Noah Smith — What to teach intro economics students

Noah Smith is up with a post on what to teach in Econ 101. Initially trained as a physicist, his suggestion is to connect theory with reality.

In natural science courses, much of the focus is on empirics. It is critical to know when a theory is a good approximation of reality and when it is not, and looking at evidence is the only way to know this. So in high school physics, you roll a ball down a ramp and measure its position at different times to see how gravity works. In chemistry you dump some silver nitrate into some potassium chloride, and you watch the silver chloride precipitate out of the solution. In biology you look at cells under a microscope.

But in introductory macroeconomics this is not done. I never once gave students a data set and said "Here, regress Y on X". There was no reason I couldn't have. OLS is easy to do, and easy to explain (simple least squares is very intuitive and can be shown with a picture). Sure, intro students aren't going to be coding DSGE models in Matlab or converging MLE routines for structural models. But doing some simple empirics would give students a feel for how economists test their theories. It would give them a hands-on feel for data. And it would allow lecturers to explain why certain statistical techniques can lead to false certainty (i.e. the Lucas Critique).

As it stands, students in introductory economics courses walk away feeling that econ theories are "received wisdom" - that a theory is just something that a smart guy dreamed up, and then concluded was right because it sort of seemed plausible (which, sad, to say, describes some econ theories all too well). And - fortunately for American society - we have somewhat of an aversion to received wisdom. We call it by the name of "bullshit." And rightly so! As Feynman said, "Science is a belief in the ignorance of experts."

So I say, if you want to give introductory economics students a better picture for what the science is really good for, teach them the part that links theory to reality. 

Read the whole post at Noahpinion
What to teach intro economics students

by Noah Smith

My comment there:

If I were taking Econ 101, I would be looking for the prof to explain why mainstream economists 1) did not see the crisis coming, 2) cannot agree on what caused it, 3) don't know how to fix it, and 4) have not come up with a plan to prevent another crisis.

Some people did get it, but they are not mainstream and their ideas are neither being taught nor listened to. See James K. Galbraith, Who Are These Economists, Anyway?, which was written in response to Paul Krugman:

"Of course, there were exceptions to these trends: a few economists challenged the assumption of rational behavior, questioned the belief that financial markets can be trusted and pointed to the long history of financial crises that had devastating economic consequences. But they were swimming against the tide, unable to make much headway against a pervasive and, in retrospect, foolish complacency." —Paul Krugman, New York Times Magazine, September 6, 2009