Introductory Econ Textbooks: A Different Take on the Issues

My eyes were drawn to Timothy Taylor’s gloss on Greg Mankiw’s ruminations on the life of an econ textbook author.  As such an animal myself (Microeconomics and Macroeconomics: A Fresh Start), I’ve thought about many of the same questions.  Differently.

Issue #1: How do you teach the introductory economics courses if you have a dissenting perspective?  Mankiw lays out three alternatives, teaching the mainstream and suppressing your own views, teaching minority or fringe views (i.e. your own), or not teaching introductory econ at all.  He says the second option is “pedagogical malpractice”, and Taylor agrees.  I opted for an approach neither of them consider, to present mainstream economics in the third person: this is what that particular group thinks.  Allow for a critical distancing, which is not the same as critique.  I didn’t write “this stuff is garbage”, but “here are the assumptions that conventional economists make that distinguish their approach from others.”  Whenever possible, I point out where other disciplines differ, and while I encourage students to judge for themselves, I don’t pressure them into adopting any one point of view.  This is called critical thinking, and it barely exists in the world of economics textbooks, which proselytize shamelessly.

Issue #2: What should be the role of supply and demand theory and, in particular, the welfare interpretation of it?  Mankiw feels welfare economics gets short shrift in the typical intro econ course and text, while Taylor demurs.  I am mostly on Mankiw’s side here, but from a critical perspective.  I agree entirely that welfarism underlies virtually all applied econ work outside macroeconomics, and it’s important for students to understand what it means.  We just saw a “Nobel” prize awarded to an economist, Bill Nordhaus, whose primary claim to fame is an application of the welfare framework to climate change.  Nearly every economist working on climate issues adopts the same approach.  It would not be an exaggeration, however, to say that the vast majority of climate scientists regard their work as nuts.  Clearly there is a pressing need to present the underpinnings of welfare economics to as wide an audience as possible, so they can understand these disputes.

In my micro text I devoted half of one chapter and all of another to these foundations, which I called the Market Welfare Model.  As I defined it, the model has three conditions, that the supply curve represents the marginal cost to society of the good in question, the demand curve the marginal benefit to society, and that there is a single, stable market-clearing equilibrium.  The half chapter spells out precisely what “social cost” and “social benefit” mean in economics (which is not what they mean in other frameworks), and the full chapter is devoted to working out the logic that goes from these framing concepts to the welfarist conclusion.  A further chapter on market failure takes up the first two conditions, and the final chapter on general equilibrium theory considers the third.  In one sense, this is Mankiw on steroids, but I think he would recoil at the critical distancing with which all this is presented.

Issue #3: Do current economics textbooks cover too many detailed topics?  The argument that one hears not only from Mankiw but also many other authors is that the incentives of the textbook biz bias toward over-inclusion.  Each reviewer has a favored topic and lobbies the publisher to have it included.  The argument is made that it is easier for an instructor to skip the stuff they don’t care about than conjure up what’s missing that they consider indispensable.  The result is a massive tome bristling with highly specialized material of limited interest at the expense of deep treatment of the key ideas.  Taylor mostly agrees.

I do too, but again with a somewhat different take.  First, I’ve come to think that a good introduction to a discipline would present a set of exemplars that would be relatively standard for new learners.  For instance, climate change should be given detailed treatment in every introductory text, micro and macro alike, where the concepts and tools being developed could be given a bit of a workout to see what they mean in real life.  This should not take the form of a just-so story where climate change just happens to validate everything we always thought, but a test of the strengths, weaknesses and limits of a given approach.  I can imagine a number of other potentially canonical examples: the pay-productivity relationship, health care, financial stability—topics of longstanding interest that are complex enough to illuminate multiple questions in economics.  I confess to not having understood that very well when I wrote my micro text, but I had it mostly figured out when I came to macro.

Second, what makes a “specialized” topic germane to introductory treatment in my book (literally) is its relationship to the core assumptions economists make.  Information asymmetry and the strategic perspective of game theory, for example, are often treated as specialized, but for me they are foundational.  I made a point of presenting a prisoner’s dilemma payoff matrix before a supply and demand diagram in the micro text, since to me the distinction between individual and collective rationality is prior to any other treatment of what economists regard as rational behavior.  (So is a discussion of the psychological assumptions economists make about the nature of rationality, as well as their reduction of all social behavior to choice and exchange.)  General equilibrium theory for me is not a special topic at all, a throwaway add-on, but a primary investigation of whether or to what extent the supply-and-demand metaphor works.  On the other hand, I’ve reluctantly come to think that much of what is covered in the treatment of risk actually is specialized.  It’s certainly important—absolutely indispensable in some contexts—but a student can get the gist of what economics is about without wading into the arcana of certainty equivalence.  Just about all of the so-called microfoundations of macro falls into this category as well.

Issue #4: Should textbooks be free?  Mankiw says no, and he bases his argument on the presumption of market efficiency: if existing textbook publishers, who are disciplined by competition, can’t put a book on the market for less that $200 a pop, where could the cost savings come from?  Wouldn’t “price controls”, like a zero price, require a corresponding reduction in quality?  Taylor, who has actually worked on a reduced-cost e-text project, thinks textbook quality is fairly standardized, but not so the ancillary materials like tutorial software, prefab presentations and text banks.  Here is where we would find the downside of cheap.

My perspective is rather distant from theirs.  First, I think economics is definitely not a settled field, nor is economic pedagogy a done deal.  There is plenty of experimentation that needs to be done, and this requires a multiplicity of texts instructors can choose from.  (Austrians should understand this point in their bones.)  The issue is not quality per se, but innovation and rivalry, or at least the opportunity to try out alternative approaches and assess the results.  This is why I am concerned about the movement to standardize textbooks in order to achieve zero cost.  The price is right, but the standardization is not.

Second, the arms race in ancillaries is a reflection of poor pedagogy in economics.  Of all the social sciences, economics gives the least disciplinary attention to teaching strategies.  I haven’t done the quantitative work (has anyone?), but based on my experience, there are fewer sessions at the ASSA meetings devoted to pedagogy than you would find in most other fields.  Economists have been notoriously slow to transition to active learning methods, much less a true critical thinking framework.  This is visible in most of the baroque supplementary material purveyed by textbook publishers, a deadly, mind-numbing hammering of procedures (diagram manipulation) to be inscribed in short-term memory.  Not that it’s all bad, of course.  I transitioned this term to a flipped classroom: I recorded my lectures and posted them online (with short self-graded quizzes to encourage and document attention) in order to maximize class time for workshops and other activities.  In general, however, active learning is less given to prefabricated, standardized aids; it is tailored to the students in front of you, the issues of the moment, and the flow logic of how well various ideas are gelling from week to week.  The best ancillary would be a guidebook for instructors explaining the techniques for crafting small research projects and engaging workshops, along with examples of what has worked in the past.

All that said, zero is still the best price.  I think it’s appropriate for foundations or other funding sources to support a multiplicity of free textbook options.  (I’m not looking at you, Bill Gates.)  INET has done this with its CORE project, but no one else.  I don’t think funding is the whole story, however.  Economics needs to regard pedagogy as one of its central missions.  This is not only a matter of having more panels about it at the national meetings; there needs to be more disciplinary reward for putting one’s time and energy into the development of strategies and materials for the classroom.  This means promotion, prizes and esteem, and it would require a substantial cultural shift.  Where to begin?  I suspect we have a vicious circle that could well become virtuous.  Today we have a bleak landscape of minimal innovation in pedagogy and little institutional recognition for those who do this work.  In a world well-populated with innovative experiments in teaching and learning, it would be natural to reward the most successful or even just provocative projects.  So again the next step seems to belong to the funders.