That got me thinking: What are the kids doing in the second semester of a year of intro economics? At a lot of schools, they're taking intro macro, often called Econ 102. I used to teach that class at Michigan, actually. And to be honest, I'm starting to think that this class is not really necessary. I think econ departments should think seriously about turning 102 from a macro class into a data/econometrics class.
Why should undergrads learn macro in their first year of econ? If they go on to be econ majors they can easily start out with intermediate macro and not miss anything important. If they just take the first-year econ sequence and then go into the business world, what do they really need to know?
In terms of growth theory, they might as well know the Solow model, so they can understand that capital accumulation by itself won't be a sustainable source of economic growth. Really, the Solow model is just a convenient way of teaching growth accounting, introducing ideas like capital, labor, human capital, and total factor productivity. And it's the one time in intro econ where you use a differential equation, so that could be useful for general math skill. Other than that, there's not really much growth theory an intro student needs.
How about business cycle theory? When kids go into the business world, it will probably help to know the standard Milton Friedman, New Keynesian, AD-AS, accelerationist Phillips Curve theory of monetary policy. That doesn't mean the standard theory is right (maybe Neo-Fisherian theory is better!), but since most people in the business world and at central banks sort of think it's right, kids will benefit from knowing it. It's easy and quick to teach to 101 students, since AD-AS fits right into the supply-and-demand graph stuff they're doing anyway. And if you want to mention RBC, you can just take the AD-AS graph and draw a vertical AS curve.
That's all I can really think of, and it's only about two weeks of material.
We have a lot of macro theories, but none that really work well unless you pick your data set very carefully and squint very hard. We have some methods for gathering evidence, but none that are very satisfying, and none that are simple enough for most intro level kids to understand.
And to make it worse, most of the macro theories that economists take halfway seriously are too hard for intro kids, so they end up learning silly stuff like Mundell-Fleming and Keynesian Cross that no one even halfway believes. Do we want kids going out in the business world and making deals as if interest rates will eventually equalize across all countries? God, I hope not.
So devoting 50% of the first-year econ sequence to macro just seems like a giant waste to me. We tend to think of macro and micro as symmetric things, but really "micro" is a lot bigger and more general than "macro". It affects a lot more policy questions, it has a lot more abundant and reliable evidence, it has a lot more interesting theoretical methodologies (game theory!), and it is more directly relevant to what students will eventually encounter in the business world.
So here's my new proposal for the first-year intro econ sequence. Replace useless macro with useful micro empirics. Either:
A) make 101 about theory and 102 about micro evidence, and stick Solow and AD-AS into 101, or
B) make 101 and 102 both predominantly micro (with Solow and AD-AS thrown in), and intersperse theory and evidence while stretching the sequence over 2 semesters.
And just kill the all-macro 102 course. It's not really doing anyone any good. It's kind of a barbarous relic.
1. On Twitter, Matt Yglesias says that econ probably has too much prestige tied up in macro to ditch the intro macro class. Maybe that's true. But I wonder if intro macro might now be generating negative prestige for the profession. Since the crisis there have been millions of words written in the media about how macro is bunk, macroeconomists don't know anything, etc. Killing intro macro might actually be saving the field some embarrassment, because a lot of those 102 theories really are obvious bunk, and most of the rest have taken a beating since 2008.
2. Some people (in the comments and on Twitter) have suggested that simply teaching kids the meaning of GDP, inflation, etc., and how these things are measured, could fill a whole semester. My response is: Maybe, but why go looking for ways to fill a whole semester? It sounds to me like status quo bias - because we've always taught an intro semester called "macro", we had better go find some "macro"-y stuff to teach. Sure, learning about growth accounting and NIPA calculations and whatever is cool. But there's a whole bunch more super duper useful stuff they could be learning instead: data analysis! Data analysis is becoming more and more important in econ, and more and more important in the business world. We're doing students a disservice by not teaching it in intro classes, and if we're going to correct that, something will have to make way. And I think the best "something" is macro.