tag:blogger.com,1999:blog-17232051.post3664380521986262607..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: When teaching econ, start with the parts that workNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger54125tag:blogger.com,1999:blog-17232051.post-16865912276634457252013-12-15T03:12:41.069-05:002013-12-15T03:12:41.069-05:00‘bourgeois’ economics is able to grasp the phenome...‘bourgeois’ economics is able to grasp the phenomena of the everyday life of a capitalist economy in a manner that is far superior to anything the Marxists can produce' Oskar Lange 1935Geoff Robinsonhttp://geoffrobinson.infonoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-1049757883477860752013-12-11T23:33:51.185-05:002013-12-11T23:33:51.185-05:00Trig is necessary for most *practical* geometry pr...Trig is necessary for most *practical* geometry problems (which show up all over the place) as well as for anything to do with electricity or magnetism. In short, every engineer needs to know it.<br /><br />What you really need for calculus is *analytic geometry*, which sounds simple, but requires a minimum of a semester of *practice* in order to be good enough at it to do calculus properly. Unfortunately, analytic geometry has dropped out of the high school and college curricula entirely.<br /><br />It's not a full-semester course, it's maybe a month for the slowest people, if it's taught well (it usually isn't).<br /><br />Probability and Statistics is HARD and is a full-year course minimum no matter what. This is because it is *counterintuitive* to our human brains. That said, everyone needs to learn it. The very hardest parts are the non-mathematical parts -- question design, qualitative data analysis, etc. -- the sort of stuff in "How to Lie With Statistics".Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-55426012808932093212013-12-11T23:29:50.783-05:002013-12-11T23:29:50.783-05:00Micro SHOULD be politically controversial. The fa...Micro SHOULD be politically controversial. The fact that it isn't is part of the deep rot in economics.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-59669390655647997962013-12-11T23:28:00.719-05:002013-12-11T23:28:00.719-05:00I was going to say don't teach micro at all --...I was going to say don't teach micro at all -- most intro micro is a useless pile of bull, with assumptions which are never true.<br /><br />But see below. I think the answer is to teach mostly economic history with multiple case studies. And a tiny, tiny number of theories -- only the ones which *really* work.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-23444133613940888802013-12-11T23:25:31.379-05:002013-12-11T23:25:31.379-05:00Steve, if you're dealing with empirical applic...Steve, if you're dealing with empirical applications, you won't run into trouble. Just say "Look, here's the facts (big piles of statistical and historical data follow)". "Now, here's the models which work to explain these facts."<br /><br />The trouble is, if you're a *typical* econ professor, teaching a *typical* curriculum, the liberals in your class are usually right -- and you're usually an idiot who hasn't been paying attention to reality, who has instead been promoting models which don't work. The lack of attaching your theories to evidence is the problem.<br /><br />How did I learn about the relationship of the money supply to inflation and deflation? A discussion of the gold mines of 16th century Spain, and how they didn't make the country rich -- outside of class. Followed by a discussion of the effects of deflation with specific historical examples of debt deflation. None of the theory was worth jack shit, the historical examples are what mattered.<br /><br />Most of the econ curriculum should be thrown out in favor of an economic history curriculum, frankly. You've got maybe 5 working generalizations from that history, and a lot of non-working ones. What matters is teaching the students the history.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-50205914688617427772013-12-11T23:19:58.082-05:002013-12-11T23:19:58.082-05:00" Basic micro has a lot of explanatory power,..." Basic micro has a lot of explanatory power, but it doesn't nearly run into the law of diminishing returns as quickly. "<br /><br />Actually, it doesn't. See Christian Gormsen's comment below. Basic micro has close-to-zero explanatory power and fails almost immediately. Much worse than the situation in macro.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-75958436319042391012013-12-11T23:17:52.528-05:002013-12-11T23:17:52.528-05:00I agree with your basic principle -- teach the par...I agree with your basic principle -- teach the parts which work -- but I have to point out that most of microeconomics 101, as generally taught, falls in the "It does NOT work" category.<br /><br />Microeconomics 101 "theory of the firm" (models of firm behavior) are just wrong, and aren't even decent approximations.<br /><br />So your curriculum restructuring would be radical. Neither micro NOR macro would, as a whole, be taught during the first year. <br /><br />First course: Keynesian theory-of-money principles of money printing in busts and money shredding in booms would be taught, but that's pretty much all of macro which is proven to work. Absolute advantage is too obvious to be worth mentioning, and relative advantage theory is false, empirically, so no trade theory. Supply and demand would be taught, but without the usual "supply curves" because they don't really exist in most cases. Then spend some time on public finance theory and pollution -- negative externality theory. <br /><br />Then move straight on to econometrics. You can't learn finance econ properly without doing econometrics -- learning it by itself leads to voodoo behavior and bad investing, since the finance "rules" never actually hold consistently, only statistically. So econometrics would finish off the introductory course. And there would be NO supply curves (supply is fixed or caused by outside forces) and NO "Okun triangle" nonsense -- and NOTHING about tax policy, because economists other than Emmanuel Saez don't appear to know anything about tax policy. Maybe a short segment on what a mess price caps cause, but with real-world examples like Nixon or NYC rent controls, rather than theoretical gibberish.<br /><br />Finance econ requires explaining all kinds of erudite legal obscurities in order to explain to people what bonds actually *are* and stuff like that, so it's slow to teach. So finance would be the 201 course.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-58649988164410832192013-12-11T20:41:47.603-05:002013-12-11T20:41:47.603-05:00I agree that economics education should start with...I agree that economics education should start with the parts that work but I’d go further. Many of the problems with economics arise from a failure to adequately answer the question of the link (if any) between economics and science/scientific method.<br /><br />One aspect of science is that it starts with simple things that work and builds from there. For example, physics took several hundred years to move from apples falling from trees to speculating about the beginnings of the universe. Ideology, on the other hand, comes up with an answer to the beginning of universe and then asks what other questions it can answer before dinner. Science also tends to be very sceptical about forecasting the future while ideologues can forecast just about anything. Science revels in diversity (did you know that there are about 100 different species of lemur in Madagascar, all carefully identified and classified by scientists) while ideologues simplify everything. <br /><br />It’s not clear where economics fits into the science-ideology spectrum.<br /><br />Economists should also spend time thinking about other more philosophical aspects of economics before getting into the technicalities. <br /><br />For example, in a system as relatively simple as a single large business, different people will give different descriptions of the system and its problems. The CEO, finance manager, head office planning manager, factory operations manager, marketing manager, HR manager etc will all have different perspectives.<br /><br />In successful businesses, the various perspectives are blended into a whole which is greater than the sum of the individual perspectives. In failing businesses, people can often mistake their own perspective for ‘the truth’; other perspectives are then dismissed as ‘wrong’; anyone using a different perspective is dismissed as stupid or corrupt; and endless infighting ensues.<br /><br />You might think that this is obvious. However, from the outside, the economics profession resembles my description of a failing business. The concept of perspective is rarely mentioned except to point out that non-economists are all stupid as they think of the macro-economy from the perspective of a household. It rarely seems to occur to economists who think in terms of one specific model that there might be other models, with different perspectives, which might also be useful.<br /><br />The skills required to synthesise the useful bits from different perspectives are very different from the skills required to develop a single logically consistent perspective. <br />Jamienoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-70202959827636199592013-12-09T20:08:35.758-05:002013-12-09T20:08:35.758-05:00How are you going to teach "what works" ...How are you going to teach "what works" without teaching any facts? Or what facts are you going to discuss where students aren't politically invested?<br /><br />You can eliminating teaching anything about poverty, unemployment, taxes, spending, debt, the environment, and health care right off the bat.Stevehttps://www.blogger.com/profile/10230344931186858123noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-45933121062404195492013-12-09T06:50:04.598-05:002013-12-09T06:50:04.598-05:00There should be far more emphasis on assumptions. ...There should be far more emphasis on assumptions. As a math student, I'm trained to pay a ton of attention to the assumptions in the statement of a theorem. I've made enough mistaken "proofs" by ignoring what seemed like trivial assumptions in the statement of theorems.<br /><br />The sense that I get is that economists, especially when debating public policy love to go back to their usual models, but completely ignore the assumptions the model requires.<br /><br />Like for math students, it should be drilled into economics students that paying attention to the assumptions is CRITICAL.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-52999645881365322372013-12-09T05:54:03.030-05:002013-12-09T05:54:03.030-05:00Good post, Noah. But how about: "Teach the mi...Good post, Noah. But how about: "Teach the microeconomics that work"? A typical intro micro class is a simplified version of an Arrow-Debreu model. Everything on your list above is a departure from that perfect-competition-constant-returns-to-scale-no-uncertainty world. I think the true scandal in econ 101 is all the effort wasted on general equilibrium ideas, which also happen to give the wrong intuition for how the macroeconomy works.<br />Paul Seabright has a nice complaint about where research micro is in introductory micro: <br />http://www.project-syndicate.org/commentary/paul-seabright-criticizes-the-poverty-of-the-undergraduate-microeconomics-curriculumAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48219218489990341532013-12-07T17:09:13.515-05:002013-12-07T17:09:13.515-05:00Phil, inflation is a change in prices, or, inverse...Phil, inflation is a change in prices, or, inversely, in the value of money. The supply of money is precisely one half of the the equilibrating force. What of the demand for money? Are all price changes always the result of of movements of only supply or only demand?Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-39902207964386307842013-12-07T07:34:44.851-05:002013-12-07T07:34:44.851-05:00Download The Hobbit 2 Movie
Download The Hunger G...<a href="http://www.hobbit2.org/" rel="nofollow">Download The Hobbit 2 Movie</a><br /><br /><a href="http://downloadthehungergames2.wordpress.com/" rel="nofollow">Download The Hunger Games Catching Fire Movie</a>Download The Hobbit 2http://www.hobbit2.org/noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67528169077412526572013-12-07T00:17:06.472-05:002013-12-07T00:17:06.472-05:00A couple of points....
First off, I don't kno...A couple of points....<br /><br />First off, I don't know why you are calling macro 101 business cycle theory. There is much more to macro 101 than business cycle theory. In fact, I am not sure why anyone would simply devote a whole semester to business cycle theory for basic macro. That would be a disservice to students. <br /><br />Second, the order it largely irrelevant. I remember reading some studies a few years back showing that it was largely irrelevant in what undergraduates took first. If anything, taking macro before micro was slightly more beneficial. I would try to look them up, but I am too apathetic since I see this debate is much ado about nothing. <br /><br />Third, and most importantly, basic macro has a lot of explanatory power and you start to run into the law of diminishing returns fairly quickly or even to the point of being taught nonsense. This is unlike basic micro. Basic micro has a lot of explanatory power, but it doesn't nearly run into the law of diminishing returns as quickly. <br /><br />We don't need an unifying explanation of recessions, and trying to achieve one is a practice in absurdity. Different recessions have different explanations. Sometimes recessions can be forecasted in advance. Baker predicted both the dot com and housing bubble. Many recessions are follow after an inverted yield curve. <br /><br />There are explanations for inflation - cost pull, demand push, and more money chasing the same amount of goods and services. <br /><br />Government has a role in preventing and correction recessions. However, we live in a time where many economists have abandoned basic macro, along with a time where basic Keynesianism is viewed hostility, ignorance, and outright insanity. Unfortunately, we now live in a world where many economists have abandoned basic macro and resorting to making things up - like fiscal consolidation during a time of severe AD deficiency leads to economic growth, that high debt causes lower growth, instead of lower growth causing more debt, and "printing" more money causes deflation. <br /><br />Simply reversing the unprecedented contraction in public employment, investing into infrastructure, and offering middle class tax relief would push us back to full employment. However, many people (and some economists) are still struggling with this. Instead, they see investment into public infrastructure and restoring public employment an assault on their freedoms and an attack on future generations. <br /><br />It simply complete abandonment of basic macroeconomics to see some of the policies being pushed forward by some economists and VSPs. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-90233601817632825972013-12-06T02:33:04.761-05:002013-12-06T02:33:04.761-05:00A couple of years ago Brad DeLong included things ...A couple of years ago Brad DeLong included things for his students on his blog, which is one reason I became devoted to it. In addition to "draft mid-term exam" questions he had two articles, something like "The Most Important Thing For Students To Remember." The first gave a bunch of reasons why free markets are the best thing since bubblegum. The second was a list of a lot of ways free markets can fail. When I took econ they never mentioned the many assumptions involved in the supply and demand diagrams. They never mentioned that you must have many producers, none of whom can influence the price. They never mentioned that you must have absolutely free entry into the market. They never mentioned that consumers must have instant, complete information. Fifty years later, most advocates of "free" markets still don't want to mention those things. We used Samuelson's textbook, and the way he presented macro I think would have been understandable before micro. That was before the math became so important.Procopiushttps://www.blogger.com/profile/17554355440319405363noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-28217297246458679402013-12-06T02:14:58.127-05:002013-12-06T02:14:58.127-05:00Mostly a great post Noah. I often had the feeling ...Mostly a great post Noah. I often had the feeling when trying to navigate the current macro debates, that so much depends on hard to observe parameters, regimes etc... that cannot be identified well based on the available data and evidence (and micro data need not resolve the debate: the same evidence on say wage rigidity can be interpreted very differently depending on how applicable you think the wage rigidity is to the marginal workers, and how much flexibility firms have in shifting future work conditions etc...). I suspect you have the same problem with string theory (or other attempts to unify physics) , except high level theoretical physics doesn't have the same real world implications as macroeconomic policy and analysis for now. I guess some people are more optimistic than others in thinking that once you've understood your microeconomics (+some game theory, and basic models of assymetric information,principal agent probleme -i.e modern micro), you can use that to build up coherent explanations of business cycles and financial crises, possibly without constantly appealing to large deviations from non market clearing prices. But, as you said this contention that you can easily develop macro from micro is still controversial: not yet fully digested for convenient use by MBA's and journalists. And at the end, you may still have to allow for large exogenous shocks reflecting hard to quantify animal spirits, sentiments, technological factors. At which point you need to know your econometrics, ideally including how to deal with unobservable variables (state space models and filtering- which is unfortunately not part of undergrad or even many masters econometrics courses). By the way, if you dig deeply enough into the macro growth/development litterature, a lot of the mechanisms explaining big long term income differences between countries can be relevant to explaining permanent effects of things like financial crises, which is kind difficult if you're just thinking in terms of AS/AD or other pure business cycle models. So there is a connection at that level.danielshttps://www.blogger.com/profile/01799942447501959179noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-85983666484420423352013-12-05T19:04:05.833-05:002013-12-05T19:04:05.833-05:00Econ as presently constructed DOES teach a particu...Econ as presently constructed DOES teach a particular political viewpoint. So maybe it should be open about this? Maybe teach it 'Political Economy?"Peter Thttps://www.blogger.com/profile/13289172253358199028noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-15022297777339020532013-12-05T18:59:07.756-05:002013-12-05T18:59:07.756-05:00You have the political problem that many right-win...You have the political problem that many right-wing types don't think many of these fields should (or even do) exist....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-36046067737861035592013-12-05T17:59:23.582-05:002013-12-05T17:59:23.582-05:00Not that I'm really qualified to have an opini...Not that I'm really qualified to have an opinion, but I'm with you. If you haven't spent at least a little time pondering supply and demand and what they mean and how they work, I don't know how you're going to understand things like loanable funds and the effects of changes in interests that come up in intro macro (or should).<br /><br />Also, I would think a good intro micro course would spend nearly as much time talking about what's unrealistic about the assumptions of perfect competition as memorizing "abstract theory."<br /><br />Frankly, I'm not sure I buy that micro is abstract theory while macro is not.Adamhttps://www.blogger.com/profile/00848821084269314215noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71390318719213096482013-12-05T16:12:58.071-05:002013-12-05T16:12:58.071-05:00start with game theory as Dixit recommends, then d...start with game theory as Dixit recommends, then do micro and then macro. Recessions are easy - its just a stag hunt game.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-23027772245806668642013-12-05T14:18:52.479-05:002013-12-05T14:18:52.479-05:00I don't think econ's job is to teach a par...I don't think econ's job is to teach a particular political viewpoint.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35197477933420245382013-12-05T14:17:20.354-05:002013-12-05T14:17:20.354-05:00No, I got that, I just disagree.No, I got that, I just disagree.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57346482789627576732013-12-05T14:06:44.558-05:002013-12-05T14:06:44.558-05:00It's hard to do applications and teach models ...It's hard to do applications and teach models that work at the same time because people come in with beliefs (based on their politics) about how the economy works. So when you do an application with a definitive conclusion someone has to face reality and that gets ugly. It can be a big distraction for those students (usually liberals so usually most of the class) and if they want to argue about the setup for the application it is a distraction for everyone.<br /><br />"What do you mean CO2 causes negative externalities.... this carbon tax is BS?"<br />(studying labor supply/high implicit marginal tax rates) "So you're blaming the poor for being lazy?!?"<br /><br />You can concede there are alternative models, blah blah blah, but then you're either going to be back to studying what we don't know or lying to the kids.Stevehttps://www.blogger.com/profile/10230344931186858123noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-24402780429373131652013-12-05T14:00:44.667-05:002013-12-05T14:00:44.667-05:00This is for Carola Binder: Can you share with us w...This is for Carola Binder: Can you share with us what was taught as the basics of data analysis... courses, textbooks or even lecture notes if any.... or maybe even a blog post would be greatAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-88814092949820900522013-12-05T13:37:39.516-05:002013-12-05T13:37:39.516-05:00+1. Especially on the micro stuff.
I do think mac...+1. Especially on the micro stuff.<br /><br />I do think macro is also taught because it is political/controversial, important and fun for the professors.Anonymoushttps://www.blogger.com/profile/02635749385748660522noreply@blogger.com