UNC-Chapel Hill’s Economics Program Lacks Historical Perspective

A few weeks ago I went camping with some fellow members of the University of North Carolina at Chapel Hill’s Young Americans for Liberty chapter. Whenever we get together, there is sure to be an impassioned discussion—not just about the Carolina Panthers or the best brands of bourbon, but also American foreign policy and free market economics. I usually jump at the chance to talk anything related to economics—my area of study—but I was lost around this campfire discussion.

As my friends eagerly engaged each other in the philosophies of Friedrich Hayek and Ludwig von Mises and even Ron Paul’s book End the Fed, the only thing that came to my mind was the equation for the equilibrium level of capital per worker in Solow’s growth model. So I sat there in silence, thinking I thought I was the econ major!

It turns out that my frustration that weekend is rooted in a larger problem. Economics programs across the country—gearing their curricula to prepare students for the rigors of grad school—have been replacing the teaching of the history of economic thought with the memorization of mathematical models. But what should be required of, and in the end is more beneficial for, every undergraduate is not just a mastery of those models, but understanding of their historical context and the journey of thought it took to build them.

The decline of economic history can be illustrated by the fact that, since 1975, the number of faculty members specializing in economic history has fallen from 5 percent to just over 2 percent. And 70 percent of such faculty are entering latter stages of their careers, having earned their PhDs before 1994. This trend is manifested at my school, UNC-Chapel Hill, in the declining importance of economic history courses.

In 1997, the economics department offered seven such courses, five of which a student could count toward his or her major. Today, however, only two of the five economic history courses count toward a major. Moreover, the fraction of students who take either class is small given that they can choose their four electives—the number required to earn the major—from among more than 25 courses. The result: a typical undergraduate student finishes his or her economics degree without studying, for example, John Stuart Mill.

Additionally, some of the required courses have made memorizing models their focus. Many students regard Econ 101 and Econ 420 (an intermediate macroeconomics course) to be as math-intensive as any calculus class. Unfortunately, little mention is made in those courses of the great economists who created such models, or of the context in which they were first formulated. For example, I learned more about the life and work of Friedrich Hayek this summer as a research intern at the Pope Center than I did during three years of college coursework.

Without any historical context, theory is often left in the shadows of its models. Dr. Kelly Markson, an economics professor at Wake Technical Community College, finds that heavy emphasis on equations often leaves the meaning of their concepts hidden to the students who either are new to economic thinking, or are less mathematically inclined. I can attest to that from my experience in Econ 420. Grasping the intuition behind the various models was a secondary concern for most students as they struggled to learn the array of equations introduced with each. In the end, rote memorization generally trumped real learning.

Examining historical context opens a much needed perspective for students. For instance, one readily sees the motivations for socialism when considering that Karl Marx wrote The Communist Manifesto and Das Kapital during an era in which England was still industrializing. Around him he saw what he considered to be the suffering of the working classes whom the bourgeoisie exploited in London’s factories. Similarly, John Maynard Keynes wrote his book The General Theory of Employment, Interest, and Money in response to what many considered the failure of capitalism during the Great Depression, and the need for government intervention into the economy. Without this context in mind, one can hardly appreciate the great lengths he goes to mathematize aggregate variables. This same lesson holds true across history, from Adam Smith to Thomas Piketty.

But the teaching of economic history has other important justifications. Executives in the financial industry increasingly find that young economists have little knowledge of the causes of the Great Depression and other financial crises. And Robert Solow argues that teaching economic history sheds light on the “interaction between economic behavior and social institutions.” Interpreting this interaction requires the kind of “logical rigor” that is just as important as any mathematical model.

These historical lessons should be the cornerstone of the undergraduate economics education—not occasional asides that invoke little engagement from students. To remedy this problem, the department should adjust two of its introductory courses and make economic history a requirement for earning the major.

Students in Econ 101, the majority of whom in a given semester are likely to be non-economics majors, are poorly served during the time it takes to memorize the equation for price elasticity. Instead, a better economics foundation could be built by interpreting excerpts from, say, Adam Smith’s The Wealth of Nations. Similarly, Econ 420 can produce better economic thinkers by focusing less on fitting into the course as many models as possible, and more on actually reading the groundbreaking books and analyses of Keynes, Friedman, and others.

The department should also expand its current selection of economic history courses that count toward the major—perhaps reintroducing previously offered courses such as “Revisionist Economic History.” Undergraduates in the program should be required to complete one such course.

In the end, what should be sought is balance. There is, of course, value in having a thorough knowledge of economic models. But they alone contribute little to any meaningful conversation—whether in the classroom or around the campfire—when presented without historical perspective.