George Mason University economist Donald Boudreaux writes for the Martin Center about the continuing need for economics education.
In an article published recently in the Atlantic, “The Curse of Econ 101,” University of Connecticut law professor James Kwak argues against what he assumes to be the content, thrust, and effect of the basic principles course, Economics 101.
He thinks it’s too simplistic. And he’s sure that in its simplicity, it masks the complexities that must be accounted for when passing judgment on economic reality and especially on government policies.
According to Kwak, over the past few decades Econ 101 has devolved into “economism,” which he describes as “the belief that basic economics lessons can explain all social phenomena—that people, companies, and markets behave according to the abstract, two-dimensional illustrations of an Economics 101 textbook.” The two-dimensional illustrations to which Kwak refers are supply-and-demand graphs.
In Kwak’s telling, Econ 101 professors indoctrinate impressionable students with the belief that anything in reality that is economically essential can be explained with simple and abstract supply-and-demand analysis.
Moreover, according to Kwak, this abstract emphasis on supply and demand is both a consequence and cause of a larger problem with economics in general. That problem, Kwak notes, is that “economics degrees are highly mathematical, adopt a single narrow perspective and put little emphasis on historical context, critical thinking or real-world applications.”
That observation about economics degrees is Kwak’s one kernel of truth. Modern economics is indeed excessively mathematical and typically presented without historical context, critical thinking, and real-world applications. …
… So I join Kwak in objecting to such airy theorizing. But I dissent from his identification of supply-and-demand analysis as the quintessence of such airy theorizing.
When taught well and wisely, supply-and-demand analysis is the central part of the economic way of thinking. This way of thinking both deepens and broadens students’ understanding of economic reality. Contrary to Kwak’s assertion, such analysis teaches neither that prices automatically and without friction move to equilibrium levels nor that nothing matters except consumers’ and producers’ narrow material concerns.
Instead, the economic way of thinking incites students to ask probing questions about reality that they would otherwise never ask. It encourages them to search for and discover aspects of reality that would otherwise remain hidden. It prompts students to ponder the reality far more profoundly and fully than they would otherwise do. Junking or radically changing Econ 101 would leave students ill-prepared to understand the world around them.
