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Symposium 2013

Proposal - A better interaction between contents, methods and ethics can improve our teaching of economics.

The Challenge

Economists are asking the great questions that motivated the discipline when it began – questions of growth, distribution, behavior and instability. The field is booming in terms of methods. Field a ...

Economists are asking the great questions that motivated the discipline when it began – questions of growth, distribution, behavior and instability. The field is booming in terms of methods. Field and lab experiments have been introduced and advances in empirical analysis allow policy interventions to be evaluated. Economics has never been more central to the discussion of the major policy issues that animate the public. But economists are in disrepute. And economics teaching is under pressure to change. There are three sources of pressure. The public, policy-makers and employers blame economists for complacency prior to the crisis. Some complain that the undergraduate curriculum is training candidates for admission to PhD programs and is too narrow and technical for the majority who will work in business and government. Students are forming new student societies to press for teaching more relevant to today’s serious economic problems. Teachers themselves feel the pressure from students. They are discomforted by the gap between what they teach and the last 3-decades of developments that frame their research, and are anxious about the potential of the new disruptive technology of MOOCs (massive open on-line courses).

The discipline of economics is well equipped today to be up to the task to address the challenges it has been asked to respond to. Among others, we have to transform the teaching of economics in various dimensions and this text is a contribution in that direction. We have today better tools and a better understanding of human behavior, and how it shapes and is shaped by institutions. On the other hand there are improvements on teaching methods and tools for the classroom we can bring to our curricula.

Let me start with a statement: The methods we chose in our teaching of economics - or for that matter any other discipline, are at the same time a reflection and a cause of the fundamentals dominating the discipline at that particular point, and how it is practiced. (See more here).

The teaching of economics could benefit greatly if we transform part of the contents that are being taught in economics, if we enrich the pedagogical methods used in the classroom and outside of it, and if ethics and moral reasoning could recover their primal role in the foundations of this discipline. I will show three examples on these components below.

Regarding contents, think of cooperation: While mainstream economics has been quite successful in teaching and conveying the policy effectiveness of the “gains from trade”, it has stressed much less the case of the “gains from cooperation”. The Prisoners´ Dilemma game continues to be a metaphor for justifying free-riding, zero-contributions to public goods, the tragedy of the commons, and thus the need for market or state interventions, closing the space for self-governance as an economic solution to this coordination failure. In fact, when it succeeds in the mainstream textbook, cooperation is often shown as something bad for society because it happens e.g. when two duopolists collude to capture the rents from market power, so the idea of cooperation remains as either implausible or detrimental. We need to bring in the “gains from cooperation” argument as one more possibility for efficiency-enhancing solutions just as important as the “gains from trade”.

Regarding ethics, the teaching of economics can do a better job. The ethical implications of the practice of economics demand a strong training in moral judgment and ethical reasoning of students which is lacking in most of the basic training of economists and textbooks. Interestingly, students are much better at evaluating inefficiencies than at evaluating unfairness of an economic outcome. From the beginning of any introductory economics course we should provide students with the tools and criteria to critically assess the problems of justice, fairness, inequality within and across generations. Political philosophy and moral psychology could be easily incorporated into the introductory courses and therefore equip students with better tools to combine with the conventional tools of studying efficiency from their first year. Let me give an example I give to my students for discussion: "A competitive market for mattresses operates in equilibrium. The rainy season floodings affected an entire region of a country, triggering significant material and psychological losses. Mattress traders raise substantially their retail prices because of rising demand. Is the new equilibrium efficient? Is this new equilibrium fair? Should someone intervene in this market?." Current students in their introductory courses have much better tools to solve the rather less interesting first question, but struggle with the second and third questions.

Regarding methods, we have today excellent new participatory and interactive teaching tools to enhance the capacity of students in critical thinking. The potential of classroom economic experiments could be crucial. By placing students in experiments in the shoes of the agents that we intend to model and explain in our lectures and readings we can be more successful in bringing realism and pertinence to what we teach. Experiments can bring better spaces of dialogue and reflection on the normative vs. positive aspects of economics when students experience lively the behavioral foundations of how competition brings efficiency, or how cooperation can succeed, or how fairness gets in the way of efficiency.

Research has shown the capabilities of humans to be empathic or prosocial, and how they coexist with envy or the selfish pursuit of material gains. These traits probably explain why humans have succeeded in so many challenges over millennia through cooperation and competition. Political economy must recover its place in the introductory micro and macro courses, and probably with better moral reasoning tools and a more experiential education through experiments in class, our students can improve their understanding of how economics is understood and practiced to build a fair and efficient society.

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