Economics education has major problems. Doctoral programs are churning out applied mathematicians and statisticians with little to no knowledge of price theory. At the undergraduate level, social control (“market failure!”) and activism (“inequality!”) have replaced careful reasoning about markets and politics. Very few programs instill in students an appreciation for the power and universality of the economic way of thinking.
Economics curricula look the way they do because of decades of incremental and disconnected choices about topics and methods. These may have been defensible at the time. But the result is a course of study that leaves students ill-prepared to speak or write intelligently about economics.
We need a reboot. Even at this late hour, there are enough good economists in positions of responsibility within the academy to make a difference. It’s time to remove the “dismal” from “dismal science” and rethink what we teach. We should start with our core texts.
There’s no universally best syllabus for all schools. Different programs can emphasize different things, especially in their specialty subfields. But there are several texts that have stood the test of time and continue to offer deep insight. If I were responsible for designing a curriculum, here are the books around which I would build a program:
Introductory economics. Econ 101 is the most important course in the curriculum. As the accomplished economics educator Paul Heyne realized, we should teach the introductory economics class as if it’s the only one our students will take. Show them the big picture. Give them the key to unlocking the secrets of wealth and poverty. Convey the wonder and breadth of the economic way of thinking. Do this well and it won’t be students’ only class but the first of many.
There are several good options for an Econ 101 text. But in my opinion one stands head and shoulders above the rest: Universal Economics by Alchian and Allen. From basic topics such as scarcity, property rights, and demand, to advanced topics such as price-searchers’ strategy, interdependencies, and even unemployment and inflation, two of the 20th century’s best economists guide readers through the subtleties of economic reasoning without excessive complexity or jargon.
Make no mistake, this is not an easy book. It demands significantly more from readers than, say, Mankiw’s widely used introductory text. But the effort is worth it. No other text does as good a job at teaching the fundamentals. If students stop taking economics after Econ 101, they will know all they need to for practical purposes. And if they progress towards a minor, major, or graduate work, they will have a stronger foundation from this book than any other currently available. As I wrote in a recent review, Universal Economics “should be required reading for all Bachelors and Masters students, as well as a prerequisite for doctoral study.”
Intermediate economics. Most intermediate courses are taught as watered-down PhD seminars. The abstraction and lack of relevance leave students confused and unprepared to solve real-world problems. Obviously, this is a mistake. While we should encourage our intermediate students to think more deeply about the assumptions and content of workhorse models, we must never lose sight of the goal: refining students’ analytical toolkit so they are prepared to think like economists.
My favorite texts at this level are Steven Landsburg’s Price Theory and Applications, Hirshliefer et al.’s Price Theory and Applications, and David Friedman’s Price Theory: An Intermediate Text. All of them do a good job showing students what’s under the hood of the models they learned in Econ 101. However, they will not overly tax students mathematically. They also retain the all-important focus on problem solving. After a semester spent with one of these texts, students will be well on their way to competency as applied economists.
Advanced economics. It doesn’t much matter whether we consider “advanced” the final (elective) stage at the undergraduate level or the first (required) stage at the graduate level. Instead, what matters is the focus. An advanced economics course should help students cross the bridge from consuming economics to producing economics. That doesn’t necessarily mean scholarly papers. But it does mean sophisticated analyses of ongoing controversies among economists and contemporary problems in markets and politics.
Avoid fashionable texts like Mas-Colell et al. and its knockoffs. If you must have a fancy presentation, Varian and Kreps are better. But keep in mind that even at the advanced level, very few students need to know the abstract mathematics of preference relations or equilibrium existence proofs. Rigor shouldn’t come at the expense of relevance.
I recommend Gary Becker’s Economic Theory and Jaffe et al.’s Chicago Price Theory. Ideally, instructors will use them both. Becker’s text contains many topics Jaffe et al. don’t cover. Jaffe et al. go into a little more depth on the topics that overlap. Together, these books will help students critique and build partial-equilibrium models that are just complex enough to yield meaningful insights.
Mathematical economics. I dislike most mathematical economics texts. They usually do a poor job of explaining their relevance for practical economic reasoning. And they usually do a very poor job of rooting their models in economic intuition. A notable exception is a little-known book last revised in the year 2000: Silberberg and Suen’s Structure of Economic Analysis.
Every math econ text will introduce readers to and prove the envelope theorem. Silberberg and Suen is among the few that explains why it’s economically important. Although much of the presentation is dated—economists rarely use linear programming and matrix algebra to solve their models these days—the text still does a good job conveying the fundamentals of constrained maximization and comparative statics. Knowing these is essential for doing price theory at the highest levels.
Companion texts. Some good all-around texts to supplement the above are McCloskey’s Applied Theory of Price, Milton Friedman’s Price Theory, and George Stigler’s Theory of Price. When students get stuck, sometimes a different way of presenting the material can drive a point home. Augmenting core topics with the relevant sections from these books will help to build economic intuition. McCloskey’s in particular is valuable because the end-of-chapter problems are very good.
Problem solving. Unless you’re Gordon Tullock, the only way to get good at economics is by solving many problems. Although the economic way of thinking is simple, applying it is not easy. It will take lots and lots of practice. Consult Khan’s Price Theory Problems and De Meza and Osborne’s Problems in Price Theory for a thorough list of accessible yet challenging exercises. Those interested in graduate school should work through every problem in these books
Papers. Everything on Waddell’s and Williams’s lists. These are classic readings in economics that all advanced students and practitioners should know. I also highly recommend Mulligan’s recent papers, especially his price-theoretic perspective on externalities and his analysis of how public policy affects opioid consumption. Finally, if readers will excuse the self-promotion, I direct their attention to Salter and Cutsinger’s exploration of the state of price theory within the economics profession.
Fixing economics will take a lot of work. But it is work worth doing. These texts can help us get the job started. We have nothing to lose but our ignorance.
Alexander William Salter is the Georgie G. Snyder Associate Professor of Economics in the Rawls College of Business, the Comparative Economics Research Fellow at TTU’s Free Market Institute, a Senior Fellow with AIER’s Sound Money Project, and a State Beat Fellow with Young Voices.
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