Thursday, May 7, 2015

Textbook Confessions: Government Failure

Textbook Confessions: Government Failure.  That's the title of an article recently published in The Journal of Private Enterprise by Eyzaguirre, Ferrarimi, and O'Roark.  Here's the abstract:

What students learn in the Principles of Economics course may become the permanent lens through which they view and understand how the economy works. While most textbooks cover a core of material in a consistent manner, the same cannot be said for the treatment of government failure. We review twelve principles of economics textbooks to analyze the treatment given to government failure. Our analysis shows that authors fall short in adequately addressing this topic, thereby exposing students to the fallacy that government is the solution to market failure and drawing dangerously close to the line between positive and normative analysis.

The rationale for the paper is straightforward.  While almost all textbooks have detailed sections on how markets can fail, the just-as-important coverage of how governments fail is often lacking.  If students in economics only learn about how markets fail and not governments, they'll get a distorted view of the world. 

In their analysis, they found big differences in coverage across textbooks.  One fact I found surprising is that Mankiw, a Republican, covered government failures less than Baumol and Blinder, who are Democrats (or at least worked for them).  I was not surprised that Krugman's book ignored government failures completely. 

The whole paper is very readable, and their paper is motivating me to create and post lecture videos on government failures for my courses.  I'll post links to the lectures when they're available.

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