Saturday 4 April 2020

How ideas spread: Why Econ101ism is economist's Frankenstein and we are to blame.

Alaspoor YorickI knew him well”
 William Shakespeare, Hamlet

Do you see a problem with the above quote? If you do, it is because you either know Hamlet very well or you know it is a famous misquote. The real line is Alaspoor YorickI knew him Horatio?". In fact, there are lots of famous misquotes that continue over time. Some of which you will have no idea that they were a misquote. I always found Neil Armstong’s “One small step for man, one giant leap for mankind” confusing: was it profound or just a tautology? In fact, he said “One small step for a man, one giant leap for mankind”, which obviously makes much more sense. The reason this misquote exists is due to the sound cutting out a little so you can barely hear the “a”. Listen to it again.

If a significant proportion of people know these misquotes exists, why do they continue? One would hope over time information about the correct quote would dominate the misquote, and the misquote would disappear from memory. As a result, I think the misquote is a good starting point to discuss how ideas and information spread.

The recent book by Robert Shiller’s Narrative Economics seems to agree with my view about how ideas spread, or at least I think that it does.  I haven’t picked up the book yet which has been sitting on my bedside table for a few weeks now. But after reading the blurb, I think I get the gist of what he is getting at, and I may never get round to reading it.

Some of you will now be thinking this is sacrilege. This guy is meant to be an academic, he could be spreading misinformation about Shiller’s view, how scandalous! Well the reason I did this was to demonstrate my point.*

My actions were how a lot of people will come to understand and spread ideas. Even if I read Shiller’s book cover to cover, I may not do a good job of explaining what Shiller is getting at. Perhaps Shiller did a bad job of what he was getting at. Perhaps I misread what Shiller’s view is, and perhaps you misread my misreading and so on.

Now I am not suggesting that we can never understand anything or not seek to try and understand.  But I think it is important to recognise that information, or more importantly our
understanding of that information, is not passed on like carbon copies. Think “Chinese whispers” but on a much larger scale.

However, even if the idea is passed on correctly, certain ideas may spread faster and dominate other ideas. You may have heard the quote:

A lie gets halfway around the world before the truth has a chance to get its pants on.

Winston Churchill (did not say this)

So how fast an idea spreads is important for our collective understanding of that idea. But perhaps we believe that eventually the “truth” will dominate other ideas so we shouldn’t worry too much about it. However, even if we were to accept this always happens eventually**, there is still going to be a period of time where people will believe the lie over the truth.

In economics there is a term called Econ101ism. This is attributed to the simple ideas that are taught in Econ101 but then are often misapplied to more complex scenarios. A key example of this is people thinking the market is always efficient. What is strange is that in Econ101 you often see cases where the market is inefficient, such as externalities (think, pollution etc).

However, I would argue this is not really the fault of students misremembering what they were taught, it is partly a problem with how Econ101 is taught: it does not consider the consequences that students are actually going to misremember and forget in the future. So Econ101ism is economics very own Frankenstein (actually economists are Dr Frankenstein and they created the monster that is Econ101ism).

For the most part, Econ101 does look at benchmark cases where the market is always efficient. Even if we deviate from this to show how it often isn’t, students are going to hear “market” and “efficient” an awful lot. So it is hardly surprising that overtime many students will come away remembering the thing that was repeated over and over.

My greatest concern is that even if we spread the notion of Econ101ism, it is really hard sometimes to convince individuals once an idea such as Econ101ism takes hold.

So Econ101ism is out there and even if we were to change how Econ101 is taught completely, it is still going to take an awful long time to cure. As Shakespeare said “the truth will come out”. But my worry is, what happens in the meantime?

*This is one of my favourite pedagogical techniques. Yes I do wear a leather jacket and sit on my chair backwards whilst teaching, why do you ask?

**It may not always happen eventually. And yes, we can have a debate whether we can know something to be “true” or not but I need a drink first.


My friend Helen, a Shakespeare expert, informed me that it is actually “the truth will come to light”. I wish I could say I did this on purpose but sadly I did not. The weird thing about is I did in fact look this up before I posted the blog, so I must have subconsciously made the typo!

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