Economics students and faculty are trapped in a system that stops them diversifying the field so that it better reflects the real world, according to a new study from Germany.
The problem could even require government intervention to shake the discipline out of its narrow focus, according to one author of the study.
Economics has long been criticised for an excessive focus on “neoclassical” models of the economy, which tend to assume that people are fully informed and rational “economic men”, are often highly mathematical, and have been accused of neglecting issues such as inequality.
Since the crash of 2008 – after which economists faced tough questions about their collective failure of foresight, most famously from the Queen – the debate over the field’s arguably limited models went from being internal to one that has attracted the attention of the public and other disciplines, said Eva Schweitzer-Krah, a research assistant at Goethe University Frankfurt and one of the co-authors of the study.
The analysis – which surveyed about 350 second-year economics students across five of Germany’s biggest economics departments – discovered deep dissatisfaction among learners. More than one-third said that they were disappointed in the subject, while more than half said that economics had too little practical relevance.
Ninety-five per cent agreed that it was dominated by a “purely” mathematical perspective, the research found – yet less than a quarter agreed that the economy could “generally be described, explained, and predicted in mathematical terms”. About three-quarters also said the discipline needed input from other fields, such as history, political science and sociology – one of the key demands of campaigners trying to make economics more pluralistic.
Yet despite this evidence of disillusionment, just 6 per cent of those surveyed had “personally engaged” in efforts to pluralise economics away from neoclassical models, the research found. Their core beliefs about the economy were still neoclassical, said Ms Schweitzer-Krah; only one-third thought the model of rational, calculating Homo economicus was unrealistic.
This suggests that despite being unhappy with the subject, economics students are taking a “strategic” decision to go along with mainstream economic theory in order to pass their exams, she said. Discussions with students at the University of Mannheim had confirmed this impression, she added; they complained that their workload stopped them from seeking out alternative paradigms.
Students see the need to rethink economics, “but they have neither the time, resources or energy” to challenge what they are taught, Ms Schweitzer-Krah said.
Academics may be caught in a similar trap, suggests the paper, “Students’ perception of the pluralism debate in economics: evidence from a quantitative survey among German universities”, set to be published in the International Review of Economics Education. To gain permanent jobs, economists are under pressure to publish in the “right” journals where neoclassical economics still holds sway, said Ms Schweitzer-Krah. There is even some evidence that in Germany, younger academics fighting to build their careers are even more orthodox than their older colleagues (of whom 90 per cent are estimated to belong to the mainstream anyway).
To break this cycle, government funding or course accreditation could be linked to academic positions being filled by economists with different views, she suggested – although she acknowledged that this could bring charges of state “manipulation”.
But the risk of inaction was that economics graduates would take their narrow view of the economy into influential positions in business and politics, she added.