Real world economics

This research shows that Dutch economics curricula lack attention for real-world economic phenomena on a structural level. Although it is possible that the theoretical insights offered give us as students some insights in dynamics behind actual economic processes, this research at the same time shows that a link between those more polished theoretical insights and the rather complicated and messy real-world is often absent.

First, the amount of courses paying attention to specific economic sectors, such as the health sector, the housing market or the energy market, is measured. On average 9% of the courses pays some degree of attention to real world economic sectors. In 7% of the courses, economic sectors played a substantial role. 0% of the courses are entirely focussed upon real world knowledge of economic sectors.

Second, when looking at the percentage of ECTSs devoted to economic history throughout theory and methods courses, it is found that 6% of the courses spend at least some time on economic history, while only 2% of the courses spend larger amount of time or the entire course on economic history.

Third, the amount of courses that centralise one or more real world economic problem(s) is quite low. On average 8% of the courses do so at least to a limited extent. 5% of the courses spend larger amounts of time on dealing with problems occurring in the actual economy (as opposed to staying purely within the realm of theory) and only 1% of the courses are entirely devoted to this.

Finally, the three indicators just discussed are integrated by taking into account the percentage of total courses that pay attention to economic history, real world economic problems and/or economic sectors. This research shows that on average, 75% of the courses in Dutch economics curricula do not pay any significant attention to the complexities of the actual economic world. That is, three quarters of the courses stay completely within the world of abstract theory and methods, spending time neither on economic history, nor on economic problems, nor on economic sectors.

It should not be possible to graduate from an economics education without a thorough understanding of the economic reality. Yet in our current education system, this is in fact the norm. And yes, theory and research methods form the core of an academic education. But the walls of the ivory tower should not be too thick. Methods and theories should always be only a means, with understanding the economy as an end. This means that courses or parts of courses should be devoted to aspects of the actual economic system.

There are many ways to do so. Examples include guest lectures, excursions, analyses of sectors, detailed empirical discussions in papers, et cetera. Although this category largely overlaps with empirical research, it is different from empirical research per se, in that the real world has to be central while the treatment of empirical work can also be to demonstrate a theory.

A lack of attention for real world economics increases the risk that we as students will confuse theory for the real world itself (Clower, 1995; M. Morgan, 2012). Metaphorically speaking, the map gets mistaken for the territory. On the other hand, stepping outside the classroom and getting contact with the real economy helps to keep things fresh and helps to sharpen our minds. Facing the real world also helps us to become critical towards methodological assumptions. People often do not obey theoretical models, and the best way to realize this is look at what people really do. Through real world knowledge, the contingency of theoretical models is put into a sharper focus.

We are not alone in claiming this. The majority of the Dutch economists agrees that for a professional non-academic economist, solid real-world knowledge of the Dutch economy is very important (Van Dalen et al., 2015).

Economic phenomena always happen within a specific historical and institutional context (Hodgson, 2001). This means that properly trained economics students should possess knowledge of the history of the economy. Not only knowledge of the history of economic thought is relevant; economic history itself must be studied. Examples on the macro-scale are the rise of capitalism and socialism, various waves of globalization, the Great Depression, and the 20th century history of the monetary system. In the realm of meso-economics, one might think of the process of industry restructuring when new technologies are discovered (‘creative destruction’). In terms of micro-economics, how advertising has developed throughout history could be an example.

Again, Dutch economists largely agree. The majority of the economists feels that ‘the ability to place issues within their historical context’ is a very important skill a non-academic economist should have (Van Dalen et al., 2015).