CityReads│A New Way of Learning Economics to Understand World

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A New Way of Learning Economics to Understand Real World

A new introductory economics curriculum, including a lengthy e-book titled “The Economy,” lecture slides, and interactive quizzes, is freely available online.

John Cassidy，A new way to learn economics, New Yorkers, September 11, 2017, https://www.newyorker.com/news/john-cassidy/a-new-way-to-learn-economics

Source: http://www.core-econ.org

New school year starts at September. I recalled when I was in college many years ago, I bought a very expensive two-volume textbook for my economics course. I started to read it with a high expectation, but I was beaten by the supply-and-demand curves and equations very quickly. Several years later, I tried the highly popular textbook, Principles of Economics by N. Gregory Mankiw, which begins by listing a set of ten basic principles in a very accessible way. But the unrealistic assumptions of rational people and perfectly competitive market are the norm. I failed to finish the book again.

Students in economics all over the world were asking, why has the subject of economics become so detached from our experience of real life? Especially after the world financial crisis of 2008–9, and the ensuing Great Recession, many students (and teachers) complained that existing textbooks didn’t do a good job of explaining what was happening. In many countries, groups of students demanded an overhaul in how economics was taught, with less emphasis on free-market doctrines and more emphasis on real-world problems.

To respond to this requirement from students and teachers, a group of economists from 13 countries, together with teaching and learning experts, researchers, reviewers, instructors, students in the pilot universities, and editors, designers, and web developers, part of a project called core Econ, has put together a new introductory economics curriculum, one that is modern, comprehensive, and freely available online. In 2014, the first beta of The Economy online was launched (http://www.core-econ.org). Courses based on CORE’s text have been taught as the standard introduction to economics at University College London, Sciences Po (Paris), the Toulouse School of Economics, Azim Premji University (Bangalore), Humboldt University (Berlin), the Lahore University of Management Sciences and many other universities throughout the world. In July 2017, as we write this, 3,000 economics teachers from 89 countries have registered for access to our supplementary teaching materials.

The online course text was just published by Oxford University Press.

CORE is a truly global project in two ways. It’s development spans the world, and it is open to anyone, anywhere, who wants to use it. The online materials use a Creative Commons license that allows for non-commercial free use throughout the world. Material has been contributed, edited and reviewed by literally hundreds of scholars. Our hope is that the best of economics can become part of how all citizens understand and seek to address the problems that we confront.

The major authors of the contents of The Economy—all of them contributing their expertise for free—are from 13 countries.

Understanding how CORE’s The Economy is different

The focus  on these real-world problems explains why we called this book The Economy rather than Economics, which is the standard title for introductory texts. The economy is something in the real world. It governs how we interact with each other and with our natural environments in producing the goods and services on which we live. In contrast, economics is a way of understanding that economy, based on facts, concepts and models.

The Economy is a course in economics. The text focuses throughout on evidence on the economy, from around the world, and from history. It is motivated by questions – how can we explain what we see? Throughout, we start with a question or a problem about the economy—why the advent of capitalism is associated with a sharp increase in average living standards, for example—and then teach the tools of economics that contribute to an answer. And because we apply economic models to important, complex and difficult problems, CORE students learn immediately both the insights gained from modelling, and the unavoidable shortcomings of models.

CORE teaches students to be economists:

Start with a question, and look at the evidence.

Build a model that helps you understand what you see.

Critically evaluate the model: does it provide insight into the question, and explain the evidence?

The following table provides a way to understand the structure of the text by comparing it with standard principles textbooks.

Standard principles text	CORE’s The Economy
Part 1. What is economics?	Unit 1. The big questions about the economy
Part 2. Supply and demand	Units 2–3. Economic decision making
Part 3. The production decision and factor markets	Units 4–6. Economic relationships and interactions
Part 4. Beyond perfect competition	Units 7–10. Markets
Part 5. Microeconomics and public policy	Units 11–12. Market dynamics, how markets work and don’t work
Part 6. Long-run growth	Units 13–15. The aggregate economy in the short and medium run
Part 8. Short-run fluctuations and stabilization policy	Unit 16. The aggregate economy in the long run
Part 9. Macroeconomic applications	Capstone units 17–22

The core approach isn’t particularly radical. (Students looking for expositions of Marxian economics or Modern Monetary Theory will have to look elsewhere.) But it treats perfectly competitive markets as special cases rather than the norm, trying to incorporate from the very beginning the progress economists have made during the past forty years or so in analyzing more complex situations: when firms have some monopoly power; people aren’t fully rational; a lot of key information is privately held; and the gains generated by trade, innovation, and finance are distributed very unevenly. The core curriculum also takes economic history seriously.

The industrial revolution in one chart

The most pressing problems that economists should address, according to students at Humboldt University.

Word clouds from students in Sydney and Bogota are barely distinguishable from this one: inequality was the most common word in their minds. In France, when we tried the same experiment, unemployment showed up more often. Climate change and environmental problems, automation, and financial instability were frequently mentioned around the world.

The e-book begins with a discussion of inequality. One of first things students learn is that, in 2014, the “90/10 ratio”—the average income of the richest ten per cent of households divided by the average income of the poorest ten per cent—was 5.4 in Norway, sixteen in the United States, and a hundred and forty-five in Botswana. Then comes a discussion of how to measure standards of living, and a section on the famous “hockey stick” graph, which shows how these standards have risen exponentially since the industrial revolution.

The presentation features lots of graphs and charts, and, in some cases, students can download data sets to create their own. Take the figures on inequality as example. Looking at the following two figures, one can see that: There are common trends across most of the countries for which we have data: For example, a fall in inequality between 1920 and 1980.Countries differ greatly in what happened since 1980: In some of the world’s largest economies—China, India, and the US—inequality rose steeply, while in others—Denmark, France, and the Netherlands—inequality remained close to historically modest levels.

The share of total income received by the top 1% (1913–2015).

Declining share of the top 1% in some European economies and Japan (1900–2013).

The quizzes are interactive, and the presentation is enlivened by potted biographies of famous dead economists (Smith, Keynes, etc.) as well as video interviews with eminent living ones, such as Thomas Piketty.

A new online introductory economics curriculum features video interviews with eminent living economists, such as Thomas Piketty.

Photograph by Fred Dufour / AFP / Getty

The members of the core team deserve credit for responding to the critics of economics without pandering to them. They have produced a careful but engrossing curriculum that will hopefully draw more people into economics, and encourage them to continue their studies. But the core material isn’t just for incoming students. It will also reward the attention of general readers and people who think they are already reasonably conversant with economics. 

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