Teaching Economics as if People and Planet Really Mattered

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. Lovisa Reiche explains.

“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.

 

 

 

 

 

Comments (6)

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  1. Jim Bennett says:

    This is an interesting article which brought two things to mind for me:
    – the history of teaching socialist economics in Scotland being kicked off by the “Marxist Dominie” John MacLean in the early 20th century. MacLean was famous for touring Scotland, not only delivering speeches, but also conducting classes in economics everywhere from Hawick to Halkirk. He was actually paid to teach Marxist economics in Eastwood of all places!
    – in the 1980s, the Militant Tendency organised hundreds of training programmes in economics – everything from the Tendency for the Rate of Profit to fall to the Role of Surplus Value, for its members in Scottish housing schemes. The organisation may have been narrow in its focus but as a training ground in formal economics, it was second to none.

    I think there’s a role for the author and her colleagues to reach out and establish a wider teaching of economics across Scottish communities, following in some fine Scottish traditions!

  2. Graeme McCormick says:

    The challenge of globotics will make a new approach to economics urgent. If gthere will be far fewer jobs with less time at work the challenge for policy makers is to devise a system of income for every one which allows them to have healthy and fulfilling lives. I reckon a really worthwhile Universal Citizen’s Income of £200 per week is required at today’s prices.

    The effects of globotics are beginning to be felt and will only increase rapidly. We have an opportunity to embrace it as part of our Independence model. It is disappointing that the Sustainable Growth Commission did not include it in its report ,a nd it could have shown how to increase conventional growth while providing a model whereby the majority of people will not be left wanting but actually benefit from these techonological advances.

    MY own firm reduced th workign week from 35 hours to 25 hours with no loss of salary on the basis that the work done in 35 hours was done in 25 hours by using technology and changes in working practices. It has worked and provides a far better work life balance to staff while reducing business costs too

  3. Pracheet joshi says:

    I, to a greater extend agree to the argument that, Economics as a SUBJECT is interesting. But, STUDYING Economics in not fun. My experience is that, studying Economics feels more like studying a complex machine. If Economics is a social science and Economy a social institution which is regulated by humans than it should be as relatable to humans as it is to machines. It is importantly in this criteria that, I think, Economics lags behind in making people fall for itself. And so more people like Psychology, Sociology and not Economics. I think this point matters a lot. Because I have seen more than half of the class not choosing Economics for TYBA course because they find it unrelatable, dismal, dry and difficult. The rest of the class was choosing Economics to earn good salary. These are not good signs for the future of this field.

  4. Alan says:

    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.

    Agreed. Economics students might want to build bridges to disciplines in the humanities and social sciences that do study economic phenomenon differently. Acquaintance with intellectual history would undermine the fictive economic history taught to students in departments of economics. For a start see Paul Sagar’s short critique of economists’ misuse and misrepresentation of Adam Smith. He was not a utilitarian or a worshiper at the alter of self-interest. For something more academic see The Conspiracy of the Merchants. In addition to history, economists ignore other social sciences such as anthropology. Economic anthropology, unlike economics, is continuous with the political economy tradition. For an anthropological critique of neoclassical economics see Marshall Sahlins’s On the culture of material value and the cosmography of riches. Also worth a read is Chris Gregory, an economist turned anthropologist, on the limits of Piketty’s critique: The Three Faces of Thomas Piketty.

  5. Peter Crowley says:

    It all went pear shaped because the economists at the Treasury thought they could use Keynsian principles to manage bank solvency, and reduce margins, sidelining the Bank of England. They then objected to “Their” money then being used to bail out the banks, and forced them to smash up SMEs to pay them back – it like borrowing from the Kray twins. Macphersons predictions that commercial borrowers would flood back due to low interest rates could not have been more wrong. Hence sub 1% interest rates for 10 years, a flatlining economy, and Brexit.

    Any questions?

  6. Kei London says:

    Excellent work

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