During my years of studying Economics, from the Bachelor’s Degree to my current status as a Ph.D. student, I have gradually come to acknowledge the dramatic impact that undergraduate-level training has on the students. Among other things, it shapes their world view and the tools through which they understand, analyze, and normatively evaluate various economic facts and real-world dilemmas. Therefore, I believe that the pedagogy of economics, especially for undergraduate students, is one of the most crucial subjects in economic thought. In this post, I  will not explain my reasons for believing this, but rather, briefly present a pedagogical change that had been carried out at Tel-Aviv University a few years ago, and of which I was part[1].

In 2016 I was a member of a mixed team of teachers and students created in order to rethink and rewrite the introductory course in first-year economics (“Principles of Economics”). The team included two lecturers, Prof. Neil Gandal and Galya Ofer, and two graduate students, Tamar Levy-Boneh and myself. The most significant change we introduced into the course was incorporating topics from the history of economic thought into the syllabus. Another significant component of our new version of the course was the pedagogical-methodological position we adopted, which will be described below.

In working on the new course, we had set ourselves three goals: improving students’ learning habits, giving them an overview of the discipline, and presenting a coherent methodological stance regarding the relationship between the models taught in class and “real-world problems”. Here I will focus on the second and third objectives, both of which touch on fundamental issues in the debate within the international economic community regarding the training of its undergraduates. This debate has become more prominent in recent years, in part due to the student letter of 2014 and the re-thinking groups that have followed it, as well as, of course, the launch of the CORE project in 2012.

Although the debate about undergraduate economics is getting more attention since the 2008 financial crisis, it is not, in fact, new to the discipline; it has been going on for over 25 years.[2] Tracing the literature, one finds  several key points keep arising again and again.

One such issue, which goes back to the early 1990s, has to do with the discrepancy between classroom models and the current state of the discipline. The undergraduate core courses present students with a set of models, which form the basis for mainstream economic thought: some neoclassical models, as well as some tools developed in game theory. Contemporary economists are critical of these models, but this is not reflected in the way students are being taught. Another issue has to do with the relationship between the classroom models and the “real world” problems. While many undergraduate students pursue a degree in economics our of a desire to better understand economic phenomena they are concerned about, most of what they study is presented to them as isolated theoretical models, whose relationship to the “real world” remains unclear.

These issues are not independent of each other. Relating undergraduate materials to the “real world” is a complex problem, partly because the undergraduate curriculum only includes a small part of the body of current economic thought. There are two commonly held views on this issue, one of which argues that teachers need to emphasize the strength and usefulness of simple economic models in thinking about “real world” problems. The other argues the opposite – that it is essential to emphasize the uselessness of these models, and the futility and irresponsibility of any attempt to apply the models taught in the classroom to “real world” problems[3].

In rewriting the introductory courseat Tel Aviv University, we decided to adopt a third position, based on a methodological stance presented in detail by Danny Roderick in his Economics rules (Rodrik, 2015). Rodrik portrays the development of economic theory not as a struggle over the best model, but as a process of gradual expansion, during which a wide variety of models are created to suit different circumstances.

It is often claimed that the purpose of an undergraduate degree in economics is to teach students to “think like economists”. Students learn to practice a set of principles and use them to perform various economic analyses.[4] The danger is that these principles, used by mainstream economists as mere guidelines for conventional analysis, will be taught as the rules of how the economic system actually works. Thus, the subtleties of economists’ understanding of these principles are not clearly explained to students, who therefore miss a crucial distinction between economic theory and policy recommendations. Students should be made to understand that policy recommendations cannot always be deductively inferred from theory. They should also be made aware that analyzing policy in the “real world” requires diverse kinds of knowledge, some of which may come from non-formal ways of thinking, such as, for example, a good understanding of economic institutions (which itself must be grounded in an understanding of history and sociology), or an ability to consider ethical aspects.

Having sketched the terms of this dilemma, I will now present some of the principal changes we have made in the introductory course, and then explain how they form a solution for the problems just discussed. As mentioned, the basic change we introduced to the curriculum was combining topics in the history of economic thought alongside the presentation of standard economic models. This was done in the following way: first, we rewrote all the presentations of the lectures, so that each model now appeared with some (minimal) historical context – it was placed on a timeline, attributed to the economist who authored it, and accompanied by a few relevant historical facts. Our students now learn, for example, that Ricardo’s international trading model was created in response to the mercantilist view, and that Von-Neumann and Morgenstern presented their work about game theory as a critique of the Robinson Crusoe model.

The second change we introduced, and the one I find most significant, was adding a pedagogical component, perhaps a trivial one for non-economists, which required students to read economic papers and review them. In other words, we added writing assignments. In each assignment, students were asked to read texts of historical importance – some of them written by economists, others by historians of economic thought – and to respond to them critically, according to guiding questions. It is important to emphasize, however, that the focus of the course had not changed – it had not been made into a course in the history of economic thought. What we did do was use the history of economic thought to give students a sort of ‘overview’ of economic theory, and place the course’s content on the historical continuum of the discipline. Thus, while getting their initial practice in the “Principles of Economics”, students also learn to recognize the major protagonists and critical ideas in economic thought, as part of their general introduction to undergraduate studies.

The pedagogical benefits of thus incorporating historical discussion are many. A particularly significant one was being able to explain to students that economic theory is not a uniform body of knowledge, but an ongoing conversation between different scholars and researchers, who might hold differing views on both policy and methodology. Discussing themes from the history of economic thought also allowed us to present the students with some concepts and ideas which the basic models themselves do not address. Some of these themes refer to models the students will learn later in advanced courses, while others belong to schools of thought that are not part of the curriculum (e.g., Joseph Schumpeter’s “creative destruction,” or the role of power in the labor market as part of the analysis of income distribution according to Karl Marx).[5]

Beyond the inherent value of being acquainted with the history of economic thought, the addition of the subject to the introductory course supports the pedagogical-methodological approach rooted in Rodrick’s thought. Roderick’s principal argument is that different situations call for the use of different models. Therefore, understanding an economic model also implies understanding the conditions under which it may be suitable for a particular situation. This approach provided us with a flexible framework for presenting models in the classroom: we could portray the models not as competing attempts to explain how the economic system works as a whole, but as various attempts to describe the different mechanisms which may be operating within the economic system side by side.

A useful by-product of this approach is that criticizing a particular model does not have to lead us to discard it as useless.  It only means that the fundamental assumptions of the model do not adequately describe a particular empirical phenomenon, and that the model’s cogency regarding this phenomenon is therefore limited. This way, the critique does not undermine the model, and students are not required to silence their critical intuitions in favor of adopting the logic of the models they learn. This approach also makes it clear to students that some of the crucial characteristics of policy problems might not be part of their curriculum (the dynamics of economic institutions, for example). From a pedagogical point of view, we have been trying to convey to students that understanding the limits of the model may help us to use it correctly[6].

To conclude, I would like to add a few brief comments. Firstly, the discussion presented here does not obviate the need for updating the curriculum itself to contain a broader body of knowledge, including more up-to-date models and familiarity with economic institutions (as was impressively done in the CORE project). Secondly, I would like to suggest that the pedagogical-methodological approach outlined here can be useful even without the context of the history of economic thought, as this approach can be of great value to students in itself. On the other hand, it is vital to incorporate the history of economic thought into undergraduate studies as a full course, whose depth would go well beyond what we were able to provide in our introductory course.

My own experience has shown me that students are happy to get to know the major thinkers in the discipline they have chosen to study. Moreover, the history of economic thought provides a suitable framework for discussing economic ideas in a broad context, with reference to political thought, history, and philosophy. I believe that undergraduate economics students should be given basic education in these fields as well, even though they do not include finding the local maximum of a utility function.

References

Allgood, S., Walstad, W. B., & Siegfrid, J. J. (2015). Research on teaching economics to undergraduates. Journal of Economic Literature, 53(2), 285-325.

Caldwell, B. (2013). Of Positivism and the History of Economic Thought. Southern Economic Journal, 79(4), 753– 767.

Colander, D. (2005). What Economists Teach and What Economists Do. The Journal of Economic Education, 36(3), 249-260.

Frank, R. (2010). Principals of Microeconomics. In S. W. Bowmaker (Ed.), The Heart of Teaching Economics: Lessons from Leading Minds (pp. 3-23). Northhampton, MS, USA: Edward Elgar Publishing.

Rodrik, D. (2015). Economics Rules: Why Economic works, when it fails, and how to tell the difference. New-York, NY, USA: Oxford University Press.

Rubinstein, A. (2006). Dilemmas of an Economic Theorist. Econometrica, 74(4), 865-883.

Siegfried, J. J., Bartlett, R. L., Hansen, W. L., Kelley, A. C., McCloskey, D. N., & Tietenberg, T. H. (1991). The Economics Major: Can and Should We do Better than a B-? The American Economic Review, 81(2), 20-25.

Siegfried, J. J., Bartlett, R. L., Hansen, W. L., Kelley, C. A., McCloskey, D. N., & Tietenberg, T. H. (1991). The Status and Prospects of the Economics Major. The Journal of Economic Education, 22(3), 197-224. doi:DOI: 10.2307/1183106


[1] This post is based on a lecture given during the seminar on Philosophy and History of Economics at the Cohen Institute at Tel Aviv University. More broadly, it is based on my M.A dissertation, carried out under the supervision of Professor Neil Gandal of the School of Economics at Tel Aviv University. The views expressed here are mine alone, and do not represent an official position of the School of Economics.

[2] See for example (Siegfried, et al., 1991).

[3] Arguments for the first position can be found in Robert Frank (Frank, 2010), and for the second – in David Colander (Colander, 2005) and Ariel Rubinstein (Rubinstein, 2006). While Colander claims only that the specific models studied in the undergraduate degree are not sophisticated enough, Rubinstein presents the second methodological position as a matter of principle.

[4] See (Siegfried, et al., 1991) and more recently (Allgood, Walstad, & Siegfrid, 2015).

[5] See Bruce Caldwell as to why the history of economic thought should be reintroduced into the economics curriculum (Caldwell, 2013).

[6] From this perspective, we can indeed invite students to think about “real world” problems through the models they study: without trying to convince them that those models are an adequate description of real-world problems, we invite them to take the model they have learned and judge whether it can be used as a useful description of some specific issue of their choice. This way, we try to sharpen their intuitive understanding of the advantages and disadvantages of using economic models in thinking about various kinds of problems. I find this tactic somewhat similar to David Colander’s proposal to present undergraduates models as “exercises for the brain” (Colander, 2005).

3 Comments

Leave a Reply to Yam Maayan Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s