Economic textbooks ‘are still teaching theories discredited by financial crisis’

Will the next generation of Irish economists be better prepared to tackle an economic crisis or has the profession failed to learn from the largest financial crash since the great depression?

Last week a professor of economics at Imperial College, London, Michael Joffe, said that textbooks for the subject continued to teach theories that have been completely discredited by the financial crisis, and some that had been debunked decades ago.

He was not arguing from an ideological perspective but from that of a scientist. He said the aim of the subject should be to provide students with analysis based on the way the world works, not the way theories argue it ought to work.

A lecturer in economics at the University of Limerick, Stephen Kinsella, said the course that they were teaching has been completely transformed since the economic crisis.

On Mr Kinsella’s undergraduate course he dedicates a whole lecture to failed theories.

“The ‘received wisdom’ bits are bracketed in one lecture called ‘zombie theories’ which students do need to know, because the profession expects them to know these terms; but I insist the students understand exactly why these theories failed and what is being done now to rebuild parts of economics without them,” he said.

In UCC, lecturer Seamus Coffey said there was a problem with the perception of what economics is used for. He said that the subject is an evolving science and that they currently do teach things that are wrong, but that it is part of a learning process.

“Do we teach stuff to our students that is ‘wrong’? Probably. I think here we try to get across the idea that economics is a way of thinking. It is very difficult to come up with absolute descriptions the way they are presented in a textbook, but understanding those descriptions is important.

“I think some of the issue is people expecting economics to be something that it is not — a forecasting tool. Economics is an ever-evolving science and the lessons we learn happen by looking retrospectively. The current crisis will change, and is changing, economics,” he said.

NUI Galway’s Dr Terry McDonough said the profession has completely ignored what has happened in the recent economic crisis. “The crisis has shamefully had little influence on the ideas of the economics profession in general,” he said.

Professor Brain Lucey from Trinity College Dublin said the real problem lay with the Leaving Cert economics course which he described as “archaic and technically wrong”. He said there had been a shift in emphasis in Trinity with the Business school now taking into account alternative theories and behavioural economics.


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