More investment banking schadenfreude

I have to mention a New York Times op-ed in which Roger Cohen can barely contain his glee at the fate of the “masters of the universe” who may now be seeking alternate employement. I sympathize:

When I taught a journalism course at Princeton a couple of years ago, I was captivated by the bright, curious minds in my class. But when I asked students what they wanted to do, the overwhelming answer was: “Oh, I guess I’ll end up in i-banking.”

Try teaching economics, sir! We’re the ones who really get to see squandered potential: in economics classes, it’s beyond overwhelming. And get this:
According to the Harvard Crimson, 39 percent of work-force-bound Harvard seniors this year are heading for consulting firms and financial sector companies (or were in June). That’s down from 47 percent — almost half the job-bound class — in 2007.

Isn’t that a little bit tragic? Is the only thing we can offer our smartest young people a career in consulting and banking? Is it the only thing our smart young people want to do?

Using economics to talk policy

A few years ago I took a course called “Economics of OECD Countries” with a wonderful teacher, Gavin Cameron, who sadly passed away recently. It was really an economic history course; we took a few big, general, flexible models from macroeconomics and used them to talk about the last hundred years in the rich countries of the world – the Great Depression, oil shocks, the ‘Golden Age’ of growth, the rise of computers, productivity. It wasn’t an especially politicized class, just nuts and bolts economics, but I’ll be forever grateful not just for learning a bit of history but for learning that a little model goes a long, long way.

For instance: the BBC website had a piece a while back about the presidential candidates’ economic policies with this passage:
Mr McCain has endorsed “supply side economics”, calling for more tax cuts for business to boost economic growth and sharp cuts in spending programmes.
Mr Obama, on the other hand, wants more domestic spending, particularly on health care, and has indicated that he is not averse to higher taxes on the rich to pay for it.

Again, I’m not going to start analyzing policy, but I really like – no sarcasm here, I promise – that the same debates that have cropped up again and again through the history of economic policy as an actual thing are still here. A crude characterization would be to call Obama Keynesian, on the strength of what the article is saying; it’s the famous injection of spending by the government to try to prop everything up, the great policy success of the original Keynesian era. That was the one that dragged America out of the Great Depression. 
Or did it? Surely a bold stroke to open the government’s wallet when the whole country is broke, but, of course, there’s plenty of wiggle room for debate. One of the many things we talked about in our course was the role of war spending in providing a natural bounce out of the Depression. Same concept, different reasons. 
McCain’s being painted in the BBC article as a supply-sider, which is something of a dirty little epithet around the Dem-leaning economics faculties of the world. Paul Krugman made his journalistic bones (as opposed to his impressive academic record) with “Peddling Prosperity“, a big chunk of which was devoted to a critique of what came to be called supply-side economics. Perhaps I’m reaching a bit here, but you could plausibly argue that supply-side policy grew out of monetarism, which was itself the big weapon against the oil-shock driven recession of the 1970s. Keynesianism versus monetarism was the big debate in economic policy, and it lives still into the 21st century.
As a teacher, the beauty of these debates is that they don’t need fancy techniques, or math, or number crunching, to be explained. Naturally some of the academics who’ve spent their careers on policy questions are doing very complicated things, but to explain – in simplified form, but correctly – what was driving the problems of the 30s, the 70s, or whenever, and the logic behind the policies that were tried, is easy. It takes a bit of clear reasoning and is even easier if we are willing to use a few simple diagrams, both commodities that go a long, long way in economics. It’s possible, even, to boil the whole mixture off to a supply-and-demand story. Don’t roll your eyes, though: there’s a reason why that’s the most famous, most reproduced little model in economics, and how awesome that we can use it to talk about the biggest policy issues of the last century.
Many economics courses are ‘tooling up’ courses, where you learn those models, the diagrams, the math; what is even more crucial are those courses like the one Professor Cameron taught me, the ones where we use those tools to think about interesting things. It’s truly staggering how simple the tools are that we used, truly gratifying to learn how far even the simplest little insight can go. 

Positive bias and normative bias

The opposite of analysis is bad cliché, a sloppy knee-jerk. It’s whenever an innocent-looking question in Econ 1 provokes a response that is answered with a phrase like “greedy companies”; it might even be whenever economics is confused with “business” or “finance”, because, after all, what short-circuits economic analysis faster than pinning a label of bias on economists?

Not that you couldn’t defend such a label. After all, it certainly looks like economists are biased when your first contact with them as a student of the subject is our friendly principles course. What a delicate balancing act, though. Bryan Caplan quotes Paul Krugman:

When the latest batch of freshmen shows up for Econ 1, textbook authors and instructors still try to separate students from their prejudices. In the words of the famed economist Paul Krugman, they try “to vaccinate the minds of our undergraduates against the misconceptions that are so predominant in educated discussion.”

Make no mistake, there’s a reason why it’s so difficult to play devil’s advocate to argue against the very real work of introductory economics courses. Is there a fundamental difference between positive bias and normative bias? Normative bias is opinion, and represents healthy disagreement: “I believe the minimum wage should be raised, even if it raises unemployment, because those people who do work at minimum wage are impoverished”, or “I believe the minimum wage should not be raised, even given that those who work at minimum wage are impoverished, because it might wreak havoc with the labor market”. Both acceptable, both, arguably, representative of what you might call “normative bias”.

Positive bias is more problematic. It could be accurately called “being wrong”. That’s the kind of problem that leads the designers of introductory economics courses to swing wildly to the extreme of trying to batter the bias out, looking suspiciously like indoctrination in the process. Think of how disheartening it is, though, to face a whole class who have heard about “competition” with Russia, China, India, whatever country is the current flavor of Evil, and try to teach the theory of comparative advantage. A very real challenge for economists is to explain the (deceptively simple) positive theories that form the foundation for the argument in favor of trade (personal and international), markets, government, etc etc, while walking the tightrope across the normative ravine.

The challenge, then: is a student who says “globalization hurts America” wrong? Is this a positive bias or a normative bias? More accurately: is this an opinion or a misreading of fact? What about a student who uses the sinking-feeling phrase “greedy oil companies” when asked to evaluate the effects of a gas tax? Here’s a passage from that Bryan Caplan article:

People tend, for example, to see profits as a gift to the rich. So unless you perversely pity the rich more than the poor, limiting profits seems like common sense.

Yet profits are not a handout but a quid pro quo: If you want to get rich, you have to do something people will pay for. Profits give incentives to reduce production costs, move resources from less-valued to more-valued industries, and dream up new products. This is the central lesson of The Wealth of Nations: The “invisible hand” quietly persuades selfish businessmen to serve the public good. For modern economists, these are truisms, yet teachers of economics keep quoting and requoting this passage. Why? Because Adam Smith’s thesis was counterintuitive to his contemporaries, and it remains counterintuitive today.

And again, on international trade:

How can anyone overlook trade’s remarkable benefits? Adam Smith, along with many 18th- and 19th-century economists, identifies the root error as misidentification of money and wealth: “A rich country, in the same manner as a rich man, is supposed to be a country abounding in money; and to heap up gold and silver in any country is supposed to be the best way to enrich it.” It follows that trade is zero sum, since the only way for a country to make its balance more favorable is to make another country’s balance less favorable.

Even in Smith’s day, however, his story was probably too clever by half. The root error behind 18th-century mercantilism was an unreasonable distrust of foreigners. Otherwise, why would people focus on money draining out of “the nation” but not “the region,” “the city,” “the village,” or “the family”? Anyone who consistently equated money with wealth would fear all outflows of precious metals. In practice, human beings then and now commit the balance of trade fallacy only when other countries enter the picture. No one loses sleep about the trade balance between California and Nevada, or me and iTunes. The fallacy is not treating all purchases as a cost but treating foreign purchases as a cost.

My own bias is to worry that we mistakenly strangle normative bias out of the economics classroom by too-much, too-soon overzealousness. Yet how else will we be able to impart the simple, counterintuitive lessons that will help us to fight positive bias?

Ignore the past, and it shall teach thee?

So why don’t we teach much economic history anymore? An article in the Chronicle by Russell Jacoby asks this question, with similar for the history of psychology and philosophy, by wondering why Marx doesn’t feature on your typical economics syllabus.

The analogy is probably to the natural sciences. Once we scientificize (is that a word?) economics, it becomes more reasonable to follow the path of the naturals – after all, the history of chemistry, for example, might be interesting, but it doesn’t necessarily help you be a better chemist. Economists try to answer very specific, answerable questions: methodology becomes crucial, and while the foundation of methodology is important, it’s not it. Here’s what Jacoby says on the topic:

The flight from history marks economics and philosophy as well. Economics looks more and more like mathematics, in which the past vanishes. Sometimes it even looks like biopsychology. A recent issue of the American Economic Review includes numerous papers under the rubrics of “Neuroscientific Foundations of Economic Decision-Making” and “Cognitive Neuroscientific Foundations of Economic Behavior.” But can we really figure out today’s economic problems without considering whence they came?

Of course, my prejudice is the history of thought for its own sake is worthwhile. I want to know how economics evolved; how the foundations of the subject and a couple hundred years of thought brought us to where we are today. However: it’s useful like that more to people like me with a predisposition to wonder about the philosophy of the subject than it is to those who are more interested in learning the tools to form and evaluate policy, for example. If I want to advise on school vouchers, to pluck one example, it doesn’t necessarily help me to know the history of economic thought; I need to know the evidence on school vouchers. Obviously.

The ‘economics as toolbox for analysis’ – positivist, scientific economics – maybe doesn’t need the past. Research building on research, like we do as academic economists, doesn’t need the foundation of the history of thought. Seeing the evolution of the subject, and the little battles over the big issues of days gone by, might, however, make studying the subject as an undergraduate more interesting. Perhaps we could have both: the toolbox-y courses and the intellectual history, for-their-own-sake courses. Why do we need to justify the history only as something that contributes to the toolbox, especially when that might not even be true?

Maybe that’s why courses in economic history or the history of economic thought are not as widely offered as you might expect. Maybe they’d be nice or interesting, but very few academic economists are historians or scholars of thought; we’re scientists now. What faculty wants to teach a course so wildly unrelated to their other work, their research?

Classifying economics: humanity or science?

How should the discipline of economics be classified within academia – does it belong to the arts, sciences, social sciences, humanities? A wonderful article called ‘The Burden of the Humanities‘ by Wilfred McClay in the Wilson Quarterly got me thinking about that this morning.

Even if we go by something so simple as what degrees are offered in departments of economics there doesn’t seem to be much consensus. While the Bachelor of Arts remains perhaps the most common undergraduate degree in economics, the Bachelor of Science isn’t unheard of; indeed, the London School of Economics, one of the most recognizable schools for the subject, awards the BSc. At Oxford University, the undergraduate degree is the BA, but at postgraduate level the MSc – is this a good reflection of the journey up the hill of science, math and statistics that we economists make on the course of our study? If so, why do so many North American universities – NYU, Yale, Brown, Toronto, etc etc – award the MA as a postgraduate degree (albeit in the US usually as a consolation prize for those abandoning the PhD)? What about something like Economics and Finance? Is that more BSc-ish than just economics?

Do we belong to the humanities or to science? This question is obviously closely tied to the ethos of economics teaching, especially the positivist teaching method and the quantification of the discipline. If your economics education focuses on the political, moral, philosophical, historical, intellectual parts of economics, it sounds more like the humanities. If it focuses on the mathematical, statistical, empirical, experimental, computational parts, it sounds more like science, or at the very least, ‘social’ science. Maybe since there’s no ‘standard’ blend of these two categories in an economics degree it’s right that we don’t know which degree is more appropriate; all I know is that the scientific categories are much, much more prevalent in the content of US undergraduate economics education than the humanities categories.

McClay’s essay talks about the defining characteristics of humanities, borrowing first from the National Endowment for the Humanities definition which allows the humanities to include, among other things:

“those aspects of social sciences which have humanistic content and employ humanistic methods…”

This would seem to allow economics into the party, since it is closely concerned with human behavior, especially microeconomics which is obsessed with how people make choices and decisions. Or is it? Historically, macroeconomics has often relied on a characterization of a country as a big machine, to ask how, for example, exchange rates interact with interest rates, or whatever. There has to be a human element buried somewhere, unlike in the natural sciences, but it’s not the focus. McClay addresses just this point:

“But this can be stated more directly. The distinctive task of the humanities, unlike the natural sciences and social sciences, is to grasp human things in human terms, without converting or reducing them to something else: not to physical laws, mechanical systems, biological drives, psychological disorders, social structures, and so on. The humanities attempt to understand the human condition from the inside, as it were, treating the human person as subject as well as object, agent as well as acted-upon.”

You could plausibly argue that the history of economic thought has been a reduction of the human to something else; this is valuable because it allows us to abstract from the uncertain world of how people behave into a place where we might be able to draw plausible, tangible conclusions, but just as it’s taken the discipline into a place of backlash where ‘behavioral economics’ wants to recover a keen interest in the way humans operate, it might have carried away much claim we had to be part of the humanities. Of course this also implies that a bunch of the psychological-type economics that’s so very popular at the moment might arguably be ‘humanities’, but that probably overstates the case, since psychology itself isn’t usually considered as such.

McClay argues further about the tendency towards science and away from the humanities:

“For many Americans… [the humanities go] against the grain. After all, we like to think of ourselves as a practical people. We don’t spend our lives chasing fluffy abstractions. We don’t dwell on the past. We ask ­hard headed questions such as Where does that get you? How can you solve this problem? What’s the payoff? If you’re so smart, we demand, why aren’t you rich?”

There’s a strong similarity between this line of argument and the tendency towards science within economics itself, and perhaps all the same questions apply there. If I imagine arguing that we should have more normative content in economics courses, I immediately imagine being challenged, ‘where does that get you?’, ‘what’s the payoff?’. Plus, as a nice bonus, ‘why aren’t you rich?’ could, in another context, be a very pithy summation of the boneheadedness of economists towards the normative metrics of happiness or success.

The weird paradox, however, is that, to this eye, the practical value of the majority of economics research is very difficult to find; I know science for its own sake is still science, pushing the bounds of knowledge etc etc, and I know the charge can be leveled at any subject, but still, for better or worse, ‘what’s the payoff?’ is a question we could rightfully ask in response to any claim of economics to be a science.

And what do we lose when we drop the humanistic from economics? McClay says:

“For you can’t really appreciate the statuary of our ­country—­our political and social and economic ­institutions—­or know the value of American liberty and prosperity, or intelligently assess America’s virtues and vices against the standard of human history and human possibility, unless you pay the price of learning the ­stories.”

This is certainly true of the abandonment of economic history and the history of economic thought as fields of study in so many departments of economics. If we can argue for economics as science or as humanity, why have we dropped all humanistic study of it? Won’t we lose the ‘stories’, the lessons of the past, the normative context, the ability to critically evaluate the scientific results that we might be able to squeak out of our modeling and empirical analysis?

Finally, McClay ends discussing the role of the humanities in contributing to the attainment of ‘happiness’ or satisfaction in life.

“…the lure of a pleasure-swaddled posthumanity may be the particular form of that temptation to which the Western liberal democracies of the 21st century are especially prone.

One of those things left behind may, ironically, be happiness itself, since the very possibility of human happiness is inseparable from the struggles and sufferings and displacements experienced by our restless, complex, and incomplete human natures. Our tradition teaches that very lesson in a hundred texts and a thousand ways, for those who have been shown how to see and hear it.”

In the context of the study of economics, can’t we make a similar argument? It’s not just that economics may have contributed heavily to the ‘happiness as goal’ business, or to the wedding of income, GDP and money to ‘wellbeing’; By abandoning the humanistic in the teaching of our subject, don’t we neglect to show the next generation how to see and hear the humanistic as it relates to the organization of our economies, our world? Economics is not a technocracy. We need to understand its humanistic foundations if we are to wield its tools and arguments as experts.

Easy money

Here are some numbers on average starting salary by college major from the Wall Street Journal. If we want to understand what drives people to study economics, part of the reason must be found here.

So, there’s economics, a proud 4th with a not-too-shabby $43,419. First of all, being that I don’t believe economics is vocational, and that I think we don’t place a very high premium on intellectual excellence in the teaching of economics, this is already, to me, a bit weird.

The easy, and I think true, point to make is that if we do some kind of perceived difficulty/scariness of subject times starting salary, economics will win hands down. If all I care about is cash and how hard my degree will be, I doubt I’m choosing math or engineering over economics. It’s easy money.

For once, I’m going to try to use some economics to talk about this. Labor and skills are scarce resources; salaries for graduates in the hard sciences are understandably high, since these skills are valuable and not so very many people study those subjects. But I see exactly zero reason why economics is different, in that light, from management science or history, for example. Does majoring in economics change your abilities in the same way that studying computer science makes you a better code-writer?

Where are the economists going, anyway? From the article:

Scott Bell, who plans to graduate this year from New York University with a degree in East Asian studies, was looking for a job in financial services or consulting. The 21-year-old was unable to land interviews with major investment banks, despite a strong grade-point average and an internship in the Tokyo office of global management consultancy Bain & Co.

East Asian studies would, in this context, seem to be more valuable than economics in preparing someone for a career in financial services or consulting. Economists seem to be facing stiff competition in the labor market for consulting and banking, and of course they are no more qualified for such jobs than anyone else who is literate and numerate, which might itself be contributing to the premium for economists.

I struggle not to fall back on the familiar signaling story for education. I said this a while ago:

Perhaps economics just looks good, perhaps even because it’s confused with finance or business. Perhaps we, the educators, are complicit in the charade because it brings high enrollments and money. There is no incentive to change the program, even if the core is rotten. It’s like an asset bubble – the value of economics as a major, the value of economics to a university, to economics departments, goes up and up and up, but at the bottom there is nothing.

I strongly recommend this short article, “What jobs do economics majors get?”. Listen to this:

Employers are happy to hire students with undergraduate degrees in Economics. They are often looking for good mathematics skills, good writing skills, ability to use a word processing program such as Word and a spreadsheet program such as Excel. Some jobs require skill in using a statistics program – these are appropriate for people who did well in or liked ECON 3254. Computer programming skills are definitely a plus. Almost any programming language will appeal to most employers, although some have a preference for “C” and “Visual Basic.”

OK, so employers want people who can read, write, do math and use a computer. Statistics is good. Computer programming is awesome. This has nothing to do with economics. And lo:

The important thing to understand about finding a job with an economics degree is that employers are less interested in whether you have a specific skill, like being able to find the intersection of the supply and demand curve, than they are in the package of skills that people with economics degrees have. Secret: most of the skills which people use on the job they learn on the job.

Cool, so all the stuff we teach in undergraduate economics is useless to employers (astonishment!), yet people study economics in record numbers. What’s the disconnect here? Is it really just a house of cards, floating on air? What do we teach economics students to do that other students can’t? What do employers think we teach? Back in the original article, this makes more sense:

A breakdown by industry shows that starting salaries for accounting and finance grads rose by a mere 1.9%, while business-administration and management graduates saw increases of less than 1%. The average offer for computer-science majors, on the other hand, rose 7.9%. Engineering graduates saw an average increase of 5.7%.

I’m not down on economics as a field of study. I think it can be interesting and multidisciplinary and philosophical and relevant and topical. However, it seems sometimes to all to be tailored to these numbers: you can earn big bucks by majoring in economics, and economics classes become just a crappy thing you have to do to get there. Everyone’s happy with the status quo.

Sensible economic policy is not just found in textbooks

Standard caveat: I remain apolitical here. Hat tip to Economist’s View, whose discussion of Andrew Leonard’s Salon article on some current trade policy touches on a lot of interesting things.

Apparently there’s a “Trade Adjustment Assistance” program on the Senate radar. Now, this could be considered sensible economic policy, whether or not you agree with it.

“The Trade Adjustment Assistance program is designed to compensate manufacturing sector workers who are displaced by trade. It includes financial support for education and training, a health care credit, wage insurance and other goodies.”

It’s a well-worn argument that long-term benefits from trade with other countries might come with short-term costs for those workers who find employment in industries which produce goods most likely to be imported. Social justice might argue for support for such workers; help the worker, not the industry is not an original maxim. It can be applied equally to “dying” industries. If the typewriter industry is becoming obsolete, do you subsidize the typewriter producers or let them die and use your welfare state to support the people who are affected?

Maybe it’s too harsh to say that this is not a textbook argument, but one certainly can’t gloss over the negatives of any policy, no matter how positive the positives, and, recall, those pesky Principles of Economics said that Trade Can Make Everyone Better Off.

The Salon article refers to this, from The Atlantic, makes the forceful and obvious point (I will paraphrase) that a proper welfare state doesn’t ask why, just helps the needy while they need, and that this trade adjustment business is a band-aid, a facsimile of a real solution for the problems of the consequences of harsh and widespread unemployment in whole communities at a time.

Not to wade into the politics where I don’t belong, but I like this:

“Preaching the benefits of free trade without being willing to take care of the “losers” created by trade isn’t very bright in an election year when workers are feeling squeezed, and the opposition party controls Congress.”

Ignoring the electioneering stuff, the direct analog to an economics class or an economic policy debate would be to actually have a proper debate, an acknowledgment that everything isn’t always super-awesome. Similarly, the Economist’s View take:

“It seems to me that an administration that truly cared about the working class would be eager to find a way to help those who are hurt from trade, that they would make it a high priority and insist it get done, but there’s little indication – through actual action – that helping workers hurt from trade, or from economic conditions more generally, is a priority.”

This is perhaps one of the biggest economic policy questions: how big should your welfare state be? Design is one thing, but we have a fundamental philosophical question here, which is bigger than technicalities. Let’s brawl that one out, historically, globally, politically, morally, economically.

Except for poor old John McCain, who gets kicked again. Hard. I’m on record: I think he is an economist (for a suitable definition of economist). Not Economist’s View.

“I think a lot of people are missing the point about John McCain’s lack of knowledge about economics… Anyone who really cared about economic policy and its effect on households would have taken the time to become familiar with the basics. How will he know how best to help workers if he has no idea about the underlying economics? If he asked, there are very prominent economists who would be happy to spend an hour once or twice a week – kind of like a principles course – explaining how the economy operates. But he never bothered, never took the time, because he apparently doesn’t care enough to give up the time necessary to actually understand the polices he is voting on. I wouldn’t mind the ignorance so much if there was any indication at all that he had tried to over come it, any indication he thought it was important enough to learn about, but there isn’t.”

We’re going to give McCain the Principles of Economics course? I just got chills. Surely not the one we give the poor undergraduates? From me:

“A list of “principles” pregnant with loaded statements is not the right way to present our discipline.”

Let’s not indoctrinate John McCain too!

Microeconomics in six words

This is certainly frivolous, but in the spirit of the addictive six word memoir (see here and here), I got to wondering about the six word memoir for the traditional undergraduate Intermediate Microeconomics course. My best effort is:

“Markets work, except when they don’t.”

Intermediate Microeconomics is a course I have both taken and lectured. It’s the gateway drug to economics electives, in a way that the Principles courses I hate so well are not: it is dry and musty with terminology, calculus and diagrams. Relating student to material is the difficult part, as with all of these positivist courses. When I took the course, it was split half and half between the dry stuff and policy debates that applied it, which was perhaps a good idea.

A six word syllabus for Micro?

“People, firms, markets: now with calculus!”

The technical parts of the course are about the foundations of all scientific theoretical economics: how we can model people, how we can model firms, how we can model interactions. It builds, in my opinion, towards the two monumental political economic results in our canon, our intellectual arguments for and against markets as a resource allocation mechanism. They are the first and second theorems of welfare economics. The first one sets out the conditions under which markets will give a Pareto efficient allocation of resources, and the second one sets out the conditions which would make lossless redistribution of resources possible.

First of all, these are tremendously elegant, in the mathematical sense. Second, they are utterly unrealistic. Together, this makes them a fascinating and infuriating jumping-off point for all debate about the appropriate way to allocate resources, in specific situations and in the wider sense. They don’t answer the questions. They beg us to ask when we can do better; they beg us to ask what better even means. All philosophical, moral and political debate on economic policy bursts fractal-like from these seeds, the painstaking culmination of the “how”, the layering of the interactions of all the actors in the economy.

That’s when technicalities can become interesting. It made me want to follow those paths where they led.

Eternal students

Just in time to miss the question of economics as vocation versus learning for its own sake comes this article from BBC News. “French students shy of the real world”, it says, and the message is that France is a mess because French students are intellectually curious. Perhaps I paraphrase slightly.

France may be a global leader in high technology, but employers complain that today there are far too few students studying science and technology and there are far too many studying “soft subjects” which leaves them ill-prepared to join the real world of work.

I asked a passing student what he wanted to do when he left university. “I want to be an eternal student, ” he said. “Just learning for learning’s sake.”

Fair enough, that might not get a great deal done in the scheme of things, but what a great sentiment. We are, after all, talking about a rich country here. Some young people will surely become scientists and engineers, if that’s what they want. Some other young people will find that a “soft subject” (?) will be the one that stimulates them to want to know and to learn. The luxury afforded to the people who do not struggle to find food to eat or a place to live is to indulge in pursuits like these. We can afford to foster excellence in knowledge and learning, whatever form it may take.

Or we could start a state-run forced labor program.

“But with such poor economic growth and such huge public debt, this country now needs its clever young students to leave the university campus and start ploughing their skills and enthusiasms into the profitable world of work.”

Chills. Why not just set up labor camps and get it over with? Who said anything about “growth” or “profitable”? Didn’t the student just tell you he wants to simply learn? Was it not once the case that universities and learning were valued on their own merits? Can the technical and vocational not coexist with the abstract? I know there exist some non-technical careers out there for which the key requirement is “intelligent”. As an employer, maybe I need scientists, but maybe I need people who are bright and creative and literate.

As I argued yesterday, there are particular implications for a field like economics which is torn between feeling itself purely vocational and purely not. This French debate then mirrors the tension at the heart of the teaching of economics; can it not be OK to pursue this field because it’s interesting?

Then it’s bizarre that it feels like many students take economics courses not because they enjoy them or because they are vocational. Perhaps economics just looks good, perhaps even because it’s confused with finance or business. Perhaps we, the educators, are complicit in the charade because it brings high enrollments and money. There is no incentive to change the program, even if the core is rotten. It’s like an asset bubble – the value of economics as a major, the value of economics to a university, to economics departments, goes up and up and up, but at the bottom there is nothing.

Maybe, maybe not. Maybe there is something down there. But if it’s not intellectual curiosity, a desire to know, then what is it?

Is economics vocational?

Being that we have not the faintest idea why people choose to take economics courses, this will be a difficult question to answer: is economics vocational? What exactly would an economics education prepare you for?

My stereotypical economics major wants to be an investment banker or something of the sort (again, pure prejudice, since no evidence exists). I argued a while ago that maybe – maybe – the sub-discipline of finance could possibly be considered vocational for those types. Economics courses will be of no practical help, although I suppose the civics that passes for Econ 101 might help with terminology. My advice: go to a school that will let you major in business.

So: what would an economics education prepare you for? To be more explicit: “if I major in economics, what will I be able to do, or be better at, that I couldn’t otherwise have done, or done so well?” Some suggestions, and justifications.

Statistician or data analyst. Econometrics is usually a requirement for all economics majors. Since the computing revolution, economists have lovingly embraced statistical analysis as a way to coax the relationships in the real world out of data. Theoretical and practical data preparation and analysis will be practiced in econometrics courses, and any course falling under the foul name of “applied economics”.

Policy wonk. Economics can inform argument and debate about policy. This is especially true of economics courses that straddle positivist analysis and normative debate, such as public economics. The purely esoteric economics courses might not be the ideal ones to make this point.

Philosopher. Economics contains a lot of points of philosophical debate. “Welfare economics”, which tries to discuss and provide metrics for normative goal-setting, is a particularly rich field for flights of fancy. The realness of economics does not take it out of the philosophical world; it’s elusiveness holds it in.

Applied mathematician. I’m very doubtful about this one, but here it is anyway. Economics can’t teach you math. Plus, economists are like the chimps jumping up and down to reach the fruit when we could just ask the giraffe – it feels like any mathematical or technical problem we have would be immeasurably simpler for a mathematician or computer scientist to solve than it is for the economist. Nevertheless, it may well be the case that studying economics could make a person better at applying mathematical methods to the tangible.

Academic economist. Our courses are taught with the same positivist motivation demanded in the research conducted by academic economists. The “applied” courses accomplish this for the type of researcher who does data work, and the theoretical courses accomplish it for the type of researcher who does, well, theory work. I’m worried by the lack of diversity in the models and applications we present – it doesn’t reflect the range and power of economics – but nevertheless, the method we present is, for better or worse, the same as the method we use.

Historian / person-of-the-world. No idea what I should be calling this, but an economics education should (should) include some history of thought and history of economic policy. One of my favorite college courses was one where we took one simple, flexible model of a country’s economy – really simple, just pictures and words – and used it to debate the economic history of the 20th century. Whatever that type of knowledge-for-its-own-sake is called or is useful for, I’m throwing it in this list.

I’ve kind of exhausted my ideas. Now, at least here in American colleges – or maybe just this American college, though I suspect not – “academic economist” gets far, far, far, far too much play. Far more than anything else on my list or anything else that could be on the list. I would be utterly astonished if the non-existent evidence on why people take economics courses showed that they all wanted to do write academic articles in economics. Astonished and miserable. Yet, here we are, in a situation where economics courses are most commonly run without philosophy, history, politics, debate.

Academics do economic science in a vacuum without these things. It has to be that way, because we want to isolate facts as well as we can isolate them. That doesn’t mean that we should be teaching economics that way. It could be so rich. Yes, the science can be interesting, but so can the history of the world, the intellectual foundations of the discipline, the policy debate built on the evidence. I’d hate to think we’re robbing our students of these things.

Perhaps the answer, then, is that economics is not fundamentally vocational. Aside from my pet issue of economics-abused-as-civics, we have a problem with economics teaching if it is trying to pretend to prepare people for something specific. It can surely help a person develop skills, but at least as important, and probably more interesting for the average student, is teaching economics as an intellectual pursuit for its own sake. We know what would make our courses more interesting (not the same thing as pandering, I hasten to add), more intellectually exciting, yet we pull back. Is it because we believe we’re training all our students to be academics?