Let’s be frank – we have rather a few issues which need to be addressed. Whether it’s growing inequality, shrinking social mobility or environmental degradation, our collective prosperity depends upon the ability of our young economists to pragmatically address the crises we face. It’s my concern that contemporary economic studies are failing to equip students with the holistic intellectual arsenal they require.
My view is not intended to denigrate or disparage the discipline. There is a most unfortunate tendency amongst some well-meaning yet impractical detractors who do insist on decrying the ability of all economists to be a ‘force for good’ within the community. Their criticism is flawed and fails to recognise the role that many economists have played in designing and promoting the policies which have expanded living standards, enhanced prosperity and stabilised civil society.
There are also those who still regard economics as a sort of remote and imperious science based upon infallible mathematical models and indifferent to the affairs of empirical reality. Whilst certainly an accurate descriptor of a vital component of economic studies, to summarise the entire discipline as such is to demonstrate either a disingenuous inclination or a personal decision to ignore the events of the twentieth and twenty-first centuries.
It is as indicative as it is concerning that the 2008 Global Financial Crisis was largely unforeseen. It’s not brilliant when the collective performance of a profession predicated on predictive modelling is described by a Professor at Wharton Business School as ‘they missed it, they positively denied that it would happen’. It’s also not great when blame is assigned to the ‘widespread use’ of ‘simplistic and outmoded models’ which ‘failed to account’ for the critical roles played within the economy by political actors and financial institutions such as banks.
Essentially, it is the view of a distinguished Professor at a prestigious Ivy League University that the methods of economic prediction not only failed to forecast the most significant economic recession since the Great Depression but entirely discounted it as a possibility. Given this, it is most reasonable to suggest that we consider the academic tools we are providing to our young economists.
It’s hardly contentious to acknowledge that we require our students to be educated in a manner which produces innovative analysts and reformers who fully comprehend the complexities of the economic dilemmas we face. It is especially confusing given the full-throated support of industry leaders for a broader education.
Lamenting the quality of recent graduates, the former Chief Economist at HSBC noted that ‘too few economists newly arrived in the financial world have any real knowledge of events…the global financial crisis can be more easily understood by someone who has prior knowledge of the 1929 crash and, for that matter, the 1907 crash’.
Such enlightened statements demonstrate the increased awareness that economics has historically distinguished itself by its synthetisation of many disciplines to accurately define a problem and envisage a practical solution. There is a reason that Keynes described the ideal economist as a ‘mathematician, historian, statesman, philosopher – in some degree’.
Personally, I am buoyed by the increased attention devoted to behavioural economics. But, whilst courses continue to prioritise the theoretical to the exclusion of the empirical, they risk losing their relevance amongst the broader community. After all, most people are very sensibly concerned with what does happen, not what theoretically happens.
The inability of economics to make a firm case for its role in addressing pressing social concerns may be what is dampening the enthusiasm of younger Australians for the discipline. Research conducted by the Reserve Bank highlighted a 75% decline in enrolments for Year 12 economics students between 1992 and 2016.
As always, trends are more pronounced amongst some demographics than others with the disconcerting decline in enrolments only the tip of the iceberg. Closer analysis demonstrates that a subject which boasted near gender parity in 1992 now records a female enrollee rate of slightly more than a third. Private schools and students from higher income families are also disproportionately represented.
Now, it is patently obvious that there is nothing wrong, per se, with individual men from private schools and higher income families choosing to study economics. However, the over-representation of a particular demographic is questionable. Economics thrives when it understands the material experiences of all Australians and it cannot purport to offer broad, inclusive solutions if it is the sole purview of a narrow segment of Australian society.
Far from diminishing traditional courses, economic history and behavioural economics offer us an opportunity to expand our economic analysis. The ability of young economists to create and shape policies which benefit all Australians is greatly enhanced when they are fully equipped with the most rounded education possible.