BY DAVID HOPE 7/09/2015
I started my masters in economics at the London School of Economics in autumn 2008. At the same time, just down the road in Canary Wharf, the world’s media were assembling. Photographers were fighting each other to snap pictures of disgruntled Lehman Brothers employees carrying boxes of their belongings out of the bank’s plush office building. The giant American investment bank — with assets roughly equal to the GDP of Switzerland — had just filed for bankruptcy. We all know what happened next.
This should have been a great time to be an economics student. The world economy was crumbling before our eyes and we ought to have been in the perfect position to survey the wreckage. Sadly, there was a real disconnect between what was going on outside the window and what was being taught in the classroom. I honestly think I learnt more that year from reading about the global financial crisis in the Financial Times and The Economist than I did from my masters at a world-renowned university.
I am not the only one to feel this way. Economics students from all parts of the globe have started to voice their dissatisfaction with what they are being taught. In particular, they do not believe their (often very expensive) economics training has prepared them to truly understand the financial crisis or the world it gave birth to.
It is clear the university economics curriculum — largely unchanged for thirty years — is in dire need of reform. Students have been leading the charge. For evidence, look no further than the nationwide student protests in Chile or the student-run organisations aiming to shake up the discipline such as the University of Manchester Post-Crash Economics Society and Rethinking Economics.
Despite the energy behind curriculum reform, universities have so far been slow to overhaul their undergraduate syllabuses. One major obstacle to change has been the lack of a viable alternative to the current curriculum — not anymore. The CORE Project, which pledges to teach economics “as if the last three decades had happened,” has just launched The Economy. The 20 unit e-book provides a comprehensive introduction to economics for undergraduates and is the first step on the road to changing the way economics is taught. Under a Creative Commons license, The Economy is also open-access, online and free. (See the end of article for details of how to get your hands on The Economy.)
The frontier of economics has moved a remarkable distance in recent times, but the undergraduate curriculum has been slow to incorporate the latest thinking. Take one field as an example: behavioural economics. Since Amos Tversky and Daniel Kahneman’s pioneering work in the 1970s, the sub-discipline has blossomed. Innovative methods such as laboratory and field experiments have shown that humans care about fairness and other people, and that we are prone to biases and irrationality.
Undergraduate courses, if they teach these concepts at all, tend to tack them on at the end, where they are out of place and easily ignored. The central conceptual framework instead focusing narrowly on homo economicus: the self-interested, utility-maximizing machine that can be hard for students to relate to.
The Economy, on the other hand, incorporates behavioural economics into our conceptual framework from the very beginning. As early as Unit 4, students learn about social dilemmas, such as tax collection and joint farming projects, and how they can be resolved through altruistic preferences and institutions. They are also shown experimental evidence from the US, Kenya, India, Colombia and Israel (among others) in order to ground these concepts in a variety of real-world settings.
Another example of how The Economy helps to bridge the gap between what economists now know and what is taught to undergraduates is how it deals with nature. In the traditional syllabus, environmental economics may be offered as an optional stand-alone course but is rarely considered in introductory courses. In our conceptual framework, the economy is treated as part of the biosphere. For example, Unit 1 of The Economy looks at the environmental damage caused by the capitalist revolution, Unit 10 studies the pollution externalities of pesticides used in banana production in the Caribbean and Unit 18 addresses the big problems in environmental policy such as climate change and over exploitation of common resources.
As the name CORE suggests, the project is not looking to add topics to the current curriculum but rather to fully integrate the latest economic thinking into the heart of the new curriculum.
I studied undergraduate economics at University College London. I decided to pursue a degree in economics because I wanted to better explain the world around me. It was the questions that really got me excited. When will government intervention into the economy improve economic outcomes? Why are some countries rich and others poor? Why are some economies so much more unequal than others? Once I arrived at university, I was therefore disappointed to learn my first two years would predominantly focus on solving mathematical problems devoid of any real-world context. Like many economics students before me, I became excellent at solving problems sets but had trouble thinking critically about the major economic issues facing the world.
It was only in the last year of my undergraduate degree that I was reminded of why I had originally chosen to study economics. Third year was spent applying economic tools to a diverse range of real-world issues, ranging from addiction and marriage markets right through to poverty reduction schemes in the third world and policies to combat climate change. It was a hugely rewarding and eye-opening year of study.
My experience is not unique; many students feel that too much of the current curriculum is frustratingly disconnected from the real world. The CORE Project therefore put empirics at the heart of the way they teach. In fact, each unit begins with a real-world hook to whet the students’ appetite. The hooks included in The Economy cover both historical (e.g. the Irish potato famine in Unit 2 and 17th century European pirate ships in Unit 5) and contemporary issues (e.g. Apple’s outsourcing of its production chain in Unit 6 and Tesco’s pricing policy in Unit 7).
Economic models are not introduced in The Economy for the sake of it but instead to answer a specific question about the real world. For example, why did some countries have consistently lower unemployment than others over the past 40 years? The Economy is also filled with data from the real world. We want students to leave the course with a better understanding of their economy and others around the world, both now and throughout the long sweep of history. Unlike standard courses, the tools students learn in The Economy are not the end in themselves, but rather the means with which to answer questions about the real world.
We do not pretend to have all the answers. Economics can shed light on many areas of the world but we have to be humble about what we do not know. Economists regularly disagree with each other, as anyone who keeps an eye on the economics blogosphere can attest! We use When Economists Disagree boxes throughout The Economy to zoom in on some of the areas where economics has yet to settle on an answer. Unit 9, for example, casts an eye over the debate between Nobel laureates Eugene Fama and Robert Shiller on the existence of bubbles in financial markets.
The CORE Project is not just reforming the curriculum but is also pioneering an innovative way of creating content. The Economy has been produced collaboratively by around 20 academics volunteering their time. The academics are based in institutions in a wide range of countries (US, UK, Turkey, Colombia, France, Chile and India to name a few) and are experts in their fields (e.g. Sam Bowles on institutions and bargaining, Yann Algan and Wendy Carlin on macroeconomics, Kevin O’Rourke on economic history and Rajiv Sethi on financial markets).
The e-book format also allows us to take advantage of the latest technology to improve learning experiences and outcomes. The Economy contains interactive figures, integrated multiple-choice tests and Leibniz popups that set out the algebra behind the key concepts. To improve student engagement over traditional textbooks, we include Surprise Me popups (did you know Adam Smith was stolen by “a band of gypsies” when he was aged four?) and videos of world-renowned economists talking about their area of expertise (e.g. Joseph Stiglitz on the financial crisis and Juliet Schor on work hours).
The Economy is the beginning of a long journey of curriculum reform; it is not the end point or a definitive list of topics. We hope that departments build on our material in their own ways, taking account of their locality, the expertise of their faculty and what their students want. Additionally, we will be encouraging all students and faculty using our materials to provide us with feedback about how they could be improved. One great thing about producing an e-book is that it can be easily updated in response to the demands of our users. In the not-too-distant future, we are optimistic that economics students will finally get the curriculum they want and deserve.
To finish, Perspectives’ editorial team has asked me to speculate on what the economics curriculum will look like in 100 years time. I would be a fool to claim my predictions are anything other than hand waving, but that is the joy of long term economic forecasting: it takes an awful long time to be proved wrong!
We have learnt from the last 100 years of economics that the evolution of the discipline is heavily influenced by real-world events. For example, the Keynesian doctrine was born in the 1930s in response to the policy failings of the Great Depression and New Classical Economics developed alongside the stagflation of the 1970s. It is hard to predict what the major economic events of a century’s time will be, but I would expect how to deal with climate change, global food production and ageing populations will be high on the agenda. It will be harder to ignore these issues as their costs become larger over time.
One prediction I can be fairly certain on is that tomorrow, as yesterday, economics will be written by wherever capitalism (or the economic system that supplants it) is happening most energetically. I therefore expect important inputs from beyond Europe and the English-speaking world, as the relative economic power and influence of the Western world fades over time.
Overall, I expect the economics discipline to adapt to the changing world and rise to the challenge of tackling the new questions it poses. After all, isn’t that why we all became economists in the first place?