Time to revamp the way economics education is delivered.

According to the Department of Education, Employment and Workplace Relations (now dissolved), labour market demand for qualified economists in Australia is forecasted to nearly double from 2012 until 2017. To ensure that economic graduates in Australia graduate with sufficient skills required in the workforce, the Australian Business Deans Council (ABDC) endorsed a set of new academic standards for degrees in economics in December 2013. These economic learning standards are separate from the qualification standards set by the Australian Qualifications Frame (AQF), where the latter are the standards universities have to adhere to under Australian legislation.

The endorsed new learning standards imply that future graduates in economics should be able to predict interest rate movements and its impact on the economy, evaluate a proposal to completely deregulate the energy industry in Australia, and to be able to identify the trends and outliers in electricity prices using economic intuition and relevant datasets. According to the communication standards set, future graduates in economics are expected to be able to “present a clear and coherent exposition of economic knowledge, ideas and empirical evidence both orally and in writing, individually or in collaborative contexts”.

A group of economists from various Australian universities was set up to construct the new learning standards. This project was mainly funded by the Australian Government for Learning and Teaching, gaining the support of the Economics Society of Australia as well. The learning standards were drafted after a thorough consultation process with academics and professionals and employers in the industry. The group also had the support of an expert advisory panel, consisting of prominent economists such as Professor Allan Layton of University of Southern Queensland.

These endorsed standards cover five learning domains: knowledge, application, data analysis, communication and reflection. The tasks that economists in the industry work on often draw on these learning domains. For example, it is not uncommon for an economist to be asked to investigate the causes behind high inflation or deflation in Australia or to come up with an economic model to identify price outliers in the commodity market.

In an interview with The Australian, Professor Guest recognised that both international and domestic students would find the communication standards to be demanding. This doesn’t come as a surprise since academics who have been in the industry for many years continue to struggle to present the economic ideas in their papers clearly and simply.

Do these newly endorsed learning standards for economics graduates sound like an insurmountable challenge? It is indeed a challenge, for many reasons that are not just limited to the high communication standard that is expected of future economics graduates.

One may be inclined to think economics graduates from ANU would certainly be well equipped with this endorsed set of skills, given how well regarded the economics degree and the university are in national and worldwide surveys of universities. However, this isn’t necessary true, as these surveys typically reflect the quality and quantity of international research output, an indicator that is perhaps more important to academics and potential PhD candidates in economics, rather than undergraduate economics students. These surveys tell us nothing about the content taught in economics courses or the quality of these courses. As a tutor for several economics courses over the last few years, there are at least two ways in which I suggest the delivery of economics courses in ANU (or more broadly, Australia) can be changed to help economics graduates meet the ABDC’s endorsed set of minimum learning outcomes.

 

1. Tutorials

Currently, economics tutorials are still mainly delivered using the conventional “chalk and talk” process. This means that tutors go through the tutorials on the whiteboard each week, with students often coming in without much preparation done. There is generally a lack of engagement between the tutors and students, as students, particularly the shy or weaker ones, do not actively participate much in these tutorials. As a result, students often go away not learning much from tutorials, apart from copying down the answers. After all, we all know from experience that the amount of learning you get from tutorials is highly correlated with the amount of participation.

Delivery of tutorials via group work discussions may just be the way to go for some economics courses. There are several studies that suggest that group work is a more conducive way of learning compared to the “chalk and talk” delivery. It isn’t hard to see why. When students work in groups with their peers, they often feel more at ease discussing their ideas and answers.   When group work discussions are successfully facilitated by tutors, the discussion among peers is likely to lead to “deep learning”, where students really understand the economic concepts and are able to apply them in different situations.

In fact, such unconventional group-work-styled discussions are currently in place for ECON1102 Macroeconomics 1 tutorials this semester. In these tutorials, students are split into four groups, discussing each question for five to fifteen minutes, before embarking on a five to ten minute “talk back” session. As the name suggests, in the “talk back” sessions, students present or contribute to the discussion of the question at hand based on what they have discussed among themselves. As a tutor for this course, the first tutorial was certainly awkward, not just for the students but for myself. However, after some time, students become accustomed to the format of the tutorials, and are more confident and at ease with their peers when it comes to discussing the problem set. Students also start learning from one another, working and talking through the thought processes in economics, while the tutor facilitates the group discussions along the way. Of course, for a typically unconventional economics tutorial format like this to work, participation marks are awarded to incentivise students to participate in group work and class discussions.

 

2. Assessments

A glance through the course outlines of economics courses suggests that most assessments are commonly in the format of tutorial tests, as well as mid-semester and final examinations. Some courses may have an individual assignment or project as part of the assessment. However, group projects and oral presentations generally appear to be uncommon.

For most subjects, apart from highly technical economics courses, there are certainly no reasons why assessments should be the way they are. Economists in the workforce often find themselves working in groups. Having more group work assessments in university can help prepare students for such collaborations when they step out into the workforce. Moreover, even for economists who work individually, they are often required to present their recommendations to stakeholders. Oral presentations in economics courses can help students learn how to present economic recommendations and concepts coherently and logically. Through these presentations, students are probably also going to realise that presenting economic concepts in a coherent manner, particularly to a wider set of audience who may not be economists, is a lifelong skill to pick up and one that does not come naturally for most.

These new learning standards for economic graduates are more likely to be achieved if we break away from the conventional way of delivering economics education to students. However, as these economics learning standards are independent from the qualification standards, it will be interesting to see how much of these standards are actually adopted by each university in Australia in the future. Using these learning standards as a benchmark for structuring economics degrees and making changes to the way economics education is delivered can only be helpful for graduates as they step out to the workforce.

Economics is good for many things!

A few weeks ago, the NY Times recently published an article titled “What is economics good for?” The follow up comments to the article are available here.

I have read the article twice. The main argument in the article basically says that “the fact that the discipline of economics hasn’t helped us improve our predictive abilities suggests it is still far from being a science, and may never be.” I do not agree with the article for several reasons

1. Economics as a Social Science

Economics is commonly categorised as a social science. I definitely do not know who was the one who defined economics as a social science. I am certain that Economics definitely does not fit into the conventional definition of Science. But, the question here is: Does it matter?

Why are we arguing over whether Economics is a science?

2. Economists are never meant to predict anything! (I know there are many who agree and disagree with this.)

The article says that:

Economics has never been able to show the record of improvement in predictive successes that physical science has shown through its use of harmless idealizations. In fact, when it comes to economic theory’s track record, there isn’t much predictive success to speak of at all……What is economics up to if it isn’t interested enough in predictive success to adjust its theories the way a science does when its predictions go wrong?

The article compares how economics has fared with respect to physical science in terms of predictive successes.

I don’t know what happened over the years that led everyone to think that economists are people with crystal balls that could tell you about the future. We can’t! I think economists who are humble and with some humility will tell you that they can’t forecast the future with 100 percent probability of getting it right. But, we analyze the economy based on what has happened consistently in the past. Economists use the resources we have, make logical analysis and forewarn people about the possibility of an upcoming crisis, a possible “bubble” in the economy and so on. Forewarning people about an upcoming crisis is different from predicting what will happen definitely.

I believe economics as an area of study and profession is entering a new era, where people in the field are constantly trying to improve their skills, and to incorporate more characteristics of human behaviour into their models. In fact, to have a shot at “predicting the economy”, neuroeconomics/natural experiments might be the way to go. Even without our dismal predicting skills, I think economists have contributed a fair bit towards facilitating the understanding of the economy.

Let me end this post with something to ponder about:

If medicine hasn’t helped in certain areas, does it mean we stop trying?

(Well, I am really just trying to make people think about other disciplines. For example, a cure for HIV is not quite discovered yet, does that mean we should stop trying?)

 

That excel error (that policymakers now have an excuse to use in future.)

1681.strip

Source: http://dilbert.com/strips/comic/2007-08-08/ (h/t John Quiggin)

The error in the Reinhart-Rogoff (2010) [RR thereafter] paper titled “Growth in a time of debt“, also published in AER. RR (2010) concluded that a public debt-to-GDP ratio above 90% drags on a country’s economic growth. More importantly, there is somewhat a nonlinear relationship between debt and economic growth. Herndon, Ash and Pollin (2013) tried to replicate the results in RR (2010) and find that when the debt-GDP ratio breaches 90%, growth slows to 2.2% and not the -0.1% that RR (2010) finds.

The next new deal (blog of the Roosevelt Institute) shows you how the mistake was made, while Reinhart and Rogoff provides an explanation.

This error is needed to get the results they published, and it would go a long way to explaining why it has been impossible for others to replicate these results. If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel. – Next New Deal.

As a researcher in this area, I’ve read that paper a while ago. Yes, it is an influential paper. Yes, a mistake is a mistake. But,

i. It is one of the many papers that have been published on this topic involving debt-GDP ratio, and implications on the economy. And, I do not really think policymakers actually based their decisions to promote austerity soley on these papers. Paul Krugman explains what I think rather well in this piece. The Altlantic provides a rather good take on this too.

ii. Debt-GDP ratios above 90% can’t be good for an economy, whether a linear or nonlinear relationship between debt-GDP ratio and economic growth exists.

Economists and researchers alike should definitely be responsible for the work they put out to public and for the work they publish. As an economist that is a perfectionist and rather pedantic, I know how easy it is to make mistakes in what you do, despite the number of times you may have checked through your work. It is scary to know that you may still make mistakes despite your best efforts, especially when you are handling lots of data. Unfortunately, in academia, there isn’t a whole lot of cross-checking going on. It is already difficult to find someone working closely in the same field, using the same methodologies.