Can Undergraduates Be Taught To Think Like Economists?

The title of today’s blogpost has been copied, word for word, from a blogpost I had linked to earlier (the fifth link in this post).

It’s been about two and a half years since I read that post. I would still like to believe that Deirdre McCloskey was wrong, and that you can too teach undergraduates to think like economists. But well, perhaps the truth lies somewhere in the middle.

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A common goal for principles of economics courses is to teach students to “think like economists.” I’ve always been a little skeptical of that high-sounding goal. It seems like a lot to accomplish in a semester or two.

https://conversableeconomist.blogspot.com/2019/03/can-undergraduates-be-taught-to-think.html

Both Tim Taylor and Deirdre McCloskey (whose essay I excerpt from below) aren’t saying that you can’t teach economics to undergraduates. You most certainly can, and you don’t need to run a fancy-pants model to ascertain this. What they are saying, however, is that it is one thing to teach them the principles of economics. It is quite another to teach them to apply these principles in their lives, at all times.

Bower thinks that we can teach economics to undergraduates. I disagree. I have concluded reluctantly, after ruminating on it for a long me, that we can’t. We can teach about economics, which is a good thing. The undergraduate program in English literature teaches about literature, not how to do it. No one complains, or should. The undergraduate program in art history teaches about painting, not how to do it. I claim the case of economics is similar. Majoring in economics can teach about economics, but not how to do it…. (Emphasis added)

http://www.deirdremccloskey.com/docs/graham/natural.pdf

It is one thing to teach opportunity costs. And most students we’ve taught will tell you the definition. The “good” students will tell you three different definitions, from three different textbooks, and maybe cite a couple of academic papers that ruminate about what the definition means. Well, great. Do these students apply the concept of opportunity costs in their daily lives? Do they ask themselves if this (whatever this may be) is the best use of their time, and what are they giving up in order to do this?

Does winning matter more than learning? Does winning matter more than doing? If you end up defeating somebody else – a person, a team, a tribe, a party or a nation – what do you gain? And to go back to the previous paragraph, was it but a Pyrrhic victory?

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Consider this hypothetical:

Let’s say there’s two teams in some corporate environment somewhere. And for whatever reason, these teams don’t get along well together. Both sides believe that they’re in the right, and the other side is in the wrong, and we’ve reached Mark Twain territory.

Are they going to go to their manager(s) and ask them to resolve this issue? Sure, it may seem like a good idea initially. But said managers, I can assure you, have things to do. Deliverables to, well, deliver. Teams to manage. Projects to initiate. Other people to manage. And so the manager(s) might listen to both teams long list of complaints once, perhaps twice.

But eventually the price mechanism will come to the party. The more the two teams spend time on this, rather than on work, the more expensive the situation becomes for the enterprise. Because a commodity that is limited (time) is being spent on non-productive work (productive, in this case, can be thought of as remunerative).

Since the whole point of the firm’s existence is to maximize revenue, this will not be tolerated for too long. The manager(s) will eventually say one of the following:

1. Figure it out yourselves, but get the work done, for that’s what matters. Or else.
2. Let’s reallocate, forcibly, both teams on to other projects. This will usually be accompanied with a mental note to themselves that truly important projects in the future should not be given to these team members. For obvious reasons.
3. Or let’s shut down the project, because the point of a firm is to do the work that earns one the money. Start something new, with a new set of people.
4. Now, since the team members are old enough to know that eventually pts 1 to 3 will occur, they usually swallow their differences and get the work done. Sure, bitching about the other team will happen in bars and pubs in the evening, and sure the other team won’t be called home for dinner anytime soon. But in the workplace, professionalism will win out, due to the price mechanism. In more explicit terms, they will get the work done because they know that otherwise they will be fired.

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The reason all of this will happen is because these team members will have families, responsibilities, loans to pay off. The money they will lose out on by losing their jobs is far too important, and the threat of losing out on their income forces them to behave professionally.

The opportunity cost argument comes into play. Playing politics may be good for your ego, but it ain’t good for your wallet. But that lesson comes with age, it doesn’t come from attending principles of economics classes.

A nineteen-year old has intimations of immortality, comes directly from a socialized economy (called a family), and has no feel on his pulse for those tragedies of adult life that economists call scarcity and choice. You can teach a nineteen-year old all the math he can grasp, all the history he can read, all the Latin he can stand. But you cannot teach him a philosophical subject. For that he has to be, say twenty-five, or better, forty-five. …

http://www.deirdremccloskey.com/docs/graham/natural.pdf

Adults don’t necessarily grasp the argument that the opportunity cost of politics is work. But they understand the rules of the game called life. They do understand that the opportunity cost of politics is an increase in the probability of losing their wages. And so they still practice politics, but more covertly. Not, in other words, an ideal situation if the system is trying to optimize work, but hey, better than overt politics.

How to get students to understand that the opportunity cost of politics is learning? That the opportunity cost of politics is not getting fun projects done? That the opportunity cost of resolving arguments, or adjudicating who said what to whom and when is not being able to start other fun learning based projects? There’s no price mechanism at play, there’s illusions of immortality (they don’t get that time is limited), they don’t have the responsibility of putting food on the table (they come from a socialized economy called a family), and they haven’t experienced the tragedies of adult life.

To them, winning a political argument against the other side is the best use of their time.

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Principles of economics, if taught well, and if learnt well, should in theory help you understand that the opportunity cost of politics is work. Philosophy should in theory teach you that good work is better than bad politics.

I’ll say this much: I was convinced that Deirdre McCloskey was wrong when she said that you couldn’t have undergraduates do economics, even if we taught them economics.

Now?

I hope.