TCS Daily

Learning Economics

By Arnold Kling - September 22, 2004 12:00 AM

"So long as economists mutter about incomprehensibilities and seem to be ordering up policies that normal people resent while telling us all how good these policies really are for us, sure, normal people are going to shun economists. Why wouldn't they?"
-- Michael Blowhard

Michael Blowhard has identified three important reasons that ordinary people resist learning economics. First, economists seem arrogant. Second, we do a poor job of explaining our thinking to non-economists, or novices. Third, our policy prescriptions often rankle. My new book, Learning Economics, attempts to address some of these concerns.

Arrogant Attitude

Consider the following matrix:

Left-wing Economists

Right-wing Economists

Left-wing Novices

Right-wing Novices

There are genuine differences between left-wing economists and right-wing economists. In my book, I explore these in chapters adapted from Sweetwater vs. Saltwater and Hayek, Stiglitz, and Michael Powell.

However the differences between economists and novices are in some ways even more important. The Kerry camp's economists, such as Alan Blinder or Laura Tyson, are embarrassed by his novice tirades against offshore outsourcing or Saudi oil. Similarly, economists who support President Bush are embarrassed by the long-term Budget outlook.

Because the difference between a novice and an economist is important, it is really difficult to predict which candidate would have the better economic policy. I believe that the economists in Kerry's camp would be preferable to the novices on Bush's side, and vice-versa. It is hard to forecast economic policy without knowing who the President will be listening to when key decisions arise.

The cover graphic for Learning Economics is a diagram from the board game Othello. In that game, there is a clear difference between decent players and novices. Decent players understand mobility strategy. Novices, including players who have won many games against other novices and who think of themselves as experts, choose moves based on other, incorrect notions. This can be demonstrated clearly in any game between a novice and a decent player -- the novice will be crushed.

In economics, the differences between novices and decent economists are not as easy to demonstrate. However, the fact that the standard of living in capitalist South Korea is 10 to 20 times higher than that of Communist North Korea is indicative of the validity of basic economic theory.

Just as in Othello, in economics there are issues on which experts have imperfect knowledge and disagree with one another. Our arrogance should be tempered. In my book, I quote Herbert Stein, who has written that "economists do not know very much about economic policy...non-economists know even less."

I believe that economists have a right to feel that we have superior knowledge on issues of public policy. However, the implication of this is not that we should be given deference and power. Instead, I believe that economists have an obligation to explain our thinking to novices, and novices have an obligation to attempt to understand economics.

The Math Barrier

I made a mistake this year in my Advanced Placement Statistics course. A difficult concept that I tackle early in the course is Conditional Probability. This year, I came up with a powerful way to look at conditional probability, using truth tables.

With truth tables, some students attained a clear understanding of conditional probability much sooner than has ever happened in one of my classes. However, other students ended up more lost than has ever happened in one of my classes.

Mathematical constructs in economics have a similarly divisive effect. They make it easier for students with a gift for abstraction to grasp economic concepts firmly and quickly. However, they make it harder for everyone else.

My sense is that even for the best students, mathematical constructs in economics tend to go into short-term memory. The really important lessons of economics can be forgotten, if they are even learned in the first place, in a class where students are graded on their ability to manipulate diagrams as opposed to their ability to apply economic reasoning.

Some economists seem completely lost without their mathematical tool kit. Unable to explain economics in plain English, they stoop to the novice level, or even lower. I put Paul Krugman in this category, as I explain in a chapter adapted from Type C and Type M Arguments.

Learning Economics shuns diagrams and other mathematical apparatus. I am trying to teach economics without the math barrier.

Resenting the Conclusions

Economists draw conclusions that can be frustrating to people. If you think that paying for your own health care is too expensive, I argue that it is mental illness to believe that paying for each other's health care is affordable. If you believe that price controls for prescription drugs would make us better off, I suggest otherwise.

Perhaps some people will be so upset by the policy conclusions in Learning Economics that they will be turned off. I hope instead that they open their minds and try to raise the level of their thinking.

It is possible for an economist to draw policy conclusions that differ from those in Learning Economics. However, my goal is to raise the level of debate, so that those who disagree with me are able to address the economic arguments, rather than evade them.

The author's latest book is Learning Economics.


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