Friday, June 6, 2008

Whither Economics?

In an interesting post on Critical Mass, Erin O'Connor confesses her ignorance about "how money works." She writes: "But I'm like most of us. . . . Everybody thinks he is an authority on how money ought to be managed and spent. But few of us really understand what money is, how it works, or what kinds of consequences can come from certain kinds of financial decisions."

It's no wonder, she says, so few of us have a clue about financial matters. Nobody studies economics. A study of leading universities' degree requirements (ACTA, The Hollow Core, 2004) showed universities don't require a course in basic economics as part of the core curriculum.

O'Connor attributes our nation's staggering financial ignorance to "academe's broadly socialist monoculture." Universities embrace "collectivism and cooperation, redistribution of wealth, government-run social programs, single-payer health care," but are hostile to capitalism and the infrastructure that makes markets work. "You don't have to look hard at all to find colleges and universities that press students, in course after course, to make moral determinations about how economies ought to be run--but you would be hard pressed to find a school that requires students to ground those determinations in actual economic knowledge."

The Treasury Department's Financial Literacy and Education Commission should take note. Instead of requiring disclosure of more information to consumers who cannot interpret it, Treasury should focus on introducing all Americans, inter alia, to the guns 'n butter tradeoff, the speed and time value of money, and the effect of marginal change in supply or demand on the price of widgets. I'm not expecting that any time soon.


Displaced Person said...

The statements quoted are silly and unsupported by evidence. Virtually every college and university in this country has an economics department and all are majority neo-classical economists. The policy errors claimed by the quoted writer have no basis in fact. Most humanities majors have no knowledge of economics or interest. If the writer were reasonable or properly educated - which she does not seem to be - she might acknowledge that there are perspectives on the social issues that are beyond the bounds of neo-classical econmics and not necessarily illegitimate because they do not agree with the neo-classical answer.

Jeffrey Harrison said...

It seems to me that those who profess to be the least interested in economics and claim to adopt different perspectives adhere in their own behavior to the assumption of rational self interest more often than those who actually do know something about economics. Maybe you have to understand what it really means to think like an economics in order not to.