Making introductory economics “relevant” : a historical perspective

Today’s econ-twitter humming is all about introductory economics. Again. What is discussed, though, is not the set of new “post-crisis econ 101textbooks, but a suggestion to replace introductory macro with a data-econometrics course. Ironically, the previous rendition of “how to make intro economics more relevant” was all about teaching introductory macro before introductory micro, not about taking it down (see Mike Konczal and Paul Krugman’s posts).

Capture d’écran 2015-12-01 à 00.05.51More specifically, Konczal advocated a return to the way Samuelson introduced generations of students to economics in the first 13 editions of his textbook, Economics. Samuelson wrote his textbook for non-economic students – it is only in 1965 that an undergrad econ major was opened at MIT, but most engineering and science students were required to take introductory economics since the 1940s. It was released in 1948, and immediately became the blueprint for MIT’s “Principle of Economics” sequence. The textbook opened with a macro course covering notions of scarcity, national income accounting, income determination, unemployment, economic growth, inflation and international economic problems, then turned to micro and surveyed consumer theory, the theory of firms, equilibria, capital theory and micro policies. The order was reversed in the 14th edition, published in 1992. Konczal argues that this change was a consequence of the end of the Soviet union and of Western markets deregulation, which resulted in a “rediscovery of the market,” but it is not clear how much Samuelson’s Preface owed to his coauthor, Nordhaus, or to McGraw Hill editors. What is more interesting is that the micro/macro reversal occurred much earlier at MIT.

The macro-oriented structure of Samuelson’s Economics quickly came under such virulent attacks that in 1952, Ralph Freeman, then head of the department of economics at MIT, provided some justification for the associated introductory sequence:

“We have tried to keep up with the increasing mass of quantitative data becoming available and to keep abreast of improvements in analytical techniques and of shifts in emphasis resulting from changing economic conditions.

An interesting example of such a shift is to be found in the treatment of unemployment…. A great deal of what (economists) wrote and taught was based on the assumption of full employment… In recent years the economist’s enquiry has focused on economic fluctuations. Unemployment of resources has thus become a major problem for investigation along with a study of changes in the level of prices. Because ups and downs in employment and periods of inflation and deflation are associated with changes in income available to purchase goods and services, the spotlight has been turned on income analysis. The study of national income has been stimulated by the publication of improved statistics emanating chiefly from the federal government and by the development of new and better techniques of analysis.

I do not mean to imply that the traditional subjects have been abandoned. The economist is still trying to explain what the economic system is and how it operates … What has happened is a reorientation of these traditional inquiries around the problems of income, employment and price levels. This new approach seems to have brought the study of economics nearer to the daily lives and people and closer to the problems with which business men are most vitally concerned.”

In other words, a depression had shifted the focus to economic fluctuations, unemployment and income analysis, which stimulated the production of new statistics and the development of new theoretical insights. Teaching macro first thus brought introductory economics in line with real-world issues. Sounds familiar?

By the early 1970s, the situation at MIT had radically changed. As I have described in an old post, the stagflation, the energy crisis, the urban crisis and the associated social upheaval challenged the economic curriculum. Numerous MIT students joined the newly-founded URPE, and some MIT instructors criticized Samuelson’s textbook for neglecting Marxist economics. They asked that material by Heilbroner, Galbraith, Baran and Sweezy be added to Econ 101’s reading list. Students’ letters and petitions were circulated. At MIT as elsewhere, students were asking for more “relevance.” Among faculty, it was felt that a newly emerging applied microeconomics had the right tools to understand agents’ individual decisions and to design corrective tax schemes and incentives of all kinds. Peter Temin, then in charge of dealing with students’ demand, thus decided to switch introductory micro and macro:

The new course will be oriented toward economic problems of current interest – such as the ‘energy crisis,’ pollution, and inflation – and problems will be integrated into the teaching of the course…microeconomics (the study of particular industries and markets) will precede macroeconomics (the study of the economy as a whole). This will serve to introduce the student to economics through the consideration of problems whose nature is most readily apparent to the non-economist and which are of professional interest to many engineers. In addition, a knowledge of microeconomics provides a necessary foundation for the study of macroeconomics …

Capture d’écran 2015-12-01 à 00.11.54Capture d’écran 2015-12-01 à 00.13.50







MIT Introductory Economics around 1965 and 1975

Additional changes included the generalization of problems sets –“these problems will provide practice in the use of economics to analyze particular questions,” Temin wrote – and supplementing Samuelson’s textbook with articles from Challenge, The Public Interest, Public Policy, or articles by Kenneth Galbraith to “improve the students’ understanding of econ concepts by showing him applications and provide factual background.”

In 2015, as in 1952, 1973, 1994 or 2013, proposals to change the introductory economics sequence are aimed at making it more “relevant.” But the very notion of relevance is constantly evolving, Jean-Baptiste Fleury explains. In the 1970s, “relevant economics” was expected to explain and solve burning social issues. Economists thought this could be done through the “sophisticated look at current economic concepts and problems”provided by applied micro. Problem-oriented textbooks flourished. In the 1980s and 1990s, students rather understood relevance as the ability to explain everyday situations, a demand met by the rise of Freakonomics-type of textbooks. At the same time, economists increasingly defined “relevant” as “empirically confirmed,” as is visible in the proposal to teach data analysis in introductory economics. In the end, introductory economics sequences reflect social demands as much as scientific developments, and are shaped by 1) what “relevant” means 2) what the crucial facts to be explained are (between 2013 and 2015, there might have been a switch from money-macro-finance to inequality-micro topics) and 3) ways of “looking at facts” (measurement, theoretical explanation of “stylized facts,” data analysis, etc.)

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