics than in the good old days, I’m convinced that’s a big part of the explanation. That, plus the growing recognition that university economics is a subject which is generally badly taught, in which you do a lot of maths without seeing what it proves or how it might be useful to you in the working world.
Which brings me to the second lesson: Whether you teach at school or uni, perhaps the single most important test of your success is whether you instil in your students a “love of economics”. Whether you convince them it’s interesting, important and useful. In my experience, it turns on whether you can visually and aurally demonstrate your enthusiasm for the subject and somehow convey this enthusiasm to your students. If you can infect them with your enthusiasm – your love – for the subject, you’ve done them a huge service.
What are my qualifications for offering reflections on the teaching of economics? Well, although I make no claim to being an economist – my qualifications are in accounting, and I prefer to describe myself as a journalist who writes about economics – I did have three years of economics in the commerce degree I gained from the University of Newcastle in the second half of the 1960s, so I am qualified as a student of economics. And whether or not I’m qualified, I have 40 years of experience as a teacher of economics – partly in lectures to high school and, occasionally, uni students of economics, but mainly in my newspaper columns, which have always put a heavy emphasis on teaching. I was a part-time tutor in accounting at UNSW for two years, which helped me realise how satisfying it felt being a teacher. I’ve also had some experience over the years as a hirer and trainer of the product of your labours: economics graduates. My job gives me plenty of contact with economists – particularly with top econocrats, almost all of whom are sufficiently well-qualified to be academics, but also with academics themselves – and also with high school economics teachers, who also aren’t economists, but teachers whose topic is economics.
Throughout the five years of part-time and full-time study it took me to get my pass degree, I suffered under an appalling misconception: that accounting was really interesting, while economics was boring and pointless. I had my heart set on becoming a chartered accountant, did economics only because I had too, and it wasn’t until after qualifying as a chartered accountant, becoming disillusioned, and then washing up at Fairfax in 1974, where it was suggested I become an economic journalist (because “economics and accounting are pretty much the same thing, aren’t they?”), that I realised I’d got that exactly the wrong way round: accounting was boring and relatively unimportant, whereas economics was infinitely interesting and involved grappling with problems such as inflation and unemployment, which were of considerable importance.
I blame my lecturers – who included Brian Johns for micro and Warren Hogan for macro – for allowing me to retain the delusion that economics was boring and irrelevant to the real world of business. To my recollection, they made no attempt to put the theory they were teaching me in a wider context – to help me join the dots. I can remember wondering what a model was, and thinking that none of the businesses I audited in Hunter Street ever mentioned using a demand curve to determine their prices. It never occurred to me to wonder that one of the businesses I audited was actually a (in those days, still legal) cartel, setting the prices for the pipes and tiles made by half a dozen pottery works in the Hunter Valley.
No one paused from their exposition of diagrams and models to explain why economics relied on theories embodied in geometric or mathematical models in its attempt to explain how the economy works, why models were, of necessity, a simplified representation of reality, why a model as complicated as the real world would explain nothing, that the game was about identifying key causal relationships and not worrying about less important complications, why the test of a model was whether its choice of which factors to include and which to ignore was well judged.
It was many years before I realised that, in my late teens and even though I’d worked full-time for a couple of years in the commercial world, I was far too inexperienced in the “real world” to make sensible judgments about whether what I was being taught would or wouldn’t be of use to me in the rest of my working life. That if my lecturers thought it worth teaching me this stuff, I should give them the benefit of the doubt. It was even more years before I realised that theories about how the world works were the main thing universities had to offer and pretty much the only thing they should bother offering. Every profession has a body of knowledge that attempts to find order among the chaos in the aspect of the real world that it professes to know about, and university is pretty much the only opportunity practitioners get to learn about that theory in any systematic way. So, provided they’re teaching good theory, universities should never apologise for being theoretical. There’s not much theory in accounting, but what there is is what I’ve found most useful from what I was taught. As a commerce graduate, no one taught me how to do a bank rec, but that’s the sort of practicality you can pick up in the first few weeks on the job.
Apart from not bothering to explain the role and rationale of seemingly unrealistic theories, I can’t remember my lecturers or tutors making much effort to demonstrate how those theoretical insights could be used to shed light on real world problems. My mate Jeff Borland at Melbourne has published a great little book of first year case studies – one I give to each of my new recruits to economic reporting – and it’s not hard to find books of case studies based on newspaper reports, if you’re not capable of finding your own. Lecturers who preside over courses that fail to link theory back to real world issues deserve to be shot. They just can’t be bothered making the effort to move from theory for its own sake to theory because it can actually be quite useful – and thus interesting.
One of the keys to being a successful explainer of economics in the media is to take the trouble to work out where your audience is coming from: what they know, what they don’t know, what their misperceptions are, which aspects interest them and which don’t. Successful lecturers do the same. I imagine students taking first-year courses fall into three main categories: those who’ll do economics for just a year or two, then take away whatever and what little they’ve learn to last them for a lifetime as a teacher, accountant, businessperson or lawyer – and a voting citizen. I imagine these would be most numerous. Next in size would be those who complete a full major in economics and go on to be economic practitioners, working in the public sector, the banks and financial markets, or eventually as self-employed economic “consultants”, or even the odd journo. Last comes the smallest group, those who’ll go on to be your successors as academic economists.
I think the great temptation you face as academics is to aim your lectures to those three groups in inverse proportion to their numerical significance. My guess is that, consciously or unconsciously, most courses – particularly those beyond first year – are aimed at educating potential academics. Why? Because not bothering to change gear is more intellectually satisfying for the lecturer and requires less effort. Where first year economics is a terminating course – say for those who’ve been conscripted by the Business faculty - the main thing students need to take away is a deep understanding of some version of Mankiw’s Ten Principles of Economics. If you’re not doing that you’re short-changing a lot of your customers.
But the student group I worry most about are the future economic practitioners. I suspect that most academics are so inward-looking and arrogant that they take little pride in what is their main practical task and contribution to economic welfare: training practitioners, many of whom will have much greater influence over the management of the macro economy and the efficiency of particularly industries than their teachers ever will. When I write columns criticising “economists” for some failing, I often get angry feedback from academic economists, indignantly rejecting my criticism. To many academics, economist equals academic economist. It never crosses their tiny minds that my criticism is directed at a far more socially significant group: their former students, economic practitioners. Sorry, their performance worries me far more than yours, even though the adequacy of your teaching must bear its share of responsibility for the adequacy of their performance.
I have two related worries about the adequacy of your teaching of future practitioners. First is the way I believe that, too often, your academic enthusiasm for exploring limiting cases and other intellectual fascinations crowds out the far more important task of giving students as much practice as possible in applying models to the solution of practical problems. This, after all, is just what economic practitioners will spend their working lives doing.
My second worry about the adequacy of your teaching of practitioners is my belief that you spend far too little explaining the limitations of the models you teach. All theories and models have limitations, and introducing models while failing to identify their key limitations is professional negligence. You don’t truly understand a model unless you understand its limitations. If you don’t understand its limitations, you’ve learnt from a comic, not a textbook. What are the assumptions on which the model is built? Which are the most significant assumptions? Which are the explicit assumptions and which the implicit? I had studied and written about mainstream economics for many years before Geoff Harcourt told me something I hadn’t realised: it’s based on an implicit assumption that the parties to economic transactions are of roughly equal bargaining power. That’s a hugely important assumption.
Practitioners who use models without fully understanding their limitations – and who draw policy conclusions which they publicise without warning politicians and public of the key assumptions on which they rest – are a menace to the nation, contributing to the disrepute in which economists are often held. Stuart Birks, a senior lecturer at Massey University, has written a little book called 40 Critical Pointers for Students of Economics, available via the World Economics Association, against which all of you could usefully assess the adequacy of your efforts to ensure your students understand the limitations of the models you teach them. https://www.worldeconomicsassociation.org/library/40-critical-pointers-for-students-of-economics/
Even worse, I worry that economics teachers don’t do nearly as much as they should to ensure their students understand that models are just models. I believe too many of your students walk away under the impression that some version of the neoclassical model actually is the economy. If so, you’re guilty of a terrible intellectual crime. Just this year someone who’s not an economist repeated to me the statistician George Box’s aphorism that “all models are wrong, but some are useful”. Is this what you tell your students? If not, why not? In Dani Rodrik’s recent book offering a critique and defence of conventional economics, Economics Rules, the main point he hammers is that “it’s a model, not the model. Economics is a collection of models; cherish their diversity.” I think it was Joan Robinson who advocated the “tool box” approach to economics: you assess a problem and its context, then reach into your tool box and select the particular model best suited to solving that problem. Is this what you teach your students?
I had intended to switch my critique from how you teach to what you teach, which I planned to kick off by saying that economics is half useful insights and half con job. But I’ve run out of time and if you want me to justify that assertion you’ll have to invite me back.
