Do we need to change how economics is taught?

Question: Do we need to change how economics is taught?

\r\n

Dan Ariely: So this goes back to the question of, “What’s the role of economics?”  And economics has two roles.  One role, it’s a field of study.  It’s a fantastic, wonderful field of study.  It shouldn’t be changed, right?  It’s just lovely.  The same way that philosophy is lovely, and sociology and so on.  And the field should keep . . . keep on going.  The second part where economics is different from all social sciences is that it has prescriptions for social policies.  It tells us how to behave.  It tells policies what to do.  It tells business people what to do.  And this is the place that worries me.  This is the place that I think we should include more in the discussion than just standard economics.  So for example my idea would be to create a new field that would be called “policy research”.  So imagine that we do a tax cut for $800 billion just for example.  What is the right way to do it?  Is it just the right way to take economic principles, and based on that decide how much to give and who to give to and so on?  Or is it better to take Iowa and give some people in Iowa some discounts, and other people other rebates and so on, and check which one works better?  You see as a scientist I have ideas about what will work better or not.  But I don’t have the confidence or the audacity to suggest that I know everything and I can predict the real right approach.  I can suggest experiments, and the result of the experiments could tell us what to do.  And that’s actually my hope.  My hope is that economics will join psychology, and sociology, and behavioral economics to create a field where everybody proposed experiments.  We test them out and we learn the most about what we should be really doing.  Now I’ll give you one example for (46:04) this on some committee that is looking at the No Child Left Behind Policy . . . That’s a policy that gives schools money . . . to schools, and principals, and teachers based on performance of kids.  We all have ideas about it.  Is this right?  Is this wrong?  I personally think there’s a lot of things wrong with it.  Most of teachers also think it’s very wrong.  But with the billions of dollars that go into it – and I’m not sure what percent of GDP education; let’s say it’s about 15 . . . With the billions of dollars that go into it, nobody is creating good studies that are testing the efficacy of this.  For me this is just unbelievable.  And here is just a list of questions that we have no ideas about.  What’s the right age to start studying?  We don’t know.  I mean for each topic we don’t know.  How many minutes should a class session last?  We have no idea.  What is the ratio between teachers and kids that are ideal?  No idea.  I sat next to the head of UNESCO a few weeks ago and had lunch with him.  And he said there’s one thing we know about education, and that’s the quality of the teachers really matters.  I said fine.  What does it mean – “quality of the teachers?” “I don’t know." I mean it’s unbelievable that we spend so much money based on our conceived notion about what’s right and what’s wrong.  As a scientist I say we know some things, but we don’t know so much.  Let’s just create a system where we do more experiments and test more things out.  I think businesses should do it more, and I think the government should do it more.  And one good case is medicine.  You know medicine before the FDA was just placebos.  We would put leeches, and bleach people, and all kinds of ointments.  It was useless.  And as a burn patient, you know I suffered through some treatments that were just placebos.  What the FDA is doing is forcing people to work against their natural tendency, and forces people to do experiments.  If you’re a physician and you think Ointment A is good, you’re not going to deprive half of your patients from it just to test if it’s working.  You would give everybody this.  If you’re a businessman and you think this is good for your clients or for your stockholders, you’re not going to deprive half of the population of it.  You’re going to give it to everybody.  The FDA is forcing people to do something that’s not natural – experiments.  And by doing that we’ve advanced medicine in a fantastic way.  But I think the same discipline is important for other things – for policies and for business.

\r\n

Recorded on: Feb 19 2008

\r\n

 

Economics is a field study that delivers policy prescriptions, Ariely says.

Why the ocean you know and love won’t exist in 50 years

Can sensitive coral reefs survive another human generation?

Videos
  • Coral reefs may not be able to survive another human decade because of the environmental stress we have placed on them, says author David Wallace-Wells. He posits that without meaningful changes to policies, the trend of them dying out, even in light of recent advances, will continue.
  • The World Wildlife Fund says that 60 percent of all vertebrate mammals have died since just 1970. On top of this, recent studies suggest that insect populations may have fallen by as much as 75 percent over the last few decades.
  • If it were not for our oceans, the planet would probably be already several degrees warmer than it is today due to the emissions we've expelled into the atmosphere.
Keep reading Show less

Vikings unwittingly made their swords stronger by trying to imbue them with spirits

They didn't know it, but the rituals of Iron Age Scandinavians turned their iron into steel.

Shutterstock
Culture & Religion
  • Iron Age Scandinavians only had access to poor quality iron, which put them at a tactical disadvantage against their neighbors.
  • To strengthen their swords, smiths used the bones of their dead ancestors and animals, hoping to transfer the spirit into their blades.
  • They couldn't have known that in so doing, they actually were forging a rudimentary form of steel.
Keep reading Show less

Health care: Information tech must catch up to medical marvels

Michael Dowling, Northwell Health's CEO, believes we're entering the age of smart medicine.

Photo: Tom Werner / Getty Images
Sponsored by Northwell Health
  • The United States health care system has much room for improvement, and big tech may be laying the foundation for those improvements.
  • Technological progress in medicine is coming from two fronts: medical technology and information technology.
  • As information technology develops, patients will become active participants in their health care, and value-based care may become a reality.
Keep reading Show less