This article was originally published in Bella Caledonia.
“Economics is fun and exciting!” So said my economics professor at the University of Aberdeen in our first class. After four years of studying economics, my honest opinion is that he was right, but only because the subject is fun and exciting; the study of economics is not.
Economics is the science of how to govern for the benefit of the whole of society. It is grounded on utilitarian philosophy and Adam Smith’s ideas of self interest.
Studying how to make people’s lives better through policies that improve systems is highly relevant and exiting. However, for many economics students, they quickly become disillusioned once they step inside the classroom. The current curriculum teaches neoclassical economics, which models a representative agent and aggregates their rational decisions to reach a general equilibrium. Mainstream economists use rigorous maths, and attempt to treat the subject as a natural science. However, unlike the natural sciences, economic models are based on assumptions, not observations.
Assumptions about perfect rationality and information are fundamental to the economics curriculum. When a fellow student included a section in their dissertation which justified the use of the rational actor model, their supervisor advised them to skip this section, saying, “Your work will be graded by economists – don’t waste space justifying the rational actor model to us.”
Why is this a problem? Because in their 2007 World Economic Outlook, the World Bank observed, “improved fundamentals” and forecast a “positive outlook” over the coming years. In the same report, they acknowledged some risks but suggested “a soft landing seems likely”. Yet in August 2007, BNP Paribas blocked withdrawals from two of its hedge funds, signalling that banks had lost trust in the market. A year later, Lehman Brothers went bankrupt and the economy crashed. While some financial institutions were bailed out with tax payers’ money, others declared insolvency which led to the loss of jobs and incomes.
In the aftermath of the financial crisis students studying economics anticipated that their lecturers would explain the crisis and improve their models. Instead, their lecturers typically added an additional slide to “Introductory Macroeconomics”.
Disappointed with what they found in their curriculum, students at the University of Manchester founded the “Post-Crash Society” – and Rethinking Economics was born!
Since then student groups across the world have joined the organisation, including groups at the universities of Aberdeen, Edinburgh, Glasgow and St Andrews. In addition to organising conferences and events (such as, the annual Shifting Paradigms Conference in Aberdeen) these student groups have been lobbying their departments for change.
The goals of Rethinking Economics are diverse and range from small steps to big changes. Rethinking Economics wants students to be tested not only on their knowledge of maths but also on their understanding of the subject, and has lobbied for additional tutorials in the Honours Year for this purpose. They have also called for tutorials to be split so that students can practice mathematics but then also discuss the implications of those calculations for the economy.
In the longer term, Rethinking Economics hopes to diversify the modules taught in the curriculum. They do not believe that the models and approaches of neoclassical economics are all wrong, but they do believe that they need to be enriched through a more pluralist approach. For instance, behavioural economics doesn’t replace existing models, but aligns them with observed human behaviour and psychological insights. Other approaches focus on the role of effective demand and highlight how it is shaped by: expectations; society’s power structures; and the invisible economy (mostly serviced by women). Rethinking Economics is also critical that not enough focus has been placed in economics lectures on the environmental boundaries of our planet, and whether growth is sustainable, and if so, how?
All of these insights would be valuable to economics graduates who may go on to become society’s future policy makers.
The ideas that Rethinking Economics have proposed have generally had a warm response from individual lecturers at various Economic departments up and down the country. Many lecturers and professors fully agree with the problems described above. However, universities face constraints; adding more tutorial hours is costly, as is employing experts and researchers to teach the pluralist topics outlined above.
These financial constraints are exacerbated because universities are incentivised to maintain their neoclassical research agenda. Any research published in the top five journals increases an economics department’s rankings, which in turn enhances the university’s research grant and individual career prospects. Therefore it is not in the institution’s interest to undertake research on heterodox economics.
Thus, while many lecturers themselves understand the flaws of how economics is taught at universities and support Rethinking Economics, they are powerless as individuals to challenge these financial and institutional constraints.
There is a danger that universities will continue to sacrifice research that could improve our societies in favour of elegant maths. Economists currently produce economics for economists, not economics for society; this makes it irrelevant for students who want to engage with policy-making.
Many organisations are now working to promote a different economic model, or a ‘wellbeing economy’, that prioritises people and the environment over economic growth. Rethinking Economics campaigns for students who want to study towards such an economy and ultimately make society a better place. When that happens, then the study of economics can indeed claim to be fun and exciting.