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Climate change means we must rewrite economics textbooks

COMMENT: A crisis in economics education is creating a generation who don’t understand climate change

Do politicians need better advice and analysis on climate impacts to allow them to make better strategic decisions?

Do politicians need better advice and analysis on climate impacts to allow them to make better strategic decisions?

By Erin Nash and Yuan Yang, Rethinking Economics

Millions of students across the world take undergraduate economics courses each year. They will leave to take on roles in academia, business, politics and policy-making.

The ways in which we are taught to think will frame how we respond to the global challenge of climate change. And yet, we economics students are not being educated to open our eyes to the world.

We are instructed to divert our attention from reality and to focus on our textbook models. We are encouraged to think of our discipline as value-free, scientific, and authoritative.

This approach gives us little chance of engaging with the challenges of climate change with the nuance and consideration they demand.

This is one reason why more than 65 student groups across 30 countries in the ISIPE global network are seeking changes to the way economics is taught at universities. We call for pluralism: a diversity of values, methods and schools of thought in economics.

Is economics value-free?

The reality is that the economists that are currently produced by many of the world’s top-ranked universities are severely ill-equipped to make judgments on what is good for society.

We are not taught to scrutinise the ethics of our judgments; we are not taught to recognise the boundaries of our discipline; and we are not encouraged to think critically about our methods.

Harvard economist Gregory Mankiw has asserted that “like most economists” he doesn’t “view the study of economics as laden with ideology”. He recently wrote that the “dirty little secret” of economics who give policy advice is that they become political philosophers. “Our recommendations are based….on our judgments about what makes a good society,” he said.

Mankiw’s view that economics is value-free and apolitical is reflected in his macroeconomics textbook – the predominant textbook for undergraduate teaching.

And yet economists must make both explicit and implicit ethical judgments all the time: in selecting what level of welfare present and future generations ought to enjoy through the use of ‘discount rates’ within economic models; and in using monetary measures such as prices to indicate worth, despite many people considering many things in life – humans, human relationships, parts of our natural world – priceless.

An example of value-ladenness is in what economists do and do not choose to discuss.

Early on, we are taught that we cannot and should not make comparisons between the welfare of different people; so an economist has nothing to say about an island being submerged if some people in the global North are made better off.

If we’re lucky, we might get introduced to a slightly more sophisticated measure of efficiency (Kaldor-Hicks efficiency). This states that if a rich country is happy to pay a poor country to accept its hazardous waste, polluting abroad rather than at home, that should just be considered an efficiency-improving exchange.

According to John Ashton, former UK climate change envoy, the problem with current economics is that it cannot distinguish between “growth that recognizes resource and ecosystem limits and growth that pretends they do not exist.

“Anyone who tries to make such distinctions is committing the heresy of ‘directionality’.”

Towards a realistic economics

The current approach is not the only way to see the world.

Tom Green of the Liu Institute for Global Issues writes in his survey of economics textbooks that increased GDP generally means increased matter and energy. But the reverse could also be true.

“Rather than seeing increasing throughput as a sign of economic health, ecological economists argue that a healthy economy achieves high levels of wellbeing with a minimum of throughput,” he writes.

The intellectual insularity of modern economic teaching is partly achieved through its isolation from real-world issues.

Oxford University tutor Alex Teytelboym accused the undergraduate economics curriculum of focusing on “cute theoretical models” that had not been subjected to empirical analysis. “Climate change economics requires the opposite approach.”

We are currently within a critical decade for climate action, and economics as a discipline has enormous potential to play a positive role in this. Yet our economics education is largely silent on the reality of the climate crisis, despite its importance to our individual and collective futures.

This crisis has been one of many reasons students are now rethinking economics. In response to the crisis of economics teaching, we are forming alliances worldwide: with students, academics, and all citizens. Two weeks ago, we simultaneously released an open letter across 20 countries calling for pluralism in economics teaching.

The world is waking up to see the links between our planetary crises and the state of economics teaching.

The authors are members of Rethinking Economics, an international network of students who want to ‘demystify, diversify, and invigorate economics’. Find out more on their website.

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  • Thomas Simmons

    Sorry, but as an Economist who’s been teaching the subject for 16 years and written 3 textbooks, I have to disagree with all of these students. Economics, as currently taught, *clearly* and *unambiguously* allows for the examination and inclusion of values these students hold dear. I think, perhaps, they need to examine the totality of the field more, and whine a little bit less. My suspicion is that they are more concerned with “telling the world what they know they already want” than doing the hard work of learning to think in the logical, systemic steps that characterize economics. The Tweet Generation enters the University….

    • ƬϵαƤᴑƭƭƴ

      Capitalism Apologist alert

      • Bill

        As you type away on a computer powered by electricity, in a home that is air conditioned and heated, with a refrigerator stocked with food in the next room, and a television blaring the latest global warming scare tactic, all things provided by capitalism. Funny.

  • GGR

    Dear Rethinking Economics,
    I have taught AP Macroeconomics for 26 years. During that
    time, I have seen a concerted movement to bury Keynesian economics and enshrine neo-classical, laissez-faire economics.
    That fad has mostly faded except that it now infects our national
    legislative branch to such an extent that fiscal policy solutions to our
    current crisis are impossible. It isausterity or nothing.
    This has crippled one of the world’s biggest economies.
    Although we teach negative externalities, a serious attempt
    to include the cost of environmental degradation in every economic calculation
    is not done.
    The role of altruism, compassion, and global awareness that
    affects decision-making at the individual level is discounted as an emotional
    as opposed to a “rational” basis.
    We should not throw out the good with the bad, but a thorough rethinking is more than important, it is vital.
    I am, at 65 years of age, still a student of economics. I would be proud to join your organization.
    Thank you for the work you have started.

  • pdjmoo

    This is just great. Old Economics has lead us to the brink of disaster on this planet when everything and everyone has become just a dollar figure on a balance sheet. It is heartening to see our younger generation questioning the old order.

  • Marc Aurele

    Instead of talking, studying, debating, modeling why don’t we simply enforce the already existing laws and stop trashing our planet?

  • lanedc

    Are there any business people who have started, developed, and run a business that majored in economics in college? And by that I mean a real business not a paper pushing business but one that actually produces something. I am 65 years old and know several successful business people. Not one has a degree in economics. But most have a bettter understanding of real life economics than the talking heads I see and hear on T.V. Or on Yahoo.

  • Science Officer

    Economically, global warming is proof that you really can pull money out of thin air….

  • Bill

    Therein we find a hint of truth. Fact is we don’t need to rewrite economic textbooks because of climate change. We need to use the lie that is climate change to change textbooks. This whole thing is about control and money. Follow the obscure path to those two things and you will find the puppet masters.

  • Rick

    This is what people who don’t like the laws of economics do – they pretend that they can ignore that which they don’t like. The problem is that it’s like ignoring physical laws, like gravity. You end up with the blind leading the blind right off a cliff, with the leader complaining that it’s the cliff’s fault.

  • Robert W

    We now have an entire generation of confounded buffoons. Changing economics textbooks to include sensationalized alarmist dogma? What could we call this chapter, “how to fund raise yourself to prosperity” perhaps?

  • Schlibdiver

    Truth is, they don’t want free trade, national autonomy, and economic freedom, they want communism.

    Let not ours be the generation that caves-in to communist tyranny.

  • Graehame

    If climate change led to the downfall of the Bronze Age civilizations, the fall of Rome, & the Mongol invasions, then what does that do the the argument that modern-day climate change is man-made? What it does, in my view, is make the whole argument about whether climate change is man-made or not completely irrelevant.

  • Michael Foster

    Coal oil and gas fueled a frenzy of accelerating growth for a couple centuries, during which time we have run into biological limits.

    Economics must understand Value and account for the True Cost of failing to achieve 6%-8% annual reductions in fossil fuel emissions that the geophysical laws of the planet demand. If we plan to return something habitable at the end of this century, HOW MUCH. Never mind peak oil and running out of stuff like fish and water, which causes another kind of collapse. Please tell me how economics values my grandchildren’s right to stuff like biodiversity as we observe the 6th extinction unfolding.

    Please explain to the forest industry the economic benefit of leaving a forest standing in a decade when our remaining carbon banks might keep us from crossing thresholds that trigger abrupt shift-state global warming.

    Please explain to Monsanto the economic benefit of handing over seeds and foregoing patents so that people can eat and farmers stop committing suicide.

    Please explain to fuel corporations the economic benefit of a moratorium on drilling and mining for new fossil reserves in a time when we have 5x more reserves than we can possibly burn without cooking our grandchildren and everything to come.

    Where are the values-free models that can answer how to live in a finite system where human population has climaxed and our incredible waste now forces us to face collapse or a whole new model built on cradle-to-cradle resourcefulness that restores a balance of cleaner air and water and land use on a rapid time frame.

  • Edward J Wood

    Ah, yes, the emerging study of “green accounting:” the idea that it is somehow more valuable to leave stuff in the ground than dig it up, to put a dollar value on things you don’t intend to sell. No more mining, no more drilling, no more forestry, no harvesting of natural resources whatsoever. Turn America into one big Amish farm community with no powered vehicles, no electricity, no running water.