Economics education — teaching cohorts after cohorts of students useless theories

15 February, 2018 at 20:17 | Posted in Economics | 4 Comments

Nowadays there is almost no place whatsoever in economics education for courses in the history of economic thought and economic methodology.

This is deeply worrying.

A science that doesn’t self-reflect and asks important methodological and science-theoretical questions about the own activity, is a science in dire straits.

How did we end up in this sad state?

Philip Mirowski gives the following answer:

phil After a brief flirtation in the 1960s and 1970s, the grandees of the economics profession took it upon themselves to express openly their disdain and revulsion for the types of self-reflection practiced by ‘methodologists’ and historians of economics, and to go out of their way to prevent those so inclined from occupying any tenured foothold in reputable economics departments. It was perhaps no coincidence that history and philosophy were the areas where one found the greatest concentrations of skeptics concerning the shape and substance of the post-war American economic orthodoxy. High-ranking economics journals, such as the American Economic Review, the Quarterly Journal of Economics and the Journal of Political Economy, declared that they would cease publication of any articles whatsoever in the area, after a prior history of acceptance.

Once this policy was put in place, and then algorithmic journal rankings were used to deny hiring and promotion at the commanding heights of economics to those with methodological leanings. Consequently, the grey-beards summarily expelled both philosophy and history from the graduate economics curriculum; and then, they chased it out of the undergraduate curriculum as well. This latter exile was the bitterest, if only because many undergraduates often want to ask why the profession believes what it does, and hear others debate the answers, since their own allegiances are still in the process of being formed. The rationale tendered to repress this demand was that the students needed still more mathematics preparation, more statistics and more tutelage in ‘theory’, which meant in practice a boot camp regimen consisting of endless working of problem sets, problem sets and more problem sets, until the poor tyros were so dizzy they did not have the spunk left to interrogate the masses of journal articles they had struggled to absorb.

Methodology is about how we do economics, how we evaluate theories, models and arguments. To know and think about methodology is important for every economist. Without methodological awareness it’s really impossible to understand what you are doing and why you’re doing it. Dismissing methodology is dismissing a necessary and vital part of science.

Already back in 1991, a commission chaired by Anne Krueger and including people like Kenneth Arrow, Edward Leamer, and Joseph Stiglitz, reported from own experience “that it is an underemphasis on the ‘linkages’ between tools, both theory and econometrics, and ‘real world problems’ that is the weakness of graduate education in economics,” and that both students and faculty sensed “the absence of facts, institutional information, data, real-world issues, applications, and policy problems.” And in conclusion, they wrote that “graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues.”

Not much is different today. Economics — and economics education — is still in dire need of a remake.

Twenty-five years ago, Phil Mirowski was invited to give a speech on themes from his book More Heat than Light at my economics department in Lund, Sweden. All the mainstream neoclassical professors were there. Their theories were totally mangled and no one — absolutely no one — had anything to say even remotely reminiscent of a defence. Being at a nonplus, one of them, in total desperation, finally asked: “But what shall we do then?”

rethinkYes indeed — what shall they do when their emperor has turned out to be naked?

More and more young economics students want to see a real change in economics and the way it’s taught. They want something other than the same old mainstream neoclassical catechism. They don’t want to be force-fed with useless mainstream neoclassical theories and models.



  1. “Indeed, The Market may not even exist as a tangible entity, it may simply be a figment of the economists’ imaginations; a metaphysical/theological positing of equilibrium and harmony – a religious-like belief that somewhere out there is a Godlike Hidden Hand that ensures benevolence; in short: a primitive belief that real science did away with years ago.” (Naked Capitalism, 12/19/2011, Yves Smith)

    This is the first time I have seen an explicit statement of a though-intuition I have been entertaining since I began my deep dive into economics. Since I follow Lars on RWER I have seen posters speak as though the “market” is some single natural entity of nature. This has always not set well with my own experience after disarticulating a specific market (See: My view for now is that there are many different kinds of markets created by many different kinds of actors. A farmers market is not the same as, say, the supply chain created by lead big-tech companies and their “third party vendors” who provide a “contingent” workforce, and the multilayers supply chain of the “third party vendors” who then use RPOs, etc.

    Each market must be dealt with (disarticulated) on its own merit. If some share certainly similarities these will emerge with time. But this reified use of the term market in my view hides more than it reveals and is often used to hide manipulative and deceptive supply chains and corporate shenanigans.

  2. “But what shall we do then?”

    First do no harm.

    I also agree with the other poster, Rob Reno, that there are different markets. I claim financial markets are not subject to assumed constraints imposed by economists imagining physical widgets. Finance has figured out how to relax budget constraints by creating new credit that circulates as money today as if the promise to pay will be kept; when the promise comes due, finance has many ways to roll over or forgive loans, or pay from insurance. Insurance can pay based on future promises circulating as money today. When those future promises come due, the same finance mechanisms deal with default by rolling over loans, forgiving them, or insuring against loss … thus the endless cycle of putting off final settlement for another day continues.

  3. Sargent’s advice to undergraduates:

    “Math is the language of economics. If you are an NYU undergraduate, studying math will open doors to you in terms of interesting economics courses at NYU and job opportunities afterwards. Start with the basics: take three calculus courses (up to and including multivariable calculus), linear algebra, and a good course in probability and statistics. These basic courses will empower you. After you have these under your belt, you have many interesting options all of which will further empower you to learn and practice economics. I especially recommend courses in (1) Markov chains and stochastic processes, and (2) differential equations.

    Superb economists at NYU (e.g., Robert Engle, Xavier Gabaix, Stanley Zin, Jess Benhabib, Douglas Gale, Boyan Jovanovic, David Pearce, Debraj Ray, Ennio Stacchetti, Charles Wilson, and others) have made notable contributions to economics partly because they are very creative but also because they studied more math than others.

    My personal opinion is that if you are an undergraduate at Stern or the NYU CAS economics department and you are seriously interested in learning as much rigorous economics as you can at NYU, you will be much better off taking one or two additional math and statistics courses rather than spending time and credits writing an undergraduate honors thesis. This will also look better on your transcript if you plan to apply to graduate school…”

    No doubt the prescription for more superb thinking – widely and deeply informed -about our economic problems in the making.

  4. But, alas, the old guard still defend its immutability:

    “Pontus Rendahl, new director of teaching in the faculty, is exemplary of the economics mainstream, a term he is loath to use. “When you say mainstream it just means scrutinised,” he tells me. The Economics academy was once home to a diverse network of schools of thought, with Keynes towering over Cambridge and the libertarian Hayek at LSE. But Rendahl dismisses this as fundamentally dated, arguing that economics is now a positive science like any other,…”

Sorry, the comment form is closed at this time.

Create a free website or blog at
Entries and comments feeds.