About Time: Rewriting College Economics Textbooks

To paraphrase anti-globalization protesters, is another kind of Econ textbook possible?

I needn't rehearse the argument made by critics of the social science of economics that the global financial crisis of 2008-2009 revealed the emperor's clothes. Leftists declared economics as "bunk" that led us into disaster. Rightists on the other hand, said that economic principles were not correctly applied, leading us into disaster. (It was "moral hazard" writ large instead.) So many years on, we are no nearer "consensus" save for the general agreement that economics education should be made more applicable to real-life situations to maintain relevance in the higher education curriculum. Writers of mainstream economics textbooks like Greg Mankiw have borne the brunt of this criticism as the world seeks more "relevant" textbooks.

The CORE project aims to salvage economics.

But how are we to go about this task? Should we introduce "heterodox" theories favored by leftists? Or, should we draw more real-life examples to illuminate economics principles? Figuring out this task has been the lot of the multi-country, multi-university CORE project, whose tagline is "teaching economics as if the last three decades happened." Ouch. Anyway, the gist of the exercise is to introduce recent innovations in economic research to introductory courses such as concepts of cognitive biases (as opposed to the machine-like rationality of homo economicus) and the interaction between markets and morality:

But economics is not fighting the last war. In the past three decades, experimental methods have shown that people are more fair-minded and moral, and less calculating than the so called Economic Man of the textbooks. The fact that we are nicer and not quite as clever as economists once assumed has direct implications for policies to address problems of financial instability, climate change, and economic disparity. The new research greatly expands the set of politically viable and economically effective policies to ensure a sustainable planet and to level the economic playing field.

Another example: improved techniques for computer modelling of complex interactions among millions of economic actors can help design policies to address financial volatility and environmental degradation. For our students, though – especially those in the core courses of the curriculum – this is all a well-kept secret. We impose a curriculum that is increasingly remote from what economists now know, and more distant still from the pressing problems that drew our students to economics in the first place.

The immediate cause of this move to rewrite introductory textbooks is of course the global financial crisis:

Since the financial crisis, student groups have attacked economics departments for failing to deal with the world’s most pressing social issues, including inequality and global warming. They have also criticised professors’ reluctance to teach a range of economic theories, with courses instead focusing on neoclassical models which they claim do little to explain the 2008 meltdown...

Robert Johnson, INET’s president, said: “There’s a problem that undergraduate courses don’t reflect the research of senior economists. There’s also an issue that the examples that we use in textbooks are often based on US data and institutions and don’t produce much excitement elsewhere, particularly in the emerging economies. We’re trying to address that.”

Take that, Greg Mankiw! You need to get a move on development economics. That said, a number of critics are still not convinced that minor tweaks here and there to include real-life cases are sufficient to update the introductory economics curriculum. Rather, a major overhaul is necessary:

Louison Cahen-Fourot, a doctoral student at Paris XIII university who has also been involved with PEPS, a French group advocating more pluralism in economics, said: “The problem is [CORE] is not really pluralism,” Mr Cahen-Fourot, said. “It’s very much mainstream and it does not meet what we would like to see at PEPS, such as more alternative voices or methodologies. We also would like to see more openness to [methods from] other social sciences,” he said.

Rafe Martyn, a doctoral student at the University of Cambridge, said: “It’s sensible to do what CORE is trying to do and base teaching in empirics and to bring the content more into line of current research. There’s a fear that CORE just wants to present the theory it thinks is right, but the people involved are diverse and it’s a work in progress.”

The plan is for the ebook to be modified by online crowdsourcing of student and faculty comments, as well as by other economists. The final version is expected at the start of the 2016 academic year.

My personal opinion is that there already are alternatives to mainstream neoclassical economics that provide an informed analysis of global financial crises, markets and morality, and so on. You have the community of IPE scholars, for instance. You also have folks who study questions from the perspective of economic sociology. In other words, there already is a plurality of perspectives on economic phenomena. Admittedly, however, IPE has not made that much inroads into the mainstream--and the same generally. holds true for economic sociology. 

Oh, for IPE to reach mainstream consciousness!

UPDATE: Speaking of the economics of textbooks, Mankiw is also a well-known price gouger. Aside from the content of these things, they have outrageous prices to answer for--especially Stateside.