OPINION: Microeconomics at SIPA
By: Kate Champion
I love economics. But I despise the traditional microeconomics class.
For me, economics is an amazing tool for helping to grow social welfare, for determining if public policy is working or not, and for aligning incentives. But in a traditional microeconomics class you will almost never be exposed to any of these concepts. Instead, a torrent of abstract graphs and neoclassical philosophy will be thrown at you. This is a detriment to our students.
It was a detriment to me in undergrad, when after several semesters of econ classes that never engaged in real world policy, I gave up on it as a potential major.
And it is a detriment now, in my MPA of Environmental Science and Policy program, where my cohort is coming to regard the field as “make believe,” as one fellow student put it. That’s problematic because Columbia is training a generation of policy experts to distrust a field that could be very useful.
In micro everyone is taught that humans are rational automatons, competition is ample, and that, if left alone, markets will always find a perfect optimum. This model produces some pretty extreme suggestions: government regulation is bad, taxes are bad, and minimum wages and labor protections are bad. Obviously, if you are a student of public administration you are aware that the government has at least some role to play in the economy. Sitting through a class that teaches this material just results in eye rolls and mockery from the students who can plainly see that the model is flawed.
‘But models are supposed to be simplifications of reality.’
Yes, I know that. But a model that is so divorced from the real world that it ceases to produce actionable results is a failure. The frustrating thing is this isn’t news. As early as the 1930’s the influential economist John Maynard Keynes was coming to see that most markets were subject to market failures and therefore needed government intervention.
There is a role for this archetypical market in microeconomics education. It should be used as an ideal theoretical market that real world markets can be compared to. Not as a model of reality. Using it in this way would allow students to observe real world markets and then analyze where they deviate from the optimum.
And if you’re thinking ‘isn’t this already how micro classes do it?’ The answer is no. Explaining this simple shift in viewpoint to my classmate caused him to declare he learned more from me in five minutes than he had from the program’s micro class all semester.
But beyond reframing existing material I think there are some valuable things that should be prioritized ahead of the idealized supply and demand models. This is true for all microecon classes, but it’s especially important for classes taught to people who will be engaging with economists, without actually being economists (such as the one required in my MPA program).
Starting with data!
Micro econ traditionally has no data in it, but almost every economist uses it these days, especially the ones who are at the forefront of the field. Obviously, it’s too much to expect advanced statistical analysis in an intro class. But students should engage with the conclusions that come out of current economic studies. It would force the class to teach something that is verifiable and brings the material back to reality, which is what students want.
Second, give a why. When Raj Chetty decided to teach an alternative to Econ 101 at Harvard, he gave a clear goal for his class: what are the roots of income inequality and how can economists work to fix this issue? Most microecon classes do not provide such clear motivation. Instead, students pick up on the implicit goals of economics as justifying government inaction and protecting the interests of the rich. They’re not wrong since most microecon is heavily influenced by the politics of neoclassicism. But this is an inappropriate goal when training public servants.
I would suggest a better objective is the following: how can the economy be used to grow social welfare? The good news is there are lots of economists who use this goal to frame their work. We just have to teach it.