The way we teach economics

Economics: A debate

I enjoying sharing the small amount of economic jokes I know with my students.  Here's one I used last semester, "They say if you lined up all the economists in the world head to toe they still wouldn't reach a conclusion".  Of course, I'm the only one who thinks it is funny, but that won't stop me.

My mentor introduced economics to me as a debate, as a conversation.  I thought I understood what that meant, economists have debates and talk to each other and then economics comes out of it.  However, the more I delve into economics, the more I see why it is indeed a debate.

Here are two examples of recent debates in economics (in the blogosphere at least):

If the interest rate is positively or inversely related to inflation

Macroeconomic Methodology

A student beginning to study economics might be surprised to see economists  debating topics that have so much sway over the economy.  A positive statement is supposed to be "what is". It is not supposed to be good or bad or even right, just testable.  There are so many positive economic claims. Claims from models and claims from empirical work.

One of the charges of economics as a field is to debate which of these claims are important and most supported. The debate is highly relevant, even when talking about things like the sign on the interest rate, because in the end, the economy is made up of people, and people will bear the burden of the mistakes of the field. 


Economics: A Web

Even the definition of economics is contested; the study of how people make choices, the social provisioning of goods, the study of allocation of scarce resources, etc. 

Heterodox economists will often refer to "the mainstream" when discussing certain methodologies, assumptions, and concepts.  But what do we really mean by "mainstream"? After hours of blog navigating (Geez, I took my professors for granted), I came across another debate about this issue between Lars P. Syll, Simon Wren-Lewis, and others.

The conclusion is that mainstream economists believe that the market system can work and can be efficient. Believing in the natural rate hypothesis is just one way for this idea to manifest.
New Classicals and New Keynesians are both in the mainstream, although New Keynesians have more and more realistic assumptions in their DSGE models.  As far as I can tell, methodology is also comparable.

(I believe there's a link between the microfoundations debate and the divide between mainstream and heterodoxy.  Microfoundations developed in the marginal revolution in a sense were the roots of neoclassical economics.  NC and NK economists defending microfounded macro models would seem to be defending neoclassical roots in macro models.)

But yet, to be mainstream, as Simon Wren-Lewis challenges, one does not have to fall in line with conservative ideals that are usually associated with neoliberalism.