May 16, 2014 7:37 pm
Economics: Change of course
In the wake of the crisis, students are calling for a more relevant curriculum that reflects different approaches
When Yuan Yang began her economics course in autumn 2008, she was shocked that within the cloisters of Balliol College, little attention was paid to the world outside. As Lehman Brothers’ bankruptcy left markets reeling, her lectures at Oxford university offered little to help her understand how the failure of a single US investment bank could cause global pandemonium.
Only when she voiced her disquiet to her tutor did she encounter theories that offered explanations for what was happening. “The crisis exposed how disconnected the teaching of economics is from helping students understand real-world events,” says Ms Yang, now a 23-year-old student at the University of Beijing.
“When I discovered that, within economics, there was an alternative to what I was being taught, it was such a relief. I had felt like I was part of an intellectual enclave that had no consideration for what could be learnt from psychology, philosophy or anything else in the social sciences.”
Ms Yang is at the forefront of a growing movement of young economists calling for universities worldwide to reform the way they teach the dismal science. They believe exposure to a broader range of approaches is essential if their generation is to avoid the policy errors made in the run-up to the crisis, and to grapple with issues such as inequality and the economic consequences of climate change.
In 2012 Ms Yang helped found the Rethinking Economics network, aimed at changing what she describes as the subject’s isolation from public debate. The network has branches around the world, which are among the 42 student organisations that this month signed an open letter calling for the standard curriculum to be overthrown.
“Most economics models we’re taught consider just one thing: profit. There’s little consideration of sustainability or equity,” says Nicolò Fraccaroli, the founder of one of the groups – Rethinking Economics Italia – and a student at Luiss Guido Carli in Rome. “Universities need to teach you how to do a job. But first we need to be sure that people who are going to move massive amounts of capital are conscious of what they’re doing.”
The open letter is part of a broader rebellion against mainstream economics teaching. It has gathered pace since the financial crisis dented the view among some in academia that economics had solved most of the world’s big economic conundrums.
Lena Kaiser said her interest in economics was piqued by wanting to understand inequality, the theme of Thomas Piketty’s bestseller, Capital in the 21st century . Her studies at the University of Mannheim left her disappointed. “The questions I wanted to discuss weren’t discussed at all. There was no critical thought whatsoever.”
But over the past three decades, undergraduate courses have been increasingly dominated by the quantitative methods of the neoclassical school. Almost six years after the collapse of Lehman Brothers, the standard university course has barely changed. A study by Peps-Economie, a group of students who came together in 2009, found that just 1.7 per cent of modules in French universities covered economic history and there was just one course at a single university devoted to the epistemology of economics.
Eric Beinhocker, head of the Oxford Martin School’s wing of the Institute for New Economic Thinking, an organisation founded in 2009 by billionaire hedge fund manager George Soros, says: “The world has changed a lot. Economics has changed a lot, too. But the curriculum hasn’t.”
Reformers accept that policies with their roots in mainstream neoclassical economics helped contribute to the Great Moderation, the era of stability and prosperity in the decades running up to the crisis. Yet they view as myopic the focus on just one school of thought. Louison Cahen-Fourot, a member of Peps-Economie, says: “We’re not anti-neoclassical, or anti-maths. We just see it as one part of something much bigger.”
Those who studied before the crisis describe complacency among not only academics but also their fellow students. “When I started in 2004, I asked very critical questions in class. When I did, everybody said, ‘you’re wasting our time – we need answers for the exam’,” says Thomas Vass, the founder of Rethinking Economics’ New York branch. He is now a student at the city’s New School, which does offer more heterodox courses.
The turmoil since 2008 has provided a fresh catalyst for change. Camilla Cea, who was involved in student protests in Chile between 2011 and 2013, says: “The critics to today’s curriculum have long existed. [But] the financial crisis has acted as a trigger.”
Students are not alone in calling for reform. Support has come from policy makers including Andy Haldane, the Bank of England’s chief economist-designate, and Peter Mooslechner, an executive director at the Austrian National Bank. Wendy Carlin, a professor at University College London, who leads a project at the Institute of New Economic Thinking to reform undergraduate teaching by compiling course material from different schools of thought, says: “The [letter] is great – very open and constructive.”
Other academics have been more wary. The University of Manchester refused demands by students in its Post-Crash Economics Society to include an optional module for next year’s syllabus on alternative theories of financial crashes. Officials have said they will consider adding a module on alternative economic theories from 2015.
Critics of the students’ demands point to the work of economists they view as mainstream, whom they argue explain the crisis. They also contend that the methodologies used by other schools lack rigour.
Tony Yates, reader in economics at Bristol University, blogged in reply to the Manchester demands: “Students wanting to draw the analogy between the financial crash and organic processes had better stop chatting about Austrian economics and start crunching exotic non-linear ordinary differential equations [or rather, starting the slow and painful process of learning how to do it]. Even if heterodoxy is to be the new orthodoxy, students are going to need [to] suffer the trials of dynamic mathematics.”
Yet student frustration – fuelled and disseminated by social media – remains clear. Mr Cahen-Fourot, active in the Peps-Economie group since moving to Paris in 2011, says: “Without any co-ordination, students around the world had all had the same feelings about their economics education. We started to think it was a global problem.”
Last December he sent Facebook messages and emails, eventually arranging a Skype call in late January. Mr Fraccaroli says: “We speak around 10 different languages and a lot of us – like me – are not native English speakers. But we shared the same feelings. We had some arguments but we solved them and the way we have co-ordinated our campaign around the world is proof of it.”
Acting together has strengthened the groups’ individual efforts. “We’ve been asked for several presentations. We are [now] being taken seriously as part of the intellectual discourse,” Ms Kaiser says: “There was a post-manifesto event at the University of Heidelberg on curriculum reform attended by several members of the economics faculty. It was packed.”
Partly inspired by the letter, a branch of Rethinking Economics has been founded in Beijing.
Some worry that renewed global growth could muffle calls for reform. “The crisis has been very important. Economic recovery helps people to pretend there is nothing wrong,” says Joe Earle, a member of the Post-Crash Economics Society. “Student life is very transient and curriculum change only happens with a lag so we need to keep the pressure up.”
Others are more positive. “The letter was very thoughtfully done. Now it’s up to faculties to listen and be as constructive,” Mr Beinhocker said. “I’m quite optimistic you will start to see change.”
Student protests have come and gone, and the question remains whether the mooted curriculum reforms would have mass appeal. Mr Vass is confident. He says his old classmates no longer view him as a time-waster. “Those people [who told me to be quiet] come up to me and say: ‘Now I understand why you were so critical’. There’s a completely different attitude.”
Copyright The Financial Times Limited 2014
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