Welfare economics in Econ 101

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I’m wondering today, on an otherwise lovely Friday, how soon to introduce welfare economics into an introductory economics course.

I know. Bear with me.

I think one of the most fundamental jobs of introductory economics is to start to build the famous “invisible wall” between positive and normative economics. The textbook distinction is between questions about the way the world is—positive—and the way the world ought to be—normative.

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The second best: achievable policy

If you can’t get what you want, what’s the next best thing? This is pretty much the deepest question in economics, being that preferences are king in a world of scarcity.

It lives also in a more complicated way in a relatively obscure piece of economics called the theory of the second best (which stems from a paper all the way back in 1956 by Richard Lipsey and Kelvin Lancaster). I’ve been thinking about this today after going back and forth with Megan McArdle on Twitter about the funding of policy research, ending up here. The question at hand is whether “relevant” policy research is done in academia, with funding therefore from the higher education system.

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Law, force, revulsion, disgust… Trump

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One assumption,  often unstated, in the economics we teach at the introductory and intermediate levels is the absence of force. Another assumption that we typically take a while to unpack is the rule of law and property rights. And still a third assumption is the cultural context of what is fair game to be traded in a society. I want to talk a little bit about where they show up in the context of two key ideas in the undergraduate-level canon, general equilibrium theory and externality theory.

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Living in a story; economics and narratives

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As I continue my summer-long vision quest to build the platonic ideal of an Econ 101 syllabus (kidding… maybe?), I’m thinking about modeling, representation, and narrative.

The question at hand for the course is how to balance “received wisdom” versus “how we do things”. I’ve always found one of the hardest things to get across in teaching economics the idea of modeling.

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More on higher ed funding

Following up on my post from yesterday about higher education funding, I’d like to discuss this article from William G. Bowen and Michael S. McPherson from last week at Vox. I think it is quite representative of the wonky, centrist view—dare I say consensus—that casts the student pays model as a self-evidently “right” approach.

There are many illuminating points in the article. In particular I am quite receptive to their “proposals for reform”: briefly, work to improve graduation rates, reform PhD programs to reduce the oversupply of PhDs relative to academic jobs, professionalize teaching faculty to address the outrageous reliance on mistreated adjunct faculty, and consolidate some small colleges to avoid costly duplication of administrative spending. I think these are excellent starting points for a healthy debate.

But nevertheless I would like to strongly object to the characterization of the funding debate that runs through the first half of the article. I’ll pull a few excerpts that I believe get it wrong on the student pays versus society pays debate.

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Who should pay for higher education?

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Details might change, but the really big question in higher education funding is always the same: public funding versus private funding. I’m not breaking any new ground here and I’m certainly not advocating anything radical, but it’s on my mind today with “debt-free college” very much in the discussion on the first day of the Democratic National Convention. Every so often I like to refresh my memory on the fundamentals and reaffirm why, on balance, I favor the availability of ambitious, quality, zero-tuition higher education.

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What I talk about when I talk about economics

I’m preparing to teach Econ 101 this fall for the first time since 2008. Reviewing textbooks and figuring out what to teach, I find myself right back in that moment. My understanding of what economics is seems to me as far away as it ever did from how we teach it and what it’s perceived as. I feel as tarred and feathered by the field as I ever did.

At that time in 2008, the financial crisis was revving up and I was working out my concept of economics and what I could possibly make of it. I was writing a lot in an anonymous blog, to organize my thoughts, work out my differences of opinion with the field, procrastinate from more mundane work, and figure out what I thought an economist was. The problem was that I was allegedly in the process of becoming an economist, but I didn’t really see myself reflected in what that seemed to mean.

I guess I still don’t. Since I find myself revisiting similar thoughts now, I decided to unseal that part of my record and merge all of those old writings here. So it’s all now in the archives on this site, which you can get to through the widget on the right (the old site is still up at this link). I’m sure there are plenty of things that I wouldn’t write again in retrospect. But I want to be honest about how that process went for me, and how it still goes.

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Give the people what they want

Jonathan Rauch has an essay called “How American Politics Went Insane“in The Atlantic this month that I would recommend reading.

Party-dominated nominating processes, soft money, congressional seniority, closed-door negotiations, pork-barrel spending—put each practice under a microscope in isolation, and it seems an unsavory way of doing political business. But sweep them all away, and one finds that business is not getting done at all. The political reforms of the past 40 or so years have pushed toward disintermediation—by favoring amateurs and outsiders over professionals and insiders; by privileging populism and self-expression over mediation and mutual restraint; by stripping middlemen of tools they need to organize the political system. All of the reforms promote an individualistic, atomized model of politics in which there are candidates and there are voters, but there is nothing in between. Other, larger trends, to be sure, have also contributed to political disorganization, but the war on middlemen has amplified and accelerated them.

There is a populist snowball effect at play. Distrust of politics and politicians leads to a demand for processes that are more direct and less shady, which leads to the dismantling of systems of brokerage and compromise, which leads to next to nothing getting done, which leads to more distrust of politics and politicians, which leads to “screw ’em all” amateur candidates, which leads to nothing at all getting done, which leads to distrust of politics and politicians…

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