The demand side

“I DON’T care who writes a nation’s laws, or crafts its advanced treatises, if I can write its economics textbooks.” So said Paul Samuelson, an American economist who more than achieved his aim by producing a bestseller. But debate swirls around the teaching of the dismal science—nowhere more so than in Britain.

When the financial crisis hit in 2007-08, many economics students found themselves ill-equipped to think about what had gone wrong in the economy or how to fix it. Although researchers in top universities had studied financial panics, their work had not filtered down to the lecture theatre. Undergraduate courses focused on drier stuff, imparting a core of basic material that had not changed much for decades.

As a result, aspiring economists struggled to analyse burning issues such as credit crunches, bank bail-outs and quantitative easing. Employers complained that recruits were technically able but could not relate theory to the real world. Graduates’ knowledge of economic history—crucial during the crisis, given its parallels with the Depression of the 1930s—was especially lacking.

Students became dissatisfied, too. Groups such as Rethinking Economics, a London-based network of student reformers, emerged to challenge the conventional wisdom of the classroom. At Manchester University, a student revolt led to plummeting satisfaction scores, driving the economics course down the league table.

Teachers have now responded. University College London has introduced a new curriculum, the result of a project led by Professor Wendy Carlin. The old textbooks had things the wrong way round, Ms Carlin says. They taught concepts like supply and demand in an abstract way and then illustrated them with simple examples, such as the market for apples and oranges. By contrast, the new material challenges students to consider real-world topics from the outset. The section on labour supply begins with the history of real wage growth. The new course also acknowledges the limitations of basic models: the trade-off between efficiency and fairness is mentioned early, for instance. Students consider only the first in most introductory courses elsewhere.

Though Ms Carlin and her colleagues are overhauling teaching methods, the content of the course remains fairly mainstream. That irks those who think the financial crisis has posed a more fundamental challenge to the subject. Rethinking Economics wants curricula to cover heterodox schools of thought. For example, mainstream economic models rely heavily on the concept of equilibrium—a state in which nobody has an incentive to change their behaviour. Critics say this is never reached in the real world, so is a flawed starting point. They want more philosophical discussion about how best to approach economics, and point to Leeds, Greenwich and Kingston universities as models of how to do this.

Two rather different questions have been posed. One asks whether courses do a good job of equipping students with the most important insights from mainstream academic research. The other asks whether young economists should learn more than just today’s favoured approach. It would be odd if curricula departed radically from the academic consensus. But perhaps mainstream theory must catch up with its students.