A superb debate in NYT on the topic on how we should be teaching economics after the crisis.
While a protest of an introductory economics classat Harvard University last semester seemed inspired more by the Occupy movement than by academic criticism, it raised questions about how the teaching of economics should change in light of the financial crisis. Indeed, what have we learned in the last five years that should be imparted upon future generations of economists?
Mona Chalabi, a 2011 graduate of Sciences Po in Paris and the author of “The Latest Financial Crisis: International Relations Goes Bankrupt,”suggested this forum.
There are contributions from Taleb, Blinder, Chinn etc. A superb read.
I really liked this from Chalabi:
An economist must be a “mathematician, historian, statesman, philosopher, in some degree.” So, promisingly, begins the sixth edition of “Macroeconomics” by Greg Mankiw, a key reading for my introductory economics class at the University of Edinburgh (and still a key reading six years on). Unfortunately, the book, like the course that prescribed it, delivered on only one of those claims: to be a mathematician.
What began as eloquent and logical graphs and formulas quickly spiraled out of control and I soon found myself reading that “economics is not only a social science, it is a genuine science. Like the physical sciences” and that financial crises can be predicted by using the following formula:
I was not persuaded. The over-reliance on mathematical modeling and its subsequent abstraction, together with a near-disdainful attitude toward other social sciences, left me feeling entirely disillusioned with economics in the U.K. So much so that I decided to leave the university and study abroad at Sciences Po in Paris, which took a broader approach to the field of economics.
Predicting financial crisis using a formula! I have heard of models which have many equations trying to predict crisis and failing miserably. And someone seems to have come out with one formula which need to read this paper showing the formula.
She says the crisis is a ripe time to change how we teach economics. Though, initial responses are disappointing:
Professor Alan S. Blinder of Princeton University — one of the debaters in this forum — has noticed this change in his undergraduate economics students — “rapt attention and no sleepers!” He says the financial crisis has resulted in a generation of students who “want, expect and deserve explanations.” But in most syllabi and textbooks, the changes are tweaks at most — an altered preface in the latest edition, some additional further reading. Little has changed. One enduring feature, also noticeable among economic policymakers, is the use of abstract language that defies logic. “Negative growth” and “growsterity” are, therefore, considered serious terms despite their internal contradictions.
The financial crisis offered a golden opportunity for university economists to question the utility of supposedly scientific models that failed to predict an economic earthquake. For most professors, however, a fervent attachment to their discipline and the mathematical models within it mean that the financial crisis is still perceived as just another inconvenient anomaly. Clearly, the financial crisis cannot be easily contained and neither can its study be confined within the walls of economics departments. Negative contagion in the financial markets could turn into positive academic contagion. Issues cannot be quarantined today, if ever they could be.
Not sure about the positive academic contagion at all. But yes pretty sure we will continue to see negative financial contagion..