Tuesday, August 21, 2012

Is the study of economics only for the right?

Some on the left apparently think so, according to this article in The Chronicle of Higher Education.

Some of the claims here, though, I find completely ridiculous. I've used some of the leading textbooks by Mankiw (more on the right) and Baumol and Blinder (more on the left).  Both though, teach almost exactly the same material.

In principles of microeconomics and macroeconomics courses, we cover many controversial topics, but what we do in our courses is positive analysis - the analysis of "what is", "what happens", etc.  We learn that rent control leads to less available housing, that firms that pollute will produce too much of a product unless the government intervenes, and markets cause any "wage gap" for men and women who are doing equal work to disappear if firms maximize profits.  Notice how none of these issues above involve the word "should".

From learning what happens, that's when a student (and this professor) can implement their value system and do normative analysis - examining what "should" or "ought to" occur.  I think the fact that we find that the unemployment rate rises among affected groups with an increase in the minimum wage and that firms are also hurt (and a decrease in total surplus) means that we should decrease the minimum wage.  Others in the class, however, could have a different normative view.  These views are are important, but not included in the students' tests.

These views aren't taught in a principles of economics - at least not by anybody doing a credible job.  While I encourage my students to think about how they would use what we find in our positive analysis to guide their normative beliefs, that normative issues aren't tested on the exam. I feel reassured that even though I'm more on the right on economic issues, I've recruited many students to major in economics who are more left-wing.  Economics is not for just one political party - it's for anybody who wants to understand how the economy works.

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