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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A while ago I mentioned the mysterious science of “welfare analysis”. It tries to evaluate outcomes or predictions of economic analysis or modeling; the idea is to figure out whether x is “better” than y.
That’s not an easy task; we have to figure out how we’re going to measure things if we’re going to compare them. Unfortunately, the only way to answer the question is to take a position on the motivations of the people who’d be affected by your policy. It’s sometimes said that the noxious euphemism “thinking like an economist” means “taking all consequences into account”; leave aside for a moment the obvious point that that’s not “thinking like an economist”, it’s “thinking properly”, but rather let’s figure out what “thinking like an economist” actually requires.
It often seems to require answering that question of “better”, to require taking a position on how you’re going to evaluate policies. It’s more fundamental than assuming something about a utility function, or whatever it takes to perform welfare analysis, but rather seems to require an acceptance of those nefarious so-called “principles” of economics, an agreement with what constitutes a “better” outcome for society.
Then we’re led into a world in which very few people who self-identify as “economists” profess support for any policy or means or resource allocation that lies outside the capitalism-with-some-government model that is the status quo. Is that because once a person has studied economics, it’s obvious to them that this is “best”? Is it because it’s impossible to succeed in the study of economics if you don’t agree that it’s “best”, because you’re turned off or ridiculed?
Economists run the risk of being seen as arrogant if we pretend to understand what a “better” outcome is. In the small this manifests as our faith in the cipher of “welfare analysis”; in the large it manifests as the homogeneity of belief and thought among economists.