Tag Archives: economics

Walter Lipmann, public economist

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A new biography, [amazon_link id=”0674368134″ target=”_blank” ]Walter Lippmann: Public Economist[/amazon_link] by Craufurd Goodwin, is a very interesting portrait of someone not all that well known now. I ended it appreciating that Lippmann was a more important figure in early 20th century America than I’d realised, perhaps a Martin Wolf of his day. The mixture of intellectual rigour and status with an ability and urge to communicate with the wider public is relatively rare, and important in modern democracies, with all their political and economic complexities. Lippmann was probably the first ‘public economist’.

I was aware of Lippmann only through his 1920 book [amazon_link id=”0691134804″ target=”_blank” ]Liberty and the News[/amazon_link], which for some random reason sits on my shelves, and [amazon_link id=”1484150295″ target=”_blank” ]Public Opinion[/amazon_link], published in 1922. The biography concentrates instead on his books and columns on economics and political economy, tracing the development of his thought as he watched the Depression and war unfold, and engaged with both Keynes’s and Hayek’s work. Throughout the decades, however, in an era when the old order was dying, Lippmann challenged the attractive certainties of the extremes, observing that ‘free’ markets had never existed, and that collectivism relied on censorship, spying and terror. This search for a way to manage the modern economy, and deliver to voters in democracies the economic well-being or assurance they demanded, while safeguarding liberty, remained his theme throughout, above all in [amazon_link id=”1178812782″ target=”_blank” ]The Good Society[/amazon_link].

Lippmann sounded (in [amazon_link id=”1560005599″ target=”_blank” ]The Method of Freedom[/amazon_link]) rather like a modern behavioural economist: “The classical economists over-estimated the enlightenment which is based on self-interest and the fortitude based on self-reliance. … Imitation, the herd instinct, the contagion of numbers, fashions, moods, rather than enlightened self-interest, have tended to govern the economy.” And elsewhere, he emphasised the importance of institutions, regretting the fact that economists had not combined their powerful analysis with a ‘humanly satisfactory’ social philosophy. Economics needed to show concern not only with liberty, but with a ‘concern always for those who could not cope with modernity,’ as Goodwin puts it.

Lippmann, always interested in education and closely involved in the economics department at Harvard, was unable, though, to resist the tide of increasing specialization, to stop the schism between the humanities and social sciences, or the isolation of economics from politics, philosophy, psychology and history. What a shame.

This is a timely biography. Lippmann’s concern to navigate through the real complexities and uncertainties of a transitional, even revolutionary, economic era while avoiding the appealing, easy answers was admirable. So was his determination to explain to fellow citizens the economic debates of the day. Not surprisingly, I find the idea of a public economist very attractive. As a character, Lippmann seems slightly unappealing – brilliantly successful from his undergraduate days on and wholly plugged in to the establishment, he comes across as rather smug, although this is no doubt partly because of my anachronistic reading of his letters as quoted here. There is also perhaps a bit too much detail in the book for the mildly interested reader, although having said that it is well-written and not at all too long. Lippmann is well worth re-discovering as we continue through our own period of economic and political upheaval, and this book sheds light on what made him an important figure who deserves to be better known.

[amazon_image id=”0674368134″ link=”true” target=”_blank” size=”medium” ]Walter Lippmann: Public Economist[/amazon_image]

[amazon_image id=”1178812782″ link=”true” target=”_blank” size=”medium” ]The Good Society[/amazon_image]  [amazon_image id=”1484150295″ link=”true” target=”_blank” size=”medium” ]Public Opinion[/amazon_image]

Teaching economics

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Good news from the land of the soulful science: a number of economics departments – including my own at the University of Manchester – are reviewing their undergraduate curriculum.

As someone who has been involved in the CORE project, which is being piloted in the UK by UCL this academic year, I naturally think it has a lot of appeal. It:

“Begins with ‘the capitalist revolution,’ introducing the student to what the economy is (rather than, as is more common, what economics is, generally depicted as simply the study of markets, or of constrained optimization). Our starting point focuses their attention on a series of pressing problems today – including economic prosperity, environmental challenges and inequality.  And it underlines the fact that the economy is embedded in its social and environmental context. Knowledge that comes from other disciplines – from history, political science, climate science, demography, and psychology – is part of the formation of an economist …. [The concepts included] passed two tests:  are they important in equipping students to address the major economic challenges faced by society today? And can the concepts be used in complementary ways, so that the student learns a unified, connected and multi-faceted way of understanding our economies, including their histories and the varieties of possible future economic systems that we might wish to consider?”

However, there are other alternatives beginning to emerge. Recently I’ve been looking at Peter Dorman’s two volumes, [amazon_link id=”3642374336″ target=”_blank” ]Microeconomics: A Fresh Start[/amazon_link] and [amazon_link id=”3642374409″ target=”_blank” ]Macroeconomics: A Fresh Start[/amazon_link]. In very many ways they are vastly better than many conventional textbooks such as [amazon_link id=”184480870X” target=”_blank” ]Mankiw[/amazon_link]. They refer to the real world and recent events.

The micro volume, for example, starts by discussing economics in the context of intellectual history and also some of the building blocks: the psychology of decision-making, rationality and uncertainty, and the concept of equilibrium. It discusses values and well-being. It then looks at the range of economic  institutions, markets, firms and civil society as well. There is a more conventional section on demand and supply. Then a final chunky section on microeconomic challenges – financial markets, inequality, poverty, ecology. I would be very happy to teach from this.

[amazon_image id=”3642374336″ link=”true” target=”_blank” size=”medium” ]Microeconomics: A Fresh Start (Springer Texts in Business and Economics)[/amazon_image]

I’m less well-placed to comment on the macro volume, except to say it also looks a lot better to me than the alternatives. For example, it starts with measurement of national accounts aggregates and includes institutional issues. It then proceeds by presenting different macro theories or approaches in their historical context – Keynesianism in the 60s and 70s, the turn to free marketeering, the ‘Great Moderation’ and the crisis. This is far more honest than pretending to present a settled body of knowledge.

My gripe – and it’s a big one – is that each volume is just under £50. One of the U of M students recently blogged about the price of textbooks. I don’t blame her for the complaint. No doubt there are other new textbooks on the way but I wonder if any of the publishers will opt to test the price elasticity of demand? The CORE modules are available online for free as a public good, with the effort donated by a large group of academics from around the world. Free is quite a big advantage.

The Worldly Philosophers – the better half

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Yesterday’s post on the women problem in economics prompted a comment asking who would be included in a female version of Robert Heilbroner’s classic [amazon_link id=”0140290060″ target=”_blank” ]The Worldly Philosophers[/amazon_link]. A Twitter conversation later, here is my curated version of the suggestions.

Harriet Martineau

[amazon_image id=”0875802923″ link=”true” target=”_blank” size=”medium” ]Writings on Slavery and the American Civil War[/amazon_image]

[amazon_link id=”0253340713″ target=”_blank” ]Harriet Taylor[/amazon_link]

[amazon_image id=”0253333938″ link=”true” target=”_blank” size=”medium” ]The Complete Works of Harriet Taylor Mill[/amazon_image]

Clara Collet

[amazon_image id=”1103312634″ link=”true” target=”_blank” size=”medium” ]Educated Working Women: Essays on the Economic Position of Women Workers in the Middle Classes[/amazon_image]

[amazon_link id=”0245545395″ target=”_blank” ]Rosa Luxembourg[/amazon_link]

[amazon_image id=”1931859361″ link=”true” target=”_blank” size=”medium” ]The Essential Rosa Luxemburg: Reform or Revolution and the Mass Strike[/amazon_image]

[amazon_link id=”0044408722″ target=”_blank” ]Beatrice Webb[/amazon_link]

[amazon_image id=”0521297311″ link=”true” target=”_blank” size=”medium” ]My Apprenticeship[/amazon_image]

[amazon_link id=”1849664684″ target=”_blank” ]Barbara Wootton[/amazon_link]

[amazon_image id=”B002B5X2MK” link=”true” target=”_blank” size=”medium” ]Social Science and Social Pathology [By] Barbara Wootton, Assisted by Vera G. Seal and Rosalind Chambers[/amazon_image]

Joan Robinson

[amazon_image id=”B00I70KLUY” link=”true” target=”_blank” size=”medium” ]The Accumulation of Capital (Palgrave Classics in Economics)[/amazon_image]

Phyllis Deane

[amazon_image id=”B00425W4WG” link=”true” target=”_blank” size=”medium” ]The First Industrial Revolution. Second Edition.[/amazon_image]

Anna Schwartz

[amazon_image id=”0691137943″ link=”true” target=”_blank” size=”medium” ]The Great Contraction, 1929-1933 (Princeton Classic Editions)[/amazon_image]

Elinor Ostrom

[amazon_image id=”0521405998″ link=”true” target=”_blank” size=”medium” ]Governing the Commons: The Evolution of Institutions for Collective Action (Political Economy of Institutions and Decisions)[/amazon_image]

There were also Twitter suggestions about women economists living and working now, including: Anne Kruger, Dambisa Moyo, Ngozi Okonjo-Iweala, Emily Oster, Esther Duflo, Helene Rey, Deirdre McCloskey. But I can think of many others and I think a Worldly Philosophers-type collection would need to stop short of modern times. One needs a bit of hindsight to judge lasting influence, although I’m sure many of those on the list will qualify in time.

Economics and women

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Economics has a women problem. It’s obvious enough just looking at the talking econo-heads who appear on TV, but the data confirm the impression. Studies by the Women’s Committee of the Royal Economic Society have found that in academic research and employment, women are in a minority in economics departments, and the proportion declines the higher the level – women are under-represented as professors in particular. The latest report also finds a decline in the proportion of undergraduate economics students who are female (although numbers overall of economics students have been rising).

A new working paper (pdf) by Mirco Tonin and Jackline Wahba of the University of Southampton finds that the gender gap precedes university: despite the relatively high pay and the potential for an influential career offered by an economics degree, in the UK only 27% of students enrolling for economics degrees are female, compared to 57% of all students enrolling for university. (They use the UCAS data on acceptances for the 2008 round.) They find no evidence of universities discriminating against would-be female economists; the gap lies in the fact that girls are less likely to apply to do economics, even after controlling for individual characteristics, type of school and region. A large part, but not all, of the gap is due to the differences in girls’ A level choices at school, as they are less likely to have chosen maths and economics at 16.

The paper therefore urges better maths preparation for girls in high school, so that more of them choose to study it for longer. Some people, of course, would urge economics to become less mathematical, but I’m not one of them, although it should never be only about the mathematical models. In many ways, a more ‘real-world’ economics would need more proficiency – think, for example, about network theory, or the use of non-linear dynamic systems in macroeconomics.

The paper landed in my email in the wake of the arrival of a new book, [amazon_link id=”0691121737″ target=”_blank” ]Why Gender Matters in Economics[/amazon_link], by Mukesh Eswaran. It’s fascinating.

[amazon_image id=”0691121737″ link=”true” target=”_blank” size=”medium” ]Why Gender Matters in Economics[/amazon_image]

There are three sections, covering: whether women and men behave differently in economic situations (more or less altruistic, risk averse etc) and their power within households when it comes to economic decisions; gender in markets, which covers the labour and credit markets and globalization; and finally a section on the institution of marriage looking at questions such as access to birth control and fertility rates. It’s a non-technical book, having grown out of an undergraduate course. It discusses these questions in the setting of both poor and rich countries. Of course, it does not summarize all the empirical literature on these questions, but it gives readers the analytical tools to think about them, and enough of a flavour of the state of evidence on the answers.

The book ends on a sombre note, reporting the evidence of a decline in the subjective well-being of women, either absolutely or relative to men, in recent data for developed and developing countries.

We certainly need more women economists for its own sake – there is likely to be distortion in the questions addressed by any subject which is only a quarter female, and an odd sociology. To give just one example, the absence of data on unpaid work in the home makes it hard to evaluate lots of policy proposals concerning (paid) labour force participation; the economists and statisticians who concluded unpaid domestic labour should be outside the GDP production boundary were men.

Beyond this, though, Tonin and Wahba are right to say that a career in economics is potentially influential. Economists wield great influence over public policy, including policies affecting the lives, economic power and ultimately the well-being of women. There is lost ground to make up. Girls, women, brush up on the maths a bit if you need to, but above all come and study economics!

Economies and economics

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As part of the preparation for the new course I’m teaching at the University of Manchester this autumn, Economics for Public Policy, I’ve been looking again at [amazon_link id=”0691126380″ target=”_blank” ]Microeconomics: Behavior, Institutions and Evolution [/amazon_link]by Sam Bowles. It’s a decade old now but still pretty unique in its approach, which is rooted in social interactions and institutions rather than the atomised individuals of the standard micro course. In other words, it’s about economies, and not ‘economics’.

[amazon_image id=”B00MF16TVQ” link=”true” target=”_blank” size=”medium” ]Microeconomics: Behavior, Institutions, and Evolution (The Roundtable Series in Behavioral Economics) by Bowles, Samuel (2006) Paperback[/amazon_image]

It’s a graduate level text, but I’ve also started looking at a brand new undergraduate micro text, [amazon_link id=”3642374336″ target=”_blank” ]Microeconomics: A Fresh Start[/amazon_link] by Peter Dorman. It starts with some history of thought and then the assumptions of economic models, and the values and objectives of economics, before going on to institutions – of which markets are one example. Demand and supply and market structure come later, followed by bargaining power and market failures. There is a final section on applied economics challenges, such as poverty, ecological questions, financial markets. Although I’ve not worked through any of it in detail, it is hugely more appealing than the standard textbooks. I’m not teaching micro per se, nor have I worked through this in any detail, but would recommend anyone who is teaching the core undergraduate courses to take a look at this. There’s also a [amazon_link id=”3642374409″ target=”_blank” ]macro volume[/amazon_link] I’ve not yet looked at.

[amazon_image id=”3642374336″ link=”true” target=”_blank” size=”medium” ]Microeconomics: A Fresh Start (Springer Texts in Business and Economics)[/amazon_image]

Sam Bowles is one of the leading lights of the CORE curriculum reform project, in which I’m also involved, and its Intro to Economics goes into the pilot phase soon. There are lots of different barriers to reform of the economics curriculum, the availability of better (ie. non-standard) textbooks being only one of them. It’s so encouraging, though, to see – only 2 years on from [amazon_link id=”1907994041″ target=”_blank” ]What’s the Use of Economics[/amazon_link] – several more realistic and humane approaches to economics being developed for use where it really matters, in the education of future generations of economists – and policy-makers, and bankers, and accountants, or whatever they go on to be from their undergraduate degree.