Vol. 3. Numbers 1 & 2 2006

ARTICLES The Ranking Game, Class, and Scholarship in Frederic S. Lee American Mainstream

Four Reasons for Pluralism in the Teaching of Frank Stilwell Economics

An Introduction to eRoadmapping: Providing Rodney Carr, Mary learning paths for students and empowering teachers Graham, Phil Hellier and Helen Scarborough

The Shrimp Game: Engaging Students in the Margaret Giles and Jo Classroom Voola

Is Economic Philosophy a Subject Worth Teaching? L.A. Duhs

Trends in Economic Degree Enrolments within Alex Millmow Australia 1990-2004

Teaching Economic Philosophy: Economics, Ethics L. A. Duhs and the Search for the Right Maximand

Insecure Participation: Experiments in a One-day Christopher R. Geller Introduction to Economics

Attendance and assessment performance in Averil Cook and James Economics courses at the University of Queensland’s Laurenceson Ipswich campus

NOTES AND COMMENTARIES Posting of EVALS for Net Access by Students Editors Anti-Plagiarism Software Editors

Editorial Executive • Co-Editor Dr Mohammad Alauddin Telephone: (+61 7) 336 56664 Email: [email protected] Web Page: http://www.uq.edu.au/economics/staff/alauddin.htm • Co-Editor Mr Alan Duhs Telephone: (+61 7) 336 56574 Email: [email protected] Web Page: http://www.uq.edu.au/economics/staff/duhs.htm • Associate Editor Dr Abbas Valadkhani Telephone: (+61 7) 3864 1233 Email: [email protected] Web Page: http://www.bus.qut.edu.au/schools/economics/contacts/academic.jsp • Book Review Editor Mr Alex Millmow Telephone: (+61 3) 5327 9057 Fax: (03) 5327 9405 Email: [email protected] Web Page: http://www.ballarat.edu.au/ard/business/staff.shtml • Business Manager Dr Mohammad Alauddin Email: [email protected] Editorial Board Professor William J. Baumol, New York University, USA. Professor Harry Bloch, Curtin University of Technology, Australia. Professor Bruce Chapman, Australian National University. Professor Kenneth Clements, University of Western Australia. Professor David Colander, Middlebury College, Vermont, USA. Professor John Foster, The University of Queensland, Australia. Professor Andrew Hannan, University of Plymouth, UK. Professor Yujiro Hayami, Foundation for Advanced Studies in International Development, Japan. Professor Tim Hazledine, University of Auckland, New Zealand. Professor K.L. Krishna, Delhi School of Economics, India. Professor Alan Luke, Nanyang Technological University, Singapore. Professor Rod O’Donnell, Macquarie University, Australia. Professor David Round, University of South Australia. Professor Daniel Rubinfeld, University of California, Berkeley, USA. Professor Warren Samuels, Michigan State University, USA. Professor Amartya Sen, Harvard University, USA. Professor John Siegfried, Vanderbilt University, USA. Professor Jim Taylor, University of Lancaster, UK. Secondary School Teaching Representatives Mr Doug Cave, Queensland Economics Teachers Association, Australia. Mr Ian Searle, Brisbane Boys Grammar, Australia Australasian Journal of MISSION STATEMENT

The Australasian Journal of Economics Education is a peer-reviewed journal that publishes papers on all aspects of economics education. With a view to fostering scholarship in the teaching and learning of economics, it provides a forum for publishing high quality papers and seeks to bring the results to a widening audience. Given both the increasing diversity of the student clientele, and increasing calls for greater attention to the quality of tertiary teaching, this Journal seeks to foster debate on such issues as teaching techniques, innovations in the teaching of economics, student responses to such teaching, and the incentive systems which influence the academic teaching environment. The AJEE is interested in research involving both quantitative and qualitative analyses and also in interpretative analyses based on case studies. While the Journal is Australasian-focussed, it encourages contributions from other countries in order to promote an international perspective on the issues that confront the economics discipline. AJEE aspires to:

1. Report research on the teaching of economics, and cultivate heightened interest in the teaching of economics and the scholarship of teaching. Pedagogical issues will be a central feature, and will encompass work on the teaching of economics in diverse contexts, including large and small classes, undergraduate and postgraduate classes, distance learning, issues confronting foreign students on-shore and off-shore, and issues related to the teaching of fee-paying MBA and other post-graduate groups from diverse disciplinary backgrounds. Though economics is the prime focus, consideration will also be given to work on other subjects that have a demonstrated relevance for the teaching of economics. Such issues will also involve evolutionary issues in the teaching of economics, in terms both of effective ways to teach evolving theory and of evolving technology with which to teach that theory (including on-line teaching). Recognition will be given to the fact that economics as a discipline has not fared well in CEQ results (course experience questionnaire results) since the reporting of those results began in Australia. Nor has economics teaching typically been well received in the USA or UK, according to survey evidence. In that context the relevance to teaching of changing administrative arrangements in universities will also be highlighted (eg in terms of contemporary quality assurance procedures and other government policy changes in Australia and New Zealand). 2. Report research on the nexus between teaching and research (including research on the diverse, changing and potentially conflicting incentives within the academic industry). Papers exploring the extent to which research and teaching activities are complementary or competitive will be welcomed. 3. Recognise the relevance of some more deep-seated implicit assumptions and issues of economic philosophy embedded in what is commonly taught, (as in Sen’s work on economics and ethics, for example). Inter alia, the question arises as to the way in which students respond to economics taught as a path to scientific certainty, as against economics taught as reflecting unsettled debate and vigorous controversy. 4. Recognise the place of history in the teaching of economics. Both HET and tend to play a diminishing role in professional economics training, as emphasis on technique dominates. This a-historical approach to the teaching of economics has been criticised by many influential economists (including Joan Robinson, Leontief, Myrdal, Colander, and Robert Clower in his acerbic remarks about the value of much that is published in such prestigious journals as the AER). This line of criticism has been continued in the recent growth of associations in a number of countries (including one for Australia and New Zealand) and on the web through the Post Autistic Economics (PAE) newsletter. Historical and institutional factors will thus provide one focal interest. 5. Recognise interdisciplinary issues important to the presentation of economics in various contexts. On the one hand, economics students are not systematically exposed to the insights of other social sciences and the conformity or otherwise of their conclusions with those of economics. On the other hand, other disciplines within the social sciences and humanities (e.g. the Social Work profession) do not always include even an introduction to economics for their students, notwithstanding that economic issues are often very important determinants of the environment within which they operate. More fundamentally, questions arise as to whether social science is more than the sum of its respective parts, and as to whether the roots of economics can be fully understood in isolation from the history not only of economics but also of politics and philosophy. 6. Establish a link to the teaching of economics in the secondary schools, given that tertiary enrolments in economics reflect fluctuating enrolments in economics in the secondary schools. 7. Encourage on-going surveys of student response to the teaching of economics across Australasian (and other) institutions, including response to experimental teaching and to differences between institutional approaches. (c.f. Colander and Klamer’s 1988 survey of economics students at USA ivy league institutions.) 8. Monitor trends in the teaching of economics both globally and in the Australian and New Zealand university systems (such as enrolments, staff- student ratios, international-domestic student ratios, offshore offerings etc), and the implications of those trends for various funding arrangements. 9. Promote a series of papers on specialised themes within the overall province of the teaching of economics e.g. on the teaching of Principles courses, the teaching of History of Economic Thought, the teaching of intermediate and , the teaching of , and likewise regarding teaching in such streams as Quantitative Methods, large first year classes, non- English speaking background students, the teaching of economics to non-economists, product differentiation in teaching economics, and professional education in economics in executive education programs outside conventional university contexts. 10. Monitor the measuring and rewarding of quality (economics) teaching within Australasian universities.

Vol. 3. Numbers 1 & 2 2006

AUSTRALASIAN JOURNAL OF ECONOMICS EDUCATION

CONTENTS

ARTICLES The Ranking Game, Class and Scholarship in Frederic S. Lee 1 American Mainstream Economics

Four Reasons for Pluralism in the Teaching Frank Stillwell 42 of Economics

An Introduction to eRoadmapping: Providing Rodney Carr, Mary 56 Learning Paths for Students and Empowering Graham, Phil Hellier and Teachers Helen Scarborough

The Shrimp Game: Engaging Students in the Margaret Giles and Jo 73 Classroom Voola

Is Economic Philosophy a Subject Worth L.A. Duhs 90 Teaching? Trends in Economics Degree Enrolments Alex Millmow 111 within Australia 1990-2004 Teaching Economic Philosophy: Economics, L.A. Duhs 123 Ethics and the Search for the Right Maximand

Insecure Participation: Experiments in a One- Christopher R. Geller 151 day Introduction to Economics

Attendance and Assessment Performance in Averil Cook and James 171 Economics Courses at the University of Laurenceson Queensland’s Ipswich Campus

NOTES AND COMMENTARIES Posting of EVALS for Net Access by Students Editors 184 Anti-Plagiarism Software Editors 186

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 1

THE RANKING GAME, CLASS, AND SCHOLARSHIP IN AMERICAN MAINSTREAM ECONOMICS

Frederic S. Lee University of Missouri, Kansas City E-mail: [email protected]

ABSTRACT

The paper starts with an analysis of the rationale and logic of ranking which culminates with the conclusion that the criteria used to rank journals which are then used to rank departments are influenced by where the top departments publish. In the second section, the intellectual and social organization of mainstream economics is delineated and the role of ranking within it identified; while the third section summarizes the empirical research and shows that irrespective of the ranking criteria used, the outcomes have been a relatively stable hierarchy of journals and departments over the past three decades. Drawing from the previous discussion, the fourth section argues that the rankings of journals and departments contribute to the making and retaining of mainstream economics as a class-hierarchical dependency structured science. Finally, the last section concludes the paper with a discussion of the implications arising from economics being a class and hierarchy-based science.

Keywords: Department, Journal, Ranking, Class, Science

JEL Classification: A14.

1. INTRODUCTION

The American economics profession has been interested in the ranking of economic journals and departments for over thirty years. From the start, the rankings had significant impacts on both individual economists and departments. In fact, the first comprehensive and influential ranking of economic journals and departments by William Moore (1972, 1973) was precipitated by the desire of neoclassical economists in his department at the University of Houston to cleanse it of Institutionalist economists (Lower, 2004). Moreover, the rankings are used in university promotion and allocation decisions, and in the recent case of Notre Dame to restructure the economics department in favor of 2 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

mainstream economics. Yet little has been written that explores in detail the implications of ranking on the organization of economics in the United States, either with regard to mainstream or heterodox economics.1 This paper is a contribution to this little-examined topic as it pertains to the former. That is, the paper explores what kind of impact rankings has on the social production of mainstream economic knowledge. Casual observation suggests that rankings have contributed to creating a scenario where neoclassical economists produce scientific knowledge as an unintended by- product of acquiring invidious social distinctions. But the impact may also have other consequences—but what? Thus, the paper starts with an analysis of the rationale and logic of ranking which culminates with the conclusion that the criteria used to rank journals which are then used to rank departments are influenced by where the top departments publish. In the second section, the intellectual and social organization of mainstream economics is delineated and the role of ranking within it identified; while the third section summarizes the empirical research and shows that irrespective of the ranking criteria used, the outcomes have been a relatively stable hierarchy of journals and departments over the past three decades. Drawing from the previous discussion, the fourth section argues that the rankings of journals and departments contribute to the making and retaining of mainstream economics as a class-hierarchical dependency structured science. Finally, the last section concludes the paper with a discussion of the implications arising from economics being a class and hierarchy-based science.

2. RATIONALE AND LOGIC OF RANKING

In the post-war period 1945 to 1970, American economic departments made clear decisions to hire well-trained neoclassical theorists with proselytizing attitudes to transform the way economic theory was being taught to its undergraduate and graduate students. Intermediate theory courses in microeconomics and macroeconomics were introduced and in some cases with a course as a prerequisite; mathematical economics courses became required for undergraduate majors; graduate theory courses became more mathematical; some degree of mathematical preparedness was expected of incoming graduate students; and graduate students were taught that a true scientific economist was one who discarded ideological biases, became detached and objective, and accepted the conclusions of logic and evidence. As a result economic

1 For a critical examination of the impact of journal and department rankings on economics in the United Kingdom, see Lee (2006). Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 3 departments throughout the United States became increasingly homogeneous: being neoclassical-theoretical in tone, attitude, and research.2 This also meant a change in the training of graduate students, with an increased focus on a common core of theory supported by extensive training in mathematical and statistical techniques.3 With these forces in place by the 1960s and into the 1970s, departments in many different universities had improved so much—having highly trained faculty publishing in the ‘conventional’ top journals and in the new journals and having instituted doctoral programs - that it was not clear who in fact were the top departments qua doctoral programs or what were the top journals.

2.1. Ranking Departments

The significant expansion of Ph.D. granting institutions from approximately sixty-six in 1940 to ninety-four in 1971 led to a questioning as to which doctoral programs were, in terms of scholarly and educational quality, truly the top programs—the well-known established programs or had the new up-start programs taken some of their places. This question was posed, for example, by the National Science Foundation in light of its disbursement of large sums of monies to universities. Other federal agencies and private foundations were also interested in the question because they needed a mechanism to help evaluate requests for funding projects. A second reason for posing the question was to help prospective graduate students select the best program for their needs. The final reason was that the answer could assist university administrators in developing fund raising strategies and making resource allocation decisions concerning specific graduate programs, and public officials when making policies and funding decisions concerning higher education. This latter reason became

2 By 1990 the hegemony of neoclassical theory was so complete that in line with most American mainstream economists the American Economic Association Commission on Graduate Education in Economics simply did not recognize that economic theories other than neoclassical economic theory existed, while also noting that graduate and undergraduate programs in the United States were virtually identical in terms of the core theory taught. To put it another way, the Commission simply assumed that all economists spoke the same language, that is, were intellectually-theoretically the same—a conclusion that clearly emerges from the work of Klamer and Colander (1990). Complementary to this are the ongoing efforts to ensure that all American high school students are taught neoclassical theory. This is evident in the Test of Economic Literacy administered to high school students and in the establishment of voluntary content standards for pre-college economics education developed by the National Council on Economic Education. The content of the standards included only neoclassical economic theory and its universal truths (such as scarcity and choice, markets work, marginal analysis, and supply and demand), since the inclusion of alternatives would, it was feared, confuse the students and the teachers and hence prompt them to abandon economics altogether. [Krueger, A. O. et. al, 1991; Hansen, 1991; Kasper, et. al., 1991; Nelson and Sheffrin, 1991; Siegfried and Meszaros, 1997; Buckles and Watts, 1998; and National Council on Economic Education, 1997] 3 To make room for these changes, history of economic thought and economic history were frequently dropped as required core courses and sometimes dropped altogether from the course offerings. [Barber, 1997; and Aslanbeigui and Naples, 1997] 4 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

progressively more important to the point that universities by the 1980s used rankings to decide whether departments should exist, be reorganized, or abolished, while governments adopted educational policies that tied public funding directly to department (or university) rankings. [Cartter, 1966; Roose and Anderson, 1970; Niemi, 1975; Dolan, 1976; Jones, Lindzey, and Coggeshall, 1982; Tschirhart, 1989; Goldberger, Maher, and Flattau, 1995; Scott and Mitias, 1996; and Holcombe, 2004] Underlying the desire to rank departments and their doctoral programs was the fundamental assumption that discipline-specific knowledge while evolving was broadly uncontested; that is, the professors and practitioners of each discipline generally accepted and engaged the same body of evolving knowledge, and produced relatively homogeneous scientific output. Without this assumption of knowledge homogeneity, department-program rankings would be largely meaningless. However, by adopting department performance indicators and hence the assumption, it becomes easy to use them to rank departments and their programs that are not keeping up with the evolving theory, techniques and applications as “less than adequate,” “marginal,” or “not sufficient for doctoral education” without wondering whether the ranking was due to intellectual bias. If the less than adequate departments-programs are so classified because of a bias against the kind of economics they support and with resource allocations directly tied to rankings that are blind to it, then one possible secular consequence is the decline of contested knowledge and intellectual- scholarly diversity, and the rise to dominance of an uncontested, unquestioned intellectual orthodoxy. In this situation, thinking “wrong” thoughts becomes “scholarly” crime punishable by the withdrawal of department-program resources or worse. [Dolan, 1976]

2.2. Ranking Journals

The mainstream economists of the 1960s were generally satisfied that they as a collective knew without a doubt which economic journals were “venerable and prestigious” (Coats, 1971, p. 30) and which were not. This shared tacit knowledge flowed from the initiation of economic graduate students and newly minted Ph.Ds. by their professors into the vague, opinionated, and ephemeral folklore of what are good, not-so-good, and even non-economic journals, which meant that they published in the same journals as did their professors. For example, from 1958 to 1968, the faculty in the top fifteen economic departments (see fn. 19 below) produced 64.5% of the articles in eight core journals including the American Economic Review, Journal of Political Economy, and Quarterly Journal of Economics. In addition, from 1960 to 1969 these same Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 5 departments produced 43% of the pages in five core journals including those mentioned above. Finally, the graduates of these departments publish heavily in the same journals, as in the case of the American Economic Review where 57% of all the authors and 77% of the authors with American were from these departments. [Moore, 1973; Siegfried, 1972; Hogan, 1973; Eagly, 1974; and Sun, 1975] The 1960s was also a period when the number of economic journals more than doubled; and this led to some doubts, perhaps, as to which economic journals were prestigious and hence constituted the core journals of the discipline: were the older journals such as the American Economic Review, Journal of Political Economy, and Quarterly Journal of Economics still prestigious or had they declined and been replaced by newer economic journals? If the concern with invidious comparisons of economic journals extended no further than a game of publication one-upmanship among colleagues, then the answer to the question would matter little. But this is not the case when departments, university administrators, and grant-giving institutions base their tenure, promotion, salary, and grant decisions on the prestige (now equated with the quality of scholarship or the scientific output) of the journals in which one publishes (Centra, 1977; Boyes, Happel, and Hogan, 1984; and Dearden, Taylor, and Thorton, 2001). If the ‘subjective’ prestige of a journal is directly equated to an article’s scholarly quality and hence scientific importance (as opposed to what the article is actually about irrespective of where it is published), then the prestige ranking of journals becomes a short-cut for administrators to evaluate academics and more significantly to evaluate and rank departments. For the ‘short cut’ to be accepted by administrators and economists alike, three intermediate steps had to be taken, the first of which was to connect reputation-based rankings to publications. The initial rankings of economic departments (Hughes, 1925 and 1934; Keniston, 1959; and Cartter, 1966) used informed opinions. However, skepticism was voiced at whether informed opinion would actually identify the high quality scholarly productive departments. So Cartter provisionally examined it and demonstrated that for six major journals4 there existed a “clear correlation between reputation of a department and the scholarly productivity of its members” (Cartter, 1966, p. 81).5 Moreover, Siegfried (1972) provided

4 The journals used were American Economic Review, Quarterly Journal of Economics, Journal of Political Economy, Review of Economics and , Econometrica, and Southern Economic Journal. 5 The opinion surveys of 1966, 1970, 1982, and 1995 generated department rankings based on quality of the program faculty and on teaching effectiveness of the doctoral program. The correlation between the two for the 1966 survey was ‘high’ and for the 1970, 1982, and 1995 surveys was .99, .98, and .98 respectfully. Given such a tight fit combined with the difficulty of easily measuring teaching effectiveness, ranking studies have ignored teaching effectiveness per se and concentrated on quality of faculty as measured by publications. 6 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

evidence that publishing in selected ‘blue ribbon’ journals had a significant positive correlation (.891) with reputation. Finally, in the subsequent 1982 and 1995 National Research Council opinion surveys (Jones, Lindzey, and Coggeshall, 1982; Goldberger, Maher, and Flattau, 1995; and Thursby, 2000), the correlation between reputation and publication, measured in terms of total publications, publications per faculty, and citations per faculty, ranged from .60 to .94.6 But the correlations suggested that publications and informed opinions were less than a near perfect match. Therefore, the high ranking-reputation accorded to Harvard’s economics department, for example, was still insufficiently ‘objectively’ grounded, which left open the possibility that a lowly regarded economics department but one with a sufficient number of publications, pages, and/or citations could be its ‘objective’ equal. This possibility was inferred from the studies by Siegfried (1972), Moore (1973), Hogan (1973), and Stolen and Gnuschke (1977) who showed not only that there were some differences between publication-based and reputation-based rankings but also the former rankings were sensitive to the journals used for the rankings.7 A way to significantly reduce this possibility is to weight journal publications by a “journal quality index.” Thus, the second step established that the journals selected for the publication-based ranking of departments represented scholarly quality and hence were prestigious journals.8 This was achieved in all of the twenty-one articles identifying top journals (see Appendix I9) by selecting ‘blue ribbon’ journals based on author institutional affiliation, subjective evaluation such as ‘everyone would agree are core, mainstream, highly respected, quality journals,’ and/or by utilizing a citation count. Finally, the third step was to ensure that the identified prestigious journals generated a ranking of departments that was nearly the same as the reputation-based ranking. This was accomplished in

6 There is also a not-insignificant correlation between the quality of program faculty and program size as measured by the number of faculty, number of graduate students, and the number of recent graduates. For the 1982 opinion survey the correlations are .61, .56, and .75 respectively; and for the 1995 opinion survey, the correlations are .67, .67, and .81 respectively. Moreover, Thursby (2000) makes an argument that department resources (of which size is one proxy) can account for 90 percent of the variation in the 1995 survey quality scores. Thus it would seem that program size and more generally department resources are as well correlated with reputation as is publications. But these correlations have not become factors in ‘explaining’ rankings, perhaps because they imply that the difference between top and low ranked departments is not scholarship and the production of scientific knowledge or even effectively using given resources, but simply the amount of resources or money at hand. 7 This possibility was also suggested by Thursby (2000) and demonstrated by Kodrzycki and Yu (2005). 8 With this step the question of why journal publications versus other kinds of publications is completely forgotten. Academics who write books generally have fewer journal publications than those who do not. [Clark, Hartnett, and Baird, 1976] 9 The two Appendicies referred to in the paper can be found at: http://cas.umkc.edu/econ/economics/faculty/Lee/docs/ranking2ajeeapp.pdf.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 7 part because the reputation of the ‘blue ribbon’ journals was acquired from the fact that the high-reputation departments published in them, as especially is the case of Harvard and The Quarterly Journal of Economics and Chicago and the Journal of Political Economy; and in part because quantitative measures such as number of articles, number of pages, and citation counts do not indirectly ‘measure’ quality but reflect the reputations of journals derived from high-ranking departments.10 With these two steps in place, a tight fit between reputation-based rankings and rankings based on journal publications is assured—see below, Appendix II, and Dusansky and Vernon (1998).

2.3. Ranking Journals → Ranking Departments→Ranking Journals

For the short cut to actually work, it is necessary to go inside step two and establish that the ‘prestigious’ rank of a journal indicates without question an article’s scholarly quality and importance. This requires two criteria and an assumption to be in place. The first criterion is that it is difficult to publish in the journal because of its rigorous editorial and refereeing process which eliminates publish-favoritism.11 Secondly, the journal’s subject content, whether it be theoretical or applied, is directly important or relevant to economists, so that the higher the journal’s ranking the greater importance its content is to economists.12 The necessary

10 Citation counts do indicate which economic journals are important to economists. However, economists do not approach journals with a blank slate and simply determine which journals are quality and which are not by reading the articles. Rather, as suggested above, they are taught by their professors and learn by observation of the publications of the high-reputation departments which are the ‘venerable and prestigious’ journals. In short, economic journals are not just ‘experience’ goods; an emerging economist’s reading material is too important to be left unsupervised and undirected. Consequently, citation counts are not objective, independent indirect measures of quality, but rather a quantitative measure of informed opinion of the best, most useful, and influential economic journals. There is a further point. Since citation counts are aggregate counts, specialist journals in areas with few practitioners relative to other areas will have smaller citation counts. Hence aggregate citation count based journal rankings are appropriately biased in favor of journals from larger fields.[Liebowitz and Palmer, 1988; Archibald and Finifter, 1990; Beed and Beed, 1996; Seglen, 1997; and Lubrano, Kirman, Bauwens, and Protopopescu, 2003] 11 This criterion is not, it is claimed, generally met with ‘in-house’ journals, such as the Journal of Political Economy and Quarterly Journal of Economics, or with ‘in-house’ editors in that economists in the editor’s department are awarded some preferential treatment in terms of accepting and the average length of their papers. It is also not met when there is non-anonymous reviewing, such as with the American Economic Review. Since this publish-favoritism is also found in other social science disciplines, it would appear difficult to ignore, but economists producing journal-based department rankings do so, or at least rationalize it.[Crane, 1967; Laband, 1985b; McDowell and Amacher, 1986; Braxton, 1986; and Laband and Piette, 1994a] 12 History of economic thought journals on this ground alone are considered non-prestigious because mainstream economists generally believe that their content is of no importance to them since it does not contribute to the development of economic theory or methods. One case of this is Lovell (1973, pp. 39 – 40) where he excluded history of economic thought articles from his citation study of the quality of economic journals; and a second case is Brauninger and Haucap (2003) where they excluded history of thought journals from their study of reputation and relevance of economic journals. Moreover, this is clearly revealed in citation impact studies where the impact of History of Political Economy is just about if not zero. Therefore it is not surprising that the 8 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

assumption is that the content of the journals being ranked is based on and utilizes, either explicitly and/or implicitly, the same general evolving body of knowledge, theory, and methodology. However, if either criterion fails to hold or there is contested knowledge, then the connection between the prestige of a journal and the scholarly quality of an article it publishes breaks down. In particular, if different journals represent different contested knowledge, then differences in their ranking may reflect the subjective or ideological repulsion of the theory employed rather than the quality of scholarship and its importance to economists. Moreover, if the different knowledge and theory is associated with different subject matter, then for one group of economists, journals embracing the unacceptable knowledge will have unimportant content and hence be unfamiliar to and not cited by them. Therefore in a contested discipline, such as economics, differential journal citation counts indicate which journals embrace the dominant theory most completely and which do not. Hence citation counts do not indicate quality that is independent of the contested knowledge (Beed and Beed, 1996). Consequently, in departments, universities, and higher education systems where tenure, promotions, salaries, and department funding are in part affected by the ranking of the journals in which a professor publishes, then in a discipline with contested knowledge, publishing in less prestigious journals is not simply a mistake in judgment, it is punishable in terms of the withdrawal of institutional and/or national resources from the individual and/or the department. [Coats, 1971; Berg, 1971; Moore, 1972; Hawkins, Ritter, and Walter, 1973; McDonough, 1975; Bell and Seater, 1978; Gerrity and McKenzie, 1978; Graves, Marchand, and Thompson, 1982; Liebowitz and Palmer, 1984; Tschirhart, 1989; Ellis and Durden, 1991; Laband and Piette, 1994b; Pieters and Baumgartner, 2002; and Brauninger and Haucap, 2003]

3. ORGANIZATION OF MAINSTREAM ECONOMICS 3.1 Intellectual and Social Organization of Science

In light of this rather critical discussion of ranking, the question that needs to be asked is “what are the rankings actually revealing in terms of the intellectual and social organization of mainstream economics?”. To answer the question necessitates a brief digression on the organization of science itself. The sciences are social systems of work that produce particular outputs called scientific knowledge, which are explanations and

Social Science Citation Index sought to remove (and in fact did so for a period of time) History of Political Economy, which is the only explicit history of thought journal in the index, because of inadequate citations. [Liebowitz and Palmer, 1984; and Laband and Piette, 1994b] Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 9 understanding of some set of real world phenomena. However, scientific knowledge is fallible and perhaps historically contingent and hence can be contested; thus it is not some immutable objective stock that grows quantitatively. Rather, scientific knowledge is a partially demarcated body of knowledge that changes unpredictably and qualitatively. In short, what constitutes scientific knowledge has a subjective and a ‘community approval’ component. In this respect, scientific knowledge is a product of an elaborate intellectual and social organization which constitutes the system of work that is, for the most part, embedded in educational systems and their employment markets known as academic departments. The essential characteristics of a science are that its participants within this system of work see their activities as communal and hence consider themselves as a member of a community of scientists, and that the scientists control the way work is carried out, the goals for which it is carried out, and who is employed to carry it out. This further implies that participants engaged in a particular science (or scientific field) are dependent at least to some degree on each other in the production of scientific knowledge. One component of this dependency is in terms of being able to use another scientist’s research and the second is working on common issues that are relevant to achieving the goals of the scientific community. The former requires that the scientists and their research meet community-based acceptable research standards including competently utilizing acceptable research techniques; while the latter requires the existence of a community consensus on what are the goal-dependent central issues for research so as to ensure, without administrative directive, colleagues are also working on the same and/or broadly supportive issues. Thus the structure of dependency essentially determines the structure of the system of work that produces the scientific knowledge relevant to meeting the goals of the community. And those possible scientists who do not ‘fit’ into this structure of dependency, and do not produce the right kind of knowledge are either marginalized or not permitted to be part of the community.13 Several factors affect the structure of dependency: (1) the nature of the audience for which the scientific output is intended; (2) the degree to which control over the means of production of the scientific knowledge (including the equipment, the techniques, and the laboring skills), the format by which scientific knowledge is reported, and the communication outlets such as journals, are concentrated in the hands of a

13 Hence, it is possible in a scientific field, such as economics, for the ‘marginalized’ to form their own community of scientists. 10 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

few or many; the role of individual and institutional reputations in affecting both the production of scientific knowledge (and particularly what is accepted as scientific knowledge) and the goals of such knowledge; and (3) the role of state power and other organizational power outside the science community in legitimizing, supporting, or otherwise affecting, particular reputations, goals, and scientific knowledge. Variations in the impact of the factors on the structure of dependency and on the goals of scientific knowledge produce quite different social systems of scientific work. Hence it is possible to have a scientific field whose social system of work is controlled by an elite, is hierarchically structured, is centralized, has a high degree of participant dependency, and is legitimized and supported by state-organizational power and monies and which has an incestuous and evolutionary relationship with the elite. And it is also possible to have a scientific field whose system of work is populated by numerous local schools that are hierarchically structured, have a low degree of participant dependency, and are not legitimized and supported by state-organizational power and monies. Hence the intellectual and social organization of a scientific work, that is the community of scientists, is not naturally given for any scientific field, but is historically and intentionally determined by its participants and recipients of its scientific knowledge. [Whitley, 1984, 1986, and 1991; and Pickering, 1995]

3.2 Organization of Mainstream Economics

Although the methodology of mainstream economics is grounded in methodological individualism and promotes the individual actor over social interaction and social norms, the actual work activity that produces mainstream scientific output is socially organized. The structural organization of the work activity is, arguably, derived from (but not conflated with) the theoretical organization of mainstream economics. That is, neoclassical theory is arranged in a hierarchical manner. At the top is the theoretical core that comprises of primary theoretical concepts and propositions that are accepted without much disagreement.14 From them, synthetic theoretical propositions are deduced. For example, the concepts

14 The theoretical core is not written in stone—there are developments. Particular concepts may be created, developed, and/or modified, such as rationality and bounded rationality. But what is not possible is for any of the core concepts, such as rationality (and any modifications) to be ejected from the core. If this occurred, then all the previous scientific knowledge of mainstream economics would be called into question. Consequently, the theoretical core can (and in fact does) contain concepts that are contradictory. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 11 of relative scarcity, rationality, optimization, and preference structure and the propositions of convexity, equilibrium, exchange, and technology combine to produce the synthetic propositions of demand curves, supply curves, and market equilibrium. The synthetic propositions in turn are the basis for deriving ‘lower’ level propositions that directly engage issues derived from the economy and the provisioning process. They are embodied in applied economic research whose generation of empirical (as opposed to theoretical) scientific knowledge is not used to evaluate the core concepts and propositions or even the synthetic propositions.15 For this hierarchical theoretical organization to be possible, it is necessary for economists at all levels of economic research to know and work with the same evolving theory, have the same research standards, and utilize the same evolving research techniques.16 It is also necessary that they accept the same broad goals and for the more specific research issues the same set of theoretical propositions. These two requirements are achieved through the homogeneous teaching and intellectual inculcation of graduate students. That is, as noted at the beginning of the paper, graduate students in mainstream graduate programs are uncritically introduced to a pre-established body of theory. Consequently, work involving the theoretical core and resulting synthetic propositions is accepted as eventually having relevance for lower level production of scientific knowledge; and research at the lower levels utilizes directly and/or indirectly the scientific output generated at the higher level. This hierarchical dependency structure works well when accompanied by a hierarchy of intellectual deference in that economists working at the lower levels do not expect their research to question the theory coming from a higher level or to be given the scholarly recognition awarded to the higher level research; and they do not expect that they should have the same scholarly reputation as those economists doing research at a higher level. For this dual hierarchy dependency structure to work, mainstream economists must respect the hierarchy and maintain their places without question. This social control is, in part, achieved through the process of

15 Thus, this hierarchal theoretical organization of mainstream economics (which is very Lakatosian in structure) essentially protects the core from almost all forms of criticism, particularly those forms that are not empirically based, such as emanating from economic philosophy. 16 There is a debate over whether neoclassical and mainstream economics is the same or different and whether the mainstream is hopelessly fragmented or not—see Colander, Holt, and Rosser (2004), Davis (2006), and Lawson (2006). In this paper, I proceed on the basis that there is no difference and hence neoclassical and mainstream are treated as the same and used interchangeably. The rationale for doing so is that in Lee and Keen (2004) I argued that neoclassical and mainstream economics are fundamentally the same; and what differences and fragmentation that does exist really is no difference at all. A more detailed support for the position is being assembled in a manuscript on “Neoclassical Microeconomic Theory: A Heterodox Approach” which draws from textbooks as well as journals and research monographs. Clearly, if my position is incorrect, then many of the arguments in this paper will have to be recast. 12 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

community indoctrination that starts when graduate programs teach their students what the hierarchy is and that they should defer to it. Specifically, as part of their graduate education, economic students are taught to discriminate among types of scientific knowledge and accordingly value some more than others. Because this differential valuation is extended to the economists who produce the knowledge, there is also discrimination among economists in that some are considered more valuable than others. This is strongly reinforced through the control and allocation of jobs, access to the material resources needed to carry out research, and access to journals and publishers through which research that is more or less in conformity with neoclassical theory is made known and disseminated. Thus, built into this ‘mainstream’ hierarchical dependency structure are discriminatory relationships that are widely accepted as ‘natural’, the way things are to be, and hence are not seen as discriminatory. In this context, the ranking of journals and departments is designed to visibly reflect, reinforce, and internalize the hierarchical dependency structure without explicitly acknowledging the existence of the embedded discriminatory relationships. Thus the discriminatory hierarchy of mainstream economics is transformed into a community concern about reputations based on better-than-you distinctions. Individual reputation and department progress is tied to moving up the hierarchies and retaining one’s position at the top of it. Therefore ranking reflects the self-praise of existing invidious distinctions. What is not a concern is the question of the production of scientific knowledge per se; rather it is assumed that publication in a ranked journal is equivalent to the production of knowledge. Consequently, while seeking invidious distinctions promotes the production of new and differentiated knowledge, such knowledge must remain within the general orbit of neoclassical economics.17 [Beed and Beed, 1996]

4. RANKING JOURNALS AND DEPARTMENTS

Coats (1971) suggested that nine journals (see Table 1) constituted the top and leading economic journals. However, given the existence of numerous old and new economic journals, many and perhaps most economists were unconvinced by Coats’s arguments. As a result, some twenty-one different articles emerged over the next thirty years identifying the blue ribbon, core, mainstream economic journals (see Appendix I). The

17 That is to say, mainstream economics is pluralistic with respect to different research projects that do not go outside its theoretical orbit, such as behavioral economics. But it does not maintain this same open pluralistic attitude towards research agendas that are beyond the pale—see for example Lee (2006). Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 13 articles have two components: one is the selection of journals, and the second is the ranking of the journals selected. Of the twenty-three different identifications of top economic journals from the twenty-one articles, 9 include all the Social Science Citation Index journals that might be useful to economists (see Appendix I—H, K, L, M, S, T, U, V, Diamond List), 12 are based on author’s institutional affiliation, inclusion in graduate reading lists, subjective evaluation of top journals, and/or a combination of these and other factors (see Appendix I--A, B, C, D, E, F, G, J, N, P, Q, R), and 2 use a combination of the two approaches (see Appendix I--I, O). As for ranking, eight of the identifications did not rank the journals; rather they considered them as a whole as the top journals (see Appendix I—F, G, I, N, O, P, Q, R). Of the remaining fifteen, 11 use various citation algorithms (Appendix I—B, C, H, Diamond List, K, L, M, S, T, U, V), and 4 use institutional affiliation or subjective evaluation (Appendix I—A, D, E, J). The outcome of the selection and ranking processes reveals a relatively stable hierarchy of high-quality important and low-quality unimportant economic journals. This is illustrated by reference to the list of the twenty- seven top journals generated by Diamond (1989). The list includes the nine journals of Coats’s 1971 list, the eight blue ribbon journals identified in 1995 by Conroy and Dusasky (1995), and seventeen of the top journals of the most recent ranking (see Table 1). Moreover, from eight to twenty-two of the Diamond List journals are included in each of the 22 lists of top journals in Appendix I while nine appear on 75% or more of the lists and fourteen appeared on over half of the lists. Thus, there is a significant degree of commonality between the various lists; and embedded in the various lists is a core of nine top journals that does not change. The various lists also established which economic journals, such as history of thought journals, are perceived by mainstream economists as low quality and/or unimportant. [McDonough, 1975; Burton and Phimister, 1995; and Sutter and Kocher, 2001] From the 1920s to the 1960s, there existed an informed opinion as to which were the top economic departments with doctoral programs (see Table 2). However, as noted above, this view was open to question by the 1960s, hence the onslaught of fifteen department ranking studies that produced nineteen different rankings. In the studies, the process by which the top Ph.D.-granting economic departments are determined has two steps, first is the selection of the departments followed by the process of ranking them. The selection process consists of either including all (or nearly all) the economic departments with doctoral programs (thirteen of the nineteen rankings) or deals only with the top fifty departments identified by Graves, Marchand, and Thompson (1982) plus an additional number of departments thought to have progressed significantly in recent years (see Appendix II). 14 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Given the departments to rank, the ranking process consists, as noted above, of two approaches: one is based on informed opinion (see Appendix II—A, B, C, H, P) and the second based on journal publications, calculated in various ways, in the top economic journals that are previously determined and delineated in the journal ranking studies (see Appendix II—D-G, I-O, Q-S). Although the ranking approaches differed, the end results are largely the same.18 That is, reputation-based and publication- based rankings and identification produce the same top departments. Moreover, this continuity among the top departments exists over time, as is illustrated in Table 2 which compares the top economic departments in 1925 and 1934, in 1959-1970, and in 1995 to 2003. The minimal amount of variation in top-ranked departments can also be deduced from the fact that over the period of 1959 to 2003, fifteen departments appeared among the top twenty-five departments in 16 to 19 of the rankings, while another nine appeared in 11 to 15 of the rankings.19 Thus, the inescapable conclusion is that there is a high degree of continuity in the ranking of Ph.D. granting economic departments for the last eighty years (see Table 2).

5. RANKINGS, CLASS, AND MAINSTREAM ECONOMICS

Together, the journal and department ranking studies establish that top departments publish in quality economic journals and quality journals publish economists from the top departments. This symbiotic relationship existed in the 1950s (Clearly and Edwards, 1960; and Yotopoulos, 1961) and, as noted above, in the 1960s. Moreover, it has replicated itself to the present day as economists in the top twenty-four departments repeatedly directed their efforts to publish in those quality journals and end up contributing over fifty percent of the articles and pages, although this significantly under-estimates their dominance of the top journals. For the period 1974 to 1994, the top 15 departments contributed 40% of the pages to the top journals, while the top 24 departments contributed 51%. Moreover, the degree of concentration of the top 24 departments in the top 50 departments for pages produced in top journals for the period 1971 to 1983 is 72%. In addition, for the period 1985 to 1990, the top 15 departments contributed nearly 75% of the total pages contributed by American economic departments to the American Economic Review,

18 This conclusion is widely acknowledged—see Smith and Gold (1976), Stolen and Gnuschke (1977), Bell and Seater (1978), Liebowitz and Palmer (1988), Dusansky and Vernon (1998), Thursby (2000), and Coupe (2003). 19 The top fifteen departments include Chicago, Columbia, Harvard, Michigan, Minnesota, MIT, Northwestern, Pennsylvania, Princeton, Rochester, Stanford, UC-Berkeley, UC-Los Angles, Wisconsin, and Yale. The next nine departments include Brown, Carnegie-Mellon, Cornell, Duke, Maryland, New York, UC-San Diego, Virginia, and Washington. See Appendix II—last column. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 15

Econometrica, Economic Journal, Journal of Political Economy, and Quarterly Journal of Economics. Finally, from 1977 to 1997, the top 24 departments contributed more than 51% of the American-based authors to the top fifteen journals; and in 1995 the top 24 departments contributed more than 54% of the American-based authors in the top fifteen journals and 51% to the top thirty journals.20 [Graves, Marchand, and Thompson, 1982; Hirsch, Randall, Brooks, and More, 1984; Laband, 1985a; Bairam, 1994; Scott and Mitias, 1996; Hodgson and Rothman, 1999; and Kocher and Sutter, 2001] Adopting the publishing values of their professors, Ph.D. graduates of the top twenty-four departments contributed more than 70% of the articles and pages in the top journals. From 1970 to 1979, more than 70% of the pages in the American Economic Review, Journal of Political Economy, and Quarterly Journal of Economics were contributed by graduates of the top 24 departments; from 1975 to 1984, 84% of the articles and pages in the top journals contributed by authors who earned Ph.D.s from eighty American doctoral programs from 1975 to 1984 came from graduates of the top 24 departments; from 1977 to 1997 more than 67% of all authors and 83% of the authors with American Ph.Ds. in the top fifteen journals graduated from the top 24 departments; and in 1995 70% of the authors in the top thirty journals with American Ph.Ds., came from the top fifteen departments. [Hogan, 1986; Laband, 1986; Hodgson and Rothman, 1999; Collins, Cox, and Stango, 2000; and Kocher and Sutter, 2001; also see Cox and Chung, 1991] Since the top departments have historically employed each others’ graduates and exported their huge surplus to lower ranking departments (while importing very few of their graduates), their faculty are relatively homogeneous in terms of their graduate training, the graduate training they offer, and their publishing expectations.21 In addition, the lower ranking departments have increasingly become clones of the top ranked departments. Finally, over 40% of the editors of the top journals obtained their Ph.Ds. from the top twenty-four departments while 43% of the editors resided in them, which implies that nearly all of the departments have an editor from a top journal (Yoels, 1974; and Hodgson and Rothman, 1999).

20 More limiting but still supportive evidence shows that for the period 1995 – 2000 the top seven departments—Harvard, MIT, Princeton, Stanford, UC-Berkeley, Chicago, and Yale—contributed 21% to 43% of the pages of American Economic Review, Econometrica, Journal of Political Economy, Quarterly Journal of Economics, and Review of Economic Studies. And conversely supporting evidence shows that economists in liberal arts colleges do not generally publish in top journals. [Rupp and McKinney, 2002; and Hartley and Robinson, 1997] 21 Evidence for this is not extensive, but see footnote 2 and Berelson (1960), Crane (1970), Eagly (1974), and Kocher and Sutter (2001). It is of interest to note that in 1992 70% of economics faculty at Ph.D.-granting American universities obtained their Ph.Ds. at one of the top twenty-four departments. [Pieper and Willis, 1999] 16 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

With the symbiotic relationship between quality journals and top departments combined with the homogeneity of graduate training and publishing expectations and the dispersion of journal editors across the top departments, economists in these departments have all the right social characteristics to be successful—they have the right training, employment location, and social connections. In short, the top departments and their faculty form, it would seem, a class with distinct social characteristics that ensure them access to publishing in the top journals, the control of the journals themselves, and the prestige to have their work be taken more seriously than others not of their class. This is evident in the case of articles written by economists not affiliated with top ranked departments that appear in top ranked journals in that they tend to receive fewer citations than economists affiliated with top departments whose articles appear in the same journals. Hence department (or academic-class) affiliation affects perceptions of the significance of research rather than the research itself. [Oromaner, 1983]

6. CONCLUSION

The concern guiding the analysis and discussion of this paper has been to understand the impact of the ranking of journals and departments on the way neoclassical economists produce scientific knowledge. An examination of the rationale and logic of the ranking process found it to be incestuous in that the criteria for ranking journals which are then used to rank departments are affected by what journals top departments publish in. Thus, the ranking process essentially ensures that top departments publish in quality economic journals and quality journals publish economists from top departments. Then there followed a brief discussion of the intellectual and social organization of mainstream economics as a hierarchical dependency structured science from which it was argued that the ranking exercises visibly reflected, reinforced, and internalized the structure within the community of mainstream economists. As a result, the community of economists pursue the production of new and differentiated scientific knowledge as a way to acquire invidious distinctions. The survey of the ranking studies clearly showed the logic of the ranking process at work in that it revealed that over the past thirty years, there has been a stable hierarchy of top journals and departments. This ‘empirical’ fact was integrated with evidence from the ranking and collateral studies to argue that economics appears to be a class-structured as well as a hierarchical dependency structured science. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 17

So, if economics is such a science, what are the implications, somewhat speculative as they may be? Since economics is a class-based science, one is that there are lower classes: a second class composed of economists with only some of the social characteristics of the top class, such as graduate training and perhaps some social connection with editors of top journals but lack the employment location; a third class which has, to some extent, only the graduate training social characteristic, and finally, an ‘untouchable’ class of economists with none of the social characteristics. A second implication is that the top departments qua class dictate what the appropriate graduate training is and control access to the top journals and hence the production of scientific knowledge. Thus scientific knowledge in economics is class-based and hence socially constructed in that it must exhibit the social characteristics most appropriate for the continued dominance and social control of economics by the top departments (Braxton, 1986).22 Moreover, because the journal editors and journal authors share much if not all the same social characteristics, the acceptance of a paper for publication is not materially affected by whether there was single-blind or double-blind reviewing; and for the same reason publish- favoritism for a specific top journal would be difficult to identify, if it indeed exists at all. The issue is not so much journal-specific publish- favoritism, but class publish-favoritism (Crane, 1967; Blank, 1991; and Laband and Piette, 1994a). Consequently, the ranking of journals and departments is ultimately a symbiotic legitimization exercise of class domination and control in economics: the top departments publish in the top journals which are the top journals because the top departments publish in them. These actions by the top departments have given rise to charges of nepotism and of theoretical and methodological incest and inbreeding that will ultimately impede the production of scientific knowledge (Crane, 1970; Eagly, 1974; Pieper and Willis, 1999). Such charges are largely correct because continued class dominance and control requires the reproduction of the social characteristics that constitute the top departments. The final implication is its two-fold negative impact on economics and the production of scientific knowledge. Because emulation of the social characteristics of the top departments is considered important by the lower class departments, they place heavy weight for tenure and decisions on getting publications in the top journals (Dearder, Taylor, and Thornton, 2001). However, as noted above, at least 50% to 70% of the publication space in the top journals is taken by [or reserved for (?)] the top

22 Conversely, lower class departments may prefer economic knowledge that is different from what the top departments produce. A hint of this is suggested in Mason, Steagall, and Fabritius (1997) where economic departments that emphasis teaching or a balance between teaching and research rank journals somewhat differently from the top major research universities. 18 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

departments; thus, insistence that lower class economists publish in them is a recipe for professional disappointment if not self-destruction. The point of a class-structured science is to exclude the lower classes from acquiring the characteristics of the top class and hence becoming part of it. In addition, emulation in the context of class stability and embedded discriminatory relationships transforms neoclassical economists’ interest in knowledge production per se to knowledge production for the purpose of social climbing and creating invidious social distinctions. That is, lower class economists (and their departments) are driven to pursue knowledge production as a way to acquire at least some of the social characteristics of economists in the top departments. Hence they take on their research topics for the purpose of social climbing within their class and across classes; and they use the journal and department rankings to mark and legitimize their progress and their ‘social’ elevation above the less distinguished economists left behind. Similarly, economists in the top departments pursue new and differentiated knowledge production as a way to prevent the lower classes from rising above their station and to acquire in-class social distinctions relative to other top economists and use the journal and department rankings to mark and legitimize their progress. So instead of a scientific community dedicated to the production of scientific knowledge, we have one in which economists (and their departments) are devoted to social climbing and acquiring invidious social distinctions that are publicly endorsed via the ranking game where the production of knowledge emerges (if at all) as a unintended by-product. While this invidious invisible hand of knowledge production is viewed by mainstream economists as an acceptable, natural way of engaging in the production of scientific knowledge, it is not the only way. Scientific knowledge can be produced under conditions where class divisions, hierarchically organized and valued work, and intellectual deference are absent.23 Whether mainstream economics can be so transformed and still retain its hierarchically arranged theory is, however, an unresolved question that requires further investigation.

23 For example, with regard to heterodox economics, see Lee (2005). Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 19

APPENDIX I Diamond List Journals

Below lists studies that place the Diamond List Journals among the core mainstream or neoclassical journals. If the study lists less than 27 journals, all of them are considered. If the study lists more than 27 journals, but places them in ranked grouping, then the number of groups considered will include in total at least 27 journals. In addition, if the study just has a single unranked group of journals that number more than 27, then all the journals are considered. Finally, when the studies have a ranking that included more than 27 journals the first 27 are taken; and when The American Economic Review and the AER Papers and Proceedings appear separately among the first 27 journals they are combined into a single journal and the 28th journal is included. The next to final row lists the number of journals that were ranked or listed in the article; and the final row describes the criteria used by each study to rank or include the journals. 20 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Diamond List Journals, 1989*

JOURNALS A B C D E F G H

1972 1972 1972 1973 1975 1975 1982 1984 American Economic Review X X X X X X X X Brookings Papers on Economic Activity X X Canadian Journal of Economics X X X X X Economica X X X X X X X X Economic Inquiry X X X X X Economic Journal X X X X X X X X Econometrica X X X X X X X X Economic Letters European Economics Review International Economics Review X X X X X X X X Journal of Development Economics Journal of X Journal of Economic Literature X X X X X Journal of Economic Theory X X X X X X X Journal of X Journal of International Economics X X Journal of Labor Economics Journal of Law and Economics X X X X X X X X Journal of Mathematical Economics X Journal of Monetary Economics X Journal of Political Economy X X X X X X X X Journal of Public Economics X Oxford Economic Papers X X X X X X X Quarterly Journal of Economics X X X X X X X X Rand Journal of Economics X X Review of Economics and Statistics X X X X X X X X Review of Economic Studies X X X X X X X X

50 35 48 85 70 24 24 107

Note:

* Inclusion based on their citation frequency as well as citation impact and self-citation (negatively). A. Journals chosen based on author institutional affiliation and other factors; and rank based on institutional affiliation and other factors. B. Ranking based on the number of times an article from the journal was included in graduate reading lists, 1963-1972 C. Inclusion is derived from Moore (1972). Ranking based on citation count of the journals referenced in the American Economic Review, Econometrica, and Economic Journal which were arbitrarily chosen D. Inclusion and ranking based on the subjective evaluation of the journals E. Inclusion derived from Hawkins (1973); and ranking based on a mixture of factors used in articles A-D F. Inclusion based on the top journals in studies A-D. G. Used the same journals as Niemi (1975) H. Included all SSCI journals that might be useful to economists; and ranked based on citations

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 21

Diamond List Journals, 1989* (cont.)

JOURNALS I J K L M N O

1985 1987 1994 1994 1995 1995 1995 American Economic Review X X X X X X X Brookings Papers on Economic Activity X X X X Canadian Journal of Economics Economica X X X Economic Inquiry X X Economic Journal X X X X X X Econometrica X X X X X X X Economic Letters European Economics Review International Economics Review X X X X X X Journal of Development Economics Journal of Econometrics X X X X Journal of Economic Literature X X X X X Journal of Economic Theory X X X X X X X Journal of Financial Economics X X X X Journal of International Economics X X Journal of Labor Economics X X X Journal of Law and Economics X X X X Journal of Mathematical Economics X X X Journal of Monetary Economics X X X X X Journal of Political Economy X X X X X X X Journal of Public Economics X X X Oxford Economic Papers X X Quarterly Journal of Economics X X X X X X X Rand Journal of Economics X X X X X Review of Economics and Statistics X X X X X X X Review of Economic Studies X X X X X X X 27 130 129 129 9 8 34

Note:

* Inclusion based on their citation frequency as well as citation impact and self-citation (negatively). I. Used the same journals as in Niemi (1975) plus 3 additional journals ranked in the top 10 by Liebowitz and Palmer (1984) J. Inclusion and ranking based on the subjective evaluation of the journals K. Followed Liebowitz and Palmer (1984) and included all SSCI journals that might be useful to economists; and ranked based on citations L. Followed Liebowitz and Palmer (1984) and included all SSCI journals that might be useful to economists; and ranked based on citations M. Selected from SSCI journals that were clearly economics and had the highest citation count N. Journals included derived in part from Graves, Marchand, and Thompson (1982) and Laband (1985); and the journals are identified as the ‘Blue Ribbon journals’. O. Union of the Blue Ribbon journals, Graves, Marchand, and Thompson (1982), and Liebowitz and Palmer (1984) 22 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Diamond List Journals, 1989* (cont.)

JOURNALS P Q R S T

1996 1998 1999 1999 2001 American Economic Review X X X X X Brookings Papers on Economic Activity X X Canadian Journal of Economics Economica X Economic Inquiry X Economic Journal X X X X X Econometrica X X X Economic Letters European Economics Review X X International Economics Review Journal of Development Economics Journal of Econometrics X X Journal of Economic Literature X X Journal of Economic Theory X Journal of Financial Economics X X X Journal of International Economics X Journal of Labor Economics X X Journal of Law and Economics X X X Journal of Mathematical Economics Journal of Monetary Economics X X X Journal of Political Economy X X X X X Journal of Public Economics X Oxford Economic Papers X X Quarterly Journal of Economics X X X X X Rand Journal of Economics X X X Review of Economics and Statistics X X X Review of Economic Studies X X X X X 36 8 10 137 15

Note:

* Inclusion based on their citation frequency as well as citation impact and self-citation (negatively). P. Journals included derived in part from Graves, Marchand, and Thompson (1982) and added 15 new journals subjectively evaluated as newer, highly respected journals Q. Subjectively chosen as the core journals R. Subjectively chosen as the core journals S. Included all SSCI journals that might be useful to economists; ranked based on citations T. Top 15 journals selected from all SSCI journals that might be useful to economists; ranked based on citations Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 23

Diamond List Journals, 1989* (cont.)

U V Total Number of Times a Diamond JOURNALS 2002 2003 List Journal gets Listed (out of 22 studies) American Economic Review X X 22 Brookings Papers on Economic Activity X 9 Canadian Journal of Economics 5 Economica 12 Economic Inquiry 8 Economic Journal X 20 Econometrica X X 21 Economic Letters X 1 European Economics Review X 3 International Economics Review X 15 Journal of Development Economics 0 Journal of Econometrics X 8 Journal of Economic Literature X X 14 Journal of Economic Theory X 16 Journal of Financial Economics X 9 Journal of International Economics 5 Journal of Labor Economics X 6 Journal of Law and Economics X 16 Journal of Mathematical Economics 4 Journal of Monetary Economics X X 11 Journal of Political Economy X X 22 Journal of Public Economics X 6 Oxford Economic Papers 11 Quarterly Journal of Economics X X 22 Rand Journal of Economics X 11 Review of Economics and Statistics X 19 Review of Economic Studies X X 22 10 159

Note:

* Inclusion based on their citation frequency as well as citation impact and self-citation (negatively). U. Top 10 journals selected from all SSCI journals that might be useful to economists; ranked based on citations V. Included all SSCI journals that might be useful to economists; and ranked based on citations

24 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

A. Moore, W. J. 1972. “The Relative Quality of Economics Journals: A Suggested Rating System.” Western Economic Journal 10.2 (June): 156 – 169, Table 1, p. 160. B. Skeels, J. W. and Taylor, R. A. 1972. “The Relative Quality of Economic Journals: An Alternative Rating System.” Western Economic Journal 10.4 (December): 470 – 473. C. Billings, B. B. and Viksnins, G. J. 1972. “The Relative Quality of Economic Journals: An Alternative Rating System.” Western Economic Journal 10.4 (December): 467 – 469. D. Hawkins, R. G., Ritter, L. S., and Walter, I. 1973. “What Economists Think of Their Journals.” Journal of Political Economy 81.4 (July-August): 1017 – 1032, Table 1, pp. 1020 - 1022, Mean Rank column. E. McDonough, C. C. 1975. “The Relative Quality of Economics Journals Revisited.” The Quarterly Review of Economics and Business 15.1 (Spring): 91 – 97, Table 3, pp. 94 – 95. F. Niemi, A. W. 1975. “Journal Publication Performance During 1970 – 1974: The Relative Output of Southern Economics Departments.” Southern Economic Journal 42.1 (July): 97 – 106. G. Graves, P. E., Marchand, J. R., and Thompson, R. 1982. “Economic Departmental Rankings: Research Incentives, Constraints, and Efficiency.” American Economic Review 72.5 (December): 1131 – 1141, p. 1132. H. Liebowitz, S. J. and Palmer, J. P. 1984. “Assessing the Relative Impacts of Economic Journals.” Journal of Economic Literature 22.1 (March): 77 – 88, Table 2, column 2, pp. 84 - 85. I. Laband, D. N. 1985. “An Evaluation of 50 ‘Ranked’ Economics Departments by Quantity and Quality of Faculty Publications and Graduate Student Placement and Research Success.” Southern Economic Journal 52.1 (July): 216 – 240.

Diamond, A. M. 1989. “The Core Journals in Economics.” Current Contents 21 (January): 4 – 11, Table 1, p. 6.

J. Malouin, J.-L. and Outreville, J.-F. 1987. “The Relative Impact of Economics Journals: A Cross-Country Survey and Comparison.” Journal of Economics and Business 39.3 (August): 267 – 277. K. Laband, D. N. and Piette, M. J. 1994. “The Relative Impacts of Economics Journals: 1970 – 1990.” Journal of Economic Literature 32.2 (June): 640 – 666, Table 2, column 3, pp. 648 - 651. L. Laband, D. N. and Piette, M. J. 1994. “The Relative Impacts of Economics Journals: 1970 – 1990.” Journal of Economic Literature 32.2 (June): 640 – 666, Table A2, column 3, pp. 663 - 666. M. Stigler, G. J., Stigler, S. M., and Friedland, C. 1995. “The Journals of Economics.” Journal of Political Economy 103.2 (April): 331 – 359, Table 1, p. 336. N. Conroy, M. E. and Dusasky, R. 1995. “The Productivity of Economics Departments in the U.S.: Publications in the Core Journals.” Journal of Economic Literature 33.4 (December): 1966 – 1971, p. 1966. O. Conroy, M. E. and Dusasky, R. 1995. “The Productivity of Economics Departments in the U.S.: Publications in the Core Journals.” Journal of Economic Literature 33.4 (December): 1966 – 1971, p. 1971. P. Scott, L. C. and Mitias, P. M. 1996. “Trends in Ranking of Economics Departments in the U.S.: An Update.” Economic Inquiry 34 (April): 378 – 400, p. 379. Q. Elliott, C., Greenaway, D., and Sapsford, D. 1998. “Who’s Publishing Who? The National Composition of Contributors to some core US and European Journals.” European Economic Review 42.1: 201 – 206. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 25

R. Kalaitzidakis, P. Mamuneas, T. P., and Stengos, T. 1999. “European Economics: An analysis based on publications in core journals.” European Economic Review 43: 1150 – 1168. S. Hodgson, G. M. and Rothman, H. 1999. “The Editors and Authors of Economics Journals: A Case of Institutional Oligopoly?” The Economic Journal 109 (February): F165 – F186, Table 1, p. F168. T. Kocher, M. G. and Sutter, M. 2001. “The Institutional Concentration of Authors in Top Journals of Economics During the Last Two Decades.” The Economic Journal 111 (June): F405 – F421, Table 1, p. F408. U. Kocher, M. G., Luptacik, M., and Sutter, M. 2002. “Measuring Productivity of Research in Economics: A Cross-Country Study using DEA.” Unpublished, Table 1, p. 4. Http://homepage.uibk.ac.at/homepage/c404/c40433/kls.pdf. V. Kalaitzidakis, P., Mamuneas, T. P., and Stengos, T. 2003. “Rankings of Academic Journals and Institutions in Economics.” Journal of the European Economic Association 1.6 (December): 1346 - 1366, Table 1, pp. 1349 - 1351. 26 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

APPENDIX II Top 25 Economic Departments in the United States with Ph.D. Programs

Below lists studies that identified the top 25 economic departments in the United States with Ph.D. programs. If the study lists more than 25 departments, but places them in a ranked grouping, then the number of groups considered will include in total at least 25 departments. More generally, when the studies have a ranking that included more than 25 departments the first 25 are listed. The next to final row lists the number of departments that are ranked or listed in the article. The studies generally included all the Ph.D. programs in the United States, but with some exceptions. The final row describes the criteria used by each study to rank or include the departments. If the criterion for ranking departments is based on selecting and ranking the top journals, the criteria for their selection and ranking are given in Appendix I.

Departments* A B C D E F 1959 1966 1970 1973 1975 1982 Brown X X X X Boston U California Institute of Technology Carnegie-Mellon X X X X X Chicago X X X X X X Columbia X X X X X Cornell X X X X X CUNY Duke X X X Florida

Harvard X X X X X X Illinois-Urbana X X X X X Indiana X Iowa Iowa State X X Johns Hopkins X X X X Maryland-College Park X X Michigan X X X X X X Michigan State X X X X Minnesota X X X X X X MIT X X X X X X New York X X Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 27

North Carolina X X X Northwestern X X X X X X Ohio State X Pennsylvania X X X X X X Pennsylvania State X Pittsburgh Princeton X X X X X X Purdue X X X X Rice Rochester X X X X X Rutgers Stanford X X X X X X SUNY-Buffalo X SUNY-Stony Brook Texas Texas A&M X Tulane UC-Berkeley X X X X X X UC-Los Angles X X X X X UC-San Diego UC-Santa Barbara UNC-Chapel Hill X USC Vanderbilt X X X X Virginia X X X X X Washington X X X X X Washington, St. Louis X Wisconsin-Madison X X X X X X Yale X X X X X X Total Number of Programs 71 91 94 88 116 Note: * Criteria for Selection and Ranking A. In principle all doctoral programs were considered; ranking based on the opinion of chairmen of economic departments of 25 leading universities B. Selected nearly all doctoral programs; ranking is based on informed opinion derived from questionnaire C. Selected nearly all doctoral programs; ranking is based on informed opinion derived from questionnaire D. Selected nearly all doctoral programs; ranking is based on the number of faculty publications in the top 9 journals; for selection of journals and their ranking see C in Appendix I E. Selected nearly all doctoral programs; ranking is based on the number of faculty publications in 24 journals; for selection of the journals, see F in Appendix F. Selected nearly all doctoral programs; ranking is based on the number of faculty pages in top journals; used the same journals as Niemi (1975) see F in Appendix I 28 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Departments G H I J K 1982 1982 1984 1985 1985 Brown X X Boston U California Institute of Technology X Carnegie-Mellon X X X X Chicago X X X X X Columbia X X X X X Cornell X X X X CUNY X Duke X Florida Harvard X X X X X Illinois-Urbana X X Indiana Iowa X Iowa State Johns Hopkins X X X Maryland-College Park X X Michigan X X X Michigan State Minnesota X X X X X MIT X X X X X New York X X X X X North Carolina X X Northwestern X X X X X Ohio State X X X Pennsylvania X X X X X Pennsylvania State X Pittsburgh Princeton X X X X X Purdue X X Rice X Rochester X X X X Rutgers X Stanford X X X X X SUNY-Buffalo SUNY-Stony Brook X Texas Texas A&M X X X Tulane X Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 29

UC-Berkeley X X X X UC-Los Angles X X X X X UC-San Diego X X X X X UC-Santa Barbara UNC-Chapel Hill X USC Vanderbilt Virginia X X X X Washington X X X Washington, St. Louis Wisconsin-Madison X X X X X Yale X X X X X Total Number of Programs 116 93 119 50 50

Note:

* Criteria for Selection and Ranking G. Selected nearly all doctoral programs; ranking is based on the pages per faculty member in top journals; used the same journals as Niemi (1975) see F in Appendix I H. Selected nearly all doctoral programs; ranking is based on informed opinioned derived from questionnaire I. Selected nearly all doctoral programs; ranking is based on the pages per faculty member in top journals; used the same journals as Niemi (1975) see F in Appendix I J. Selected the top fifty departments as identified by Graves, Marchand, and Thompson (1982); the ranking was based on the number of faculty pages published in 27 top journals; used the same journals as in Niemi (1975) plus 3 additional journals ranked in the top 10 by Liebowitz and Palmer (1984) K. Selected the top fifty departments as identified by Graves, Marchand, and Thompson (1982); the ranking was based on the number of faculty and graduate pages published in 27 top journals, citation counts, and graduate placement; used the same journals as in Niemi (1975) plus 3 additional journals ranked in the top 10 by Liebowitz and Palmer (1984) 30 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Departments L M N O P Q 1989 1989 1995 1995 1995 1996 Brown X X X X Boston U X X X California Institute of Technology X X Carnegie-Mellon X X X X X Chicago X X X X X X Columbia X X X X Cornell X X X X CUNY Duke X X X X X X Florida X X Harvard X X X X X X Illinois-Urbana X X Indiana X Iowa Iowa State Johns Hopkins X Maryland-College Park X X X X X Michigan X X X X X Michigan State X Minnesota X X X X X X MIT X X X X X X New York X X X X North Carolina Northwestern X X X X X X Ohio State X X X Pennsylvania X X X X X X Pennsylvania State Pittsburg X X Princeton X X X X X Purdue Rice Rochester X X X X X X Rutgers Stanford X X X X X X SUNY-Buffalo SUNY-Stony Brook Texas X X X Texas A&M X X Tulane UC-Berkeley X X X X X X Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 31

UC-Los Angles X X X X X X UC-San Diego X X X X UC-Santa Barbara X X UNC-Chapel Hill X USC X Vanderbilt Virginia X X X Washington X X X X Washington, St. Louis Wisconsin-Madison X X X X X X Yale X X X X X X Total Number of Programs 124 124 70 70 107 108

Note:

* Criteria for Selection and Ranking L. Selected nearly all doctoral programs; ranking based on the total number of faculty articles derived from the 107 journals in Liebowitz and Palmer (1984) M. Articles per faculty; based on the total number of faculty articles derived from the 107 journals in Liebowitz and Palmer (1984) N. Selected the top fifty departments as identified by Graves, Marchand, and Thompson (1982) plus twenty departments thought to have progressed significantly in recent years; the ranking was based on the number of faculty pages combined with pages per faculty published in 8 blue ribbon journals O. Selected the top fifty departments as identified by Graves, Marchand, and Thompson (1982) plus twenty departments thought to have progressed significantly in recent years; the ranking was based on the number of faculty pages combined with pages per faculty published in 34 journals that were a union of the Blue Ribbon journals, Graves, Marchand, and Thompson (1982), and Liebowitz and Palmer (1984) P. Selected nearly all doctoral programs; ranking is based on informed opinion derived from questionnaire Q. Selected nearly all doctoral programs; ranking is based on the total faculty pages in 36 journals; journals included derived in part from Graves, Marchand, and Thompson (1982) and added 15 new journals subjectively evaluated as newer, highly respected journals 32 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

R S Total Number of Departments 1998 2003 Times in the Top 25 (out of 19) Brown X 11 Boston U X X 5 California Institute of Technology 3 Carnegie-Mellon X 15 Chicago X X 19 Columbia X X 17 Cornell X 14 CUNY 1 Duke X 11 Florida X 3 Harvard X X 19 Illinois-Urbana 9 Indiana 2 Iowa 1 Iowa State 2 Johns Hopkins X 9 Maryland-College Park X X 11 Michigan X X 16 Michigan State X 6 Minnesota X X 19 MIT X X 19 New York X X 13 North Carolina 5 Northwestern X X 19 Ohio State X 8 Pennsylvania X X 19 Pennsylvania State 2 Pittsburg X 3 Princeton X X 18 Purdue 6 Rice 1 Rochester X X 17 Rutgers 1 Stanford X X 19 SUNY-Buffalo 1 Suny-Stony Brook 1 Texas X X 5 Texas A&M 6 Tulane 1 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 33

UC-Berkeley X X 18 UC-Los Angles X X 18 UC-San Diego X X 11 UC-Santa Barbara 2 UNC-Chapel Hill 3 USC 1 Vanderbilt 4 Virginia X 13 Washington 12 Washington, St. Louis 1 Wisconsin-Madison X X 19 Yale X X 19 Total Number of Programs 80 74

Note:

* Criteria for Selection and Ranking R. Selected the top fifty departments as identified by Graves, Marchand, and Thompson (1982) plus thirty departments thought to have progressed significantly in recent years; the ranking was based on the combination of total faculty pages and pages per faculty in the ‘blue ribbon journals’ S. Selected nearly all doctoral programs; ranking is based on the total faculty pages in 30 journals; derived from all SSCI journals that might be useful to economists and ranked based on citations

A. Keniston, H. 1959. Graduate Study and Research in the Arts and Sciences at the University of Pennsylvania. Philadelphia: University of Pennsylvania Press, p. 129. B. Cartter, A. M. 1966. An Assessment of Quality in Graduate Education. Washington, D.C.: American Council on Education, ‘Leading Departments Rated Effectiveness of Graduate Faculty’, p. 34. C. Roose, K. D. and Andersen, C. J. 1970. A Rating of Graduate Programs. Washington, D.C.: American Council on Education, ‘Leading Institutions by Rated Quality of Graduate Faculty’, p. 58. D. Moore, W. J. 1973. “The Relative Quality of Graduate Programs in Economics, 1958 – 1972: Who Published and Who Perished.” Western Economic Journal 11.1 (March): 1 – 23, Table 4, Column 6, p. 16. E. Niemi, A. W. 1975. “Journal Publication Performance During 1970 – 1974: The Relative Output of Southern Economics Departments.” Southern Economic Journal 42.1 (July): 97 – 106, Table II, p. 101. F. Graves, P. E., Marchand, J. R., and Thompson, R. 1982. “Economic Departmental Rankings: Research Incentives, Constraints, and Efficiency.” American Economic Review 72.5 (December): 1131 – 1141, Table 1, p. 1133. G. Graves, P. E., Marchand, J. R., and Thompson, R. 1982. “Economic Departmental Rankings: Research Incentives, Constraints, and Efficiency.” American Economic Review 72.5 (December): 1131 – 1141, Table 2, p. 1134. H. Jones, L. V., Lindzey, G., and Coggeshall, P. E. (eds.) 1982. An Assessment of Research- Programs in the United States: Social and Behavioral Sciences. Washington, D. C.: National Academy Press, Table 4.1, column 8, pp. 54 – 63. 34 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

I. Hirsch, B. T., Randall, A., Brooks, J., and Moore, J. B. 1984. “Economics Departmental Rankings: Comment.” American Economic Review 74.4 (September): 822 – 826, Table 1, pp. 823 – 824. J. Laband, D. N. 1985. “An Evaluation of 50 ‘Ranked’ Economics Departments—By Quantity and Quality of Faculty Publications and Graduate Student Placement and Research Success.” Southern Economic Journal 52.1 (July): 216 – 240, Table I, p. 220. K. Laband, D. N. 1985. “An Evaluation of 50 ‘Ranked’ Economics Departments—By Quantity and Quality of Faculty Publications and Graduate Student Placement and Research Success.” Southern Economic Journal 52.1 (July): 216 – 240, Table XVI, p. 238 – 239. L. Tschirhart, J. 1989. “Ranking Economics Departments in Areas of Expertise.” Journal of Economic Education 20.2 (Spring): 199 – 222, Table 1, column 1, pp. 203 – 206. M. Tschirhart, J. 1989. “Ranking Economics Departments in Areas of Expertise.” Journal of Economic Education 20.2 (Spring): 199 – 222, Table 1, column 2, pp. 203 – 206. N. Conroy, M. E. and Dusansky, R. 1995. “The Productivity of Economic Departments in the U.S.: Publications in Core Journals.” Journal of Economic Literature 33.4 (December): 1966 – 1971, Table 1, Mean Rank column, p. 1969. O. Conroy, M. E. and Dusansky, R. 1995. “The Productivity of Economic Departments in the U.S.: Publications in Core Journals.” Journal of Economic Literature 33.4 (December): 1966 – 1971, Appendix, column C, p. 1971. P. Goldberger, M. L., Maher, B. A., and Flattau, P. E. (eds.) 1995. Research-Doctorate Programs in the United States: Continuity and Change. Washington, D.C.: National Academy Press, Appendix Table H – 5, pp. 187 – 196. Q. Scott, L. C. and Mitias, P. M. 1996. “Trends in Ranking of Economics Departments in the U.S.: An Update.” Economic Inquiry 34 (April): 378 – 400, Table 1, pp. 380 – 383. R. Dusansky, R. and Vernon, C. J. 1998. “Rankings of U.S. Economics Departments.” Journal of Economic Perspectives 12.1 (Winter): 157 – 170; Table 1, first column, p. 159. S. Kalaitzidakis, P., Mamuneas, T. P., and Stengos, T. 2003. “Rankings of Academic Journals and Institutions in Economics.” Journal of the European Economic Association 1.6 (December): 1346 – 1366, Table 3, pp. 1357 - 1360. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 35

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Table 1 Stability in Top Neoclassical Journals, 1969 – 2003

Coats’s List Diamond’s List Kalaitzidakis et.al -1971 -1989 -2003 *American Economic Review *American Economic Review *American Economic Review Economica Brookings Papers Economic Journal Economic Journal Canadian Journal of Economics *Econometrica *Econometrica Economica Economic Letters *Journal of Political Economy Economic Inquiry European Economic Review *Oxford Economic Papers Economic Journal *International Economics Review *Quarterly Journal of Economics *Econometrica Journal of Econometrics *Review of Economics & Statistics Economic Letters Journal of Economic Literature *Review of Economic Studies European Economics Review *Journal of Economic Theory *International Economic Review Journal of Labor Economics Journal of Development Economics Journal of Monetary Theory Journal of Econometrics *Journal of Political Economy Journal of Economic Literature Journal of Public Economics *Journal of Economic Theory *Quarterly Journal of Economics Journal of Financial Economics Rand Journal of Economics Journal of International Economics *Review of Economics & Statistics Journal of Labor Economics *Review of Economic Studies Journal of Law and Economics Journal of Mathematical Economics Journal of Monetary Economics *Journal of Political Economy Journal of Public Economics Oxford Economic Papers *Quarterly Journal of Economics Rand Journal of Economics *Review of Economics & Statistics *Review of Economic Studies

*The Blue Ribbon Journals of Conroy and Dusasky (1995)

[Derived from Appendix I and Coats (1971)] Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 41

Table 2 Top Economic Departments in the United States with Ph.D. Programs, 1925 - 2003

Hughes Keniston/Cartter/ Roose-Anderse Currently 1 (1925, 1934) (1995-2003) (1959-1970) Brown Brown Brown Chicago Carnegie-Mellon Boston University Columbia Chicago Carnegie-Mellon Cornell Columbia Chicago Harvard Cornell Columbia Illinois Duke Cornell Iowa Harvard Duke Johns Hopkins Illinois Florida Michigan Indiana Harvard Minnesota Iowa State Maryland Missouri Johns Hopkins Michigan New York Michigan Minnesota Northwestern Michigan State MIT Ohio State Minnesota New York Pennsylvania MIT Northwestern Princeton North Carolina Ohio State Stanford Northwestern Pennsylvania Texas Pennsylvania Pittsburg UC-Berkeley Princeton Princeton Virginia Purdue Rochester Wisconsin Rochester Stanford Yale Stanford Texas UC-Berkeley UC-Berkeley UCLA UCLA Vanderbilt UC-San Diego Virginia Wisconsin Washington Yale Wisconsin Yale Total Number of Doctoral Programs 53 71 108

1Derived from Rankings N through S in Appendix II. [Appendix II; Hughes, 1925 and 1934] 42 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

FOUR REASONS FOR PLURALISM IN THE TEACHING OF ECONOMICS

Frank Stilwell University of Sydney [email protected]

ABSTRACT Can a pluralist approach be the basis for a curriculum that provides an alternative to the standard university economics course? This paper argues that it can, but that the alternative needs to reflect the reasons for embracing a pluralist approach. It begins with a brief discussion of economic orthodoxy before turning to four arguments representing pluralism: as a response to the underdeveloped state of economics knowledge; as a recognition of the essentially political character of the discipline; as a prerequisite for progress in economic analysis and research; and as a pedagogy that fosters students’ capacities for critical and comparative judgements. Potential problems when teaching within a pluralist curriculum are then addressed, leading into discussion about whether the four arguments are compatible, and how they can be synthesised in developing an introductory unit of study.

Keywords: pluralism, orthodox economics, methodology and pedagogy, alternative curriculum

JEL classification: A11, A13, A20, A22.

1. INTRODUCTION

There is a recurrent tension in the teaching of economics. The subject is typically presented to students as a means of understanding the essentially timeless economic principles shaping the world in which they live – or at least the market economy aspects thereof. Students are inculcated into ‘thinking like an economist’ (Mankiw 2005). What they get, however, is only a sub-set of a broader array of possibilities for understanding the economy in practice. So what is going on in orthodox economics courses may be considered to be ‘training’ rather than education. It is certainly effective, judging by research into how students’ outlooks are shaped by studying economics (eg. Frank, Gilovich and Regan 1997). Their personal values become more aligned with the individualist, competitive ideologies of the market economy.

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These aspects of conventional economics teaching have been frequently criticised. Indeed, recent years have seen a particularly significant groundswell of dissident students and teachers arguing for a more challenging approach. The ‘post-Autistic Economics’ movement, originating in France in 2000, and now having global reach, is one such expression of dissent (Benicourt 2003). Books with titles like Debunking Economics: The Naked Emperor of the Social Sciences (Keen 2001), The Crisis in Economics (Fullbrook 2003) and A Guide to What’s Wrong with Economics? (Fullbrook 2004) echo concerns expressed in a longer tradition of critical publications (such as Ward 1972; Cole, Cameron and Edwards 1991; Ormerod 1994; and Self 2000). Is an alternative economic pedagogy possible? Can students be introduced to the subject in a manner that is more conducive to developing their breadth of understanding and their capacity for critical inquiry? It is the contention of this article that this is indeed possible. The key to its achievement is the adoption of a pluralist pedagogy, ie. a teaching practice that explores a plurality of different ways of understanding how the economy works. Students are thereby exposed to the competing currents of economic thought, eg. classical, neoclassical, Keynesian, Marxian and institutionalist. Feminist, environmentalist and other perspectives can also secure a significant place in the curriculum once the principle of pluralism is accepted. Pluralism is the principal antidote to the reproduction of a narrow orthodoxy in the discipline. It is a means of encouraging students to see the different ways of looking at economic processes, problems and policies. Take an issue like unemployment, for example. Are people out of work because institutional rigidities (eg. trade unions, minimum wage legislation) prevent the price mechanism from carrying out its normal ‘market-clearing’ equilibrating function? Is unemployment better explained in terms of the recurrent tendency for the aggregate demand for goods and services to be less than the economy’s productive capacity? Or does it result from capitalism’s systemic need to have a ‘reserve army of labour’ in order to ensure conditions conducive to capital accumulation? Here are three different interpretations – neoclassical, Keynesian and Marxian – of an economic problem. By looking at the analytic underpinnings of these – and other – competing explanations, the inherently controversial character of economic inquiry is revealed. Students come to see why economists commonly differ in their policy prescriptions, eg. advocating greater labour market ‘flexibility’, macroeconomic policies, a role for government as ‘employer of last resort’ or as manager of more comprehensive incomes, labour and industry development policies.

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Pluralist teaching is not a matter of simply presenting different schools of thought: it is about understanding how those competing bodies of analysis developed and how they relate to each other. It bridges between the study of the history of economic thought and a problem-based approach to teaching. The pluralist alternative is no panacea though, generating its own intrinsic challenges. These concerns are considered in this article, emphasising the link between the various reasons for adopting a pluralist pedagogy and the particularities of curriculum design. The article begins with a brief discussion of economic orthodoxy and its critics before turning to a consideration of four arguments for a pluralist alternative. These four arguments represent pluralism: a) as a response to the underdeveloped state of economics knowledge; b) as a recognition of the essentially political character of the discipline; c) as a prerequisite for progress in economic analysis and research; d) as a pedagogy that fosters students’ capacities for critical and comparative judgements. Potential problems to be encountered when teaching within a pluralist curriculum are then addressed, leading into discussion about whether the four arguments for pluralism are compatible, and whether they can be effectively synthesised in developing an introductory unit of study.

2. ORTHODOXY AND ITS CRITICS

The existence of an orthodoxy in economics education is relatively uncontentious. Of course, individual teachers commonly pride themselves on the particularities of their own teaching styles and course content. However, the core curriculum has some almost universally standard features: micro and macro theory courses, supplemented by ‘applied’ options that build on these micro and/or macro foundations. It is an orthodoxy that has been enshrined in a series of textbooks characterised by the relatively minor product differentiation that is necessary for commercial success. These books include the numerous editions and country-specific adaptations of standard textbooks by leading figures in the economics profession, e.g. Samuelson and Nordhaus (1998), McTaggart, Findlay and Parkin (2005), Mankiw (2005) and Stiglitz (2006). Looking further back into the history of the discipline, the existence of an orthodoxy defined by a standard text is not novel. One thinks of J. S. Mill’s Principles of Political Economy (1848) and then Alfred Marshall’s

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Principles of Economics (1890) as the key texts for students in the latter half of the nineteenth century and the first half of the twentieth century respectively. A turning point after the second world war was Paul Samuelson’s Economics (1948), proclaiming the ‘neoclassical synthesis’ and ushering in the era of distinctive micro-macro syllabus standardisation. The main changes since the first appearance of Samuelson’s text have been greater emphasis on ‘the micro foundations of macroeconomics’, ‘rational expectations’ and ‘new classical economics’, together with a shift from closed-economy to open-economy macroeconomics. These changes have had the effect of purging the textbooks of much of their original Keynesian character. Even the neo-Keynesian element – what Joan Robinson pejoratively termed ‘bastard Keynesianism’ (Harcourt 2001:303) – now has a relatively peripheral status in an orthodox syllabus whose contours are defined by neoclassical theory. It is this orthodoxy that has been subject to recurrent challenge over many decades. The textbooks themselves have provoked counter-texts, like The Anti-Samuelson (Linder 1977) and Beyond Establishment Economics: No Thankyou Mankiw (2002). More generally, some of the academic critics of orthodoxy have emphasised problems with the internal consistency and concepts used within neoclassical theory (eg. Harcourt 1972, 2001a; Keen 2001). Others have emphasised fundamental problems of methodology (eg. Hollis and Nell 1975; Katouzian 1980; McCloskey 1985). The lack of relevance to the analysis of contemporary capitalist institutions is yet another thrust emphasised by economists in the institutionalist tradition (eg. Galbraith 1974; Hodgson 1999, 2001). Post- Keynesians deplore the failure to embrace the array of political economic concerns raised by Keynes, Kalecki and Sraffa (eg. King 1995, Harcourt 2001b). Marxists emphasise a quite different class-based analysis of the capitalist economy, castigating orthodox economics as ‘bourgeois ideology’ (eg. Jaleé 1977; Hands 2000). Attempts to deal with these concerns have been reflected in the contents of ‘alternative’ economics texts (eg. Robinson and Eatwell 1973; Hunt and Sherman 1990; Clark 1998; Tabb 1999; and Stilwell 2006). The Robinson and Eatwell book was the subject of an interesting article reflecting on its demise (King and Millmow 2003) – a failure that, to my mind, derived fundamentally from its not adopting a pluralist approach. Meanwhile, the mainstream syllabus seems to have been unaffected by the concerns expressed by the critics of orthodoxy. At most the concerns appear as incidental matters, usually considered as asides in lectures and footnotes in textbooks, not substantially impeding the development, refinement and application of the neoclassical orthodoxy. It

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is the continued unquestioning commitment to that orthodoxy in the face of these critiques that is so frustrating for the dissidents. An attractive alternative beckons – to teach economics in a pluralist manner that acknowledges the critiques and recognises the potentially valuable insights arising from other schools of thought within the discipline of economics. Some of the newer ‘alternative’ texts listed above take this approach. Neoclassical theory is taught as just one way of understanding a modern economy, to be compared and contrasted with other approaches - Marxian, institutional, and post-Keynesian, for example. In this way students are exposed to alternative ‘ways of seeing’ economic issues.

3. PLURALISM AS A ‘WAY STATION’

One reason for adopting the pluralist approach is the pre-scientific (some say inherently non-scientific) nature of the discipline of economics. This view emphasises the underdeveloped state of economic analysis and the need for some modesty in the claims made on its behalf. From this perspective, pluralism is a ‘way station’ on the road (hopefully) to a more incisive and comprehensive understanding of the economic characteristics of the world around us. Because we cannot reasonably claim to have discovered the universal ‘laws of motion’ determining how the economy functions as a system (or even if it is a coherent system), we should keep an open mind for alternative possibilities. Students need to be introduced to the study of economics as a process of exploration. Pluralism then is the appropriate pedagogy for a discipline that seems to be continually struggling in the attempt to provide clear guidelines for understanding a complex and changing world. Whether this inadequacy of the economics discipline is a temporary situation or a permanent state of affairs is understandably a matter on which reasonable people can reasonably disagree. The aspiration to make progress through the application of scientific methods is of long standing. Neoclassical economics was driven from the outset by that aspiration. Indeed, the use of the term ‘economics’ in place of the older ‘political economy’ signalled the concern to emulate the scientific status of physics (Toohey 1994: pp. 6, 19). The continued mathematicalisation of the discipline – evident both in the professional journals and in the teaching syllabus – is also indicative of this on-going ambition. As Mirowski (1989) emphasised, the attempt to formulate economics as ‘social physics’ was fraught with contradictions from the outset. Its achievements to date have been notably modest, judging by both the explanatory capacity and the predictive power of orthodox economic models (Fullbrook 2004).

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It is doubtful that economics can ever be a science in the same sense as the physical sciences. This is partly because of the interdependence between the behaviour of subject and object – between the observer and the observed – throughout all of the social sciences. Moreover, as McCloskey (1985) has pointed out, economic inquiry in practice actually proceeds by way of ‘conversations’ in which an eclectic mix of modes of investigation and argument is adopted. If this is indeed ‘what economists do’, it is appropriate that students be introduced to the discipline by looking at a plurality of possible approaches through which further progress may be sought.

4. PLURALISM AND THE POLITICS OF ECONOMICS

A second argument for pluralism is rather different, emphasising the essentially political character of economics as a discipline. Of course, the existence of political elements in the development of economic thought is not a novel observation: the distinguished Swedish economist Gunnar Myrdal was expounding that view half a century ago (Myrdal 1969). Contrary to the view presented by mainstream textbooks, value judgements and political ideologies pervade economic thought, influencing the topics selected for investigation, the nature of simplifying assumptions and the uses made of economic analysis. In that sense, economics always has been political economy, notwithstanding the change in the preferred label for the discipline. That being the case, the best way of introducing students to a thorough economics education is by a frank acknowledgement of this inexorable link between economics and politics. In practice, this means teaching neoclassical theory as a body of analysis representing the market economy in a manner that aligns with the principles of economic liberalism – emphasising methodological individualism, self interest as the principal driver of economic activity, competitive markets as the ideal economic environment, and caution about (if not antipathy to) a substantial role for the state in economic affairs. This neoclassical stance can be contrasted with the Keynesian approach which rests upon a more aggregated view of the economy and a more positive view of the capacity of the state to act as an instrument for social betterment (O’Donnell 1999). The different values and assumptions embodied in institutional and Marxian analyses of the capitalist economy can then be discussed in the process of developing students’ understandings of those alternative, and more unsettling, ‘ways of seeing’ or ‘thinking like a (different type of) economist’. In this way, students can be introduced to conservative, reformist and radical viewpoints in the discipline of economics. They come to see that particular modes of analysis lead to

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conclusions and policy prescriptions that mesh with different political ideologies and interests. Given that the dominant economic orthodoxy currently has such a strong association with the political practices of neoliberalism, the advocacy of pluralism has an obvious association with the politics of the left. The case for pluralism, from this perspective, has a counter- hegemonic rationale, challenging the theoretical underpinnings of neoliberal ideology and policies. Academic economists of a radical inclination might even regard it as a ‘second best’ to an economics curriculum more comprehensively oriented towards, say, institutionalist or Marxian political economy. However, one cannot properly resolve the current problem of right-wing political bias by substituting a different bias. Any curriculum dominated by a single perspective – whether neoclassical theory in capitalist nations or Marxism-Leninism in the former USSR – invites the accusation of dogmatism. Pluralism is the antidote: it is the hallmark of education in an ‘open society’.

5. PLURALISM AND DISCIPLINARY PROGRESS

A third set of arguments for pluralism in economics centres on the nature of progress in the discipline itself. This is different from the two preceding arguments because it represents pluralism not as a means of coping with the inadequacies of ‘economics as a science’ but, more positively, as a means of improving it. The core proposition, as Fullbrook (2003, p.118) succinctly puts it, is that “real science is pluralist”. So, pluralism in teaching is a prerequisite for pluralism in research methods which, in turn, is conducive to disciplinary progress. This position is not universally accepted. As Screpanti (1996, p.298) argues, both realist and post-modernist approaches to social science should reject methodological pluralism as desirable in principle. From both of these perspectives, the case for pluralism is more pragmatic. Realists, believing in some notion of objective reality, would say that pluralism has to be reluctantly accepted only as a second-best because of the pre- scientific status of the discipline. Postmodernists, on the other hand, reject the advocacy of pluralism as a methodological precept because “it is not possible, from outside science, to … say that many methods are better than just a few” (Screpanti 1996, pp.304-5). So, as Samuels (1996, p.75) argues, “the rationale of methodological pluralism is that, in the absence of meta-criteria by which one methodology can be shown unequivocally to be superior to all others, analyses should not be rejected solely on the basis of methodological considerations.” On this reasoning, pluralism is necessary

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 49 because openness to alternative methodologies is more conducive to developing an understanding of the world around us. The case for this inclusive methodological stance is buttressed by observations about how progress in knowledge actually occurs. One influential view has been Thomas Kuhn’s notion of a dominant paradigm characterised by ‘normal science’ that undergoes periodic revolution when confronted with an accumulation of anomalies (Kuhn 1962). As Fullbrook (2003, p.120) points out, however, “in social sciences conditions rarely, if ever, exist for a revolution in the way Kuhn describes.” Rather, changes in social, political and economic conditions – what Galbraith (1974, p.283) calls “the march of circumstances” – are likely to be more influential. The challenge in practice is to create a professional practice whereby those changing circumstances are subjected to critical scrutiny from different perspectives. For this purpose one must learn to think in diverse analytical frameworks, continually juxtaposing them, judging their effectiveness in explaining what needs to be understood, and forging new concepts and analyses in the process. This is the case for regarding economics, or indeed any discipline, as “not a body of doctrine but an activity… [whose] work consists essentially of elucidations” (Wittgenstein, quoted in Fullbrook 2003, p.121). The key issue then becomes how to prepare for that activity. A pluralist education can be seen as a necessary, albeit not sufficient, condition. In other words, the required fluidity and flexibility of thought for progress in analysis and research is more likely to derive from an introduction to alternative ‘ways of seeing’ rather than from studying a more monolithic orthodoxy. The additional requirements of capacity for synthesis, innovation or sound judgement are a ‘tall order’ in any context, of course, but more likely to be fostered in an educational environment in which students are encouraged from the outset to address analytical puzzles in an open-ended manner, rather than to solve ‘set-piece’ puzzles within an established orthodoxy.

6. PLURALISM AND PROGRESSIVE PEDAGOGY

The fourth argument for pluralism is the most directly connected to pedagogy. This is the argument that only a pluralist approach is conducive to the development of students’ capacities to think constructively and critically. Economics is a distinctively ‘taught’ subject, where the undergraduate curriculum effectively defines the discipline and what its practitioners regard as central to it. So if ‘economics is what economists teach’ it is doubly important that it be taught in a manner that expands

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students’ intellectual capacities. Such concerns are reflected is U.S. debates about whether the character of PhD training in economics is the source of poor undergraduate teaching (Barber 1997). Yet more fundamental are the criticisms of orthodox economics teaching as ‘autistic’ (Rankin 2002) and as producing ‘tunnel vision’ (Stilwell 2005). All teaching involves forms of social reproduction, but it is important that education not be reduced to ‘cloning’. A pluralistic curriculum is the principal defence against that tendency. A corresponding danger must be acknowledged though. This is potential for pluralism to produce a relativist approach to learning in which understanding of different viewpoints effectively supplants a concern with the critical engagement necessary for disciplinary (or interdisciplinary) progress. As Sapir (2003, p.60) puts it, an uncritical pluralist approach can produce “the simple addition of competing points of view without any means to critically assess them, or even the understanding that some are not compatible with others”. This is what can be called the problem of the ‘patchwork effect’. It is particularly pertinent in the context of teaching, because the pluralist method may be perceived as a ‘take your pick’ approach to economics. Students may simply choose between rival explanations of how the economic system works according to their own prior political inclinations or value judgements. To combat this possibility, progressive pedagogy requires emphasis on discussion of the criteria by which judgements can most effectively be made and how progress in the discipline can occur. Subject to that proviso, a pluralist approach provides a more sound basis for creating constructively critical capabilities than does an orthodox curriculum that conveys the impression that progress comes only through further refinement of the existing paradigm.

7. PROBLEMS OF PLURALISM

The preceding four arguments create a strong case for pluralism in the teaching of economics. Some caveats have already been acknowledged. It is also appropriate to consider the more general problems that need to be faced in translating the principles of pluralism in economics into the classroom. Even those sympathetic to pluralism in principle may be apprehensive about actually teaching in this manner because they regard the pluralist approach as: (i) a big challenge for teachers; (ii) not necessarily welcomed by students; and (iii) a source of specific dilemmas for curriculum design. Each of these concerns can be considered in turn. Can teachers cope? Of course, it is always a challenge to develop confidence and competence in teaching other than what one was taught

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 51 oneself. Teachers embracing the pluralist approach commonly have to educate themselves in the alternative schools of economic thought before introducing them into the classroom. Inertia and/or laziness stand in the way of any such enterprise. Such considerations may explain a common reluctance to embrace change. Therein lies a potentially major obstacle, not only to innovation in teaching, but to progress in the discipline more generally. If teachers introduce only minor modifications to the curriculum on which their own education had been based, that is not a recipe for disciplinary and inter-generational progress. However, the alternative – of embracing self-education in tandem with wide-ranging curriculum reform – can be a source of considerable intellectual excitement. It takes professional commitment to its logical conclusion – embracing challenges that can produce more rewarding outcomes, both for teachers and students. Can students cope? This is a rather different matter. The question raises issues about students’ willingness and capacity to embrace a curriculum that emphasises uncertainty and contingency in the state of knowledge. Indeed, a pluralist curriculum may not be welcomed immediately by those students who have been conditioned to accept education as a tidily packaged process requiring little original thought and critical engagement. It is commonly said that this characteristic is particularly pronounced among international students from non-English speaking source countries, having to cope with new ideas in their second language. The problem is more general though. Peter Earl (2003), for example, reports encountering some resistance from students when he sought to introduce a more pluralist curriculum when teaching economics in New Zealand. He explains this partly in terms of ‘dualistic’ thinkers “who have a hard time seeing what value student arguments could have in a class discussion, so they keep quiet and wait for wisdom from the teacher” (Perry 1970, cited in Earl 2003, p.93). The key issue in practice is how to get the students to progress from a rigid outlook to one in which they accept that knowledge is provisional and debatable. Not surprisingly, this transition is made harder by prolongation of the original state. As Earl puts it, “the dominance of mainstream economics in the first year [of university studies] locks students’ expectations into continued faith in dualistic modes of learning about economics, making pluralistic teaching at intermediate and advanced levels more of a struggle” (Earl 2003, p.93). One may sensibly infer that, when it comes to the introduction of a pluralist approach into the curriculum, the sooner the better, ie. in the introductory first year unit of study. Getting down to the practicalities of curriculum design, other specific concerns arise. First, how many competing schools of thought can

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one reasonably deal with in an introductory unit of study? Second, should these competing ‘ways of seeing’ be introduced in the chronological order of their development ( as in Stilwell 2006), or in order of their current influence (eg. beginning with neoclassical theory and then turning to the critiques and challenges posed by alternative schools of thought)? Third, how much time needs to be accorded to each - in neoclassical, Keynesian and Marxian interpretations of capitalism, for example? Fourth, how much time should be spent dealing with the ‘mechanics’ of theory construction within each school of thought, as distinct from their comparative ideological aspects and policy implications? There are trade-offs to be considered, eg. breadth of understanding across competing schools of thought versus depth of knowledge in any one school of thought. There is also a delicate balance to be found between emphasising the political economic integrity of each of those schools of thought and the pursuit of disciplinary progress through their juxtaposition and vigorous interrogation. Other concerns include the appropriate form of student assignments and assessment methods. A mixture of short answers and longer essay topics can be an appropriate means of testing students’ knowledge of basic ‘building blocks’ and their capacity to ‘compare and contrast’ alternative schools of economic thought. These various concerns must be systematically addressed in the context of preparing the materials for teaching and learning in a particular unit of study. In a previous article in this journal (Stilwell 2005), I drew on the experience of doing so in the unit of study called ‘Economics as a Social Science’ at the University of Sydney. Student enthusiasm for that unit, measured in terms of quantitative scores on students’ feedback questionnaires, has been consistently high over the many years it has been taught. So, in answer to the question (posed by one of the referees for this article, and presumably building in the minds of many readers) ‘is this a realistic proposal for a first-year course?’, my own answer is ‘yes it can be done, and it has been done’. Of course, individual teachers need to make their own judgements about what suits their particular circumstances, but there is practical experience as well as ‘in principle’ arguments from which to draw.

8. TOWARDS A SYNTHESIS?

Does this all add up to a coherent case for a pluralist approach to economics education? A case for pluralism resting on four different and not necessarily compatible arguments, and ending with an acknowledgement of some dilemmas in curriculum design is not necessarily persuasive. There is a reassuring element of consistency

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 53 though. It is not just that the arguments for a pluralist pedagogy dovetail with other arguments relating to pluralism in economic theory and methodology (eg. King 2002; Anderson 2004). It is that, notwithstanding some differences of emphasis, the four arguments for pluralism presented here have a discernable sequential logic. This can be expressed in various ways, but perhaps the simplest is the 4,2,3,1 sequence. Argument 4, emphasising a pedagogy that provides an invitation to controversy, leads in to argument 2, showing students the nexus between current controversies in economics and competing political philosophies. That then leads into argument 3, explaining why future progress in the discipline requires engagement with those competing points of view. Argument 1 reappears at this point – as a reminder that we still have a long way to go, struggling to make progress in a subject that seems to suffer perpetual underdevelopment. The four arguments together add up to a powerful case for pluralism in economics education. A tidy conclusion such as that does not imply a settled set of arguments. Nor does it signal the likelihood of an imminent change in the teaching of economics in practice. So far, orthodox economics has shown a remarkable resilience in the face of recurrent critiques and demonstration of constructive alternatives. Evidently, matters of institutional structure are as important as logical arguments in shaping outcomes, as I have indicated elsewhere (Stilwell 2006, Ch. 40; 2006a). The contest of economic ideas and pedagogic principles always takes place in an institutional context shaped by power relationships. However, an engagement with the arguments for an alternative, more pluralist, pedagogy is appropriate for both the critics and defenders of the prevailing orthodoxy.

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Cole, K., Cameron, J. and C. Edwards (1991) Why Economists Disagree?, Longman, London, Second Edition. nd Clark, B. (1998) Political Economy: a Comparative Approach, 2 Edition, Praeger, Westport, Conn.

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Earl, P. E. (2003) ‘The Perils of Pluralistic Teaching and How to Reduce Them’, in Fullbrook, E. (ed), The Crisis in Economics, Routledge, London, pp. 90-93.

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Mirowski, P. (1989) More Heat than Light: Economics as Social Physics, Physics as Nature’s Economics, Cambridge University Press, Cambridge.

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O’Donnell, R. (1999) ‘Keynes’s Socialism: Conception, Strategy and Espousal’, in Sardoni, C. and P. Kriesler (eds) Keynes, Post-Keynesianism and Political Economy: Essays in Honour of Geoff Harcourt, Vol. 3, Routledge, London and New York.

Ormerod, P. (1994) The Death of Economics, Faber and Faber, London.

Perry, W. G. Jr. (1970) Forms of Ethical and Intellectual Development in College Years: A Scheme, Holt, Rinehart and Winston, New York.

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Robinson, J. and Eatwell, J. (1973) An Introduction to Modern Economics, McGraw-Hill, Maidenhead.

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Sapir, J. (2003) ‘Realism versus Axiomatics’, in Fullbrook, E. (ed) The Crisis in Economics, Routledge, London, pp.58-61. th Stiglitz, J. (2006) Economics: 4 Edition, Norton, New York.

Stilwell, F. (2005) ‘Teaching Political Economy: Curriculum and Pedagogy’, Australasian Journal of Economics Education Volume 2, No. 2, September.

Stilwell, F. (2006) Political Economy: the Contest of Economic Ideas, Second Edition, Oxford University Press, Melbourne.

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56 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

AN INTRODUCTION TO eROADMAPPING: PROVIDING LEARNING PATHS FOR STUDENTS AND EMPOWERING TEACHERS1

Rodney Carr2 Deakin Business School, Deakin University, Warrnambool, Vic. 3280

Mary Graham* School of Accounting, Economics and Finance, Deakin University, Warrnambool, Vic. 3280

Phil Hellier School of Accounting, Economics and Finance, Deakin University, Warrnambool, Vic. 3280

Helen Scarborough School of Accounting, Economics and Finance, Deakin University, Warrnambool, Vic. 3280

ABSTRACT This paper reports on the development of an innovative teaching strategy: an eRoadmap. Based on the theory of conceptual mapping, the eRoadmap provides an interactive, hierarchical structure for course delivery using the readily accessible platform provided by Microsoft PowerPoint. For the student, the eRoadmap provides a self-paced learning environment which encourages student engagement while, for the teacher, it provides an environment for the development of a course framework and the integration of teaching materials from a variety of sources. Further advantages of the eRoadmap from the perspectives of both students and teachers are discussed and future directions for development, evaluation and research are outlined.

Key Words: concept mapping, economics education, online learning J.E.L. Classification: A22

*Address for correspondence: Mary Graham School of Accounting, Economics and Finance Faculty of Business and Law Deakin University, Victoria, 3280 Email: [email protected] Phone: 03 55 633 568

1 th The authors thank the two anonymous reviewers and the editor of the Proceedings of the 11 Australasian Teaching Economics Conference for their constructive comments and suggestions. 2 Authors in alphabetical order by family name. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 5757

1. INTRODUCTION

The eRoadmap described in this paper was developed over the last twelve months by a team of staff from the Faculty of Business and Law at Deakin University’s

Warrnambool campus. The combined forces of pressure to develop increasingly online learning programs and an ever expanding range of learning resources available from a variety of sources provided the impetus for seeking to develop a suitable electronic framework for presenting an integrated course structure. Compounding these factors was a desire to improve the engagement and interest of students in studying economics.

The eRoadmap provides a framework for developing flexible learning programs which enable and enhance the integration of all materials. It utilises computer software that has appropriate visual capabilities (graphics, numerical and verbal) and visual building and linking capabilities.

This paper reports on the development of an eRoadmap for an intermediate microeconomics uniti, Competition and Industry, offered as part of a Bachelor of

Commerce degree. Given the conceptual nature of economics and the complex inter- relationships that often exist within many units of study of economics, it was felt that an eRoadmap could be particularly beneficial to students studying economics. Further eRoadmaps are being developed for two other economics units and a number of other business related units offered within the degree program.

Section 2 introduces the theory of conceptual mapping. Section 3 explains eRoadmapping using concrete learning program examples, while Section 4 relates to general educational theory. Section 5 explains how eRoadmapping can assist students and empower teachers. Guidance on developing an eRoadmap is provided in Section 6

58 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 and the paper concludes with a brief consideration of future developments, in particular the need for formal evaluation.

2. CONCEPT MAPPING

The eRoadmap is a development which is broadly based on concept mapping (Novak 2005), a technique for visually representing the structure of information, and the interrelationships between concepts. Concept maps are tools for organizing and representing knowledge and Novak (2005) claims that, to the extent they serve as a kind of template to help organize and structure knowledge, they are powerful for the facilitation of meaningful learning. A concept map is based on the learning psychology of David Ausubel (1963) and Ausubel et al. (1978), whose fundamental idea is that learning takes place by the assimilation of new concepts into existing propositional frameworks held by the learner. In essence, learning new knowledge is dependent on what is already known. New knowledge gains meaning when the learner chooses to substantively relate it to a framework of existing knowledge rather than being processed and filed in isolation according to more or less arbitrary criteria (Candy 1991, Goody 2001). Meaningful learning needs three conditions (Novak and Gowin 1984, Novak and Musonda 1991): ● Meaningful material: The learner has to have relevant prior knowledge, ● Understandable content: The information has to be conceptually well defined and presented with examples in a language the learner can relate to their existing knowledge base. ● Motivation: The learner must be motivated to consciously and deliberately choose to learn and to incorporate new concepts into their prior knowledge, rather than memorizing the concepts. The teacher can encourage students to engage in the learning process by using tools such as the eRoadmap. The eRoadmap can both identify general concepts prior to more specific instruction, and can assist in the sequencing of explicit learning tasks anchored to the conceptual framework. Although little is known about the memory processes and the incorporation of knowledge into the brain, Novak (2005), claims research supports the proposition that the brain organises knowledge in hierarchical frameworks and that learning approaches that facilitate this process Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 5959 enhance the learning capabilities of all learners. Studies such as those by Schau and Mattern (1997) and Schau et al. (2001) support this view. eRoadmapping is also consistent with the views of Schau and Mattern (1997) who suggest that for knowledge to be accessible from long- term memory, it must be organized, or structured. If connected understanding is lacking, students will be unable to apply the concepts being studied. A hierarchical structure, where the material is organised from more general to more specific information, serves to encourage and enhance meaningful learning. An overall view of the material can be portrayed followed with details on specific topics/concepts. Research by Marangos (2003) suggests that concept mapping can be a useful tool in the teaching of economics.

3 WHAT IS AN eROADMAP?

Similar to the way in which a normal roadmap provides an overview of points and pathways between points within a geographic region, an eRoadmap provides an overview of the concepts and the linkages between these concepts. A normal roadmap shows the possible paths between points; an eRoadmap shows the logical paths between concepts. Users of a normal roadmap can choose the path that best suits their specific needs; the user (student) of an eRoadmap can choose the path to follow when moving from one concept to another. Figure 1 illustrates the idea by showing part of an eRoadmap for a topic on Market Power. This particular eRoadmap was developed using the commonly available and familiar software Microsoft PowerPoint as a platformii. There are 33 slides in this topic and approximately 200 slides for the whole subject. We have incorporated graphics contained in the recommended text for the subject by Browning, & Zupan, (2004)iii. Figure 1 is similar to a traditional concept map, with rectangles representing concepts linked by arrows. The structure is a hierarchical tree- like structure. The rectangles are images of the PowerPoint slides in the PowerPoint file. There are two types of slides, ‘parent’ slides and ‘child’ slides. Images of child slides appear on parent slides. These images are hyper-linked. A child slide is viewed by clicking on the image of a parent. Text within a slide can also be hyper-linked. All slides have a standard layout or template with text references near the top right hand corner and navigation buttons in the top and bottom right hand corners. Navigation backs up the tree is enabled by providing a return button in the bottom right hand corner of each child slide. Quick return to the start, or home slide is

60 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 provided by a return home button in the top right hand corner of selected slides. There are many concepts, and links between concepts, and ways of traversing the body of knowledge contained in the eRoadmap illustrated in Figure 1. All learners are expected to cover the material in entirety but it is useful for them to have the opportunity to take the path which best facilitates their learning. The eRoadmap allows this. There is the preferred path that has been recommended by the teacher, as shown by the arrows in Fig.1, (moving from Monopoly Power to The Measurement of Potential Monopoly Power to Efficiency, Pricing, etc), but students can choose other paths if they wish. The idea is to show the ‘big picture’ and allow students to drill down to the base level slides to obtain further information if they wish. If students already have an understanding of some parts of the material, they can proceed to the particular sections which require further attention. The drilling down sequence illustrated in the eRoadmap of Figure 1 is similar to the linear content structure presented in the table of contents of many textbooks (e.g., Browning and Zupan (2004), Chs. 11, 12 and 15, pp. xviii-xx). However, eRoadmapping provides a more efficient form of learning flexibility than textbooks. In an attempt to provide topic and concept linkages and learning flexibility to readers many textbooks supplement the table of contents with verbal references in the text to other relevant sections of the book; a subject index at the rear of the book; and a section in the preface on alternate ways of combining the contents of the book. However, because of its hard copy form, the constant turning of pages to reach different sections of the text can be cumbersome, distracting and time consuming. eRoadmapping provides a computer driven, click-on-icons method of efficiently overseeing and navigating the topic material using a wide variety of instantaneously activated conceptual linkages. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 6161

Figure 1: Part of eRoadmap for Market Power and Monopoly Topic

Faculty of Business and Law Topic 5 B&Z Chs. 11-12, Market Power: pp 417-428 Monopoly

This topic examines the conduct and performance of a firm that is the sole supplier of a good or service to a market. This topic considers firm level decision making when interdependence between firms is not an issue.

1

Product Decision Making B&Z pp 313-317, Monopoly Power B&Z Chs. 11-12, pp 417-28 By The Monopolist 421-423 The analysis of monopoly can be divided into five main sections. Three approaches to production strategies will be examined:

• Discouraging potential entrants

• Innovation and invention

• Advertising and promotion

25

Reduction Of Anti- B&Z competitive Conduct pp 321- 326, 425-427 Two approaches to the reduction of anti-competitive conduct will be considered: 2 Laws to reduce anti-competitive The Measurement Of conduct

Potential Monopoly Power and The existence of monopoly does not mean that as the sole supplier the firm is necessarily exploiting this position. Price regulation Market exploitation can be measured in several ways. Such as, the extent of super-normal profits, the existence of unnecessary

barriers to market entry created by the firm. 29 The Lerner Index is an often used price based measure of market power. Pricing Decision Making B&Z By The Monopolist pp 305-308, Ch 12 Two approaches two monopoly pricing will be examined:

3

The Measurement Of B&Z Monopoly Efficiency pp 317-21, 417-428 The assessment of monopoly efficiency is usually undertaken by comparison with the efficiency of perfectly competitive markets. The efficiency of monopoly markets can be measured from two perspectives: The static analysis The dynamic analysis 12 of efficiency of efficiency

7

62 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

While eRoadmapping is an application of the general principles of effective concept mapping and structuring theory, clearly many different conceptual maps and thus eRoadmaps can be generated from the same body of information. Similarly, concept maps could be generated by students as well as teachers. The literature suggests both have educational value ( see for example, Heinz_Fry and Novak 1990, and Horton et al. 1993). Table 1 illustrates, by way of a matrix, how several economic concepts and market performance possibilities can generate many options (matrix cells) that could be used in the development of an eRoadmap with respect to monopoly power.

Table 1: Conceptual mapping options for a topic on Market Power

Performance concept Outcome Regulation Perfect Imperfect

Measurement of Pricing Indexes 1* 10 19 Monopoly Power Concentration ratios 2 11 20

Allocative Static 3 12 21

Efficiency Dynamic 4 13 22

Mark-up 5* 14 23 Pricing Discrimination 6* 15 24

Entry 7 16 25

Production Innovation 8 17 26

Advertising & Promotion 9* 18 27 *cells are not relevant

Depending upon the background and abilities of the students and the objectives of the learning program, the body of knowledge relating to monopoly power could be conceptually mapped in many ways. For example, from Table 1, a simple introductory approach might consider the concept of monopoly power in terms of a brief comparison of perfect and imperfect competition with respect to concentration ratios, static efficiency, price discrimination and barriers to entry (cells 2&11, 3&12, 15, 7&16). A more detailed analysis could include a consideration of what is meant by monopoly power and its measurement, a comparison of static and dynamic efficiency, and an explanation of mark-up pricing and technical innovation as it relates to barriers of entry (cells 10, 3&4, 12&13, 16&17). Consideration of market regulation could also be introduced, for example, in relation to market concentration, efficiency and innovation performance and barriers Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 6363 to entry (cells 19&20, 21&22, 25&26). A comprehensive analysis would also include a more detailed analysis of the performance and regulation aspects of pricing, advertising and promotion (cells 14&23, 24, 18&27). The remainder of this section provides a brief explanation of the conceptual mapping process undertaken when developing the market power topic illustrated in Figure 1. The first important factor is to develop the framework with the relevant student body in mind. For example, in this instance, the market power topic is taken from an intermediate microeconomics unit for second year Bachelor of Commerce students. Some students will not undertake further studies in micro-economics within their degree program. The unit is designed for students with limited algebraic background, hence, the explanation and analysis of economic concepts are reliant upon verbal, arithmetic and descriptive geometry techniques. The eRoadmap was also designed with references to the chosen text and with copyright approval to use text diagrams. This ensured that the eRoadmap was consistent with and was fully integrated with the hardcopy materials recommended to the student. The initial aspect of the conceptual mapping was horizontal. The objective was to establish the general relationships between market structure, performance, and regulation. The main components of the market power topic were determined to be the measurement of potential monopoly power, the measurement of monopoly efficiency, pricing decisions, product (or output) decisions and market regulation. The second aspect of the conceptual mapping was vertical or a drilling down analysis of the constituent parts of each component. The objective was to ensure that the complexities within each component were delineated. Under the Measurement of Potential Monopoly Power component the aim was to examine mark-ups and demand price elasticities measures of market power. Under the Measurement of Monopoly Efficiency component the aim was to examine comparisons between competitive and monopoly market structures in terms of production (cost) and allocative efficiency not only in static but also dynamic (technological advance and economies of size) settings. The aim of the Pricing Decision Making component was to analyse mark-up pricing and evaluate various types of common price discrimination practices. Under the Product Decision Making component the aim was to analyse firm based strategies to discourage competitor entry, to increase innovation, invention, product promotion and advertising. Finally, under the Reduction of Anti-Competitive Conduct component the aim was to provide an introduction to the rationale of Commonwealth legislation to reduce anti competitive conduct and regulate prices.

64 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

The third aspect of the conceptual mapping was again horizontal. The objective was to ensure that some of the complex interrelations between the components are examined. For example the theoretical, informational and legislative requirements to establish and maintain workable competition and long run public interest. In many instances the three aspects of conceptual mapping are not necessarily sequentially conducted but follow an iterative process. For example a vertical static analysis of the allocative efficiency of less competitive markets may result in a different market performance evaluation and horizontal public policy recommendations to that provided by a more dynamic vertical analysis that takes into consideration such factors as research expenditures, innovation and the economies of size.

4. THE LEARNING PROCESS

A logically based perception of how students learn is essential for facilitating good teaching and ensuring quality in learning. Learning outcomes, both qualitative and quantitative, are determined by a complex interaction between teaching procedures and student characteristics (Biggs and Collis 1982). Quality learning depends on factors both extrinsic and intrinsic to the learner. Extrinsic factors often relate to issues of instructional design, while intrinsic factors usually include motivation, previous knowledge, and the development stage of the learner. The intrinsic factors of motives and the strategies adopted by the student can determine the student’s approach to learning. Student approaches to learning can be understood as a continuum that extends from surface or shallow processing to deep and achieving analysis (Biggs, 1987). Table 2 provides a brief summary of the common ways students see their task, and organise their resources within each learning approach.

Table 2. Motives and strategies in approaches to learning and studying Approach Motive Strategy Meet requirements minimally: a Reproductive: limit target to bare Surface balance between working too hard essentials and reproduce through and failing rote learning Meaningful: read widely, inter- Intrinsic: study to actualise interest Deep relate with previous relevant and competence knowledge Competition and ego-enhancement: Based on organising one’s time and Achieving obtain high grades regardless of working space: “model” student interest in material Source: Biggs (1987), p.11 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 6565

Similarly, Simkins and Sosin (1999) claim that research on cognitive learning suggests that although individual students learn in different ways, all meaningful learning (learning that emphasizes understanding and the acquisition of knowledge) requires active participation on the part of the learner. The eRoadmap allows for the different learning styles that students possess. For example, the visual learner will appreciate the “parent child” structure of the eRoadmap, while the reads/write learner will prefer the text linkages. The kinaesthetic learner will like being able to experiment as they proceed through the eRoadmap. Economics has often been cited as lagging behind other disciplines in implementing instructional innovations that actively engage students in the learning process (Becker 1992, Katz & Becker 1999, Simkins & Sosin 1999). For example, Marangos (2003) cites the void of research concerning the development of concept maps for economics, despite the generally positive literature regarding its application in science teaching. The eRoadmap tool is an extrinsic factor affecting the student’s quality of learning. It provides an alternative or additional way of presenting material and engaging students in the learning process. Its use in economics education can help overcome student fears or negative pre-conceptions, improve cognitive learning and generate broader student interest in and motivation for economics. The eRoadmap gives students with different learning motivations and interests additional entry points into the study of economics. For example, it caters for the ‘point and click’, electronic visual game-playing generation who constitute a major component of the student body today. While this element could be argued to undermine a deeper learning approach, the greater flexibility and interactive learning environment will encourage a deeper learning. Students can follow the preferred pathway recommended by the teacher, or choose quite different pathways. Also the eRoadmap can be used as a framework to analyse situations not covered in the standard economics program. The eRoadmap is a vehicle that has the potential to actively engage students in their learning process and in so doing can provide an environment to encourage a deeper approach to learning. As previously mentioned, knowledge that is learned meaningfully is knowledge the learner can control and is knowledge that can be utilized in new contexts and recalled over longer periods of time (Novak, 1998).

66 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

5. ENHANCING THE LEARNING ENVIRONMENT FOR BOTH LEARNERS AND TEACHERS

In developing the eRoadmap, we feel the potential benefits, for both teachers and learners, are many and varied. Feedback from students of economics has highlighted the difficulty they experience when problem solving in determining the relevant concepts and analytical techniques (eg. “Which graphs to use?”). The eRoadmap developed here is an attempt to overcome some of these difficulties.

5.1 The learners’ perspective

An eRoadmap can provide the learner with a number of benefits. The clear overall visual perception of the key components of the topic provides for the student a clear structure of the body of knowledge to be covered. This assists the student to organise the material into a logical framework that aids the understanding, memory and recall processes of the mind. For example from Figure 1, the key components are provided in the first and second slides. The structure also aids recognition of how the topic and the key components are related to previous knowledge and learning. For example, from Figure 1, the performance measures of productive efficiency and allocation efficiency previously applied to perfectly competitive markets are now applied to evaluate monopoly performance. The eRoadmap also helps develop an understanding of how the key components relate to each other and similarly for component sub-groups. For example, from Figure 1, the relationship of price elasticity of demand to mark-up pricing, to the Lerner index measurement of monopoly power, and to the efficacy of price discrimination. As indicated in section 3, learning can result from new concepts being assimilated into existing frameworks. With the eRoadmap, students can benefit from the freedom to choose different learning pathways. This will depend on their level of understanding of the material, their interests and objectives. For example, from Figure 1, in preparing for an exam the student may wish to revise the major graphs and would therefore select the slides and pathways that provide illustrations and explanations of graphs. However, the greater the number of pathways and slides presented the greater the likelihood of students getting lost. A balance is needed in providing different pathways for students to select. In providing an analytical framework that assists the organising and structuring of knowledge, the eRoadmap means new information can Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 6767 be more readily assessed and assimilated. For example, from Figure 1, the cost effects of technological change upon monopoly performance can be readily incorporated into the current structure within the efficiency section as dynamic efficiency. Finally, this development may enhance the student’s ability to apply current knowledge to understand and interpret everyday events and to solve unique problems. For example, from Figure 1, the analysis of an extensive product promotional campaign by a large corporation can be analysed in terms of the major components as provided in slide 2. As the student has an increased mastery of the subject content, its application and development, it is hoped they will develop a greater interest in the subject. The subject has added value to the student.

5.2 The teachers’ perspective

In developing the eRoadmap, the teacher benefits from establishing a clear, overall visual perception of the key components of the topic. The teacher is challenged to identify and focus on the important concepts and the ways these are interrelated. Our experience is that this takes considerable skill and imagination, as teachers must first identify the concepts they wish students to learn and then link them in a manner that best shows their relationship to other concepts. The eRoadmap is a useful visual tool to assist the instructor in developing the structure, content and presentation of the material. eRoadmapping also assists in the logical development of major streams of study and skill enhancement within an overall learning program. For example the development of an economics major in a Bachelor Degree. This recognition of how the topic and the key components are related to previous knowledge and learning is crucial to course development. The provision of an analytical framework assists new information and material to be readily assessed and included in the learning program. eRoadmapping allows for ongoing development of the learning resources. Once a structure has been determined and a basic eRoadmap has been produced, it is possible to add additional base level slides, or links to other learning resources, without disrupting the fundamental structure. For example, in Figure 1, we might wish to enrich the material on monopoly pricing by including a video interview with a theatre owner who is directly involved with price setting. Alternatively, whole topics can also be added, if they are added from a higher-level or ‘parent’ slide. The eRoadmap can also be seen as a framework to continuously develop and improve over time. The same structure need not be adopted in

68 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 each teaching period. With each iteration the structure could change, giving the roadmap an advantage over a textbook which tends to stick to one linear structure. It also allows for continuity in the teaching of the unit. Staff changes or the taking of leave by individual staff members need not impact on the teaching of the unit since a framework for the unit can be developed irrespective of individual staff members. However, staff resistance to adopt material developed by colleagues can be a barrier to the development of the eRoadmap. To be successful, the eRoadmap needs to be a team effort so that all members of the teaching team feel they have some ownership claim and hence a willingness to implement and further develop the teaching tool. Another consideration is the efficient and effective use of staff resources. eRoadmapping is an ongoing development that can be carried out by a team of teachers. If necessary, teachers can separately create additional slides, or resources to add to slides, without disrupting the whole structure. Individual teachers can contribute in a significant and meaningful way to the whole product. Such additions can be carried out iteratively over time, as resources permit, and if a particular extension does not get added the eRoadmap as a whole is still intact and remains useful. In addition, eRoadmapping provides a method of integrating and using the many learning resources that are available to teachers and students, such as the supplementary teaching material provided by publishers with their texts. The aim is to add value to existing materials, not to replace them. Materials such as PowerPoint slides/lecture notes or online material or further exercises using platforms such as Excel or webMathematica can be integrated into an eRoadmap. The integration of all the teaching materials should assist students to use them more effectively and to appreciate how knowledge, teaching methods and assessment are incorporated within the learning program. Accessibility is also a particularly important consideration for the multi-campus university where similar sets of materials must be available to all students to maintain student equity. Furthermore, given the drive for flexible learning in educational programs, there is an increasing demand for study programs to be available online. An eRoadmap can be accessible to all students via a web site. It provides freedom to select different learning pathways depending on staff and student interest and the level of student understanding, while at the same time ensuring that all the designated material is covered. The eRoadmap could provide a new student assessment tool. In addition to being a learning tool and useful for instructional planning, concept maps can also serve as a useful assessment tool (Novak 1998, Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 6969

Budd 2004). It is possible that the eRoadmap concept could also be included as part of an assessment package. For example, students could be assessed on their ability to apply aspects of the eRoadmap to analyse and interpret a given situation or set of data. At higher levels, students could be required to produce eRoadmaps of topics they have researched or explored. The eRoadmap uses Microsoft Powerpoint as a platform and most teachers will be familiar and comfortable with the software. However, in recognition of the level of technical skill required to be able to effectively develop and link the slides and to assist with developing an eRoadmap, some guidance is provided in the section to follow.

6. DEVELOPING AN EROADMAP

For a teacher to develop an eRoadmap, he/she needs to: ● Develop/create the concepts ● Provide links and pathways between the concepts ● Provide an overall structure giving the ‘big picture’. Hence, the construction of an eRoadmap requires the developer to have a thorough knowledge of the subject matter, its component parts and the ways the components may be arranged to facilitate ease of understanding for students of varying backgrounds and learning abilities. We have found there are two main ways that teachers build eRoadmaps. There is the ‘top-down’ approach, where the developer starts with the big picture, then ‘drills down’, as a student would, by adding in lower-level slides ending up by providing the base-level slides. The other method is the ‘bottom up’ method where the teacher starts with a set of base-level slides, often a set of linearly-organized slides that they have used previously, or that were supplied by a publisher. This type of roadmapping progresses by grouping the slides into concepts, themes and up to a whole topic or unit. In developing the eRoadmap in Figure 1, we have used a mixture of both methods. Our experience is that the development process is quite iterative as developers try one structure, then upon reflection, try another. It also seems to help to have an ‘interviewer’ present who is able to ask questions of the expert to prompt the creation of themes and links between concepts. Our experience has also shown that there are many important ‘tricks of the trade’. For example, if different developers work on different topics, it is important that they adopt common formatting styles, such as the use of colours. Also, although it is possible to do the linking ‘by hand’

70 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 using the tools provided in PowerPoint, working this way can be too slow. As mentioned in the last paragraph, in many cases the development process relies on developers being able to try one structure, then if they are not satisfied with it, discard it and try another. To automate the process, we have used a set of macros written in PowerPoint; the tool we used can be downloaded from www.deakin.edu.au/~rodneyc/RoadmapTools.ppt. This resource also contains many other practical hints and suggestions for eRoadmapping. Finally, we recognize the need to involve as many of the staff who will be using the tool as possible, in the development of the eRoadmap. As with the selection of a textbook, the teaching staff need to agree with the framework being developed, otherwise it is unlikely the tool will be used.

7. CONCLUSION

To date, our eRoadmapping experience has been confined to the development of basic conceptual maps of the standard descriptive graphics content of an intermediate microeconomics program. The next stage of development is to generate hyperlinks to: ● existing study guides and tutorial exercises written by staff ● other online resources, such as government departments and regulatory authorities, newspaper sources and journal articles ● short films, interviews, discussions, lectures and the development of interactive tutorials using descriptive graphics. Some rudimentary examples are provided in the supplementary exercises to the Browning and Zupan (2004) text. In addition, measurement tools for the evaluation of the added value to staff and students of eRoadmapping need to be developed. The next stage in the development phase will be to conduct an evaluation of its usefulness to both students and teachers. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 71

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Novak, J.D. & Musonda, D. 1991, A Twelve Year Longitudinal Study of Science Concept Learning, American Educational Research Journal, Vol 28, pp117-153

Novak, J.D. 1998, Learning, Creating, and Using Knowledge: Concept Maps as Facilitative Tools in Schools and Corporations, Lawrence Erlbaum Associates, London

Novak, J.D. 2005, The Theory Underlying Concept Maps and How to Construct Them, IHMConcept Map Software a knowledge construction toolkit, online available at http://cmap.coginst.uwf.edu. accessed March 2005

Schau, C. & Mattern, N. 1997, Use of Map Techniques in Teaching Applied Statistics Courses, The American Statistician, May, Vol.51, No.2, pp171-175

Schau, C. Mattern N., Zeilik, M. & Teague K. 2001, Select-and-fill-in Concept Map Scores As A Measure of Student’s Connected Understanding of Science, Educational and Psychological Measurement, Vol. 61, No 1, pp136-158

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Simkins, S.P. & Sosin, K. 1999, Promoting Active-Student Learning Using the World Wide Web in Economics Course, Journal of Economic Education, Summer, Vol.30, Issue 3, pp278-292

i A unit refers to a one semester period of study, within the degree program. ii Microsoft PowerPoint was used as a platform because of its familiarity and widespread use among both academic staff and students. Many teachers already have teaching material on PowerPoint, enabling them to easily adapt the material to an eRoadmap. PowerPoint files can also be viewed by all students, no matter what platform they are working from. A PowerPoint viewer is available free from Microsoft if necessary. iii For copyright reasons we are unable to provide the complete eRoadmap for the Monopoly Pricing topic electronically. However, working examples of simple eRoadmaps can be found in RoadmapTools.ppt, available from www.deakin.edu.au/~rodneyc/RoadmapTools.ppt. The eRoadmap for the unit including Monopoly Pricing is available to students on CDRom. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 7373

THE SHRIMP GAME: ENGAGING STUDENTS IN THE CLASSROOM

Dr Margaret Giles (corresponding author) Curtin Business School GPO Box U1987 Perth WA 6845 [email protected]

Dr Jo Voola School of Economics and Commerce [M251] The University of Western Australia Crawley WA 6009 [email protected]

ABSTRACT

This paper, presented at the 11th Australasian Teaching Economics Conference in July 2005, and revised in the light of further experimentation, describes the use of the Shrimp Game (a tutorial game on Cournot interdependence) in a second year business strategies unit in 2004 and 2005. The paper firstly summarises Cournot games in general and introduces an example of these, the Shrimp Game, as it was conceived by Gertner in 1999 and adapted by Scott in 2003. The details of the game and its active learning requirements are then explained in Section 3. The fourth section of the paper contains findings that include heightened student awareness of interdependencies but weak convergence to equilibrium. The conclusions refer to the Shrimp Game as being a useful addition to the arsenal of practical experience for economics undergraduates.

Key Words: Shrimp Game, Cournot, business strategies, strategic interdependence, classroom games. J.E.L. Classification: D43 A221.

1. INTRODUCTION

The first teaching economics conference held in Darwin in the early 1990s had less than a handful of economics lecturers attending. They were the vanguard of a new era of concern for engaging students in the classroom. The Darwin conference spawned yearly conferences that grew in attendance and were hosted by sandstone and new universities around the country. Interest from across the Tasman saw the 2001 conference being held in New Zealand. The most recent 2005 conference had the title 74 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

of 11th Australasian Teaching Economics Conference (ATEC) with participants from across Australia, New Zealand, the UK and Singapore. This evolution of interest in the teaching of economics was accompanied by concern by economics departments around Australia over falling undergraduate enrolments (Hellier et al. 2004; Lewis and Norris 1997; Maxwell 2003; Millmow 1995; 1997; 2000). Speculations regarding the causes of this decline include the growth of the more generalist business degrees (Lewis, Daly, and Fleming 2004). Another reason cited by potential students is the relevance of economics courses both in content and delivery. “Academic economists have not kept pace with the changing instructional methods in higher education that have beckoned, successfully, other disciplines” (Becker and Watts 1998: 2). Coupled with the broader issues facing universities, attention to undergraduate economics teaching has spawned a wide range of teaching tools which, together with curriculum thinning, have attempted to slow the attrition of undergraduates. Many of these tools have been introduced at successive teaching economics conferences. Another reason for student dissatisfaction with learning economics is that it is often taught at high levels of abstraction. This can hinder some students from an intuitive understanding of the concepts. Classroom exercises designed so that students interact and make choices and decisions in the economic paradigm can be of some use in alleviating these problems (Becker and Watts 1998; Grobelnik, Holt, and Pransinkar 1999; Meister 1999). One such exercise is the Shrimp Game, a demonstration of Cournot interdependence designed to enable students to practice decision- making (choosing their own daily shrimp catch) in ignorance of competitors' current decisions but with knowledge of past decisions. This classroom game was introduced in a second year business strategies unit in 2004 and revised for use in 2005. The aims of this paper are to present an evaluation of the Shrimp Game as an example of techniques designed to engage students in the classroom, as well as highlight this experience as part of an arsenal of tools to attract students to, and retain students in, economics majors. The remainder of the paper is organised as follows. Section 2 summarises Cournot games generally and introduces the Shrimp Game as an example of these. Details of the game are presented in Section 3. Findings from the inclusion of the Shrimp Game in second year tutorials at The University of Western Australia in 2004 and 2005 are discussed in Section 4 followed by conclusions in Section 5.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 7575

2. COURNOT GAMES

Augustine Cournot (1838, translation 1929) published Researches into the Mathematical Principles of the Theory of Wealth where he conceptualised the nature of interdependence and competition between players in an industry. His model, often known as the 'work-horse' of oligopolists (Martin 1993), is a simple static game consisting of two firms in competition for a fixed market share in the market for spring water. In the original model, the production cost of the firms is zero. Later models allow for greater numbers of firms and more asymmetries between the firms. A central contribution of Cournot is the reaction function for each of the duopolists in the market. Each reaction function is written as a function of the rival’s output. Despite criticism (Daughety, 1988; Fellner, 1949; Kreps and Scheinkman, 1983), the Cournot model continues to be taught in intermediate undergraduate economics courses because of its relative simplicity and its symmetry with the more popular Bertrand model. Importantly, the Cournot model provides a useful introduction to discussion of strategic interdependence in oligopoly markets. Traditional methods for teaching Cournot models incorporate tree diagrams, payoff matrices, numerical simulations and algebraic derivation of reaction functions, with the objective of working out the Nash equilibrium. These methods are typically conceptual, technical and esoteric enough that they may pose a learning barrier to the reach of the average business student who is unlikely to have a strong mathematical background. Students typically become so concerned and engrossed about the technical and theoretical derivations that they miss the practical value of the model. In addition, traditional teaching methods focus on the equilibrium outcome and not the process by which it is reached. Games illustrating interdependencies are numerous in the literature but are principally abstract in nature and therefore difficult to interpret and translate into a classroom activity. Furthermore, the applications that arise from these are few and far between. For instance, the chicken game or the battle of sexes game are both ideal at a theoretical level in order to explain mixed strategy equilibrium. However, apart from exercises in calculations, which can theoretically illustrate the point, these games do not readily translate to activities that are sensible. Laboratory experiments simulating simple markets in controlled situations go as far back as the Chamberlain (1948) experiments designed to assess theories of imperfect competition against laboratory results. Holt’s (1985; 1995) laboratory experiments relate directly to the Cournot 76 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

model. In his 1985 experiments Holt designs a laboratory experiment to specifically test the consistent-conjectures hypothesis associated with the Cournot equilibrium with data for an individual’s behaviour. In these experiments, subjects simultaneously chose output in a sequence of market periods in the context of complete information about the relationship between decisions and profits for all participants. Holt’s experiments and other previous experiments were not, however, teaching tools. The subjects were students, but the goal of the experiments was not to instruct students about interdependence or about the Cournot model. Grobelnik, Holt and Prasnikar (1999) deviate away from this general trend and design a classroom game to illustrate strategic interactions. The Shrimp Game follows this example.

3. DESCRIPTION OF THE SHRIMP GAME

The Shrimp Game (created by Robert Gertner, University of Chicago, Graduate School of Business and introduced in the classroom elsewhere (Scott 2003)) is built from the Cournot assumptions that firms choose outputs and make their production decisions simultaneously (Garicano and Gertner 1999). This one-shot game is restricted to be set in a non-cooperative framework and does not permit cooperation between players. This version permits repeated play of a one-shot simultaneous game. The Shrimp Game is an imaginative teaching method with useful teaching and learning features. Firstly, students work with a relatively simple function. This function is written with the intention of drawing students’ attention to the notion of interdependence, without involving them in the intricacies of algebraic manipulation. The student activity is essentially concrete so that students become aware of optimizing under conditions of interdependencies. The relevance of other players' choices becomes apparent and this can be explained by the tutors with reference to choices business people must make using assumptions about their competitors' behaviours. The specifics of the game are as follows. The game involves three shrimpers, named in Gertner’s creation, as Arnold, Beatrice and Charlotte, competing in the same town for market share. They are the only shrimpers in town and are the only suppliers to this market. The shrimpers have a family history of feuds and do not communicate with each other. This assumption is used to confirm the non- cooperative nature of the game and the rule prohibiting collusion. It costs these shrimpers $5.00 per pound of shrimp inclusive of opportunity cost. The price that each of the shrimpers receives from the Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 7777

market is determined by the function P(QABC , Q , Q ) = 45-0.2(Q A++ Q B Q C ) and is common knowledge. The maximum amount of shrimp that any shrimper is allowed to catch is 75 pounds per day and, since shrimp goes bad after one day, no shrimper can store some of the catch from one day and sell it the next day. This quantity constraint keeps the shrimpers focused on increasing profit via increasing market share rather than via expanding the total market. The profit for each of the shrimpers is calculated as the number of pounds caught multiplied by the profit margin and written as

π A (QA , Q B , QC ) = Q A [P(QA , Q B , QC ) - 5] . The goal of each shrimper is to maximise profits and each of the shrimpers has no regard for the profits of the other shrimpers. All shrimp caught are traded at the end of the day when the catch is brought to the market. At this time the production levels that were chosen by each shrimper, and hence aggregate production and market clearing price, become common knowledge. It is assumed that shrimps are homogeneous in order to be consistent with the Cournot assumption. Relaxing this assumption may encourage students to engage in price discrimination based on quality differentiation of the product. Moreover, the assumption of homogeneity allows drawing symmetrical conclusions between firms in the industry. Collusion is not allowed although it is possible that some covert cooperation may enter the game with a finite number of rounds. For example, Kreps et al. (1982) suggest that, contrary to expectations, this may result from incomplete information about one or both players' options, motivation or behaviour. The equilibrium output for each firm in a three firm industry with identical cost functions given the parameters of the Shrimp Game is 50 pounds and the equilibrium price for this output is $15.00 per pound (see Besanko et al. 2007 or Church and Ware 2000 for the general method for computing equilibrium output). The equilibrium has the property that taking into account the effect that a change in quantity will have on price, each shrimper will not choose to change his behaviour of catching 50 pounds per period, when his competitors also catch 50 pounds each per period. At this Nash equilibrium, total industry output is 150 pounds and each firm will earn a profit of $500.00 (Church and Ware 2000).

78 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

3.1 Purpose and aims

The purpose of the Shrimp Game is to illustrate the notion of interdependency which is the quintessential feature of oligopoly competition. The specific aims of the incorporation of this game into a second year tutorial in a business strategies unit are twofold. First, students can experience the achievement of equilibrium through the dynamics of playing the game. A second aim relates to the teaching and learning requirements for tutorials which include an emphasis on active rather than passive learning. This is premised on the pedagogical claim that students learn more from seeing and doing (active learning) than from note taking (passive learning). Skilling (1969), in his Eleven Commandments for Teachers, lists as number eight 'Let the student work, for work is remembered long after words are forgotten. Hearing is weak, seeing is better, doing is best'.

3.2 Instructions

Two sets of instructions were prepared and distributed. One of these sets was distributed to students via the unit's web presence. The other set was given via email to tutors. These are shown in Appendices A and B respectively. The instructions to students gave the process for playing the game, including how quantities and price in each round are chosen and determined respectively. The students in class were given a mathematical version of the Cournot-Nash game from the text book with the emphasis on reaction curve treatment. Other than the previous week's lecture material on the difference between cooperative and non-cooperative games, the students were not given any details as to the context or expected outcomes of the game. The instructions to tutors were broader. In addition to specific guidelines for the conduct of the rounds of the game, tutors were briefed on the aims and expectations of the games. It was emphasised that the learning outcomes did not include the derivation of the equilibrium strategy (as might be expected with an algebraic or graphical treatment of a non- cooperative game example). Instead students were, through the process of rounds, to experience the interdependent nature of their choices and the benefits of cumulative behaviours. The lecturer and tutors met prior to the conduct of the Shrimp Game tutorials to clarify the instructions and design the results template. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 7979

This was important to control for bias in the results due to differences in tutorial management.

3.3. Conduct

In each tutorial, students were arranged in groups of three or four depending on the total class size. Students in a group of three were designated as the three shrimpers. One of these students also kept records of quantities and calculated price and profits. It is unclear whether these shrimper/recorder students gained a strategic advantage. Students in groups of four were designated as the three shrimpers and a recorder. Five rounds of the game were played in 2004. Each round represented one day. The key to successful completion of each round was the simultaneous announcement of quantities by each shrimper. The groups resolved their own means of ensuring simultaneity. For example, in some groups the quantities were written down and hidden until the announcement (by the tutor) of trading (revealing quantities brought to market). Other groups used a countdown (3,2,1,0) with the quantities being announced when 'zero' was reached. Other similar games that were looked at for use in our 2004 business strategies unit tended to involve students using computers within a laboratory setting. In the main, these required students to work alone. The use of computers was not an option for our students in this unit. Also we felt that interdependency was better played out in groups. Some changes were made to the conduct of the game for 2005. Firstly, the number of days of trading was increased to eight. In 2004, the tutors felt that the limit of five days did not give students enough time to develop strategic moves. Another change that was thought to discourage the sort of 'giving up' that may have been occurring for some individuals in some groups was to award a prize (see Cheung (2003) for the rationale for rewards) for the best group and the best shrimper, 'best' being defined in terms of highest profit. That is, in each tutorial group, the student who achieved the highest profit at the end of the game received a fun-size Mars bar. Finally, it was thought that, in 2005, students could receive more information about the purpose and process of the games similar to the instructions given to the tutors. Most tutorial groups in 2005 allowed at least one day’s trade at the conclusion of the game for cooperation. That is, each group decided quantities collaboratively to optimise the group's (rather than the individual's) profit. Students found this a relief from the ‘second guessing’ required in the game itself. 80 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

4. FINDINGS AND DISCUSSION

The unit had an enrolment of 130 students in Semester 2, 2004 but only about 40 students participated in the Cournot version of the Shrimp Game. In 2005, 99 students were enrolled and about two thirds of these students participated. In 2004, other students undertook Stackleberg versions of the game; in 2005, all participating students completed a round of monopoly (collusion) after their last round of Cournot. For the purposes of this paper, the results for each round for each group and each tutorial class are not included here. They are available from the authors by request. The discussion of the results is differentiated by year with the 2004 and 2005 results discussed separately. However, there are some outcomes that applied to both years. For example, students in both years experienced the frustration of second guessing their competitors quantity choices. Another commonality in both years was the range of students' numerical abilities. For students struggling with arithmetic, the estimation of prices was a challenge. However, most groups had at least one student who was able to do the necessary calculations. Few students were able to correctly estimate equilibrium price and quantities either preceding their choices, or during or at the conclusion of the game. This problem with weak numeracy skills is an issue common to many university economics programmes. In 2004, the results seemed to indicate four things. First, the shrimpers are increasingly aware of interdependencies with successive rounds. This awareness is necessary as it was a key reason for introducing the game as an example of Cournot interdependence. Whilst some students were only reactive to the changing fortunes of the shrimpers, many students attempted to gain the upper hand in the market, thereby reaping bigger profits. Of course, the latter students were always at the mercy of extreme quantity choices by their competitors. Second, each competitor is trying to guess what they think the other two shrimpers will choose. Those students who had estimated (correctly or otherwise) the market equilibrium price and quantity, were also attempting to use the latter to respond to what they were guessing about their competitors' choices. For example, the savvy competitor may know that the equilibrium quantity for the market is 150 pounds of shrimp. If they guess that the other two shrimpers are going to announce catches of 50 pounds each, then they might also only offer 50 pounds to the market. Of course, if the guess is wrong (say the other shrimpers offer 60 pounds each), then this competitor has a catch that is too high. Thus, his profits will suffer. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 8181

Third, evidence of convergence to equilibrium appears to be weak. Increasing the number of rounds or allowing rounds to continue within some finite time constraint was thought to be an effective solution to this. Hence in 2005, the number of rounds was increased to eight. Finally, some frustration at 'fumbling around in the dark' seemed to lead to some extreme output choices by some competitors in some groups. Meister (1999) also reported some frustration by students with their inability to influence their rivals' actions. One 2004 student commented that 'the artificial construction of the game meant it wasn't really a good model of a real market situation'. This could be attributed to the veto on cooperation or collusion that remained throughout the game. It is difficult to determine whether the game engendered enthusiasm for economics, per se, or encouraged students who may have been thinking of changing their major to stay with economics. Comments from students, some of which are below, are mainly related to the Cournot experience or the tutorial conduct. It may be the case that this single tutorial within one unit has insufficient impact to influence disgruntled students. The results in 2005 were similar to those in 2004. For some groups, convergence to optimum quantities in the non-cooperative game was apparent; in other groups there were considerable differences from one day’s trade to the next as well as between shrimpers. For all groups, the one day's cooperative trade showed better group profit results, as expected. Whilst there was no formal evaluation in either year of the game, anecdotes from students in 2004 included: When I started the game I pretty much knew the theory behind the workings of the Cournot, Bertrand and Stackleberg models, how their actions were taken and how the equilibrium was set. However, from playing the game, I really understood the motivations of the players … it really showed how the model works in reality and not just as a one shot theoretical model. I enjoyed the interactive nature of the game and its demonstration of the importance of market power in deciding prices. Comments made in 2005 included: • I didn’t mind it. It was fun. It demonstrated strategic interdependence. • When the results were on the board, it was interesting to see how those striving to win actually did the worst, and those less ambitious did the best. 82 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

• It was a good demonstration and exciting. • I liked it. • A good change rather than rote learning. • A real life example.

5. CONCLUSIONS

Hellier et al. (2004: 24) argue that students who experience a more market-oriented approach when taught economics may benefit from the added value provided. This assertion is similar to that argued by Azzalini and Hopkins (2002: 15) in their review of what second year business students think of economics. The Shrimp Game encompasses such opinions. As a tool to assist learning outcomes related to the topic of interdependencies in oligopoly, the Shrimp Game appeared to be useful for at least two reasons. First, students liked the game itself. Second, the Shrimp Game was useful as a change from the usual tutorial regime of question and (perhaps) prepared answer (chalk and talk).For example, one 2004 student made the comment "It made a change from trying to avoid answering tute questions". In terms of the broader goal of encouraging students to stay in the economics discipline, the response is unclear. In both 2004 and 2005, the Shrimp Game was played in one of eleven weeks (about half way through the semester) for a second year business economics unit. The other ten tutorials were conducted on traditional question and answer lines. It is unlikely that one interactive game session would change student behaviour or enrolment choices. However, the success of this very different hands-on approach could be taken up with other topics within the unit or in other tutorials across all economics units. It is important however not to 'overkill' by offering too many game-type sessions. Diversity in delivery is as important as topic heterogeneity in keeping today's students engaged and 'learning by doing'. Finally, if the decline in economics enrolments is to be stymied and employer requirements are to be met by economics graduates, a practical orientation to economics course content is paramount. The Shrimp Game can be just one of many teaching tools to achieve this goal.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 8383

ACKNOWLEDGEMENTS

The authors wish to thank anonymous referees together with Stephen Cheung and participants of the 11th Australasian Teaching Economics Conference (an earlier version of this paper can be found in the proceedings (Cheung, 2004)), the Faculty of Business and the School of Economics and Commerce at The University of Western Australia who funded Margaret’s attendance at the Conference, and students in the Business Economics classes of 2004 and 2005 who entered into the spirit of the game with enthusiasm and those who responded to the informal evaluation. 84 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

APPENDIX A Instructions for Students

Arnold, Beatrice, and Charlotte own the only three shrimp boats on the island of Augustine. Each incurs a cost of $5.00 per pound of shrimp (this includes the opportunity cost of time) and each can catch at most 75 pounds per day. At the end of each day, they bring their catch to market where price is determined by market demand and the supply of fish. Let QA, QB, and QC denote Arnold’s, Beatrice’s and Charlotte’s catch, respectively. Once each has decided when to stop fishing and has brought his or her shrimp to market, the price is determined by the following equation:

P(QA, QB, QC) = 45 - .2 (QA + QB + QC).

Each shrimper agrees that the above equation correctly predicts the market price of shrimp, and each tries to catch enough shrimp so as to maximize his or her dollar profits. All shrimp goes bad after one day, so a shrimper cannot keep shrimps off the market and sell them the next day. The profits for each shrimper equals the number of pounds caught multiplied by its profit margin, that is

ΠA(QA, QB, QC) = QA [P(QA, QB, QC) - 5].

You are Arnold, Beatrice, or Charlotte. Each day you will be asked to set that day’s level of production. Note that you are not able to catch more than 75 pounds of shrimp per day. The amount of money you earn at the end of the day will equal the value described above. Remember your goal is to maximize your own profits; you do not care at all about the profits of the other shrimpers.

All shrimp is traded at the Fish Market. When trade takes place each shrimper reveals his level of production for that day, so this information becomes public knowledge. The three shrimpers have a history of family feuds and no personal contact. Each will have to set its shrimp production for the day without knowing what levels the other two shrimpers set. However, as described above, at the end of each day the production levels that were set by each shrimper will become public knowledge.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 8585

In class, you will be divided into teams and asked to make quantity decisions for one of the shrimpers. There will be several rounds and several different scenarios. In some cases, all decisions will be made simultaneously, while in others, one shrimper will go before the other two. In the latter case, the first-mover’s decision will be announced to its two rivals before they make their decisions.

86 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

APPENDIX B Instructions for Tutors

The objective of this class-room simulation is to get students to understand the basis of the Cournot game. The key idea that we would like to see made clear is that the payoff for each of the shrimpers is dependent upon the market price that each of them receives, and that this is dependent upon the summation of the entire supply. What is also important to note is the adjustment process that each of the shrimpers goes through and the method by which the shrimpers learn about their interdependencies.

In their lectures, the students have heard about two player oligopolies. The only context in which the three player game has been discussed is in the Cournot 1838 model, assuming zero costs in production. The generalization that came from this model is that in an industry consisting of n firms, each will provide 1/(n+1) of the market and the industry output will be n/(n+1)=1/(n+1)*n. Therefore, for n = 3, each of the firms will supply ¼ of the market and the total industry output is ¾ of the entire market.

The students have no need to solve this problem algebraically. We are interested in seeing the adjustment process and how they go about reaching their conclusions. The game, its introduction and summing up should take 45 minutes.

Prepare for the game, by setting up a score board, as follows: ArnoArnold BeatrBeatrice CharCharlotte PROPROFIT ROUROUND 1 ROUROUND 2 ROUROUND 3 ROUROUND 4 ROUROUND 5 ROUROUND 6 ROUROUND 7 ROUROUND 8

• Break the class into a group of 3 or 4 (should take 5 minutes) and assign shrimpers- Arnold, Beatrice, and Charlotte. Also have 1 person to record all information within the group. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 8787

• Clearly identify groups- for example-group 1, group2 or group 3 for instance. (Maybe about another 5 minutes). • Clearly read the instructions aloud and make sure students understand what is expected of them. • Play 1st round of the game- say time 10 minutes. Record on the board. Calculate the profit for each group • Play 2nd round of the game- time again for 10 minutes. Record the score. Compare to see if there is any learning going on. • Play 3rd round of the game. Once again record all scores and compute profits. • Discuss all results, and note if there have been deviations from predictions of economic theory. 88 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

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IS ECONOMIC PHILOSOPHY A SUBJECT WORTH TEACHING?

L.A. Duhs*1 University of Queensland [email protected]

ABSTRACT

Economic philosophy is anything but a part of the mainstream diet in the course of an economics education. Yet there are those – including occasional Nobel prizewinners – who argue that an understanding of economic philosophy is absolutely fundamental to an understanding of economics, of why economists disagree and of why “economic rationalists” are often derided by those from other professional backgrounds. The argument put in this paper is that many social science debates hinge more on the values or social philosophy implicitly involved than on technical matters of economic 'science', and that a nuanced understanding of economics requires that each school of thought be traced back to its foundations in terms of its implicit economic philosophy a prioris.

Keywords: economic philosophy, metaphysics, a priori commitments, teaching economics. J.E.L. Classification: A12, A13, A23, B15, Y8.

1. INTRODUCTION

In What’s Wrong With Economics (1972:10), Benjamin Ward offered a totem pole of sub-disciplines in order of prestige within the economics profession. Macroeconomics, microeconomics and econometrics were at the top of the totem pole and HET and economic development were at the bottom (where development economics is unlikely to remain today). Economic philosophy did not rate a mention. In the same vein, JEL listings do not explicitly include economic philosophy, although many other sub-disciplines are named. Economic philosophy is merely embraced implicitly within the more general category of “relations with other disciplines” - which more commonly conjures up images of economic psychology. Scott Gordon (1978: 728) likewise concluded that philosophers have a lot to learn from economists, but not vice versa: “That mythical creature, the economist qua economist, need not pay much

1 Thanks are due to AJEE referees whose helpful comments led to significant improvements in this paper.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 9191 attention to philosophy, good or bad, but the philosopher of science had better pay attention to economists, good and bad”. More pointedly, on the level of the functioning of economics departments within Australian universities, departmental reviews have been known to call for the axing of economic philosophy courses, largely on the ground that academic self- indulgence cannot be permitted in an age of constrained university resources when there is so much to be taught in terms of technique. Adopting a quite different, and sometimes quite opposite, view however, are such eminent economists as Joan Robinson, E.F. Schumacher, Robert Heilbroner, Gunnar Myrdal, J.W. Nevile, Benjamin Higgins, Amatai Etzioni and Amartya Sen. For them, economic philosophy is a matter of importance. Indeed, for some of them it is a matter of the most fundamental possible importance, and one whose pervasive relevance – even if at a level often left implicit – is the stuff on which economic theories are actually founded. For them, there is important truth in the aphorism that “an ideology is what we think in, not of”. And for them, in consequence, there is an undeniable and irremovable element of ideology in economics and its teaching. Hence for Joan Robinson (1964) economics is part science and part ideology. Transposed into Myrdal’s words (1968: 32), “a 'disinterested' social science has never existed and never will exist”, since there is an inevitable a priori and there cannot be a view, except from a viewpoint. And for Heilbroner (1996a) there is an implicit economic philosophy or ideological element in economics – the role of which is to defend the scientific pretensions of the profession - which needs to be recognised as being important to the understanding of economics and its contribution to social welfare. Indeed, nothing is more important in terms of understanding why economists disagree, and why different schools of economic thought part company with each other on a range of both theoretical and practical policy issues. In short, the contentions of this paper are that an understanding of economic philosophy is a prerequisite to a nuanced or rounded understanding of many contemporary controversies in economics, and that a fundamental understanding of economics is impossible without detailed attention to the philosophical premises on which economic theory stands. The theme addressed in this paper therefore reprises the Cropsey (1955) / Ward (1972) / Schumacher (1974) / Etzioni (1988; 1991) / Samuels (1990) / Neville (1998) view that it is not economics that is the imperialist social science, but economics which has itself been colonised by one or another political philosophy. 92 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

2. THREE PERSPECTIVES ON ECONOMICS AND THEIR PHILOSOPHICAL BASES

It is useful to start with a three way division [Ward 1979; Cole, Cameron and Edwards 1983]. Economists commonly classify themselves as (i) orthodox neoclassical, (ii) institutionalist, or (iii) radical. In pragmatic policy terms this means that they tend to favour increasing amounts of government intervention in economic affairs as we move from a neoclassical to a radical/communist perspective. At a more fundamental level it means that the advocates of these respective schools accept that at the root of their theoretical perspectives lie the influence of certain philosophical a prioris related to their conceptions of the nature of humankind and to questions of ontology and teleology. Much of the debate between these perspectives hinges on the interpretation of such simple, putatively unambiguous words as ‘man’, ‘freedom’, 'equality' and ‘rationality’. A starting point is to examine the orthodox neoclassical position as one underpinned by adherence to the philosophical positions of Adam Smith and John Locke, while examining within the institutionalist perspective the deference commonly shown to the philosophy of John Dewey, or sometimes to Immanuel Kant or J.J. Rousseau (Duhs & Alvey 1989). In the case of the third or radical perspective, Karl Marx provides the most obvious philosophical underpinning, at least as far as communism is concerned, but various mixtures of Aristotle, Kant and gender studies also play a role in underpinning other conceptions which are deemed by some to be radical, albeit they may be considered by others to be merely minor variations on orthodoxy. Economics sometimes celebrates itself as the queen of the social sciences and proclaims itself to be an imperialist social science carrying other disciplines forward by injecting economics into sociology, psychology, law and such like. What is argued in this paper is more or less opposite i.e. that the continued existence of different schools of economic thought (orthodox neoclassical, Chicago School, Austrian School, institutionalists, evolutionary economists, economic personalists etc) reflects the importation into economics of different philosophical preconceptions. To that extent, the question of why economists - or schools of economic thought - disagree is inseparable from an understanding of the philosophical underpinnings of those theories or schools of thought (Duhs 1982; 1994; 1998; 2005). Again as Myrdal puts it “there is an inevitable a priori”, and much derives from that fact. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 93 93

TABLE 1: Three Schools of Economic Thought and Their Underlying Economic Philosophies

Neoclassical Orthodoxy Institutionalist Thought Radical Thought Principal economic the “market works” The “market works subject to institutional constraints” “markets are dangerous and divisive” features

small government some selective government intervention required big government

individualism (sui generis individualism) individualism in social or community context individuals define themselves through the collectivity or brotherhood ie Adam Smith m be inverted and stood on his feet Underpinning John Locke John Dewey (see JEI) and the notion of pragmatism in the social evolution Marx philosophy of values; Adam Smith Aristotle (in a different conception of radicalism eg for Cropsey, and putatively for The Bible (for Schumacher; also for 'economic personalists'); Sen) J.S. Mill Darwin (for evolutionary economists);

Kant (for Etzioni)

Philosophical Locke: man is selfish and acquisitive (ie Ward 1972: both neoclassical and Marxist theories have inherently weak Marx: man is selfless and collective; so invert Adam Smith to get to the root of the Conception of the individualistic and fundamentally notions of the nature of man at their cores. Alternatives are available. nature of man. nature of man concerned with self preservation, and the (Opposite to the requirements for private property and unlimited acquisitiveness in a preservation of the extended self in the Schumacher: adopts a generic or species conception of man characterised Lockean conception of man, the Marxist conception requires common property and form of unlimited acquisition of the by significant points of commonality, versus sui generis individualism. equality in order to match 'good' social institutions to what Marxists deem natural for material means for comfortable existence) man) Etzioni: “At issue is human nature.” Smith: commonly taken to accept that man Aristotle/Ancient Greeks: man is a social animal. What is held in common by all is self-interested. Dewey: there are no 'fixed ends' and 'growth' itself is the only moral 'end' 'men' is more important than what distinguishes them severally. 'Man' is therefore Interpreted by Sen to believe neither of the defined by the common senses of reason and speech. two propositions commonly attributed to Darwin: man has no fixed nature him. Differently interpreted by Cropsey; and by Kant: man has both a sensory self and a moral self. Hirsch, Alvey, Fitzgibbons, and others.

94 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Teleology Non-teleological No absolute, definitive or timeless teleology, but there is an implied Marx: nominally a-teleological, but ends up teleological insofar as communism is historically relative crypto-teleology for some institutionalists (eg Myrdal), said to be the inevitable result of history. if not for all of them. Cropsey: believes in a natural teleology.

Sen: explicitly non –teleological, yet reflects an inner tension with some crypto- teleological passages Rationality Partakes of choice of means but not choice Sen: in economics “rationality” is understood in several (inadequate) ways Marx: rationality is inherent in history, via the dialectic, so that rational results of ends (1977; 1987) ultimately prevail even if they are not willed by (a majority of) individuals themselves Streeten: “rational behaviour has been equated with selfish behaviour” (1995: 211). Cropsey: human reason partakes of the choice of both means and ends (following Aristotle) Myrdal: all knowledge, and all ignorance, tends to be opportunistic (1968:25)

Lutz & Lux: prior to Hume, rationality also meant choice of ends. freedom Endorses individual freedom from external Freedom from external restraint is not the same thing as freedom to do those Marx: freedom to immerse oneself in the human brotherhood, once communism is constraint. things which are fulfilling in life (or which are consistent with an implied achieved Hence individuals have the freedom to do teleology). whatsoever they choose, and there is no The understanding of freedom is interconnected with the understanding of Sen: removal of “unfreedoms” requires recognition of State and market as higher (transcendent) yardstick than the equality of opportunity, which for institutionalists does not mean an complementary institutions. People need to be free from constraining circumstances free choice of any one individual. unhandicapped race in a free market, so much as a recognition of the need as well as from legal fetters. In consequence, all values are relative. to treat unequals unequally. Cropsey: ‘freedom to’ do something specific in keeping with the fulfilment of a [Whereas privatising schools is an obvious step forward for Friedman and given natural teleology is quite different from ‘freedom from’ external constraint, orthodox neoclassicists it is more problematic for institutionalists, who see which may become mere licence. Social science has not disproved the possibility of some intervention as being necessary to achieve meaningful equality of absolute values, or of a generic nature of man and a common teleology, despite opportunity and thus to achieve freedom, properly understood.] historicist claims to the contrary. This view is radically opposed to neoclassical or libertarian conceptions of economics (and also to Marx). It is radically opposed to their conceptions of the nature of man and to their conceptions of what constitutes freedom.

Austrian School Catholic “economic personalism” and Pope John Paul II: affirm that freedom entails something more than libertarian freedom. The 'economic personalist' view is compatible with the Cropsey view, but derives from a different root. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 95 95 Methodological root Positivism; fact/value dichotomy Are facts themselves theory-laden (since they are seen through the lens of Marx: dialectical materialism theory) and hence values- laden? Cropsey: Socratic dialectics. Myrdal: a value neutral social science is a logical impossibility; there is a methodological bias in modern social science. “The only way in which we Sen: modern economics has been impoverished by the distance that has grown can strive for objectivity in theoretical analysis is is to lift up the valuations between economics and ethics. into the full light, make them conscious and explicit...”(1968:33)

Samuels 1990: facts are themselves theory dependent.

Wilber 2004: economic theory is not value free; the fact/value dichotomy is problematic.

Schumacher: the leading ideas of the nineteenth century (including positivism and relativism) contain elements of truth, but deny the notion of hierarchial order and the concept of a human species versus sui generis individuals. The disease we suffer from today is metaphysical and requires a metaphysical solution. Historical An historical perspective is inessential Important; for evolutionary economists an historical perspective is essential For Marxists, Economic history is an integral part of an understanding of the perspective e.g. in unravelling the role of path dependence unfolding of dialectical forces, including interdisciplinary forces. A non-historical approach is thus unscientific for those committed to dialectical materialism. utilitarianism Fundamental; J.S. Mill: Better to be Socrates dissatisfied than a fool satisfied. Utilitarianism is attacked by those who see endogenous (economic) conditioning of indisputable tastes (Marx) or those who subscribe to a teleological view (Aristotle; Cropsey) and Myrdal: conservatism within social science methodology has constrained a need to transcend historicist influence. economists from departing far from the traditional roots of economics in the philosophies of utilitarianism and hedonism.

Dewey: hostile to utilitarianism

Schumacher; Lutz & Lux: the catch-all category of utility is fallacious; issues of right and wrong cannot simply be reduced to issues of pleasure and pain.

Etzioni, Kant: a moderately deontological position in preference to utilitarianism.

Utilitarian judgements are distorted in the hands of either the deprived or the depraved. 96 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

In endorsing this theme, Schumacher (1974: 77) emphatically objects that many economists do not know that their theories are based on particular conceptions of the nature of man and that their theories would have to change if that underlying conception of man changed. In effect, that is also what Sen (1987; 2000) has argued more recently, and what Etzioni (1988; 1991) has tried to popularise in the context of social economics. In keeping with that understanding, the case argued here is that for economics to be taught well, what is needed is not only the retention of HET but also its supplementation by the teaching of the history of political philosophy. While Locke and Smith - and J.S. Mill - lie at the root of orthodox economic theories and are relatively well known, Dewey, Kant, Rousseau and the Bible may be found at the base of various institutionalist perspectives, and Marx and Aristotle are both evident in radical perspectives. Darwin's influence is also apparent in evolutionary economics. Thus, the cast of relevant characters from the history of political philosophy is much broader than conventional economics teaching allows.

3. IMPLICIT ECONOMIC PHILOSOPHY IN THE TEACHING OF ECONOMICS: 3.1 The Roots of Orthodoxy in Adam Smith, John Locke and J.S. Mill

Interpretative issues abound in the interpretation of any significant philosopher. There is certainly no shortage of interpretations of Adam Smith, and indeed there is still something of an Adam Smith industry today with recent interpretations offered by Sen, Alvey, and Fitzgibbons, and shorter interpretative commentaries offered by Wilber, Hirsch and others. These varying interpretations carry different policy implications with them, and underscore the importance of the study of HET. It is simply not true that all economists see Smith as the father of unbridled self-interest, or indeed as the father of the Chicago School perspective associated with Friedman, Becker, Coase, Posner and others. J.S. Mill is also acknowledged as a foundational influence in liberalism, and here too there are significantly conflicting interpretations. Friedman is emphatic that government intervention is commonly not just ineffective but actually counterproductive, and that – in accordance with his understanding of J.S. Mill - the only legitimate restraint that government may impose upon individual freedom is one designed to prevent us from impeding the freedom of others. In short, government has no legitimate role whatsoever in protecting us from ourselves. Gildin Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 97

(1964), however, reads Mill differently. He disputes this common interpretation of J.S. Mill, and its implications for the acceptability of State intervention. While Chicago School economists stress that for Mill individual liberty is the surest source of social progress, Gildin stresses that the question therefore remains as to whether Mill's chief goal is individual liberty (as in Chicago teaching) or social progress (with its teleological implications and consequent receptivity to certain State interventions). Critics therefore give pause as to whether Friedman and Chicago may in fact have misinterpreted both Smith and Mill, thereby institutionalising a conception of metaphysical issues in (imperialist) economics which neither of their putative intellectual fathers would themselves have been willing to accept. Heilbroner too (1996b: 129-157) notes that Mill came to accept that it is the proper end of government to seek to divert human energies “to the legitimate employment of the human faculties, that of compelling the powers of nature to be more and more subservient to physical and moral good”. The Mill who started by saying every departure from the principle of laissez-faire, unless required by some great good, is a certain evil, ends up with a bold vision of government that respects any undertakings by government which are beneficial to the general interests of mankind (such as provision of free or almost free primary education), but which have not been undertaken through private initiative (Heilbroner, 1996b). For Mill, the individual who is so prior to the state may thus be seen as the morally educated individual, not merely the present individual. In accepting that the only unfailing source of progress is liberty, Mill thus intimates that it is social progress that is the real goal. Friedman (cited in Nevile 1998:173) acknowledges that “As Liberals, we take freedom of the individual...as our ultimate goal”. What is made plain by a study of economic philosophy, however, is that the meaning of that 'freedom' is not unambiguous. In standard presentations little or no question is raised about the interpretation of Smith, or of Mill or of the meaning of 'freedom', yet the case for laissez-faire extracted from these sources can indeed be questioned, as Sen, Wilber, Streeten (1995: 231-233; 344-346; 239; 282) and others contend. Critics of Chicago School economics place more stress on Smith's notions of 'prudence' and 'sympathy', and Sen, Etzioni, Cropsey, Hirsch, Schumacher, Wilber and others object that orthodox received theory omits the original moral roots of Smith's formulation (see Hirsch 1977:137 and Sen 1987:22-28). Accordingly, for them, the notion of economics as science and as imperialist science suffers from the shortcomings of both an excessively narrow self-interest interpretation of Smith's teaching and a determination to view economics in isolation from its broader philosophical bases. As Samuels puts it (1990) neoclassical economics is itself a form of economic 98 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

science instructed by moral discipline – i.e. the moral discipline of utilitarian calculation and of justice as enshrined in the notion of Pareto optimality given extant entitlements. Accordingly, institutionalists and other critics do not accept that the Locke / Smith conception of what is natural to man at the root of orthodox neoclassical economics is a settled issue or that it ushered in rationalism so much as relativism. In a word, Etzioni, Schumacher, Hirsch, Sen and others stop short of accepting that Locke said the last word in defining the nature of man, and stop short of accepting that neoclassical economists have adopted unchallengable definitions of 'man', 'freedom', equality of opportunity, or of rational human behavior. The Chicago School definition of individual freedom is certainly not the chief desideratum for Sen, Schumacher, Cropsey, Austrian School economic personalists or the Pope. For them, other metaphysical matters impinging on teleology and the conception of the nature of humankind are more fundamental (see Table 1 regarding 'freedom', the philosophical conception of the nature of man, and 'rationality'). For them, the Chicago definition of individual freedom is mere licence, unrestrained or unguided by any recognition of whatever inheres in common in the human species, and by any consequently attendant teleological implications. Accordingly, it is important to recognise that Friedman's a-teleological goal, and definition of freedom, are not necessarily the goal acceptable to, and implicit in, the economic theories adopted by other economists. Indeed, Friedman's statement of what constitutes 'our ultimate goal' is emphatically rejected by various sub-groups, although it is doubtful that many economics students ever confront such issues head-on. It is to this implicit - and necessarily disputable - economic philosophy that Heilbroner and others draw attention when they protest that there is an ideological element in economics, and one that is commonly concealed in the way economics is taught. In effect, a deep schism separates those who wish to ignore metaphysical issues in order to embrace the art of economic modeling in the name of 'rigorous science' from those who care less about the refinements of mathematical models and who argue instead that what is being taught implicitly about the a priori conceptions of man, freedom, teleology and human rationality is far more important than what is being taught explicitly. Indeed, economic philosophy – which is commonly not listed for definition in Dictionaries of Economics – might be defined as enquiry into the implications of just such a priori commitments. It is noteworthy that “ideology”, for its part, is defined in the Shorter Oxford English Dictionary as "A system of ideas concerning phenomena, especially those of social life; the manner of thinking characteristic of a class or an individual." Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 99

3.2 The Philosophical Roots of the Institutionalist Perspective

As Wible puts it (1984: 1049), “The institutional school has philosophical roots in the instrumental philosophy of John Dewey”. He notes (p1051) that Commons, Mitchell, and Ayres all acknowledged a debt to Dewey, and that Dewey offered an evolutionary, instrumentalist approach to thought. Dewey regarded change as Nature's only constant, and thus disbelieved in all kinds of idealism (p1055). For Dewey (quoted in Kanne, 1988: 1213-1216), there are no fixed ends, and “Growth itself is the only moral 'end'.” Dewey's pragmatism found a sympathetic audience in the USA. He maintained Peirce's hostility to utilitarianism (Mirowski 1987: 1017), and became associated with groups opposed to laissez faire notions. For Dewey, classical liberalism had avoided all the hard questions regarding the definition of order. Mirowski (1987: 1001-1003) consequently argues that institutional economics and neoclassical economics are the offspring of entirely distinct philosophical traditions, and that “These two traditions have a profound conflict over their respective images of a 'science', and therefore profoundly incompatible images of 'economic man' and 'rationality'.” Mirowski accordingly concludes that the claim that economic 'science' has repudiated philosophical preconceptions is nothing but a vain facade, and that the roots of disagreement between contending schools of economic thought thus lie in the divergent a priori definitions of man, freedom, equality, rationality and teleology. Samuels (1990: 275) echoes this position in concluding that metaphysics and science are not mutually exclusive, and that in practice all disciplines are combinations of the two. For Samuels, as for Myrdal, there is no value-free social science, and there are unavoidable a priori. Insofar as they follow Dewey in the belief that there are no 'fixed ends', institutionalist economists seek to derive useful guidelines as to how to bring the performance of the extant economy more closely into line with evolving societal values. Institutionalists look to “instrumental valuation” or “social value theory” in keeping with their attachment to an understanding of the evolution of social values (Wisman & Rozansky 1991). For them, 'freedom' and equality of opportunity do not mean an unhandicapped race in a free market. On a methodological level, they see a methodological bias in modern social science, and tend to agree with Myrdal that a value-neutral social science is simply impossible. Positivism is attacked from a variety of philosophical perspectives, but commonly because institutionalists view the fact/value dichotomy as problematic, and because of the contention that even in matters of scientific description and 100 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

prediction there is normative significance in the methodological criteria employed. According to Samuels (1990: 303) facts are theory laden and theories are ideology laden, since valuation is inexorably involved at several levels. In consequence, institutionalists don't believe that values can be crushed out of economics by the practice of economic science (as Schumpeter contended), and - that being the case - it is best that the author's values be stated explicitly (Samuels 1990: 297, a la Myrdal). They therefore tend to see the positivistic theory / value distinction as untenable (Wisman & Rozansky 1991). The institutionalist camp is itself a broad church, however, with ample room for disagreement within it, as well as disagreement with the devotees of Locke and Smith in the orthodox neoclassical camp. Dewey is not alone at the root of the institutionalist position, and Schumacher for one is at least as critical of Dewey as he is of those outside the institutionalist perspective (Duhs & Alvey 1989). Indeed, Schumacher contends that the three political philosophies of Locke, Dewey and Marx which respectively underscore the three recognised perspectives of orthodox, institutionalist and Marxist economics are all deficient. Instead of finding a solution to human problems in the evolutionary philosophies of Dewey and Darwin, and in the supposedly middle way of Dewey-style pragmatic institutionalism, Schumacher finds an unacceptable historicism and relativism there instead. This is inevitable, of course, given that Schumacher seeks to take his bearings from a Biblical conception of the (innate) “nature of man”. This Biblical view necessarily clashes with Dewey's evolutionary perspective, which itself decries the notion of a fixed species and of “fixed ends” and thus the possibility of absolute (Biblical) values. This leaves Schumacher ultimately unable to follow in Dewey's direction, since Schumacher and Dewey sit on opposite sides of the fence in relation to Dewey's objection that traditional political philosophy has been engaged in a misguided search for “fixed species and essences” (see Horwitz: 752-3). For Schumacher it is Dewey who is misguided on the a priori level of the conception of the nature of man, and thus of human teleology and rationality. It may have been Locke's teaching that paved the way for the elevation of the passions over human reason in the choice of individual ends (or freedom of individual consumer sovereignty in the matter of human teleology), but for Schumacher no solution or improvement is to be found in the historical relativism of Dewey. It follows that while both Dewey and Schumacher are hostile to utilitarianism, the root of that opposition comes from separate sources. The safeguard Dewey finds in pluralism or populism is no safeguard for Schumacher, but merely another concession to historicism and a life- destroying metaphysics of relativism and historicism. An appeal to Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 101 evolutionary standards does not equate to an appeal to the teleological standards of Biblical teaching, and while Schumacher and Dewey may agree that much capitalist production 'merely swells the senseless bulk', they remain divided as to what constitutes rational choice and what constitutes mere chance. Plainly enough, the a priori conceptions of “man”, equality of opportunity, freedom, rationality and teleology within the institutionalist perspective (as adumbrated in Table 1) are distinctly different from those accepted by orthodox neoclassical economists.

3.3 The Philosophical Roots of Radicalism

Marx provides the most obvious philosophical root of radical economics. He objected to the privations of the capitalism of his time, and saw private property as the source of unacceptable inequality. He conceived of man as a social animal, characterised by a radical equality. He understood epistemology in terms of dialectical materialism, and saw capitalism as home to festering contradictions which would inevitably yield its revolutionary overthrow. For Marx, man is ultimately a selfless, collective being, and thus one whose humanity is consummated by elevating his social life into one of a sharing brotherhood. Accordingly, the communist experiment might be seen as an attempt to create the “new Adam in the new communist society”. That experiment has now all but been abandoned, however, as China and other ex-communist countries switch back to systems based on individual incentive and self-interest. Radical challenges to orthodox neoclassical economics nonetheless continue to exist, however, in the form of conceptions of economics which find their roots in Aristotle, or perhaps in terms of environmentalism or feminism. Consideration of Sen's Aristotelian conception is left to the companion paper “Teaching Economic Philosophy: Economics, Ethics and the Search for the Right Maximand” (Duhs 2006).

3.4 Some Practical Controversies

Rather than consider only the a prioris of different philosophical positions, those with an interest in teaching economic philosophy and political economy sometimes try to excite interest in their more abstract arguments by use of provocative practical examples. One useful case illustrates problems at the interface of economics and ethics. It is provided by Lawrence Summers' leaked World Bank memo regarding the economic efficiency of alternative ways of disposing 102 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

of dangerous pollutants, including nuclear wastes (cited in Hausman & McPherson, 1996). Summers argues that the dictates of economic efficiency reveal the desirability of relocating the world's dirty industries in poor countries - because those killed by pollutants will then be relatively low paid workers, thus implying efficiency benefits for the world economy. While this conclusion may reflect exemplary economics, it provoked outrage. In fact, the point of Summers memo is to tacitly demand that those who object to this proposal now bother themselves to sift through the principles of neoclassical economics and establish just where it is that ethical implications have entered into the putatively value-neutral scientific analysis of how best to dispose of deadly pollutants. In short, if the neoclassical economic analysis used by Summers is good enough to pass as science in other contexts, why is it that so many are unwilling to see the same principles accepted as science in this context? What implicit assumption has suddenly turned rancid? A second example is provided by Kenneth Arrow (1997). Arrow considers Margaret Radin's 1996 book on 'contestable commodities' - including such 'commodities' as baby sales, sales of human organs and prostitution – and concedes that he himself encounters difficulty in addressing such issues. Just why is it that many societies are determined to withhold such 'contestable commodities' from the marketplace, when a market for them could no doubt be established? Whereas Radin employs the approach of Dewey's pragmatic tradition, in which the formation of value judgements is a social process and outcomes are the result of widespread (democratic) dialogue, Arrow himself admits to a lifelong difficulty with Dewey's approach. He states that he has always had difficulty understanding pragmatic discussions of broad principles, and that, for him, the a priori principles in Dewey were not clear enough, especially since the opposite of some of Dewey's 'experiential' arguments seemed equally plausible. Arrow always suspected that the conclusions were arrived at first and that the arguments were derived afterwards - which is also what Allan Bloom (1975) says in criticism of Rawls's philosophy. Why then are baby sales uniformly banned? Arrow finds Radin's explanation in terms of 'personhood' less than compelling, but concedes that he does not himself have a good answer (1997: 765). In short, he recognises that there is a significant problem here, but (like Schumacher) finds it unlikely that a satisfactory solution can be found in Dewey. He thereby implies the need for a broader understanding of economic philosophy. He notes that economics and politics are separate systems and implies that it is the proper role of politics - or philosophy – to determine the proper place of economics. In thus deferring to the notion that politics Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 103 is the , rather than vice versa (as for Posner, for whom economic efficiency becomes the new definition of jurisprudence: see companion paper), he tacitly gives rise, however, to other questions about the political or philosophical values implicit in orthodox economics. He certainly implies a constraint on the Chicago School idea that economics should be accepted as imperialistic social science. Arrow notes (1997: 760) that Radin's fundamental argument is that the commensurability implied in the use of a common utility function for all human activities should be rejected. This is similar to Sen's objection in “Rational Fools” (1977) to the notion that in economics individuals are allocated one all-purpose preference function, as if they have no need for qualitative distinctions between their interests, preferences and well-being. Indeed, again approximating Sen and his deference to Aristotle, Radin herself appeals to Martha Nussbaum's capabilities approach to the (Aristotelian) question of what it is to be human, and thereby tacitly raises the question as to whether an answer to her question of why some 'commodities' are contested is perhaps to be found in Aristotle, if not in Dewey. At the least, Arrow's unease with what he accepts is a significant question is a reason for re-examining the utilitarianism of orthodox economics and for pondering the importance of the teaching of economic philosophy. Colander (2004: 36-39) likewise takes up the 'contested commodities' issue in the name of what he calls the failure of market outcomes - as against orthodox market failure - and objects that current Principles texts encourage avoidance of such controversial cases. He objects that if we don't deal with cases of the failure of market outcomes - cases where the market does everything it should, but society still disallows a market result, as in the case of baby sales – we fail our students. We especially fail those students who are thoughtful enough to recognise that there are implicit philosophical difficulties here worthy of confrontation. In a way reminiscent of the Summers lethal pollutants case above, Colander goes on to add that at the economics / ethics interface, economic efficiency might similarly dictate that a cocktail of AIDS drugs not be supplied to Africa because of the realities of demand and supply, yet few would advocate the 'efficient solution' of simply allowing poor Africans to die. In effect, this is a paraphrase of Rousseau's words that private property may be something real, but human need is also something real. In short, the Radin-Arrow-Colander examples amount to a silent criticism of the Locke-Smith understanding of man and of economics, and a claim that well-taught economics students need also to be exposed to Dewey, Rousseau, Aristotle and others, and not be misled into believing that the 104 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

important questions of philosophy have all been solved (in favour of Locke). A third pragmatic example is provided in the context of the schools debate, which has been so important to Friedman in the last decade or more. Friedman has condemned the schools sector of the US economy as an island of socialism in a sea of capitalism. He condemns it as a backward and unsatisfactory sector in terms of both efficiency and equity and in terms of the literacy and numeracy results it delivers. For him, privatisation of public schools (preceded perhaps by a policy of school vouchers) is an obvious way forward in liberating impecunious parents from unsatisfactory public schools and in restoring equality of opportunity and freedom of school choice to parents. Educational sociologists such as Halsey (1997), however, argue that Friedman misconceives what equality of educational opportunity really entails. For them, the reality is that privatisation of schools may merely cultivate an exclusionary process, such that those who live in the poorest areas will be condemned to use the poorest schools, thereby locking the poor into their poverty. Halsey et al argue that it is not privatisation that provides a solution, but the recognition that one generation's equality of opportunity necessarily creates inequality of outcome, which if uncorrected thus creates inequality of educational opportunity again in the next generation. On this understanding, an interventionist program aimed at promoting equality of opportunity is perennially required. Both Friedman and Halsey believe in equality of opportunity, but what that means for Friedman (privatisation) is quite different from what it means for Halsey (recurrent corrective intervention). A fourth illustrative example is provided by a recent Paul Krugman column in the New York Times (“Free to Choose Obesity?” 8/7/2005). Given the prevalence of obesity in the United States and in Australia, Krugman parodies Friedman's Free to Choose (1976) by asking if this epidemic of obesity merely represents the free choice of many people to become obese. According to Krugman, only ideologues or economists could believe that. For him, there is therefore some implicit limit on consumer sovereignty and on utilitarianism, and in circumstances in which he judges that consumers have failed to exercise sufficient self-discipline to act in their own best interests, Krugman is willing to call for some corrective government intervention. What are the limits to the acceptability of consumer sovereignty? From where do such limits derive, if they exist? Krugman and Friedman are obviously at odds on this point, yet in principle both could claim to be deriving their positions from J.S. Mill. In Friedman's case that is from the Mill who wrote that every departure from laissez faire is a certain evil, whereas in Krugman's case the implication is that it is from the later Mill who wrote of the need to recognise qualitative Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 105 distinctions between the pleasures and who putatively attached more significance to “social progress” than to individual liberty. At least tacitly, Krugman is adopting a set of a prioris about the nature of man and ontology and teleology which sets him at odds with the value-relativism and a-teleological approach of Chicago School economics.

3.5 Pareto Optimality and Metaphysics

The above examples make clear that economic philosophy is important to the teaching of economics not only in a theoretical context. They help explain Hodgson's objection (2001; 2004) that economics students no longer have much prospect of an education in 'big picture' questions and his plea for greater recognition that “Philosophy…encourages a critical frame of mind and can help locate the big questions… In sum, just as the requirement of mathematics is now virtually universal, so too should be some philosophy, and relevant parts of the history of ideas.” Cropsey, Schumacher, Myrdal, Etzioni, Wilber, Sen and others endorse those sentiments. Minimally, what they would like to see is a teaching broad enough to recognise that what underlies Pareto optimality is not just the three conventionally recognised Pareto value judgements (individuals are the best judges of their own welfare; individuals are independent and additive in a social welfare function; more is better etc) but also three additional metaphyiscal assumptions regarding relativism, positivism and historicism. Economic philosopher critics accordingly argue that what is taught implicitly in economics is far more important than what is taught explicitly (Cropsey 1955; Schumacher 1974; Duhs 1982; Duhs & Alvey 1989). In Cropsey’s view, when students learn welfare economics they are really being taught a particular, contentious view of political philosophy without either the instructor or the student necessarily being aware of that fact. In Schumacher's words (1974: 77), “Economics is being taught today without any awareness of the view of human nature that underlies present day economic theory. In fact, many economists are themselves unaware of the fact that such a view is implicit in their teaching and that nearly all their theories would have to change if that view changed.” For him, what is at fault is the lack of depth with which subjects are taught and the lack of metaphysical awareness. As he puts it, ideas such as relativism, positivism, evolutionism and historicism are now so firmly lodged in our minds that we are unconscious of their presence. They would not have penetrated so deeply if they did not contain an element of truth. Nonetheless, in his view (1974: 71-76) they are incomplete and dangerous, and are ultimately “a 106 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

bad, vicious, life-destroying type of metaphysics” denying the relevance of all metaphysics including themselves. Hence, Schumacher objects to the silent, self contradictory teaching that all values are relative, except for the putatively incontrovertible value that all values are relative. That singular value itself aspires to the status of absolute truth. The implicit presence of relativism, positivism and historicism in contemporary social science introduces a strong metaphysical teaching, to which Myrdal, Cropsey, Joan Robinson, Heilbroner, Schumacher, Etzioni and Sen have all attempted to draw critical attention. In one way or another they have their objections to value relativism, and to positivist methodology. They do not accept the relativist doctrine that all human values should necessarily be accepted as being of equal value. It is from this root that they see an ideological element in economic “science”, and for this reason that they see critical importance in the teaching of economic philosophy. It is by the importation of relativism, positivism and historicism that welfare economics has come to celebrate individual psychology over political philosophy. The core point of these philosophical critics of orthodoxy is encapsulated in Cropsey's words that “every logic presupposes a metaphysic”. This sentiment reappears in Myrdal in the more prosaic words “there can't be a view, except from a viewpoint.” Those who see significance in such understandings are naturally compelled to see the teaching of economic philosophy as a matter of primary importance.

4. CONCLUSIONS

Capitalism is essentially a system of free enterprise with some allowance for government interventions in specified conditions. It is essentially a system built on acceptance of John Locke's political philosophy supplemented by Adam Smith's elaboration of the economic policies consistent with that philosophy. In Locke's understanding – as against the understanding of all previous philosophers - man is by nature individualistic (selfish) and acquisitive. It follows that the institutions required for a good society are therefore ones which give free expression to that individualism and acquisitiveness. Accordingly, what is needed is private property and unlimited acquisitiveness or inequality of wealth. Marxists start with an alternative conception of the nature of man and obviously reach different conclusions. If what is natural to man is selflessness and collectiveness (see Table 1 re the philosophical conception of the nature of man in Marxist thought), it follows that private property and unlimited acquisitiveness will be divisive and disruptive, and that the Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 107 institutions of a good society are instead to be found in the public property of communism. Likewise it is apparent there will be others in an intermediate position – deriving their conceptions of a good society from Rousseau or Dewey or Kant or Aristotle – whose philosophical a prioris will drive them to seek at least some modification of the institutions favoured by either of the above intellectual camps. Putatively simple and unambiguous words such as ‘man’, ‘freedom’, 'equality' and ‘rationality’ are in fact ever present bones of contention. It is the conflicting a priori definitions of such terms that underpin dissension between the three broad theoretical perspectives considered in this paper (Table 1) and which constitute the mainsprings of dispute about many practical economic policies. This is apparent in debates within development economics, including the now famous critiques provided by Sen (2000), and in disputes about the economics of law (Posner 1979; Duhs 2005), and in the dispute between Friedman and various institutionalists about schools policies. More detailed consideration is given to selected cases in a companion paper titled “Teaching Economic Philosophy: Economics, Ethics and the Search for the Right Maximand” (Duhs 2006). For reasons related to the inevitable presence of a prioris, Myrdal regarded economics as a “soft science” requiring explicit revelation of the value premises of its authors. Joan Robinson and Robert Heilbroner similarly called for more explicit attention to ideological elements in the teaching of economics. Such calls of course tend to undermine the scientific pretensions of the economics profession, and are sometimes so unwelcome as to have those who demand attention to the contestability of a priori definitions denounced as the enemies of science. Critics of this view in fact see a fundamentalist shoe as being on the other foot, however, as doors are closed to on-going debate over basic socio-economics questions. As Hodgson (2001; 2004) puts it: today the grand view is more difficult to obtain, and the big questions fall out of favour, while the sub- disciplines specialise in minute technicalities. He looks to the post-autistic economics network to help reverse the narrowing and over-formalisation of economics which proceeded apace in the latter half of the twentieth century, and which he sees as having been intensified by the accelerated movement into business schools. The root cause perhaps remains, however, that increasing specialisation in sub-disciplines impairs wide- ranging reflection and inter-disciplinary dialogue as uni-versities become multi-versities, and questions of integrated social 'knowledge' come to be crowded out. Whereas philosophy once stood as the apex of all enquiry, an induction in philosophy today has become the exception rather than the rule. 108 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Given the importance to mainstream economics of utilitarianism, Pareto optimality, positivist methodology, and the notions of consumer sovereignty and value relativism, there are obvious reasons to increase awareness of the implications of those concepts by not merely tolerating the teaching of economic philosophy but by recognising that implicit metaphysical concepts are in fact fundamental to an understanding of economics and of why economists disagree. Whether or not there is unanimous agreement that what is presently taught implicitly is more important than what is taught explicitly, the fact that significant question can be raised about the implicit teaching in contemporary economics is a challenge that remains to be met.

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TRENDS IN ECONOMIC DEGREE ENROLMENTS WITHIN AUSTRALIA 1990-2004

Alex Millmow School of Business University of Ballarat P.O. Box 663 Mt Helen, Victoria Australia 3353 [email protected]

ABSTRACT Economics degree enrolments are an issue of deep concern for Australian economists. The marked decline in enrolments became an alarming issue in the mid 1990s. As elsewhere, the drift of students away from economics has been triggered by more competitive electives coupled with more vocationally-driven students. This paper argues that unlike the American experience where economic degree enrolments have now staged a complete recovery from the decline in the 1990s the situation in Australia remains subdued. This is despite efforts by the Australian economics fraternity to devote resources into improving teaching practices in a bid to attract and retain students.

Key words: undergraduate economic degrees

JEL code: A2, A20

1. INTRODUCTION

John Siegfried’s surveys and updates (2000; 2001; 2004; 2006) of the changing trends in economic enrolments within America are always interesting reading for economists. Making sure that young minds engage the discipline is necessarily for its propagation. It is also an issue of self interest for, as J.K. Galbraith is alleged to have said, ‘Economics is a useful form of employment for economists’. Unlike the American experience where the number taking economics degrees has apparently rebounded the situation in Australia is not so good even though economists there, as in America, have made collective efforts to address the problem. In short, the problem of student uninterest in studying economics has not been markedly reversed. It concurs with William Becker’s (2004) observation that the 112 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

problem of falling economic enrolments is a global dimension. In Australia the problem comes with some interesting developments. This paper dismisses the note of optimism sounded by Siegfreid and Round (2001) that enrolments in economics degrees in Australia were showing signs of recovery. There was, it is true, a slight recovery in enrolments from 1996 to 1998 but longer-run data for economics degree enrolments here finds that economics is still encountering difficulty attracting young minds. The scale and the significance of the decline in student numbers can be better understood when one briefly considers the recent history of university economics instruction in Australia.

2. A POTTED HISTORY OF UNIVERSITY ECONOMICS INSTRUCTION IN AUSTRALIA

There was once a time when economics degrees as distinct from economics majors were a premier and desirable qualification in Australia. The period between 1950 and 1980 was a golden age in terms of growth of the profession (Groenewegen and Macfarlane, 1990). The demand for micro and macroeconomic management meant a huge demand for economics expertise. The number of Australian universities offering instruction in economics doubled from nine to nineteen (Groenewegen, 1989: 101). The Australian economic historian, Noel Butlin estimated that between the years 1916 and 1947 some 5,000 persons graduated with an economics degree, the corresponding figure for the interval 1947-1986 was up tenfold (1987: 2). Economics bachelor degrees rose from 6 percent of the total degrees awarded in 1930 to a peak of 12.5 percent by 1980. There was, in this period of expanding student numbers, a commensurate growth in the number of instructors. These were, then, the salad days for Australian economists. During the years 1968-1978 there was a boom in the hiring of academic economists with growth rates between 9 and 12 percent per annum (Gruen, 1979: 225). The profession embarked upon the greatest expansion in its numbers with many dedicating their expertise to the public service. Today there are still twenty-nine economics departments within Australian universities though only around twenty actually offer a three year economics degree with the others working with, or incorporated within, business schools. Ray Petridis found that an economics degree was the principal or ‘generalist’ form of graduate qualification into the Australian public service (1981: 409). The fact that economists occupied the top positions within the Australian public service and wanted to replicate themselves entrenched the selection bias in graduate recruitment. The degree regimen in the post Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 113113

World War II period became ‘more technical and specialised…Americanised and more attuned to rational maximising behaviour. Increasingly, this training seemed to prefer efficiency to humanity’ (Butlin, 1987, 2). Groenewegen (1995, 6) dates this ‘Americanisation’ of Australian economics from the late sixties onwards. It was later argued, somewhat controversially by the sociologist Michael Pusey that this pattern of training and hiring of economists bore a significant influence upon government policy. Pusey (1991) specifically argued that economists within the central federal policy-making agencies were the force majeure behind the economic transformation Australia underwent in the last twenty years of the 20th century. But it was at this time that the decline in economics education in Australia accelerated even when the economy benefited from the application of neo-liberal economic reforms. Philosophically Australian economists might accept that while there are fewer economics students those who remain are more committed. In the past economics has been strong enough to shrug off challenges to its legitimacy and many might feel that, as in America, the current lapse in popularity will pass, possibly even with the assistance of corrective market forces. In the antipodes however there is now well established regret among economists that the profession has had its golden days in terms of student numbers. It is true, of course, that students are doing some economics in a myriad of business and commerce degrees but the economics degree per se has diminished in number though not in weight.

3. TRENDS IN AUSTRALIAN ECONOMICS DEGREE ENROLMENTS

While the problem of student uninterest in economics became apparent in the Anglophone countries in the nineties the latest evidence from Siegfreid is that, in America, at least, the problem has been overturned. There has been a 15 percent increase in American undergraduate economics majors since the turning point of 1996/97 when the decline in enrolments reached its nadir (Siegfreid, 2000). This might be attributable to instructors taking greater efforts at improving their teaching including innovations in instruction (Becker, 2004). By 2004 annual bachelor’s degrees in economics were 10 percent above their 1992 level (Siegfried, 2004). Margo and Siegfreid (1996) make reference to a mean reversion factor at play which seemingly allows economics to retain at least some 2.2 per cent of degrees awarded in America. No such process or 114 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

mechanism is at play in Australia. Recently Siegfreid (2006) presented the very latest American higher education data suggesting that the loss in economics majors in the early 1990s has now been entirely reversed. Again this is not being matched in Australia. The problem of falling economics enrolments within Australia first came to attention in the mid-nineties. Millmow (1995) identified the local dimension from a business school perspective where economics majors had to compete closely with other majors. Quantification of the problem began using, first, higher education numbers of enrolments at ten economics degree-awarding universities (Millmow, 1995). It was quickly followed by a survey of the Heads of Economics departments to work out the precise fall in the student load (Lewis and Norris, 1996). The latter study, sponsored by the Economic Society of Australia, found a decline in undergraduate economics degree enrolments of 13 percent from 1991 through to 1996 which was in graphic contrast to a 40 percent increase in business degree enrolments over the same period. John Siegfried and David Round (2001) identified an upturn in four countries, including Australia, since 1996. Using a sample of fourteen universities they showed that enrolments in Australian economics degrees enjoyed a recovery in numbers of some 18 per cent between 1996 and 1998. This was a brief respite; a longer term perspective tells a different story. Using the latest federal government higher education statistics Table 1 provides a fifteen-year snapshot showing that economics degrees have been consistently slipping as a percentage of total undergraduate degrees in Australia. The classification of degrees by institutional category is also reported. The data of enrolments shows evidence of relative decline for economics if one takes three-year moving averages of the data. For instance, for the years between 2002 and 2004 the percentage share of students studying economics averaged out at 1.37 percent. In contrast, for the period 1990 to 1992 the average percentage share of economics degree enrolments was 1.85 percent. This data corroborates earlier findings by Millmow (2000), who found that while the Australian undergraduate student population had increased by 70 percent in the decade from 1989 to 1999 enrolments in undergraduate economics in Australia experienced a much smaller increase of 11 percent. In the Australian undergraduate student population the percentage share of those taking a degree in economics fell from 2.5 percent in 1989 to 1.6 percent in 1999 (Millmow, 2000). By 2004 the three year moving average figure derived from Table 1 had fallen to 1.37 percent. There is an added dimension to the data set. Enrolment of females in undergraduate economics courses, as Table 1 shows, consistently hovers around 40 percent. However, much of the increase in Australian Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 115115 undergraduate enrolments centres upon females. Interestingly, enrolments of females rose from 21.4% in 1949 to 55.2% of all university students by 2000 (DEST, 2005). By 2004 females represented 58% of enrolling students (DEST 2004a). An obvious correlation exists between the direction of female enrolments and the direction of overall enrolments. If females decide against studying economics we can expect the proportion of all students undertaking an economics degree to fall further. Females might be resisting economics because the male dominance of the profession generates a perception that employment opportunities for women do not exist. Of course, if females do not study economics it merely perpetuates the male dominance within the profession. By appealing to females, economics could effectively tap into the largest sector of the undergraduate student population. The reluctance of females to study economics gives weight to those who attack mainstream economics on specifically gendered grounds (Ferber and Nelson, 1993). If the decline persists we will see the continued diminution of economics within academe and the shrinkage of the once imperial discipline into slumbering irrelevance. We might also see economists displaced or, more likely, reincarnated as business academics. Maxwell (2003) identified some shrinkage in the pool of academic economists due to the changing preferences of students. Some Australian university economics departments have lost their autonomy having been merged into other mega departments or incorporated into a business school. Some economists are reluctant however, to think there is anything fundamentally wrong. They believe the problem of falling popularity is just a cyclical one that will be rectified by market forces; that is, the relative attractiveness of pursuing an economics career will improve. This faith is under some scrutiny with the report that private sector economists have apparently recorded the fastest wage rise of any occupation from 1986 to 2005 (Macken, 2006). Those who do not entirely trust that market forces will bring back the students advocate curricula reforms aimed at bringing economics back into contact with reality. It is quite plausible that secondary school enrolments in economics might be a useful forward indicator of those likely to study economics at university. Moreover, lack of preparedness for economics study at university level may be behind the figures showing many students neither enjoying it nor achieving good grades at university (Lodewijks, 1998). In Australia, students are exposed to economics only in the last two years of their schooling. Over the last decade there has also been a sea change in secondary school student preferences towards undertaking business subjects rather than economics (Millmow, 2003; Searle, 2004). It is possible that the popularity of business subjects at secondary schools is one 116 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

of the key factors behind the relatively static numbers undertaking economics at university. There has been a very graphic decline in economics education. In the state of Victoria the number of final year students undertaking economics fell from 14 percent of total students in 1992 to 6 percent by 2001. Over the same period, enrolments in business management rose from 7 percent to 23 percent of all students (Millmow, 2003: 128). In many Victorian schools economics has been taken off the subject availability list. Out of sight quickly becomes out of mind. Searle (2004) reports similar findings for secondary schools in Queensland. These shifts in student preferences will probably mean that in the future, the supply of teachers tutored in economics will drop off because it is seen as a dead end.

4. COUNTERING DECLINE

There has been much debate in Australian university economics departments about the palpable decline in student interest in the subject. There has been much discussion about the reasons for the decline in student interest in the subject. Usually the blame is laid at the rise of business and management education which, all told, exerts a lower academic price - in terms of grading and difficulty of syllabus - upon its clients than say an economics degree (Siegfreid, 2001). Economics is often perceived by students as a boring, abstract and difficult elective or course of study. Recent research by Millmow and Bookallil (2006) discovered that vocationally-driven students, particularly females, could not readily see how an economics degree could lead on to employment opportunities. To many students the prevailing mindset was that doing economics did not mean a job at the end of the day. They opt for a more employment- enhancing business degree. This information asymmetry could be easily addressed by career advice and, in terms of the latter aspect, a teaching strategy that engages young women. The rigor and perceived relevance of the subject content is a matter of course design. Economics instructors could, for instance, emphasize the artistic, intuitive and literate aspect of economics before its technical side. Moreover, providing very visual role models, by actively encouraging females into the teaching of economics at university level, may be a practical step to encouraging more females to read economics (Alford, 1998). Many Australian economists now find themselves working within a business school setting and are primarily responsible, and primarily dependent upon, offering service subjects like the first year twins, micro Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 117117 and macro. Second and third year electives, if they are still offered, rarely attract a quorum. Boutique subjects will not last unless they can attract higher numbers of students. More generally, for economics units to survive in a business school setting they had to tie in with a real world orientation. This intramural conflict between economists and business academics is the unspoken dynamic within some business schools with the former fighting a rearguard action to preserve their position. The great irony here is how mainstream economics, renowned for its social science imperialism when it came to methodology, scope and content, now rides on the coat-tails of the boom in management education. However the young Turks of the business school sometimes see no reason to save economic electives from extinction. There is perennial pressure too at every review of the business course curricula to conflate micro and macro into a one semester unit thereby freeing up space for business academics to assign students to one of their electives. The practice confuses more than it simplifies with students emerging with only a shallow understanding of economics (Guest and Vecchio, 2003). The fact that their students never do particularly well at first-year economics merely fuels their case to wrestle more of the curriculum from the economists. One way of countering this mindset is to highlight the interrelations between economics and other business disciplines. If first-year economics subjects can be used as marketing tools as Alauddin (2002) suggests then business school staff may become aware of and appreciate the benefits of economics for the business graduate. Another formal response by Australian economists when the problem of falling enrolments first became apparent was to organize annual conferences upon teaching first-year economics. In that regard the Economic Society of Australia (ESA, 2004) in a study of nationwide teaching standards in economic instruction reported a significant degree of student dissatisfaction with the teaching they received from their lecturers. It concurs with earlier research by Guest and Duhs (2002) who surveyed students’ views on their experience with university economics. The other side of the coin was that the heads of twenty-nine economic departments perceived a decline in the quality of the students’ work (ESA, 2004). This might have been due to a general lowering of admission standards rather than poor course design or indifferent teaching. Like Becker (2004), Laurenceson (2005) attributes this to the explicit incentives placed before academic economists. In short, research scholarship rather than innovations in teaching rates more highly in the promotion stakes. 118 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

5. CONCLUSION

This paper opened by contesting the notion that economics degree enrolments were recovering in Australia as they have in America. Indeed the latest higher education statistics suggested that economics degree enrolments are still in relative decline. This is despite Australian economists devoting more resources towards improving the effectiveness and attractiveness of their courses. Part of that concern about the relatively static enrolments in economics within Australian universities focuses upon how it is not tapping into the largest part of the undergraduate student population. Demonstrating where economists are likely to be employed could spark student interest, particularly amongst young women. Australian economists have also to be aware that business students come to first year classes without any prior exposure to economics. Finally, economists need to show clearly to their rather cynical business school colleagues the interaction and symmetry of economics with their disciplines. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 119 119

Table 1: Domestic Undergraduate Student Enrolments in Economics within Australia 1990-2004.

Total National % Year Field of Education Male Female % female Economics Total Economics

1990 040301 Economics - General 3,849 2,235 6,084 36.74% 040302 33.74% 324 165 489 040304 Economic Statistics/Econometrics 40.00% 9 6 15 040399 Economics - Other 28.49% 605 241 846 Total (a) 35.61% 382,784 4,787 2,647 7,434 1.94% 1991 040301 Economics - General 37.78% 3,713 2,255 5,968 040302 Agricultural Economics 34.02% 382 197 579 040304 Economic Statistics/Econometrics 30.00% 14 6 20 040399 Economics - Other 37.73% 736 446 1,182 Total (a) 37.48% 413,995 4,845 2,904 7,749 1.87% 1992 040301 Economics - General 38.01% 3,443 2,111 5,554 040302 Agricultural Economics 34.23% 440 229 669 040304 Economic Statistics/Econometrics 50.00% 11 11 22 040399 Economics - Other 38.25% 720 446 1,166 Total (a) 37.74% 423,242 4,614 2,797 7,411 1.75% 1993 040301 Economics – General 38.87% 3,841 2,442 6,283 040302 Agricultural Economics 33.33% 472 236 708 040304 Economic Statistics/Econometrics 33.33% 10 5 15 040399 Economics – Other 41.59% 660 470 1,130 Total (a) 38.75% 426,599 4,983 3,153 8,136 1.91%

120 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Total National % Year Field of Education Male Female % female Economics Total Economics

1994 040301 Economics - General 37.34% 3,640 2,169 5,809 040302 Agricultural Economics 32.47% 497 239 736 040304 Economic Statistics/Econometrics 43.75% 9 7 16 040399 Economics - Other 41.64% 541 386 927 Total (a) 37.41% 430,761 4,687 2,801 7,488 1.74% 1995 040301 Economics - General 38.35% 3,425 2,131 5,556 040302 Agricultural Economics 34.99% 444 239 683 040304 Economic Statistics/Econometrics 31.82% 15 7 22 040399 Economics - Other 42.38% 575 423 998 Total (a) 38.57% 437,565 4,459 2,800 7,259 1.66% 1996 040301 Economics - General 39.56% 3,219 2,107 5,326 040302 Agricultural Economics 35.62% 403 223 626 040304 Economic Statistics/Econometrics 42.86% 16 12 28 040399 Economics - Other 41.83% 673 484 1,157 Total (a) 39.60% 453,863 4,311 2,826 7,137 1.57% 1997 040301 Economics – General 40.69% 3,821 2,621 6,442 040302 Agricultural Economics 38.78% 371 235 606 040304 Economic Statistics/Econometrics 46.43% 15 13 28 040399 Economics – Other 41.51% 806 572 1,378 Total (a) 40.70% 466,616 5,013 3,441 8,454 1.81%

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 121 121

Total National % Year Field of Education Male Female % female Economics Total Economics

1998 040301 Economics – General 39.50% 4,002 2,613 6,615 040302 Agricultural Economics 35.35% 331 181 512 040304 Economic Statistics/Econometrics 35.71% 18 10 28 040399 Economics – Other 46.20% 609 523 1,132 Total (a) 40.17% 473,770 4,951 3,324 8,275 1.75% 1999 040301 Economics – General 40.56% 3,939 2,688 6,627 040302 Agricultural Economics 34.19% 308 160 468 040304 Economic Statistics/Econometrics 41.36% 95 67 162 040399 Economics – Other 47.20% 642 574 1,216 Total (a) 41.20% 478,067 4,965 3,479 8,444 1.77% 2000 040301 Economics – General 38.66% 3,069 1,934 5,003 040302 Agricultural Economics 28.54% 328 131 459 040304 Economic Statistics/Econometrics 36.48% 155 89 244 040399 Economics – Other 48.72% 941 894 1,835 Total (a) 40.44% 477,002 4,472 3,037 7,509 1.57% 2001 040301 Economics – General 42.47% 714 527 1,241 040302 Agricultural Economics 40.36% 3,702 2,505 6,207 040304 Economic Statistics/Econometrics 22.22% 7 2 9 Total (a) 40.69% 520,221 4,423 3,034 7,457 1.43%

122 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Total National % Year Field of Education Male Female % female Economics Total Economics

2002 040301 Economics – General 38.91% 493 314 807 040302 Agricultural Economics 39.66% 3,659 2,405 6,064 040304 Economic Statistics/Econometrics 20.00% 8 2 10 Total (a) 39.54% 531,527 4,160 2,721 6,881 1.29% 2003 040301 Economics – General 36.72% 398 231 629 040302 Agricultural Economics 41.20% 4,405 3,086 7,491 040304 Economic Statistics/Econometrics 26.67% 11 4 15 Total (a) 40.81% 529,403 4,813 3,319 8,132 1.54% 2004 040301 Economics – General 39.32% 375 243 618 040302 Agricultural Economics 38.68% 3,765 2,375 6,140 040304 Economic Statistics/Econometrics 22.22% 14 4 18 Total (a) 38.69% 525,505 4,154 2,621 6,775 1.29% c. The data takes into account the coding of Combined Courses to two fields of study. As a consequence, counting both fields of study for Combined Courses means that the total may be less than the sum of all fields of education. Field of study classifications included are: 040301 - Economics - General, 040302 - Agricultural Economics, 040304 - Economic Statistics/Econometrics, 040399 - Economics - Other. Source: DEST Higher education statistics 1990-2004

RFI No.: 05-179

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 123123

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TEACHING ECONOMIC PHILOSOPHY: ECONOMICS, ETHICS AND THE SEARCH FOR THE RIGHT MAXIMAND

L.A. Duhs1 University of Queensland [email protected]

ABSTRACT

Economic philosophy is not often taught, and is not necessarily easily taught. It involves enquiry into implicit assumptions within orthodox economics and within alternatives to it. It seeks to highlight why it is that some critics object that neoclassical economics is too atomistic, hedonistic, and rationalistic, or why others lament that there is much hidden metaphysics in Friedman and his Chicago School colleagues. It addresses the issue of whether - in a reversal of the view that economics is the imperialistic social science - significant philosophical assumptions have been silently but inescapably imported into orthodox economics. This paper seeks to facilitate the presentation of such material with illustrations selected from social economics, development economics, and critiques of utilitarianism.

Keywords: teaching economics; economic philosophy; implicit assumptions. J.E.L. Classifications: A12, A13, A23, B15, Y8.

1. INTRODUCTION

Many regard economics as synonomous with utilitarianism. That is not necessarily so, however, and critiques of utilitarianism in the professional literature are accompanied by a series of specifications of alternative maximands, putatively superior to the maximisation of aggregate utility. Posner, Rawls and Sen are the three to have achieved greatest recognition in the economics literature for their challenges to the utility maximand, but others to have broached the subject include Schumacher, Higgins, Myrdal, Etzioni, Cropsey, Austrian School 'economic personalists' and Harsanyi. These challenges have commonly been ignored in mainstream courses, but in recent years Sen's status as a Nobel Prize winner who may legitimately be regarded as an economic philosopher has increased the readiness to take such matters seriously.

1 Thanks are due to AJEE referees whose helpful comments led to significant improvements in this paper. 126 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

In this setting, three themes are addressed in this paper. First, consideration is given to the issue of ethics in economics. This includes an appreciation of issues basic to Paretian welfare economics, and requires an understanding of what Sen (1977) calls 'rational fools' in the orthodox economics literature. Secondly, the development economics literature is used as a vehicle for illustrating some issues in economic philosophy. This involves issues related to the fact/value dichotomy in positivistic method, and raises questions about the distinction between chance and choice. It also involves questions about the definition of just what it is that is being developed. Thirdly, consideration is given to social welfare functions, which are commonly conceived in terms of utility maximisation, but which admit of the alternative specifications advocated by Posner, Rawls, Sen, Cropsey and others. Posner finds social utility maximisation to be deficient largely because of utility distortions attributable to the depraved, whereas Rawls finds utility maximisation to be deficient because of utility distortions attributable to the deprived. Whereas Rawls argues the need for some form of economic floor or safeguard for the worst-off, even if what he provides is no more than utilitarianism made contemporary, Sen similarly seeks to assist the deprived by removing 'unfreedoms' in order to facilitate the development of their human capabilities. He therefore commends his 'capabilities approach', which does more to undermine the acceptability of a utilitarian , and which argues instead for something closer to the maximisation of the development of human capabilities as understood in Aristotelian terms. He too has his critics, and fundamental questions remain unresolved in the literature. If nothing else, that does at least have the advantage of providing meat for economic philosophy students to chew. While the literature related to economic philosophy is diverse and somewhat abstruse, one submission made here is that there is much advantage in the teaching of economic philosophy in focussing on the various meanings imparted to six key words in that literature: the nature of 'man'; 'freedom'; 'rationality'; 'equality'; 'science' and teleology. Five of those words seem deceptively simple.

2. SOME PROMINENT CONTROVERSIES IN SOCIAL ECONOMICS AND THEIR ROOTS IN ECONOMIC PHILOSOPHY 2.1 Sen and the Link Between Economics and Ethics

Sen's is one of the few eminent voices raised in recognition of the need to take economic philosophy more seriously. He contends that Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 127127

modern economics has allowed too large a gap to grow between economics and ethics. He considers that all the propositions underlying the general consensus on traditional welfare economics are eminently contestable, and duly dismisses Pareto optimality as “a very limited kind of success” (1987:32). Indeed, as he sees it, Pareto optimality may come “hot from Hell” (1987:32), and is a condition which remains entirely compatible with leaving some people in extreme misery while others roll in decadence and luxury. This leaves it “an extremely limited way of assessing social achievement” (1987:35) which (merely) captures the efficiency implications of utility accounting. Accordingly, a utilitarian/Paretian approach can yield results at odds with our basic intuitions, and Sen objects at least tacitly that an ethical framework must be rejected if it is inconsistent with those basic intuitions. Significantly, in developing his critique of utilitarianism he further objects that “to identify advantage with utility is far from obvious” (1987:38), and if some interpretation of advantage other than utility is accepted, then Pareto optimality would cease to be even a necessary condition, let alone a sufficient one, for overall social optimality (1987:35-39; also 1979a, 1979b). For him, welfarism - in which social welfare is a function of personal utility levels alone - is therefore potentially disastrous. It follows that Sen's position on values and ethics in economics will be well removed from that of Chicago School economists, for whom utilitarianism and value relativism remain sacrosanct. Policy differences between them are obviously of little relevance until one first addresses what separates them in terms of the a prioris of their respective economic philosophies. There can be few better places to start a course on economic philosophy. Sen emphasises (1987; 2000) that economists should pay more attention to the implications of libertarianism and utilitarianism in apprehending issues of value relativism, historicism and political philosophy within orthodox economics. He concludes (1987:51) that “it cannot be doubted that the issue of rights and freedom places an important question mark on the general approach of welfarism (including inter alia utilitarianism and Pareto optimality).” He offers various grounds for departing from welfarism (just as Cropsey emphatically did in 1955) which “may all provide grounds for rejecting self-interested behaviour” (1987:54). One such ground arises when importance is attached to the “agency aspect” of a person - meaning that a person may have reasons for pursuing goals other than individual self-interest. Another arises if a notion of well-being is adopted that differs from utility. Given a view of well- being based upon some “objective” circumstance (eg a person’s functioning achievements or capability development) – and not primarily on preference – the simplicity of the underpinnings of the fundamental 128 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

theorem of welfare economics (which links competition to efficiency) will be undermined. On such an “ethics related view of social achievement” (1987:4) evaluation cannot be stopped short at some arbitrary point like satisfying “efficiency”. A third ground arises insofar as Sen accepts that self-interested behaviour can also be a seriously inadequate yardstick in ethical approaches that emphasise rights and freedoms. The “moral acceptance of rights may call for systematic departures from self interested behavior. Even a partial and limited move in that direction in actual conduct can shake the behavioural foundations of standard economic theory (including the fundamental theorem). At least tacitly, Sen is objecting that the economics-as-imperialist-science doctrine has affirmed important ethical positions by silently rejecting not only the agency aspect of a person and the notion of human rights but also the possibility that human well-being can reflect anything other than subjective personal preference. There is food for thought here, and experience does indeed show that economic philosophy students appreciate the opportunity and obligation to confront such issues. For Sen - in the institutionalist tradition as against the libertarian tradition - it follows that human beings must be free from serious external constraints (provided by adverse circumstances including poverty) before they can meaningfully be said to be free in the sense of being free to do as they please. Beyond that, his criticisms of the limited ways in which 'rationality' is defined in economics - merely as deductive consistency or as self-interest maximisation - give rise to questions as to whether human rationality can be applied only to the choice of policy means or can also be applied to the choice of human ends or goals. He thereby implicitly questions the orthodox conception of matters of teleology in economics and social science. In such a context it follows that for Sen (2000: 280), “the role of values cannot but be crucial”. It also follows that orthodoxy has a lot to answer for. The metric of exchange value assigns zero value to everything except commodity holdings (e.g. rights, morbidity, education), and there is at least a crypto-teleogical theme in Sen that sets him apart from the neoclassical orthodoxy. Economics is not the all-powerful imperialist social science for him, but one which needs to be supplemented by careful thought about matters exogenous to economics, including the understanding of human capabilities and thus the understanding of the nature of humankind, human well-being, human development, and human teleology. Sen's concern is to show that the standard propositions of modern welfare economics depend on (merely) combining self-seeking behaviour with willingness to judge social achievement by some utility based criterion. This is the root position of the way in which values, ethics and issues of social optimality are apprehended in orthodox economics, but Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 129129

as Sen depicts it, it is no more than a representation of the way the world would look if those underpinning assumptions held true. For Sen (as also for Schumacher, Myrdal, Cropsey, Etzioni, Higgins and Nevile) it is apparent that significant political or philosophical assumptions have been silently imported into orthodox economics. In short, there is an Aristotlelian element in Sen – one that carries the implication that the judgement of social achievement relates to the goal of achieving “the good for man” (Sen, 1987:4; 2000:14, 24, 285-289). This is at least a crypto-teleological view, and one that is poles apart from the a- teleological view of values, ethics and social optimality embedded in Chicago School utilitarianism, libertarianism and economic imperialism. This Aristotelian element in Sen is enlarged by Cropsey, and is further considered in section 4.4. Those interested in the roots of ethical controversies in economics therefore do well to pay some homage to Sen for his success in again 'legitimising' debate about such questions within economics. There is no more accessible, or more significant, place from which to start in the teaching of economic philosophy.

2.2 Economics and Ethics in Social Economics: Etzioni, Lutz & Lux, E.F. Schumacher, C.K. Wilber and the International Journal of Social Economics

A sub-group of economists, broadly known as social economists, respond to questions similar to those raised above by Sen. They find reason to object to the conception of the nature of man implicitly embedded in orthodox teaching, and seek to construct a superior understanding of social economics rested on more acceptable philosophical premises as to what is 'man', and consequently what are human needs and 'rational' human behaviour. In Etzioni's words (1988: xii), “At issue is the nature of man”. Similarly, Lutz and Lux complain (1988: 104) that “something important” is missing from the conception of man in orthodox economics, just as Schumacher objects (1974: 77-83) that “Economics is being taught without any awareness of the the view of human nature that underlies present-day economic theory”. In discussing 'what's wrong with economics', Benjamin Ward (1972) objects that neoclassical economics is too atomistic, hedonistic, and rationalistic, and in discussing 'the moral dimension' of economics, Etzioni uses almost identical words in criticising it as “individualistic, hedonistic and rationalistic”. 130 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Etzioni finds the missing ingredient in the neoclassical conception of 'man' in Kant. E.F. Schumacher, J.C. O'Brien (1996; 1992), C.K. Wilber (2004) and 'economic personalists' (Gronbacher 1998) find it in the Bible. Cropsey finds it in Aristotle. Indeed, Cropsey anticipates much that is in Sen, as well as Schumacher's view that there is a virulent 'metaphysical disease' rampant within the teaching of orthodox economics. More pointedly - mirroring the above objections of both Ward and Etzioni - Cropsey's view may be paraphrased as an objection to the inappropriate foundations of neoclassical economics in atomism (or sui generis individualism), hedonism (or utility equals advantage and is thus the root of The Good Life), and rationalism (or the implicit metaphysical teaching that human reason is but the handmaiden of the passions, such that reason partakes of the choice of human means but not the choice of human ends themselves). The common teaching of Etzioni, Schumacher, Cropsey and Sen is that there is much misconception in the present (implicit) teaching of the relationship between economics and ethics. Etzioni's conception of man (1991) requires recognition that people are not just self-interested, are not interested solely in efficiency, are not isolated in their existences as individuals but are reflective of groups, and generally prefer a mix of work and leisure over leisure alone. He rejects the utilitarianism and individualism of orthodox economics. He objects that consumption is not the sole end of economic activity. The practical consequence of this for socio-economists of his stripe is that there is need to recognise the role of social justice along with efficiency, and need to recognise the importance of protecting institutional integrity. Furthermore, there is a need to accept the significance of moral foundations for social interaction – not only for the family and community – but also for the efficacy of the market itself, which ultimately rests on trust and integrity. There is significance in 'psychological income' for a productive labour force, and a need to recognise that the harmfulness of unemployment has commonly been underemphasised. Socio-economists recognise a hierarchy of universal human needs and recognise concomitant human rights. They object to the reduction of differentiated human needs to undifferentiated 'utility'. C.K. Wilber (2004:148) reflects the Catholic social economics tradition. He castigates the unwarrantedly narrow interpretation of Adam Smith commonly delivered to economics students (as Sen also does) and argues that what Smith teaches in his Theory of Moral Sentiments is that what is required for success in creating a liberal society is adherence to a common social ethics. On Wilber's interpretation, the hero for Smith is not self-interest, but ethical prerequisites. Moreover, in terms of 'scientific' methodology, he further objects that while positivists assert that failure to Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 131131

maintain the fact/value dichotomy will result in “a disastrous slide into relativism” (p148), anti-positivists contend that it is precisely the pretense of value neutrality in positivistic social science that is itself the real harbinger of just such a disastrous slide into relativism. For Wilber and Catholic social economics the implicit positivistic teaching of the equality of all values is in fact a dangerous metaphysical teaching, and one that ultimately inclines towards nihilism and social decline. In this they have something significant in common with both Cropsey and Schumacher. Kristol (1973) and Samuels (1976:409) express similar concerns. Wilber observes that a certain shared 'world view' shapes the analysis offered by neoclassical economists, and this view reflects a set of (contestable) value judgements, primarily including (a) that people are rational and self- interested; (b) that the goal of life is to pursue happiness as understood in utilitarian, relativistic terms; and (c) that competition and market forces lead to efficiency and optimal outcomes. Wilber's list might therefore be re- worded as an objection to rationalism, hedonism and welfarism, which plainly bears close resemblance to the above tripartite objections of both Ward and Etzioni. Social economists stress that such value judgements as underpin the 'world view' of neoclassical economics need to be openly debated, rather than tacitly assumed. Accordingly, J.C. O'Brien (1992) directs attention to teleological questions in asking 'what is the end of it all'. Social economists have no doubt that the implications for social advance of value relativism and value-neutral positivist methodology are of transcendent importance, but complain that the issue is rarely deemed relevant to the teaching of economics. For them, what is taught implicitly in welfare economics is potentially more important than what is taught explicitly, and there is again obvious material for provocative courses in economic philosophy.

2.3 Austrian School 'Economic Personalists'

Also confronting the need to close the distance between economics and ethics is a sub-division of the Austrian School of economics. From its inception in 1998 The Journal Of Markets and Morality has set out to establish a fully Christian social science. Founded by Austrian School Catholics who call themselves 'economic personalists' this group seeks to combine Catholic moral philosophy and Austrian School respect for individual freedom. Its advocates therefore seek to remove what they see as the skewed conception of human nature in economics and social science – a conception which tends to be overly rationalistic, utilitarian and/or weak regarding the metaphysical dimensions of human life. For economic personalists (Gronbacher 1998; Woehrling 2001) the policy consequence of 132 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

this philosophical position is that support should be given neither to unfettered markets nor to government regulated markets, but to morally constrained markets. What economic personalists support therefore is not Statist intervention but the constraints of natural law as promoted by a moral code conveyed through voluntary associations including family and church. In effect, personalists pursue a morally healthy market place which not only distinguishes between freedom and mere licence but which also facilitates reduced transaction costs via a morally healthy society. Economic personalists – who also seek the consummation of one's humanity via entering into community with others – thus see themselves as offering a new contribution to the search for a synthesis of market and moral principles. Given their attachment to both Austrian School economics and to Catholicism, the economic personalist position is similar to, but not identical with, the social economics associated with Etzioni, Wilber or the International Journal of Social Economics. Personalists contest the implicit conception of the nature of man embedded within orthodox economics. For their own part they tend to define man in terms of the capacity for love, however, rather than in terms of the common capacity for reason and speech, as Cropsey (and Straussian philosophers) do. There is no coincidence of views here. Nor is their view coincidental with what Etzioni has in mind, with its origins in Kant, rather than in the Bible. Personalists recognise individuality, but their view is not synonomous with sui generis individualism. They resile from individualism as atomism (c.f. Ward; Etzioni), which they see as the opposite of solidarity or brotherhood, and hence seek to reflect some generic features of humankind. In consequence too, economic personalists understand 'freedom' in the way outlined in various Papal Encyclicals and that makes their understanding of 'freedom' quite distinct from the understanding provided by Chicago School libertarians. For them, “freedom” is not mere licence to do whatsoever, but freedom to pursue a teleologically superior human end. While Austrian School Catholics assert the superiority of their conception over earlier Catholic and protestant attempts to provide a synthesis of markets and morality, critics will of course object that family and church have been with us for a long time and presently seem to show an inclination to decline, rather than regenerate into viable moral regulation of economic activity. Such critics will therefore be inclined to say that the economic personalist position – which essentially combines free market dogma with Papal teaching that people should love their neighbours – is little different from hoping or praying that the world could be made a nicer place. Supporters, on the other hand, will argue that Adam Smith wrote the Theory of Moral Sentiments as well as the Wealth of Nations, and that Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 133133

contemporary economics teaching is at fault for losing sight of the importance for the market mechanism itself of an underpinning set of moral sentiments. It should be apparent from section 2 of this paper that much suitable material for economic philosophy courses arises in the context of social economics in terms of the metaphysics underlying various economic perspectives and in terms of the definitions adopted of such commonly used and seemingly non-controversial terms as 'freedom' and 'rationality'.

3. DEVELOPMENT ECONOMICS 3.1 THE MYRDAL VERSUS BAUER RIFT OF THE 1970S

In the context of third world development, Myrdal was a prominent voice of the 1960s and 1970s. He argued the case for challenging and confronting extant social and cultural practices, for various forms of state intervention, and for foreign aid from rich countries. He saw institutionalised inequality as a significant barrier to development. P.T. Bauer (1971) on the other hand took exception to interventionist stances in general and to Myrdal's advocacy in particular. Whereas Myrdal argued that value-neutral positivistic social science was literally an impossibility, Bauer was dismissive of the presumptuousness of those who contended that they could identify a higher standard than the extant values of the individuals in a given community group. For Bauer, Myrdal's insistence that it was necessary to challenge some traditional values and beliefs smacked of an arrogant, socialistic anti-scientific willingness to judge some values to be better than others. Myrdal and Bauer were plainly poles apart in terms of their underlying a priori positions. Their respective interpretations of the fact/value dichotomy left Chicago writers such as P.T. Bauer and H.G. Johnson lamenting that Myrdal would not accept facts as facts - since in Johnson's words (1972) some people may in fact prefer Buddhism to Bendixes and the inner vision to television. People do not necessarily wish to pursue the modernisation ideals that Myrdal took for granted as desideratum. In turn, Myrdal lamented that Bauer and Chicago failed to distinguish chance from choice, insofar as some socially institutionalised value systems (including religious customs) merely reflected historical chance, rather than any meaningful choice by the individuals who now live within them. For Myrdal, to base economics and social science on a sterile statement of extant 'facts' – e.g. of environmentally constrained 'choice' of religion - was thus in fact to rest social science on the unsubstantial foundation of 'chance'. Accordingly, Myrdal endorses 'tough states', and thus reveals a crypto-teleological 134 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

element in recognising a need to promote a social development which transcends particular cultural idiosyncrasies (e.g. widow burning or the caste system) even when they are widely accepted. Nonetheless, the notion of absolute values is as unacceptable for Myrdal as is the opposite notion of a complete value relativism. For him, there cannot be a view except from a viewpoint (1968:32), and viewpoints are the product of living in a particular time and place. It followed for him that there cannot be any absolute or timeless values, but only historically relative values. It also followed for him (as it does for Sen), however, that individual subjectivism was limited by life experience, education and the like, so that individual valuations were not automatically sacrosanct, as they are for Bauer and other Chicago School economists. Consumer sovereignty is thus a notion limited by experience - which it remains too for Todaro (1994:87). Accordingly, in the interests of development, Myrdal sees it as both possible and necessary to confront and transcend even some popularly supported value systems. Myrdal was therefore unsympathetic to “soft states” which perpetuated or tolerated customs and values which impeded what he (or history) considered to be progress, and unsympathetic to those whose 'scientific method' was in fact based on a confusion of chance with choice. Myrdal simply does not accept the Chicago School definitions of consumer sovereignty, freedom, rationality, teleology, value relativism, or value-neutral scientific method (Duhs:1982). His view remains dependent on recognising the prior importance of some form of political philosophy which places severe limitations on the doctrines of utilitarianism and libertarianism. Within the more contemporary development literature, it should be noted that just as a tension remains in Myrdal's rejection of both unbridled value relativism and value absolutism, so a similar tension remains within Sen, as will be seen below, insofar as he lauds Bauer's scientific merit and celebration of individual freedom (Bauer 2000, Introduction by Sen) while nonetheless retaining some Myrdalian notions of what constitute 'unfreedoms' that need to be removed. The Myrdal / Bauer rift might be dated in one sense, but the issues that spawned it remain capable of enlivening debate in contemporary economic philosophy classes.

3.2 Sen's Capabilities Approach to Development

For Sen, poverty entails more than mere income deprivation. He directs attention instead to the development of human capabilities and rights, and away from the metric of exchange value and the maximisation Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 135135

of income (Sen 2000). For him, poverty should be measured in terms of any shortfall in the fulfilment of a range of 'human capabilities', and the pursuit of 'the good life' therefore requires some understanding of what is natural to mankind. This entails at least some attempt to ponder matters of human teleology - or just what it is that constitutes 'development'. Economic philosophy issues thus again rise to the fore in this contemporary development literature. Sen's message is that human “unfreedoms” are decreased as human capabilities are increased, and his concept of fairness or justice requires an equalisation of “capability shortfalls”, rather than a maximisation of subjective utility. To a greater extent than is ever apparent in Bauer he accordingly stresses the need to recognise that State and market are complements, not substitutes, and for him there is an obvious case in poor countries for State provision of universal primary education and basic health facilities. Sen criticises a utilitarian approach to development as inadequate because poverty and deprivation distort the way individuals perceive their utility prospects. He criticises a libertarian approach as inadequate because it fails to appreciate the distinction between positive and negative freedoms i.e. between freedom from external constraints and freedom to do whatsoever one chooses. He criticises a Rawlsian approach because it mis-specifies the 'primary goods' which should be made available to all citizens at a floor level. He therefore looks to Aristotle for a justification of a 'human capabilities' approach, which calls for conscious effort to develop the human capabilities with which all of us are endowed in some measure. In short, his approach requires a specification of what is natural to man, and what is therefore necessary for the development of such 'man'. This leaves Sen well removed from the neoclassical orthodoxy. For Sen (who reflects elements of both institutionalist and neoclassical traditions, but not the libertarian tradition), it follows that human beings must be free not only from legal restrictions but also free from adverse conditions before they can meaningfully be said to be free to do as they please. Despite Sen's willingness to praise Bauer, his own a priori conceptions of man, freedom, rationality, equality, utilitarianism, justice and teleology are by no means identical with Bauer's, and he recognises that ethical approaches that emphasise rights and freedoms require more than mere self-interested market-based behaviour. In significant part, Sen's influence in the development literature of the last decade or two derives from his ability to cause the profession as a whole to become more receptive to the breadth of understandings possible for these terms. Given the status of Joseph Stiglitz in the development economics profession, a related point worth noting is that he, like Sen, stresses that State and market should be viewed as complements. There are thus some 136 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

commonalities between Sen and Stiglitz in their respective critiques of orthodox development economics and in terms of the policies they advocate, but it remains the case that Sen's objections to accepting Pareto optimality as maximand are quite distinct from Stiglitz's critique (1994) of theoretical sloppiness in the way in which Pareto optimality has commonly been pursued by orthodox economists. Stiglitz is more concerned to stress that in the presence of missing or incomplete markets, laissez-faire policies may not achieve Pareto optimality, whereas Sen is more concerned to dispute that Pareto optimality is itself a goal worth aiming for. Nonetheless, the Post Autistic Economics group (www.paecon.net) quotes Stiglitz to the effect that “[Economics as taught] in America's graduate schools ... bears testimony to a triumph of ideology over science”.

3.3 Higgins on economics and ethics in the new approach to development

Higgins (1978) argued that there was much wrong with the orthodox approach to development economics, and with the notion that what must be maximised is an additive social welfare function. In Higgins' view, it is in development economics that the philosophical disarray of orthodox economics is most apparent, and, accordingly, it is from that seedbed that he expects the next revolution in economics to emerge. On the strength of the foregoing, Sen's supporters will credit Higgins with prescience, and contend that Sen's case for changing the maximand from that of conventional welfare economics to one of capability development and equalisation of 'capability shortfalls' is the start of just that revolution. In keeping with Sen's analysis, it follows that any such revolution will have its roots in Aristotle, as well as in Smith. All in all, it is apparent that development economics presents those wishing to teach economic philosophy with provocative material, ranging from the implicit conception of the nature of man to challenges to the cultural relativity of values, and critiques of positivistic scientific method.

4. UTILITARIANISM AND WELFARE ECONOMICS: THE SEARCH FOR THE RIGHT MAXIMAND

Social optimisation means little if the wrong objective function is being maximised. Posner, Sen, Myrdal, Cropsey, Etzioni, Schumacher, Rawls and others have all argued that orthodox economics is troubled by exactly that problem, and that the glib and unchallenged presentation of a Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 137137

utility based social welfare function as maximand is far from adequate in the teaching of economics. In fact, a range of alternatives to utility maximisation is available in the literature, although it is doubtful that many economics students presently confront them.

4.1 Posner and a wealth maximisation objective

Posner (1979) argues that utility maximisation is not the best available social maximand, largely because utility calculations can be distorted by the presence of 'utility monsters'. While such utility monsters may perversely derive utility by doing things to other people, wealth maximisation presupposes voluntary transactions, which in turn require that people do things for other people. Accordingly, Posner argues that utility maximisation should be replaced as social maximand by wealth maximisation. Posner's notion has clear policy implications for the literature on law and economics and indeed for the law courts. He recognises that wealth maximisation as social maximand has its shortcomings – e.g. insofar as the poor will not fare well under his approach, and those without money will figure in the results only insofar as they matter to those with money in the marketplace – but nonetheless contends that his maximand is less rejectable than available alternatives. He sees significant deficiencies in any of the recognised ethical theories – including both utilitarianism and Kantianism. Utilitarianism is too exposed to the excesses of the depraved (as against the demeaned perceptions of the deprived, which was the problem for Sen), while Kantianism is too squeamish in view of its endorsement of categorical imperatives. On Posner's logic, babies available for adoption should be auctioned off in a baby market, rather than allocated by a process administered by a Government department. As Posner sees it, an auction would have both efficiency and equity advantages, insofar as it would not only add to national wealth via efficiency-inducing transactions, but would also ensure that available babies went to those who value them most (i.e. to those with the greatest willingness to pay). For him, wealth creation is the superior maximand, and in the context of the economics of law the courts should therefore seek to mimic market results. In terms of human rights, critics object that under Posner's system the only constraint on human behavior is the budget constraint and one has a right to do anything at all, subject only to the ability to pay. This is exactly what Austrian School personalists object to. A consequence of Posner's wealth maximand is that economic efficiency metamorphoses into a de facto definition of jurisprudence. The concept of economics-as-imperialist- social-science can scarcely be taken further than that. 138 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

4.2 Rawls and constrained utility maximization

Rawls (1972) is another to object to maximisation of aggregate utility. His objection is that utility maximisation sacrifices too willingly the interests of the poor, in the interests of the overall total. Accordingly he sees social progress as occurring only when the absolute position of the poor is itself improved. To that end, he therefore advocates acceptance of a 'maximin' criterion, on the ground that he argues that most people share a risk aversion when forced to judge social arrangements and inequalities from behind a 'veil of ignorance'. For him, what is needed is overall social progress, subject to provision of a guaranteed floor level of welfare. For Bloom, this is a mere party game, however. The 'veil of ignorance' so important to the derivation of Rawls' position is not part of Nature and never actually existed. Bloom therefore dismisses Rawls as an irrelevance – notwithstanding that Rawls has attracted significant attention from several luminaries in economics, including Arrow, Harsanyi and Sen (all Nobel laureates) – since what people would do in a hypothetical situation has no practical relevance for what actually guides people in reality or in nature. For Bloom, Rawls therefore represents no more than utilitarianism made contemporary, with a particular twist to give it appeal in the welfare state climate of its times.

4.3 Sen's conception of freedom as maximand

As is apparent from sections 2.1 and 3.2 above, Sen is critical of the idea that income is a suitable maximand for social policy, more especially since poverty involves more than just income deprivation. Following a more Aristotelian path, his concern in specifying an appropriate maximand is to argue that what is first necessary is a careful stipulation of what constitutes human 'development'. For him that means the development of human capabilities, for which purpose the removal of various “unfreedoms” is a necessity. In acceptance of the fact that the freedom of agency that we individually have is inescapably constrained by circumstance, he stresses that there is a complementarity between individual agency and social arrangements, leaving Sen (2000:xii) to expound the view that “Expansion of freedom is viewed, in this approach, both as the principal end and as the principal means of development”. He sees the idea of 'development as freedom' as radical (2000:5), with an obvious policy reach and the potential to recall some of the lost ethical heritage of professional economics. A fuller understanding of the development process requires us to accept, so Sen tells us (2000:14), that Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 139139

“it is simply not adequate to take as our basic objective just the maximisation of income or wealth, which is, as Aristotle noted, 'merely useful for the sake of something else'. For the same reason, economic growth cannot sensibly be treated as an end in itself. Development has to be more concerned with enhancing the lives we lead and the freedoms we enjoy.” Whether freedom, like wealth, is merely useful for something else remains a good question, however, and one which preserves a wedge between the positions of Sen and such explicit or implicit critics as Cropsey.

4.4 Cropsey's critique of welfare economics: an alternative conception of capability maximization

Cropsey's 1955 critique is a hard-hitting attack on the neglect of the metaphysical propositions embedded in orthodox welfare economics. In essence, he objects to the sui generis individualism (or 'atomism' as some others call it) and value relativism he sees as the silently assumed core of welfare economics teaching. As far as he is concerned, what is taught implicitly is far more important than what is taught explicitly. 140 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Table 1: Social Maximands etc: Comparative Table

Utilitarianism Posner Rawls Sen

Bentham: nature has placed man under two Posner 1979 “Utilitarianism, Economics and Rawls: A Theory of Justice 1971 Sen: Nobel Prize 1998 sovereign masters: pain and pleasure. Legal Theory”: Wealth is a surer guide than Utilitarianism is accepted today but it does Defers both to Adam Smith and to Aristotle. James Mill utility to social advantage. not suffice. There is much to criticise in orthodox welfare J.S. Mill: modified Bentham's original Utilitarianism fails insofar as it gives scant economics. teaching: “better to be Socrates dissatisfied There is a difference between doing things for treatment to the poor/disadvantaged. Pareto optimality may come hot from hell. than a fool satisfied”. others, and doing things to others. To identify utility with advantage is far from obvious.

Goal: Seek the greatest happiness of the Goal: Seek wealth maximisation, not utility Goal: Rawls contends that a prerequisite to Goal: Adopts freedom as chief desideratum: greatest number. maximization. meaningful social progress is that the floor development as freedom and freedom as must be lifted ie the poorest section of a development. community must be made better off before an improvement in average welfare can be Advocates equalizing capability deprivation as said to be indicative of social progress. a means of removing ‘unfreedoms’ and as an element of a preferable maximand. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 141 141

Utilitarianism Posner Rawls Sen

Criticisms: Criticisms: Criticisms: Criticisms: Rawls: utilitarianism gives too little regard to There are problems with the wealth Harsanyi: Rawls raises useful questions and Sen argues that there are deficiences in the poor or deprived. maximisation maximand, but Posner contends deserves two cheers if not three – but is utilitarianism, Rawlsianism and libertariansim. Posner: utility is distorted by the depraved that the problems with utilitarianism - and other ultimately unpersuasive. Rawls introduces Sen has won many accolades in recent years, ('utility monsters'). alternatives to it - are even greater. arbitrary and unacceptable discriminations but his interpretation of Aristotle is very Sen: subjective utility is not necessarily the between the rich and the poor, the healthy contestable (see Bloom 1975). same thing as personal advantage. There is Problems with wealth maximisation include: and the sick etc. Duhs 2004: If, as Sen says, wealth cannot be much to criticise in orthodox welfare (i) those without money count only insofar as Bloom 1975: Rawls is an irrelevance, since the maximand since it is merely useful for economics. they matter to someone with money he takes his bearings not from Nature but something else, cannot the same be said of Heilbroner: utilitarianism is tautological and (ii) wealth maximisation grants the right to do from an imaginary state. Rawls is merely Sen's choice of 'freedom' as a maximand? irrefutable, and essentially unhelpful. anything at all, subject only to the budget utilitarianism made contemporary to suit the Cropsey: objects to the way utilitarianism and constraint welfare state of his day. welfare economics treat distinctly Cropsey would endorse Bloom's position. differentiated goods merely as sources of Problems with utilitarianism include undifferentiated utility. (i) recognising the domain (e.g. are foreigners Etzioni: respects a hierarchy of higher and and the unborn relevant?) lower human needs and so objects to (ii) 'utility monsters'. undifferentiated 'utility' as a catchall category (similar to Cropsey). Cropsey would object that Posner has not Nietzsche: hostile to utilitarianism, since improved upon utilitarianism so much as merely pleasure is not necessarily good for us and pain transposed it, by introducing an inappropriate is not necessarily bad for us. Creativity constraint – the budget constraint – as the one commonly requires persistence through pain. limitation on human rights. 142 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

Whatever else welfare economics is, it is an implicit covert teaching of one particular, contentious conception of man and of teleology, and thus of the determinants of man's welfare. That, at least, is Cropsey's message. For him, what is being taught implicitly in welfare economics is what is central to an understanding of man and society – i.e. a view of man as an atomistic being for whom human reason is but the handmaiden of his passions. His objection is that modern economics puts economy before polity, and then presumes to analyse human welfare without first establishing just what welfare is. In its utilitarian teaching, modern welfare economics renders similar goods that are dissimilar, and renders dissimilar individuals who are essentially similar insofar as they are members of a common human species. Cropsey objects that the implicit teaching of such sui generis welfarism is a value relativism which is itself unavoidably a precursor of nihilism. At least in the long term then, Cropsey's understanding is that the methodological short cuts we have taken have not taken us where we wanted to go, but have instead undercut the foundations of the very society we sought to make strong. He thereby anticipates Samuels' observation (1976: 409) that paradoxically the Chicago School may be far more revolutionary than Karl Marx, although this was no part of their intention. He likewise anticipates Sen's observation (1987:79) that sticking to the narrow and implausible assumption of purely self-interested behaviour has taken us on a short-cut to some place other than where we meant to go. In limited measure Cropsey concurs with Sen in seeking to derive an understanding of a social maximand from Aristotle - albeit having objected to utilitarianism, libertarianism and Rawlsianism - Sen nonetheless ends up endorsing a melange of all three. On the other hand, Cropsey's deference to Aristotle is more fundamental and therefore incompatible with Sen's view (2000) of development as freedom and freedom as development. For both Sen and Cropsey, to identify utility with advantage is far from obvious, and Pareto optimality may indeed come 'hot from hell' (Sen 1987:32). They both argue against Chicago School imperialist understandings of the role of values in economics, but they nonetheless remain poles apart in terms of their final conclusions as to the mainsprings of ethical understanding in economics. Following Aristotle, the one - Cropsey - endorses a generic conception of humankind and acceptance of a natural teleology with an attendant ends-oriented conception of human rationality, while the other - Sen - is unwilling to move that far from sui generis individualism despite raising questions about the limiting ways in which 'rationality' is defined in economics (1987: 10-16; 2000: 272). Sen may be right that wealth cannot be the maximand because wealth is merely useful for something else, but Cropsey Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 143 would argue on the same Aristotelian ground that nor can freedom be the maximand (as it is for Sen) since freedom too is merely necessary for the cultivation of something else. Sen is institutionalist enough to seek to remove constraints on the opportunities individuals have to develop their capabilities in such directions as they see fit, but not Aristotelian enough to share Cropsey's acceptance that freedom cannot itself be the ultimate arbiter of 'the Good Life'. Even after 2000 years, debate about values and ethics in economics still turns on the question of whether at least in principle there may be a natural teleology for humankind as such, whether all values are necessarily individual-relative or whether some values may be absolute in keeping with the notion of a species conception of man. (Indeed, on another level, some see this as the root of the present tension between the Moslem world and the West.) Cropsey's critique is not well known within the economics literature, but critiques offered by others often recur partially to his position. As noted in section 2.1 above, Sen observes that all the propositions underlying the general consensus on traditional welfare economics are eminently contestable. Myrdal (1974: 149) notes that “Hundreds of books and articles are produced each year on 'welfare economics'; even though the whole approach was proved to be misdirected four decades ago.” Myrdal adds an endorsement of Boulding's denunciation of welfare economics as 'a monumentally unsuccessful exercise', which has preoccupied a whole generation of economists with a dead end “to the almost total neglect of the major problems of our age”. He adds (1974:149) that if welfare economics is not entirely meaningless it is meaningful “only in terms of forlorn associational hedonistic psychology and utilitarian moral philosophy”. These sentiments certainly echo Cropsey, albeit Cropsey's barbs go further and contend that this exercise may not merely be futile but also self- defeating for liberal capitalist society. While Myrdal laments that philosophers seem content to leave economists undisturbed in this futile exercise - Cropsey is an evident exception to that rule. In similar vein, Lutz and Lux (1988) conclude that their humanistic economics is really a welfare economics radically different from standard welfare economics. Higgins (1978: 27) joins the choir of complaint and objects that “The so- called 'scientific objectivity' of contemporary welfare economics and the 'positivism' of the latter day Saints of Laissez-faire is another matter. To insist that economists ought not to make value judgements about what constitutes improvements in economics and social welfare is in itself a value judgement of colossal proportions. To argue that a society based on the principle of 'one dollar, one vote' is 'good' is another matter. The economists who support the free market system on 'scientific grounds' are 144 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

in fact being highly unscientific.” That conclusion too is a resounding echo of Cropsey's case. Cropsey's argument is abstract and abstruse. But it is penetrating and provocative. It provides traction in the teaching of economic philosophy to many who have not previously confronted such argument or questions. In effect he seeks to secure agreement that no satisfactory social maximand is provided by utilitarianism or by Posner's wealth maximisation criterion or by Rawls's maximin 'correction' of utilitarianism or indeed by Sen's putatively Aristotelian 'capabilities' criterion in its pursuit of development as freedom. He invites enquiring minds to look elsewhere.

5. ECONOMICS AS IMPERIALIST SCIENCE AS AGAINST ECONOMICS AS A MANIFESTATION OF THE A PRIORIS OF ECONOMIC PHILOSOPHY

Chicago School economics celebrates individualism and thus the notion of consumer sovereignty. Utility maximisation thus presents itself as the obvious goal or maximand, and self-interest is taken for granted in decision-making. There is no 'higher' standard which transcends the market place, and individual values are therefore merely different, rather than better or worse. On this view, human rationality partakes of the choice of means but not ends, and it is therefore essentially just a matter of benefit/cost calculation which sees some people 'rationally' choose to engage in criminal activity, for example, while others do not. Under the influence of Gary Becker, Richard Posner and others, this Chicago approach has come to infiltrate the psychology, sociology and law literatures in what we know as 'economics as imperialist social science'. Thus 'mob psychology' is revealed to be not a distinctive psychological state so much as a set of circumstances in which the benefit/cost ratio attached to certain individual actions alters simply because in a mob context it is harder to detect which individual did what. Likewise, applying the 'rationality' assumption universally and regarding housebreakers as rational utility maximisers - rather than as sociological victims who need to be understood, not punished - leads to clear legal implications in the imperialist economics approach to crime and punishment. On this imperialist economics view, it follows that sociologists who advocate 'understanding' of criminals rather than punishment serve to reduce the costs of crime to criminals and are therefore themselves part of the social problem. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 145

Needless to say the above conception of economics as imperialist social science has its critics. Socio-economists and economic psychologists want to inject psychology into economics rather than economics into psychology, in order to provide a better fit to how people actually make decisions in the real world, as against in idealised theoretical models. Moreover, there is much hidden metaphysics in this Chicago School view (Kristol 1973), and Chicago definitions of 'freedom', 'rationality', and 'equality of opportunity' are certainly not Sen's, Cropsey's, Etzioni's or Schumacher's. The basis of the Chicago position (as of others) inevitably is an initial axiom or a priori which is itself an undemonstrable article of faith. At the root of Chicago economic imperialism therefore is a particular and contentious a-teleological understanding of the nature of humankind, rationality, freedom, and the relativistic root of human values. Veneration of individual liberty, defined Chicago style, results in value relativism, and ultimately endogenises ethics (in a way to which Samuels (1976:409), Wilber (2004:147-149) and others emphatically object). In consequence, Chicago is necessarily antipathetic to government intervention – that is, to the claim that government knows “better” - since there is no “better” to know. As Sen notes, such an approach results in a means-oriented conception of human 'rationality' which confines itself to deductive consistency or self-interest maximisation, neither of which Sen finds compelling as a definition of human rationality. Since 'freedom' is a term no more unambiguous than rationality – and there is not only freedom to act as one pleases but also freedom from constraint (including freedom from want) - Sen and institutionalist economists take the alternative view that freedom from constraint is a prerequisite of whether people are in fact free to do as they want in any sense worthy of the term, whereas Chicago economic imperialists (libertarians or economic rationalists) focus on extant material circumstances and a presumptive freedom to do as one pleases. Sen's freedom from constraint includes freedom from adverse circumstance, not just freedom from restrictive man-made laws. It follows that economic rationalists, libertarians or economic imperialists who place great value on individual liberty to do as they please, given extant opportunities, are dismissive of government intervention, which they see as limiting personal freedom, while – on the other hand – institutionalist economists who recognise that various institutional constraints prevent individuals from attaining a higher level of freedom see some forms of government intervention as necessary for the enhancement of personal freedoms. For Sen and others, suitable interventions thus enhance personal liberty, rather than restrict it, and the Chicago School credo is flawed at its foundation. It reveres freedom but lacks an adequate understanding of 146 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

what that freedom is. Furthermore, for Sen (1987: 15) it is itself irrational “to argue that anything other than maximising self-interest must be irrational”, and it is unacceptably limiting to adopt a conception of human rationality which involves no more than logical consistency or self-interest maximization. The turning points in matters of policy choice in fact arise not from technicalities in economic theory so much as from metaphysical a prioris underpinning the various definitions given to such keywords as rationality, freedom and man. What must be accepted is that the values reflected in the policies recommended by one or another economist reflects the prior acceptance of one or the other definition of freedom, rationality, equality of opportunity, justice, teleology and the nature of humankind. The utilitarianism and libertarianism at the root of Chicago School economics-as-imperialist- science are therefore unacceptable for Cropsey or Sen. For such reasons, neither Cropsey, Etzioni, Sen nor institutionalists more generally would rush to accept Posner's view that there is nothing wrong in principle with legitimising a market for such 'services' as torture. Aside from the fact that most people would lack the wealth to be able to afford the price that would presumably be demanded, critics of the Chicago School would also object on the less pragmatic ground that there is simply something wrong with a value system that accepts torture as merely one more good or service to be traded in the market place. They wish to reaffirm a qualitative distinction between the pleasures. Whereas Lazear (2000: 99) notes that the pervasive march of economic rationalism into every aspect of human society rests squarely on its claim to be value-neutral science, for Chicago School critics (O’Brien 1992; 1996; Schumacher 1974; Samuels 1976) the Chicago attempt to transcend metaphysics in value-neutral 'imperialist economic science' becomes what Schumacher calls a 'life destroying metaphysics'. J.W. Nevile properly objects that a rhetorical trick commonly used by Chicago School economic imperialists – or economic rationalists - is to present their policy recommendations as if they are no more than the logical consequences of orthodox economics, despite the fact that that is far from the case. As Nevile emphasises (1998:170), the policy prescriptions of economic rationalists in fact depend more on the values they hold than on the theorems of economics, and the underpinning of their value system lies in the social philosophy called libertarianism. For such reasons Etzioni (1988, 1991) explicitly sees reason to turn economic imperialism upside down. He pointedly rejects the utilitarianism and individualism of orthodox economics. He objects that people are not just self-interested and endorses instead what he calls an individualist-cum-collectivist position (1991: 4; 1988: 1-12). He sees human beings as social animals, and ones with a Kantian disposition to reflect both material selves and moral selves. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 147

Socio-economists object to the way economics reduces all things to undiscriminating utility, and to the fact that complete relativism justifies all choices, no matter how distorted. In re-asserting the need to discriminate between the qualitatively different attributes of different types of consumption they accordingly seek to inject psychology into economics, rather than vice versa. In endorsing the idea of a hierarchy of human needs, they dismiss imperialistic economics as a vehicle for undiscriminating 'rational fools' (Lutz & Lux, 1988: 181-182) who incorrectly presume that people act morally only so long as it makes economic sense (Etzioni, 1988: 63). They therefore see socio-economics as a necessary reaction to economic imperialism. Nonetheless, they too have their critics and they do not themselves say the last word on the way in which philosophy percolates through economics. The fundamental point is to recognize the hidden metaphysics in the Friedman / Becker / Posner / Chicago position and to recognize the dependence of the policy conclusions of that imperialist economics perspective on the particular definitions of rationality, freedom, equality of opportunity, teleology, and the nature of humankind which have silently been adopted – and taught - within that position. That school of economic thought, like all others, is permeated by a particular implicit political philosophy. In short, it is not economics that is the all conquering imperialist social science, but one or another economic philosophy which has colonised each contending school of economic thought (Duhs 1982; 1994; 1998; 2005).

6. ECONOMIC PHILOSOPHY AND THE MEASUREMENT OF SUCCESS IN ECONOMICS SCHOOLS

Lee (2005; 2006) objects that a recent European Economic Association project to rank economics departments throughout Europe employs as the grounds for its rankings publications in neoclassical core journals. Publications in heterodox journals don't count at all. Since European funding officials use these rankings when making funding decisions - because these are the only rankings they have - not publishing in core neoclassical journals is detrimental both to heterodox European economists and to their departments. Such rankings in Europe - and elsewhere – obviously constitute a real threat to heterodox economics and have been used to cleanse economic departments of heterodox economists. Conspicuously enough, these core neoclassical journals celebrate technique and mathematical models and do not commonly roll out a welcome mat for papers on economic philosophy. Whether or not economic philosophy is a 148 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

route to enhanced understanding of economic policy and social life, it is unlikely to be a route to rapid career advancement. This UK situation is not new and has already been seen in Australia in the form of Economics School Review Committees which have advocated the elimination from the teaching curriculum of economic philosophy subjects. Increased contemporary pressure to publish in 'top 20' Journals effectively tightens the screws on heterodox efforts in Australia, insofar as failure to comply again disadvantages both individual academics and their Schools. What Fred Lee describes amounts to an act of academic legislation that it is unnecessary and improper to critique the assumptions and metaphysical teachings which in fact stand at the very foundation of economics as a perspective on social life. For orthodoxy, these issues are settled. They need not be debated again, and indeed need not even be presented to the next generation of economics students, who instead will be deemed to be well able to stand on the shoulders of a few giants of the past. For orthodoxy, this remains so notwithstanding that at least some contemporary heterodox economists see good reason to wonder whether Adam Smith, for example, would be willing to recognise as his intellectual progeny many who claim him as their intellectual father. As Lee suggests, a 'top 10' list of heterodox Journals might be a counter measure of some use.

7. CONCLUSIONS

Economics styles itself as the queen of the social sciences. This conception of economics as science implies the need for rigor and precision, and the strongly felt need to be scientific inclines economists to search for tractability in model building. Economic philosophy, on the other hand, does not readily admit of tractability, precision or definitiveness, and hence, as Heilbroner (1996) notes, is not altogether compatible with this image of economics as science. There are those, however, who see things differently, and who believe that much of the appeal of economics comes from the vitality of debate and disagreement within the profession. For economists of this persuasion, addressing such issues of disagreement is therefore not an embarrassing failure to meet scientific pretensions, but an exciting additional dimension to the practice of economics and social science. Those who see things this way have no doubt that there is an honourable place within the economics curriculum for perspectives courses (Duhs, 1993), and for economic philosophy in particular. Even in more specific Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 149 contexts such as welfare economics there is much to be gained by careful examination of the competitive market assumptions which underlie orthodox teaching, as in the case of Stiglitz’s 1994 critique of the understanding and teaching of the First Fundamental Theorem of Welfare Economics. There is therefore even greater importance in thoroughly examining the full set of assumptions, including those of any implicit political philosophy, which underpin the whole corpus of economic theory. That, at least, is the case made here for the importance of teaching economic philosophy. In the development economics context, it is this difference between the recognised assumptions of economics and the full set of explicit and implicit assumptions that explains the continuing differences between Stiglitz and Sen, despite significant points of commonality. Whereas Stiglitz is primarily concerned to argue that welfare economics wrongly understood leads to mis-directed policy in pursuit of Pareto optimality, Sen is more concerned to question whether a pursuit of Pareto optimality is itself misdirected. Yet at present many who graduate in economics do so without ever confronting the pros and cons of utilitarianism or of positivism, historicism, the philosophy of science or matters of teleology. They do so without addressing the conception of the nature of humankind embedded within economics, or the way in which alternative conceptions of that nature - and of political philosophy more generally - reside implicitly in competing economic theories, and give content to them. They do so without more than a superficial confrontation of the fact/value dichotomy, and without addressing the question of whether there really are implicit philosophical axioms embedded in the policy positions they endorse. Instead of terminating the teaching of HET, what is needed is the opposite – i.e. the supplementation of HET by the teaching of the history of political philosophy (HPP) and its impact on contending schools of economic thought. The argument advanced in this paper is that without a basis in such foundational questions, it is not possible to have a fully meaningful perspective on economics or the social sciences. This position is not without pedigree and is certainly the general position of Joseph Cropsey, Amatai Etzioni, Amartya Sen, Gunnar Myrdal, E.F. Schumacher, Joan Robinson, J.W. Nevile, Benjamin Ward, and Benjamin Higgins amongst others. Encouragingly, there are signs of increasing interest in the broad questions of economic philosophy, as indicated by the birth of such Journals as The Journal Of Markets and Morality and the Cambridge journal Economics and Philosophy. The trick remains to have such interest integrated into mainstream economics training, however. 150 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

Moreover, this is not merely an academic issue. Metaphysical issues may not be fast moving and may not always be of much bite in the short run in relation to the immediate outcome of some specific policy debates, but their long run impact is potentially devastating. Many societies have fallen on their own swords. As Kristol argued in 1973 the real enemy of capitalism is not communism, but nihilism. At least in the opinion of a select minority of economists – including some of the pre-eminent – economics taught in the absence of an appreciation of its implicit philosophical assumptions is incomplete, inadequately understood, productive of “rational fools” and a Pareto optimality which may have been bred in Hell, and is capable of silently contributing to long run social and political problems to which it did not intend itself to contribute. As mentioned above, Samuels (1976: 409) thus concluded that paradoxically the Chicago School may be even more revolutionary than Karl Marx, although that is no part of their intention. Cropsey, Schumacher, Etzioni, Sen and others have all expressed similar concerns about the prospect that value-neutral 'scientific economics' will ultimately lead us towards nihilism and not take us where we meant to go. Economics may commonly style itself as the imperialistic queen of the social sciences, but it is apparent (Duhs 1982; 1989; 1994; 1998; 2006) that the several schools of economic thought have themselves been colonised by one or another political philosophy, and that without an understanding of such implicit philosophical foundations economics has been poorly taught. The conceptual foundations of the discipline cannot logically be less important than econometric practice, and as should be apparent from the above, abundant material is to be found in the literatures of social economics, development economics, economics as imperialist social science and the search for a suitable welfare maximand to fuel many a worthwhile course in economic philosophy.

REFERENCES

Bauer, Peter 2000, From Subsistence to Exchange, Princeton University Press.

Bauer, P.T. 1971, Dissent on Development, London: Weidenfeld & Nicholson.

Cropsey, J. 1955, “What Is Welfare Economics?”, Ethics, January. Reprinted in Cropsey, J., Political Philosophy and the Issues of Politics, University of Chicago Press, pp116-25.

Duhs, L.A. 2006, “Is Economic Philosophy a Subject Worth Teaching?”, Australasian Journal of Economics Education, Vol. 3 Nos, 1&2.

Duhs, L.A. 2005, “Inverting Economic Imperialism: the philosophical roots of ethical controversies in economics”, Journal of Interdisciplinary Economics, Vol. 16, pp323-339. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 151

Duhs, L.A. 2004, “A Critique of Sen’s Development As Freedom: Institutional Prerequisites to Empowerment”, Chapter 4 in K.C. Roy (ed), Twentieth Century Development: Some Relevant Issues, Nova Science Publishers, Inc., New York, pp366.

Duhs, L.A. 1998, “Five Dimensions of the Interdependence of Philosophy and Economics: Integrating HET and the History of Political Philosophy”, International Journal of Social Economics, Vol. 25/10.

Duhs, L.A. 1994, “What Is Welfare Economics? A Belated Answer to a Poorly Appreciated Question”, International Journal of Social Economics, Vol. 21/1, pp. 29-42.

Duhs, L.A. 1993, “Perspective Courses as a Supplement to Mainstream Economic Theory Courses”, (pp 91-103) in Paul Kniest, Julia Lee and John Burgess (eds.), Teaching First Year Economics at Australian Universities, University of Newcastle, October (ISSN 0812 1664, ISBN O 7259 0800 9).

Duhs, L.A. & Alvey J. 1989, “Schumacher’s Political Economy”, International Journal of Social Economics, 16(6), pp.67-76.

Duhs, L.A. 1982, “Why Economists Disagree”, Journal Of Economic Issues, Vol. XVI/I, March.

Etzioni, A. 1988, The Moral Dimension: Toward a New Economics, New York: The Free Press.

Etzioni, A. and Lawrence, P.R. (1991), Socio-Economics: Toward a New Synthesis, New York: ME Sharp Inc.

Gronbacher, Gregory 1998, “The Need for Economic Personalism”, Journal of Markets and Morality, 1/1, 1998.

Harsanyi, J. 1975, "Can the Maximin Principle Serve as a Basis for Morality: A Critique of John Rawls' Theory", American Political Science Review, Vol. 69, pp594-605.

Heilbroner, R. 1996, “The Embarrassment of Economics”, Challenge, Nov/Dec, 46-49.

Higgins, B. 1978, “Economics and Ethics in the New Approach to Development”, Philosophy in Context, Vol. 7.

Johnson, H.G. 1972, “The Achievement of P.T. Bauer”, Encounter, 39 (November), 64-69.

Kristol, Irving 1973, “Capitalism, Socialism, Nihilism”, The Public Interest, 31, Spring.

Krugman, Paul, 2006, “Free to Choose Obesity” New York Times Op-Ed, July 8, 2005.

Lazear, Edward 2000, “Economic Imperialism”, Quarterly Journal of Economics, February, Vol CXV/1, pp99-146.

Lee, Frederick 2006, “The Ranking Game, Class, and Scholarship in American Mainstream Economics”, Australasian Journal of Economics Education, Vol. 3, Nos. 1 &2.

Lee, Frederick 2005, Heterodox Economics Newsletter, Issue-20, December 5. http://l.web.umkc.edu/leefs/htn20.htm

Lutz, M. and Lux, K. 1988, Humanistic Economics, New York: Bootstrap Press.

Myrdal, Gunnar 1968, Asian Drama: an Enquiry into the Poverty of Nations, Allen Lane: The Penguin Press, London.

Nevile, J.W. 1998, “Economic Rationalism: Social Philosophy Masquerading as Economic Science”, in Contesting the Australian Way, eds. P. Smythe and Bettina Cass, cup, pp169-179.

O'Brien, J.C. 1996, “Economics and Ethics: The Economist's Dilemma”, paper presented at Charles University, Prague, Czech Republic, September30.

O'Brien, J.C. 1992, “Evolutionary Economics: The End of It All”, International Journal of Social Economics, 19 (3,4,5): 8-33.

Posner, R. 1979, “Utilitarianism, Economics and Legal Theory”, Journal of Legal Studies, Vol. VIII/I, January.

Rawls, John 1972, A Theory of Justice, Oxford, Clarendon Press. 152 Australasian Journal of Economics Education Vol. 2. Numbers 1 & 2, 2005

Samuels, Warren (ed) 1976, The Chicago School of Political Economy, Association for Evolutionary Economics, Pennsylvania, pp525.

Schumacher, E.F. 1974, Small Is Beautiful, Abacus, London.

Sen, A. 2000, Development as Freedom, Anchor Books, New York.

Sen, A. 1987, On Ethics and Economics, Blackwell, Oxford.

Sen, A. 1977, “Rational Fools: A Critique of the Behavioural Foundations of Economic Theory”, Philosophy and Public Affairs, Summer.

Stiglitz, Joseph, 1994, Whither Socialism, MIT Press, Cambridge, Massachusetts, pp338. th Todaro, Michael 1994, Economic Development, 5 edition, Longman.

Ward, Benjamin 1972, What’s Wrong With Economics?, Macmillan, London and Basingstoke.

Wilber, C.K. 2004, “Teaching Economics as if Ethics Mattered”, Ch. 14 in E. Fullbrook (ed), A Guide to What's Wrong With Economics, Anthem Press, London 2004.

Woehrling, Francis 2001, “ ‘Christian’ Economics”, Journal of Markets & Morality, Vol. 4, no. 2 (Fall), 199-216. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 153153

INSECURE PARTICIPATION: EXPERIMENTS IN A ONE- DAY INTRODUCTION TO ECONOMICS

Christopher R. Geller Accounting, Economics and Finance Deakin University Geelong VIC, 3217 [email protected]

ABSTRACT

Classroom experiments and exercises served as a one-day introduction to economics for students who felt insecure about taking first year business classes. The first experiment addresses demand in isolation, while the second addresses supply. A third integrates supply, demand and equilibrium in a pit market with all students having equal expected profits. A monopoly pricing exercise addresses market failure. Exercises use many incremental questions to reveal principles of microeconomics. Evaluations show that at the end of the program, students were familiar with economic results and concepts, and were more comfortable with taking economics.

Key words: classroom experiments, exercises, principles, bond, auction, pit market.

J.E.L. Classifications: A21, A22, C90

1. INTRODUCTION

Experiments and exercises formed the core of a one-day introduction to economics program for two cohorts of incoming first year students with little or no previous experience in business classes. Economics was one day of a five-day program with two days each of accounting and finance. For eight years, we held and advertised this introductory program to prepare and reassure incoming students who felt unprepared for first-year university business units. Students paid fees specifically to attend this program, and the program was financially successful for our school.

I would like to thank Stephen Cheung and anonymous referees for useful comments. The usual caveat applies.

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The purposes of this paper are to make these teaching instruments available, persuade lecturers of their usefulness, and to give guidance on possible ways to use them. To that end, my Deakin University School of Accounting Economics and Finance Working Paper 2006-32 (Geller, 2006) includes appendices providing all instructions, experiments and exercises for non-commercial educational use with appropriate citation. I re-edited the appendices fixing a few errors, making them simpler to use, and condensed their printed length. An earlier working paper (Geller, 2004) includes the instructions, experiments and exercises as used during the one- day introduction. Due to space constraints in this publication, all appendices are available electronically through those working papers: http://www.deakin.edu.au/buslaw/aef/publications/economics_wp.php. Forty-nine students attended the first introductory program on a regional campus and 79 other students attended the following day on an urban campus. None of the students attended both sessions as each cohort was participating in the week-long program on their campuses. Both cohorts had received two days of accounting lectures and the second had also received one day of finance lectures. The remaining day or two of finance followed the day of economics. I felt that an active day in the middle of a week of lectures would leave the students more open to my material on economics, and have them more refreshed for their remaining financial material. Our one-day introduction to economics used four classroom sessions separated by breaks. The first session consisted of a thirty-minute introduction and overview of economics, an experiment consisting of auctioning a bond, and an exercise using auction results to illustrate demand. The second session consisted of a ten-minute question and answer session on the bond auction exercise, a nightmare auction detailed below illustrating supply, and the beginning of a pit market experiment illustrating the interaction of supply and demand. The third session completed the market experiment and began an exercise investigating the market experiment. The final session completed the market exercise and an exercise on monopoly power. Overall, the students were active and engaged relative to undergraduate lectures throughout the program, returned promptly from lunch and breaks, and showed only limited fatigue in the final session. Eighty-eight percent of the students who responded to an end of day evaluation expressed greater comfort about taking economics units. Further, three of the five participants who expressed no increase in comfort, drew supply and demand diagrams properly, read equilibrium price and quantity from their diagrams, and correctly answered at least half of multiple-choice questions applying supply and demand.

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Although I developed these experiments and exercises over several years of teaching without referring to published materials, my experiments grew from seminars, classes on research experiments, and experiences with the experimental economics laboratory at Georgia State University in the 1990s. There is a large literature on classroom economics experiments and Charles Holt’s website at the University of Virginia: http://www.people.virginia.edu/~cah2k/teaching.html has many experiments and descriptions of much of the literature on economic experiments including instructional ones for classroom use. Holt (1999) provides an excellent overview of the broad range of classroom economics experiments. The experiments presented here contribute to the body of experiments in three ways. First, they isolate demand and supply individually in two experiments. Second, the unusually detailed exercises ‘baby-step’ students through discovery of economic principles and provide correct responses several lines after students address an issue. This level of detail and prompt checks make these exercises suitable to students who were absent for the experiment or take economics through distance learning. Third, these experiments are equitable in the sense that all students have the same potential to earn points, money or other incentives, and that none are excluded from participation through limited numbers of roles in games or through the need for non-participating assistants. However, the main contribution of this paper is an effective, entertaining, and reassuring introduction to economics. These experiments and exercises have several objectives. They introduce students incrementally to the principles of supply and demand including equilibrium, changes of curves, market outcomes and market failures. They give the students personal experience with supply, demand, and related processes. They create interaction between students and give students a common experience of economic phenomenon. They build student ability to perform basic economic skills such as drawing diagrams. As a one-day introduction, our program also had the objective of increasing student comfort with taking first year economics and providing students without previous economics experience with a foundation of economic knowledge.

2. BEGINNING THE PROGRAM

Preparation for the exercises took most of a workday: updating a bond, photocopying, printing and reviewing instructions, and preparing overhead slides. The bond (figure 1) required a new maturation date and

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redemption instructions, with one printed bond for each session and a slide version to display to students. Each student needed a copy of each exercise “write-up”: bond, market exercise, and monopoly; as well as a buyer or seller sheet for the market exercise. I used printed instructions for myself and enlarged overhead slides of the instructions for the students to read. I wrote and photocopied the evaluation during the lunch break the first day of the program, having failed to consider the need for it in advance. I began the program by introducing myself including my qualification and experience. Then I explained economics as the science, art, and mathematics of doing the best we can with what we have. ‘We’ can vary between individual, family and societal scales; ‘best’ can take a variety of meanings. Our one-day program in economics served as an illustration of such constrained maximisation in which I had to make choices about what material to address and how to address it in the limited time available. My approach was unconventional, active, participatory, and used experiments. Students need not understand the lessons and objectives of the experiments while we did them, rather the meanings would become clear during the written exercises or even later. I finished by requesting their tolerance of the unusual approach and asking for their participation. All of the following numerical observations about the experiments comes from the second cohort. I did not retain records on the first day, as I had not thought of writing this piece.

3. BOND AUCTION

The first exercise of the day constructed a demand curve from demand prices provided by the students. A bond is a suitable good for addressing demand for students since it is easy to explain and students quickly understand that receiving money in a few months is worth something to them. The bond auction illustrates demand but also introduces the idea of bonds as well as providing an opportunity to explain interest rates. An example bond is figure 1; appendix 1 is my instructions; appendix 2 is the bond exercise and figure 2 gives results. Twenty-seven students did not submit bids, apparently without affecting the exercise. While projecting a transparency of the bond and showing a twenty- dollar bill to the students, I explained that a bond is merely a document of debt with a specific date for payment. I would pay someone -- whoever brought the bond to me -- $20 at the end of the semester; I would also take money from someone -- the winner of the auction -- that day. This auction provided an opportunity to explain interest as the reward for delaying using money for consumption, as well as interest as the difference between the

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 157157 price of a bond and the redemption value. I noted my name, position, and university on the bond, illustrating the role of accountability and credibility in bond value. I also noted that I could die before the maturation date, which introduced the concept of risk and why the bond cannot be worth more than $20. While it is not strictly true that the bond cannot be worth more than $20, I feel it is important to make the claim that it must be worth less. If I were to make a ‘profit’ by receiving more than $20 someone may complain that I had abused my position thereby causing me inconvenience. The auction for the bond is a second price auction. Winners do not pay the amount they bid, but rather they pay the second highest bid amount. This invites an explanation of incentive compatibility, the reason for the use of the second price. If winners paid their bid, they would have an incentive to report a lower bid than the highest amount they would be willing to pay. By making the payment the second highest bid, the planner of the experiment has removed the incentive to report falsely. The incentives of the procedure are compatible with the teaching objective of revealing demand. Notice that this approach introduces the concept of demand as willingness to pay. The students wrote their names on slips of paper with the most they would be willing to pay in order to get $20 at the end of the semester. (Detailed instructions are in appendix 1.) The students passed the pages to the end of the row and the student on the end sorted them from high on the bottom to low on the top. I re-stacked them into one pile with low on the bottom and high on the top, and wrote the bid prices quickly on a projected transparency. The students copied the bids to use in their exercise (appendix 2). Figure 2 gives the results of the bond auction as a diagram. While students copied the bids, I distributed the Bond Exercise that guides the students through organising the bids into a diagram. Groups of two to four students completed this exercise in about 35 minutes. Each student should have an individual write-up as it provides notes on demand. I told the students that the exercise was written for diverse students. Most of the questions are very elementary (numbers 1 and 2 for example), and should be answered on face value. Others address particularly interested students (Appendix 2: Bond auction write-up question 50 for example) and are identified by statements like ‘Interested students may want to’. Most students should ignore such questions I walked around the room giving help to students as they worked on the exercise. After five minutes, I spent two minutes addressing the group as a whole to guide the students through the first 17 questions. These first questions merely orient the students to the bids and label the diagram. After 15 minutes, I briefly extended the students to question 24. Most students

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were beyond question 24, but a brief summary advanced those who lagged and may have reassured those who had proceeded further. After 25 minutes, I reviewed through question 41. This left seven minutes and most students completed the exercise. One could well explain to the students during the regular unit following this introduction, or while debriefing this experiment as part of an introductory unit, that our “demand” curve is simplified for easy presentation. We allow each student to bid on only one bond, instead of allowing multiple bids at varying prices and quantities for each student. True demand curves allow each buyer to have values for many units, and permit different values for each unit each buyer desires. The following supply auction has a comparable simplification. The objectives of the bond experiment and write-up exercise focus on a simple introduction to demand. Students must think explicitly about a dollar value of the benefit of a purchase. In the written exercise students plot points and draw curves, find demand prices and quantities demanded, shift demand curves as well as listing factors that shift demand. The relevance of this exercise goes beyond demand in that it exposes students to vocabulary relating to finance and macroeconomics.

4. SUPPLY AUCTION

Bonds are not suitable for demonstrating supply as supply prices do not vary -- unless I issued everyone with a bond, which is prohibitively expensive. Instead, I chose ‘the nightmare auction’ in which students submit the lowest payment they would accept to live through the anxiety nightmare of being the only person nude in class. The objectives of this exercise are to: • introduce supply highlighting the role of costs, • introduce and illustrate implicit and explicit costs, • show upward sloping supply as marginal cost increasing with quantity, • show a general increase of marginal costs as a decrease of supply, • present a shift of supply, • introduce the idea of simplified models, and • introduce the conditions of perfect competition.

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The procedures in this experiment are emotionally sensitive; gradual introduction helps. I made sure that several points were clear to the students, and explained some issues before revealing the nature of the auction. I advised the students to select someone they know well, someone they can ‘speak for’ on privacy issues and that obviously the easiest person would be themselves, but they are free to select someone else if they wish. They need not ever reveal whom they chose. I told the students that unlike the bond experiment, in this one they would not reveal their names, no money would change hands, and the winner would not do the auctioned activity. I gently introduced the topic. “When I was young we had this anxiety nightmare. We’d look up and realise that we were the only person in class with no cloths on.” Example instructions are in appendix 3. Students wrote on pieces of paper the minimum amount of money they would accept to live through that nightmare, to be the only person naked in class for an entire class period. I then collected the papers as with the bond, but stacked with high on the bottom and low on the top. I kept an eye out for interesting cases in order to use the time constructively and engage the students while sorting the bids. Lessons about supply awaited more organised time after the sorting when I could present supply systematically. Is one billion dollars a thousand million (USA) or a million-million (UK)? What is the daily interest on a billion dollars anyway? In each session, someone computed the interest. Some students actually specified goods, unambiguous real prices. Others specified dollars and cents or a specific unrounded dollar, which is likely to be for a specific purchase. Such real prices provided an opportunity to discuss nominal and real. Some participants expressed surprise to find out that money is not real and that economics is not about money. With the stack finished, I plotted the prices on a diagram. Our results are in figure 3, which also shows that most students did not submit bids. There is no written exercise for the nightmare auction as the specific skills and lessons would largely repeat the bond auction. Instead, I demonstrated the work. Beginning students may not know how to draw a diagram, so I showed them how to establish the length of the quantity axis and the height of the vertical axis. I had to use a logarithmic scale on the price axis. Nearly all Victorian students, from which we draw the vast majority of our students, learn logarithms during high school, although retention varies. I briefly reminded them about base 10 logarithms as the number of digits: 1 for 1, 2 for 10, 3 for 100....

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One begins plotting supply schedules with the lowest numbers because buyers sort them that way. They buy from the cheapest sources first, before ones that are more expensive. Students were sceptical. I explained that sometimes economists assume that all examples of a particular type of good are exactly interchangeable – equally useful naked bodies – and allowed further scepticism to remain for the final punch line. Anyway, buyers select the lowest cost unit and then select progressively more costly units. This is an example of marginal cost increasing as quantity increases and supply is marginal cost, as it is in markets with many buyers and sellers. I challenged the students. “I said supply was marginal cost. What costs are there in being the only person naked in class?” The students offered a series of implicit costs including loss of social standing, embarrassment, loss of friends, etc. One person mentioned the possibility of legal costs. The latter example is as close to explicit costs as I normally received in this experiment, a risk of an out of pocket expense. I asked the students if loss of social standing and embarrassment were ‘real’. They agreed both were. At this point, we can see supply on a diagram illustrating marginal (mostly implicit) costs increasing with quantity. The final stage of the nightmare auction introduces shifts of supply, increase of the marginal cost schedule as a supply decrease, and concept of ceteris paribus. I repeated the nightmare auction saying that everything would be the same as before, except for one condition. I explained that the practice of making one change at a time, ceteris paribus, is important in economics as it allows for interpreting the effects of specific causes. The one change in the nightmare auction is that ‘this time, pretend that your oldest living relative who can see is in the room with the class and you.’ I asked people to raise their hands if they (or their alter-ego) would be willing to be naked for a lower payment than before, and got no volunteers. When I asked about who would require higher payment, about half the students raised their hands. Returning to the supply diagram, some of the points moved higher with ‘grandma’ present, some stayed the same height (showing no change in cost of producing the product) and none moved downward. So, the curve in aggregate moved upwards. I reminded them that when asked for a show of hands, the participants indicated that they were less willing to provide the product, not more willing. Therefore, an increase in marginal costs (pointing upward on the diagram) is a decrease in supply (pointing leftward on the diagram). The final aspect of the nightmare auction was to ask the students if the example was realistic. They said no. Then I told them that in the

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 161161 upcoming semester there would be classes with one naked person and any naked person who could hold still was as good as any other – figure drawing in arts. I hope this will make them more receptive to economic assumptions. The nightmare auction introduced costs: implicit and explicit costs, increasing marginal cost schedule and upward sloping supply, shift of supply, and an increase of marginal cost as a decrease of supply. It illustrates vividly that implicit costs are real. It foreshadowed perfect competition and the use of assumptions, while challenging participants’ ideas about what is realistic. Academics have questioned the appropriateness of using the idea of public nudity as an auctioned activity. I have used this experiment for ten years in a variety of universities with students from all over the world. No students have complained about it either on student evaluations or through any other process. Using nudity for this labour supply auction has the marked advantage of being immediately imaginable in a way that most other labour supply examples are not: an hour of cooking hamburgers, painting a house, data entry, etc.

5. PIT MARKET EXPERIMENT

The third event of the introduction to economics program was a market simulation ‘pit’ experiment that integrated supply and demand. It introduces equilibrium, demonstrates demand and supply along with shifts of both, illustrates a level of precision in equilibrium, shows supply and demand as a predictive model, and further introduces the concept of perfect competition. This pit experiment shares features, good and bad, with Chamberlin (1948). Chamberlin found that the quantity traded in his experiments often exceeded the equilibrium quantity due to his market breaking into smaller markets around the classroom, resulting in inefficient trades. Holt (1996) addresses this phenomenon in detail. Smith (1962) resolved the problem by having buyers separated from sellers and each group call successively more favourable bids to the other group until they agreed upon a trade price. I found Chamberlin’s method of having all buyers and sellers circulate in the room to be effective in large classes. Holt notes that double auctions can be difficult and slow in large classes. “With large classes it is better to use the students near the aisles and let the others watch” (1996, p.196). “Classroom experiments are more difficult to use effectively in large classes since it is the personal involvement that stimulates student interest” (1999, p.607). I have not experienced this difficulty, but my experiments have involved at most 180 students. I prefer full participation by all students even at the cost

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of potentially weaker results. Of course, the double-oral auction format provides much more information to buyers and sellers, presents that information in a more public manner, and gives a faster convergence to equilibrium. The market simulation experiment divides the participants evenly into buyers and sellers. Each participant receives a sheet (Appendix 4, pages 2 and 3) of paper divided into seven playing rounds documenting two units of an abstract commodity ‘stuff’ for each round. Detailed instructions are in appendix 4. Sellers have the costs for each unit of stuff and buyers have a ‘resale value’ for each of two units. Sellers make profits by selling units for more than their costs and buyers make profits by buying units for less than their resale values. Since this experiment focuses on costs and resale values, it provides an opportunity to introduce abstract commodities that feature strongly in introduction to economics units. The values and costs yield an equal expected profit (appendix 5) for all buyers and sellers. That is, if each unit trades at equilibrium price, each participant would earn equal profit. As an incentive to participate industriously, I treated each point of profit as a ‘lottery ticket’ chance to win twenty dollars. Students did participate enthusiastically, and I conclude that $20 was sufficient motivation. If one used this experiment in a regular class, one may be tempted to use profit as class marks as incentive, since all students have equal chances to earn profits, but be aware of strong arguments against this practice (Stodder, 1998 and Cheung, 2003). The market experiment sheets fit classes in multiples of 20. However, the order of the buyer and seller sheets allows other numbers to participate with only minor distortion of results. On the first day of our introductory program, there were 49 participants and 79 on the second day. I did not retain records on the first day. On the second day, there were 39 sellers and 40 buyers. I read the instructions of the game to the participants, showing them example buyer and seller sheets, as well as demonstrating how to record trade prices and other information as well as how to compute profit. The market experiment begins with a practice round in which the profit does not count as a chance to win money. I have found it productive to walk through the classroom checking sheets, reminding people to play only the practice round, to “buy low and sell dear” and other aspects of the instructions. The demand and supply curves for the practice round were Pd=50- 0.2Qd and Ps=20+0.2Qs with Q expressed as a percentage of the participants. Equilibrium price and quantity were 35 points/unit and 75% of the class size of units (59 trades). The class reported 48 trades. Specifically,

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I asked all buyers who had traded no units to raise their hands, and none did – establishing at least 40 sales. Then I asked all buyers who had bought two units to raise their hands; eight did -- establishing 48 sales or 61%. Presumably, most of the participants had no idea at that time of the specifics of supply and demand, or even that the concept of equilibrium existed, much less what equilibrium was in this case. I asked buyers who traded in the last two minutes of the game to raise their hands then asked them to tell me the trading price. They reported prices of 26.5, 35, 39, and 32. The supply and demand curves remained the same for the first and second round as in the practice round. Now that the participants were familiar with the game and playing with a chance to win money, they played more enthusiastically than in the practice round. Buyers reported 53 trades, or 67%. They reported prices of 38, 33, 33, 35, 36, 34.5, 36, 31 and 34, averaging 34.5. Round 2 had 54 trades with the average price of the final trades being 35.3. In rounds 3 and 4, 25% of buyers self-selected out of each round through tâtonnment auction. I asked for a show of hands for buyers who would be willing to ‘sit out of’ round 3 and not trade any units. They would receive 10 points in compensation. Few raised their hands. I then suggested higher or lower prices until we settled on a compensation of 16 points for 10 buyers to sit out of round three. It is impossible, a priori, to give the equilibrium prices for rounds three and four since we cannot know which buyers will accept the buy-out. However, a 25% reduction in demand drawn shifted or rotated from the price axis, yields a predicted equilibrium of about 63 or 64% (50 trades) and a price of about 32 or 32.5. The result in round 3 was 40 reported trades (50%) with an average of final prices being 31.5. In round 4, 10 buyers sat out for 15 points. Buyers reported 43 trades with the prices in the last minute between 30 and 35 yielding an average of 32.5. Note that I asked buyers to report trade prices in rounds 3 and 4 when the equilibrium price had fallen. In the past, I have noticed a small bias in participant reporting of results. Buyers occasionally decline to report high prices, and sellers occasionally exclude low prices. Apparently, they hear other prices being reported and adjust their numbers or lower their hands before I can call on them. That bias could cause difficulties in the classroom if it conflicted with economic prediction. But, with care the bias can help in the classroom, although the distortion would be problematic in research. By asking buyers to report prices in rounds with suppressed prices, if a bias occurs, it does not harm teaching objectives.

164 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

In rounds 5 and 6, all buyers participated and 10 sellers sat out for payments of 8 and 11 points. Sellers reported 45 trades in each of rounds 5 and 6 with the average of the final prices being 36 and 37 ½. Quantities traded were consistently lower than the predicted equilibrium quantity, while prices were close to the predicted equilibrium. This suggests that some costs affected both buyers and sellers. Such undocumented costs would shift both supply and demand inward. With brief leading questions, the students proposed possible costs, such as the inconvenience of moving around the room and seeking trades. In this way, students discovered transaction costs as a source of market distortions. Detailed results from the six trading rounds provide students with empirical results to compare to theoretical predictions in a 53-question exercise (appendix 6). Students can complete the exercise independently or in small groups. Several important or informative answers follow shortly after relevant questions, providing students with prompt feedback and preventing them from going too astray. The exercise relies upon the students having access to the instructions introducing the market experiment, the number of participants in the exercise (class size), as well as the number of trades and final prices for each of the trading periods. With that information, even students who did not participate in the experiment, including off-campus students, may complete the exercise. Since I seldom know the number of participants before running this experiment, the exercise allows for any number of participants. Unfortunately, this requires an awkward re-scaling of the quantity axis of the diagrams in the exercise, and the re-scaling must be completed at the beginning of the exercise, questions 1.3 to 1.6. As I did with numbering the axes on the bond exercise above, I guided the students moderately quickly through re-scaling the quantity axis on the market experiment exercise. In the remainder of the first section (questions 1.xx) participants identify equilibrium through comparing marginal costs with marginal benefits, then compare the theoretical equilibrium with empirical results from the experiment. Unlike most introductions to economics, this exercise presents participants with an example of the dispersion of results around equilibrium. The second section (questions 2.xx) relates buyers to demand and shows a change in demand with its effects upon the equilibrium. The final section (section 3.11) presents the same lessons for supply.

6. MONOPOLY EXERCISE

The last exercise of the day presented students with monopoly price setting and foreshadows market failure (appendix 7). As well as

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 165165 introducing monopolies and the concept of price maker, the exercise also introduces profit maximisation; total, fixed and, variable costs; total revenue; as well as marginal cost and demand as a system of equations. I began developing this exercise years ago as an experiment. It did not work well. Over a few semesters, I reduced and dropped the experiment and simplified the exercise. I believe the current form is efficient and effective, but engaging and fun for most students only if they do it as a group exercise. This exercise presents students with a downward sloping demand curve and a horizontal marginal cost curve. It then guides them though calculations of revenue, cost, and profit. It provides details of a zero profit example, and invites the students through a profitable but not profit maximising example. The students then try to find the maximum profit through trial and error. Participants completed this exercise in small groups or individually, as they chose, and nearly all completed it in about 20 minutes. I debriefed the students afterwards, and asked students to tell the highest profit. Most found $400, the correct answer. I then showed them how to find the profit maximising price and quantity using the marginal revenue curve. I did not explain how to derive MR, but rather how to draw it from a linear demand curve. Many participants expressed appreciation of the speed of the technique.

7. CLOSING THE PROGRAM

I finished the introductory program with a five minute summary of what we learned. First, I told them that I would like them to complete an evaluation of my program before they left. I warned them that the evaluation would test them on the material so that I could find out what they learned. It would not evaluate them because their names would not be on the forms. I requested that they do their own work so that I may get good information and be able to improve the program. Then I summarised what we had done, reviewing demand and benefits from the bond exercise, supply as costs from the nightmare auction, demand and supply interacting in the market experiment, equilibrium, shifts of supply and demand, market results and monopoly pricing. While distributing the evaluation I thanked them for participating, I requested that students who had taken economics previously place their evaluations in one box, and the rest of the students place them in a box by the exit.

166 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

8. EVALUATION

An evaluation (figure 4) assessed the economic component of the introductory program, including the effect on the goals of increasing student comfort and providing basic economic knowledge. It was as an instrument to improve my teaching, not a research instrument. I wrote the evaluation quickly to provide information to me as a participant and witness to the program. I did not include controls that would be important in convincing others of subtle conclusions. Therefore, conclusions using the instrument are broad and imprecise. However, the evaluation was sufficient to support some interesting conclusions. Sixty-seven students who had not previously taken economics returned the evaluation. Of these, fifty-nine said they were more comfortable about taking economics (question 1) including 13 who volunteered that the increase was limited. Five reported no increase in comfort and three did not respond. No more than half a dozen students who had taken economics returned the evaluation, therefore I have not addressed them in any analysis. The evaluation had eight questions, but it evaluated ten aspects of economic performance. Question two revealed two criteria: 2a) Did the student label price and quantity on the diagram? 2b) Were supply and demand drawn properly, sloping up and down respectively and labelled? Question three required that the student find both equilibrium price and quantity (rounding permitted). Questions four to seven were interpreted as stated on the evaluation. Question eight served as two questions with price and quantity treated distinctly. The tenth aspect was ‘Did the student draw a changed supply or demand curve in order to answer questions four to eight on the evaluation?’ The students performed at a passing level (at least 50%) on each of the first nine points. Few students drew a curve as a tool in finding the effects of a change. I did not tell them to draw curves generally to find effects of changes nor did I direct them to do so or in the evaluation. I ‘role-modelled’ drawing curves and I had them draw changes in curves in the market experiment exercise; however I did not present the technique as a general practice. Clearly, I should have explained the usefulness of drawing curves more explicitly as only three participants used the technique. The other major problem area that the students showed was with relating marginal cost to economic results. Half of the students gave incorrect answers for each of the marginal cost questions (6 and 7).

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Overall, the students received passing marks for the material we addressed. Students who replied that they were more comfortable about taking economics after the one-day program answered two-thirds of the evaluation questions correctly (table 1). Those reporting little or no increase in comfort responded correctly on 59 and 56 percent of the items. 9 Summary and Conclusion I conclude that the experiment-based program for a one-day introduction to economics increased participants’ comfort about taking economics and provided participants with a foundation of knowledge of economics. As a participant, I feel that the program ran well, that the students remained engaged, and that the breadth and depth were appropriate given that the students would see the material again during a regular unit. The program would improve with a more explicit recommendation to use economic tools of analysis, specifically supply and demand diagrams and drawing changes in the curves. Economic experiments show promise as engaging and effective teaching techniques that may benefit our increasingly diverse student base. Experience with experiments and detailed exercises may assist foreign students (who may feel insecure about both the English language and economics terminology) as well as less academically inclined students who are entering university in increasing numbers due to economic shifts. However, experiments and especially the detailed exercises as used in this paper are not yet internationally mainstream teaching tools. A next step would be to evaluate these techniques in a controlled study in which the effectiveness of these experimental techniques is directly compared to the effectiveness of some other preparatory course. I hope other instructors find these experiments and exercises useful and I would appreciate any comments on their applications and effectiveness.

168 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

______Figure 1: Example bond

The holder of this bond is entitled to $20.00 from Teacher Name of the School of Economics, This University. The bond may be redeemed on or after Date during office hours. This bond may only be redeemed once, after which it is of no value. Only the signed original of this bond is valid. ______Teacher name Department of Economics This University ______Figure 2: Bond auction results

Bond Bids 18 16 14 12 10 8 Price $ Price 6 4 2 0 1 5 9 13172125293337414549 Quantity

Note: Twenty-seven of seventy-two students did not submit bids. ______

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 169169

______Figure 3: Results of nightmare auction

Supply for Nightmares 12 10 8 6 4

Price $Log10 2 0 1 6 11 16 21 26 Quantity

Bids to be the only person nude in class were: 5, 20, 50, 100, 200, 1000x4, 1500, 1734.73, 5K, 6K, 10Kx3, 50K, 300K, 300K, 800K, 1M, 1.1M, 1.1M, 10M, 1KM, 1.25KM, 99KM, 1MM, 1KMM. Also, ‘3 bottles of tequila’. The $5.00 bid said “lunch money.” ______Figure 4: Evaluation for one-day introduction to economics

8

6 4 2

012345678

170 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

1. Do you feel more comfortable about taking economics this year? 2. Draw reasonable supply and demand curves in the diagram below and label the axes. 3. If there were many buyers and sellers facing your supply and demand curves, what would be the market equilibrium price and quantity traded? P= Q= 4. What would happen to the equilibrium price if demand increased? Decrease Stay the Same Increase Not enough information Don’t Know 5. What would happen to the equilibrium quantity traded if demand increased? Decrease Stay the Same Increase Not enough information Don’t Know 6. What would happen to the equilibrium price if marginal cost increased? Decrease Stay the Same Increase Not enough information Don’t Know

7. What would happen to the equilibrium quantity if marginal cost increased? Decrease Stay the Same Increase Not enough information Don’t Know

8. Referring back to your original supply and demand curves and answer in question 3, what would happen to the equilibrium price and quantity if there were one seller instead of many (and still many buyers)? Price would:

Decrease Stay the Same Increase Not enough information Don’t Know Quantity trade would:

Decrease Stay the Same Increase Not enough information Don’t Know ______

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 171171

______Table 1: Evaluation results

Students with no previous economics More Comfortable about taking econ? N % Yes 46 68.6 Marginally Yes 13 19.4 No 5 7.5 Not Answered 3 4.5 Total 67 100

Performance of those not more comfortable Found Percent of test Drew S&D Equilibrium Comfort questions correct correctly P&Q Marginal Yes 59 12/13 10/13 No 56 3/5 4/5 Not Answered 67 3/3 3/3 ______

Appendices are available in Geller (2004, 2006) at http://www.deakin.edu.au/buslaw/aef/publications/economics_wp.php

172 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

REFERENCES

Chamberlin, E. H. 1948. An experimental imperfect market. Journal of Political Economy 56: 95-108.

Cheung, S. L. 2003. On the use of classroom experiments in ‘aligned’ teaching, Economic Analysis and Policy 33:1, 61-72.

Geller, C. 2004. Insecure participation: Experiments in a one day introduction to economics. Deakin University, School of Accounting Economics and Finance Working Paper, Economics Series 2004-5, http://www.deakin.edu.au/buslaw/aef/publications/economics_wp.php

Geller, C. 2006. Insecure participation: Experiments in a one day introduction to economics with revised experiments and exercises. Deakin University, School of Accounting Economics and Finance Working Paper, Economics Series 2006-32, http://www.deakin.edu.au/buslaw/aef/publications/economics_wp.php

Holt, C. A. 1996. Classroom games: trading in a pit market. Journal of Economic Perspectives, 10(1), Winter 1996, 193-203.

Holt, C. A. 1999. Teaching economics with classroom experiments. Southern Economic Journal, Jan 1999, 65(3), 603-610.

Stodder J. 1990. Experimental moralities: ethics in classroom experiments, Journal of Economic Education 29:2, 127-138.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 173173

ATTENDANCE AND ASSESSMENT PERFORMANCE IN ECONOMICS COURSES AT THE UNIVERSITY OF QUEENSLAND’S IPSWICH CAMPUS

Averil Cook1 Lecturer, School of Economics, University of Queensland

James Laurenceson Lecturer, School of Economics, University of Queensland

ABSTRACT

Two first level economics subjects are taught concurrently at the two campuses of the University of Queensland. Failure rates at the Ipswich campus are disturbingly higher than those at the main St Lucia campus. In this paper the rates of non-attendance are documented and the link between attendance and assessment performance is studied using data collected in semester 1, 2005. High rates of non-attendance and the existence of a positive relationship between attendance and assessment performance are confirmed. Strategies for raising rates of attendance are discussed.

1. INTRODUCTION

Ipswich city is approximately a one-hour drive from Queensland’s capital city of Brisbane. Since the inception of The University of Queensland’s (UQ) Ipswich campus in 1999, the School of Economics has provided three level 1 courses to the Business, Economics and Law (BEL) Faculty programs at the campus. Two are taught in first semester and these are the focus of this paper.

1 Corresponding author – School of Economics, University of Queensland, QLD 4072, Australia; phone: +61 7 3365 6604; fax: +61 7 3365 7299; email: [email protected] 174 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Enrolments for the two courses in first semester are relatively large for this campus – 380 for Introductory Microeconomics (Econ1010) and 180 for Quantitative Economic and Business Analysis A (Econ1310) in 2005. The authors had lecturing and coordinating responsibilities for these courses, although Econ 1010 lecturing was shared with another lecturer. It is now a UQ administrative requirement that Econ1010 and Econ1310 be equivalent at both campuses with respect to topics, textbook and assessment. In Econ1310 the same lecture notes (posted on the webpage) were also used for both campuses with expanded explanations during lecture time. For Econ1310 the equivalence of the courses at the two campuses has been in place since 2002, whereas for Econ1010 this has only been the case since 2004. Both courses provide numerous teaching resources in an effort to help students to learn. Aside from the lectures, there are smaller (<25 students) tutorial classes and Peer Assisted Study Sessions (PASS)2, as well as times when lecturers and tutors are rostered and available for 1:1 consultation. Nonetheless, both courses at Ipswich have disturbingly high failure rates. The motivation for this paper is that an important contributing factor to high failure rates is relatively poor attendance at lectures and tutorials. In this paper we do not try to formally model non-attendance, although we acknowledge that such an exercise would be useful for deriving policies that might raise attendance. Here we restrict ourselves to investigating exactly what the levels of non-attendance are and the strength of the link between attendance and assessment performance. The remainder of the paper is organised as follows: Section 2 discusses high failure rates and possible reasons for such. In Section 3 the key findings from our data sets are presented. A discussion follows in Section 4 about possible reasons for absenteeism and the challenges we face as teachers in raising rates of attendance with the goal of lowering failure rates in the future. Section 5 contains concluding comments.

2. REASONS FOR HIGH FAILURE RATES

The extent to which higher failure rates should be viewed as a problem is a matter of perspective. On the one hand, a high failure rate may be viewed positively as a sign that academic standards across UQ campuses are being rigorously enforced, which is in contrast to what has been reported as happening at some other Australian universities (see, for example, Sydney Morning Herald 07/05/2005). On the other hand, higher

2 More information on PASS is available at - http://www.sss.uq.edu.au/?id=1231&pid=1205. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 175175 failure rates can have a discouraging impact on teaching staff and students and as long as the trend towards making universities more reliant on student sources of income continues, there can be no guarantee that current academic standards will survive into the future. At the Ipswich campus, when a passing grade is considered a 4 3, 4, in 2005 the failure rate in Econ1010 was 46.8% (compared with 15.4% at St Lucia) and 46.1% in Econ1310 (compared with 29.5% at St Lucia). The grades distribution for the two subjects is presented in Table 1. Table 1. Econ1010 and Econ1310 Semester 1, 2005 grades distribution - % of total enrolments (cumulative % in parentheses)

Econ1010 Econ1310 Grade Ipswich St Lucia Ipswich St Lucia (cut-off %) (%) (%) (%) (%) X 1.0 0.7 1.1 0.54 1 (0 – 19%) 5.0 (6) 1.9 (2.6) 6.67 (7.8) 5.2 (5.8) 2 (20 – 44%) 25.4 (31.4) 8.4 (11.0) 30.0 (37.8) 18.9 (24.7) 3 (45 – 49%) 15.4 (46.8) 4.4 (15.4) 8.3 (46.1) 4.8 (29.5) (45 – 47% in Econ1310) 4 (50 – 64%) 27.0 (73.8) 22.5 (37.9) 38.3 (84.4) 32.1 (61.6) (48 – 64% in Econ1310) 5 (65 – 74%) 14.1 (87.9) 21.0 (58.9) 9.4 (93.9) 18.7 (80.3) 6 (75 – 84%) 9.2 (97.1) 18.5 (77.4) 5.0 (98.9) 15.7 (96.0) 7 (85 – 100%) 2.9 (100.0) 22.6 (100.0) 1.1 (100.0) 4.0 (100.0)

From the outset, we feel it is reasonable to rule out several factors that theoretically might have the potential to contribute to differences in failure rates between the two campuses. Firstly, Ipswich is not a poorly resourced campus compared with St Lucia, at least in terms of those resources that are directly related to teaching and learning. For example, all of the teaching modes offered at St Lucia such as lectures, tutorials, PASS and consultations sessions are also offered at Ipswich. And beyond any single course initiative, the Ipswich campus tends to have more resources per student - smaller class sizes, greater computer availability and the like. Secondly, the quality of teaching on offer at Ipswich, as rated by the students themselves, also compares well with that at St Lucia. In 2005, the

3 UQ uses an assessment scale of 1 (worst) – 7 (best) scale to grade students. An X means a student was enrolled but did not submit any assessment. 4 In 2005, a grade of 3 also qualified as a passing grade in the sense that the student receives credit for completing the course. It did not however allow the student to use the course as a prerequisite for higher-level, related courses. From 2006, any semblance of a 3 being a passing grade will disappear. 176 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

lecturers and tutors all received teaching evaluations from students greater than 4 on a scale of 1 (lowest) to 5 (highest)5. When seeking to explain the relatively high failure rates, the variable that stands out is the dramatically different entry requirements between Ipswich and St Lucia, even for a given program of study. For example, in 2005, students entering a federal government-subsidised place in the Bachelor of Business Management program at Ipswich were permitted entry down to an OP17. An OP score is Queensland’s tertiary entrance score measured on a scale of 1 (best) – 25 (worst). At St Lucia, the cut-off for the same program was an OP5. The variation in entry requirements is symptomatic of the university funding system in Australia whereby each university campus has an incentive to fill all of the places allocated to it by the federal government or else not only risk losing funding but also having to pay penalties. What this lower entry requirement means is that, on average, students entering academic programs at Ipswich are considerably less well prepared to excel in tertiary study compared with their St Lucia counterparts. Not only are they more likely to have a weaker foundation of knowledge but also a weaker level of application. The role of application has long been presumed significant with respect to academic performance although difficult to measure (Harris, 1940; Busato et al., 1999; Furnham et al., 2002). The reasons for the lack of preparedness to excel will vary from student to student and could be the result of differences in cognitive ability, past study techniques, work ethic, peer group influences, prior opportunities to undertake quality learning or the degree of commitment to the chosen field. Another entry difference instituted at the University level that particularly impacts on Econ1310 is with respect to mathematical prerequisites. Students entering the Business School programs at St Lucia are required to take a bridging maths course (Math1040) if they have not passed Maths B or C (or equivalent) at high school. The bridging course is not required (but is optional) at Ipswich and students are only required to have passed Maths A. Aside from entry requirements, our teaching experience at the campus also leads us to hypothesise that another factor that impacts on Ipswich failure rates is the high rate of non-attendance at teaching sessions (lectures, tutorials, PASS and consultation sessions). Non-attendance cannot be entirely separated from lower entry requirements since non- attendance may be an indicator or a determinant of application. What is important to emphasise here is that any link between non-attendance and failure rates will be magnified at Ipswich. At St Lucia, because of the higher entry requirements, a larger proportion of the students are positioned

5 One possible exception is that in Econ1010 there were two lecturers involved in the teaching. We do not know the teaching evaluation scores of the second lecturer who was responsible for teaching the last six weeks of the thirteen week course. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 177177 to achieve a final grade of 6 or 7 before they even begin the course. A lower level of application and missing classes for these students might cost a grade or two – perhaps they would achieve a grade of 5 instead of a 7 – but a passing grade will likely be attained nonetheless. For Ipswich students, not attending lectures might also cost a grade or two but the difference for this cohort is that the result for many would be a failing grade. Previous studies have lent support to the hypothesis that class attendance is positively related to performance on assessment (e.g. Park and Kerr, 1990; Romer, 1993; Didia and Hasnat, 1998). Romer (1993) concluded that attendance is positively and significantly associated with final course outcome. He found that the difference in student performance between a student who attends regularly and one who attends sporadically was about a full letter grade in the US system. Previous studies have also found that absenteeism is often lower in courses with a larger mathematical component and smaller class sizes. Krohn and O'Connor (2005) found class attendance was related to semester totals but not related to scores for examinations during the semester. Their study, however, was for a particularly easy course (very high average marks on all assessment) with a student able to achieve a pass without the final exam percentage and this is not at all similar to the two Ipswich courses. In the most recent and instructive study to date, Woodfield et al (2006) found that attendance was the best predictor of academic performance, ranking even more highly than more commonly studied influences such as intelligence and personality. These authors also showed that differences existed between the attendance rates of males and females with the former recording higher rates of non- attendance. In 2005, for the first time, lecture attendance data for Econ1010 and Econ1310 were collected and this allowed rates of non-attendance to be more accurately quantified and any relationship with assessment performance to be better explored. While attendance at tutorials, PASS and consultation sessions was not rigorously monitored, based on our teaching experience we are confident that attendance at these types of teaching sessions will be highly correlated with lecture attendance, particularly because they are deliberately timetabled around the lecture times to make them more convenient for students. 178 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

3. ATTENDANCE AND THE LINK WITH ASSESSMENT PERFORMANCE

The two courses differ in their cohort of students with Econ1310 attracting students beyond their first year of study (only seven of the 167 students in the Econ1310 data set were first year enrolments), reflecting the fact it is a renowned difficult course, and the Business School advised program structure places the course in second year. On the other hand the advised program structure places Econ1010 in first year because it is a prerequisite course for another elective course offered in second semester at Ipswich, namely Econ1020 - Introductory Macroeconomics. There is a high level of non-attendance in both courses. In Econ1010, of those 366 students for which a complete data set was available (96.3% of total enrolments), more than half (55%) attended six or fewer of the maximum possible 12 lectures. More than a quarter (28%) could be described as hardcore non-attendees having attended only between zero and three lectures. Of these hardcore non-attendees, the data suggest that males and continuing students are most obviously over-represented. With respect to gender differences in frequency of attendance, our findings are therefore in accordance with most previous studies. A particular degree program in which a student is enrolled does not appear to be related to attendance. There is some evidence that a higher tertiary entrance score is associated with better attendance, although this link does not appear strong. In Econ1310 the attendance rates were better than in Econ1010. Of the 167 students for which full data were available (93% of total enrolments), 38% attended six or fewer lectures, with 20% being classified as hardcore non-attendees. This is consistent with the finding of previous studies that a higher mathematical content within a course attracts better attendance. Similarly to Econ1010, most of the hardcore non-attendees (67%) were males. These attendance figures for both courses and statistics for other variables are presented in Tables 2 and 3. The second row of both Tables 2 and 3 indicates a clear positive association between lecture attendance and assessment performance. In Econ1010 and Econ1310 respectively, the mean final percentage for the hardcore non-attendees is 20% and 18% below that of the upper quartile of attendance. The greatest jump in assessment performance is recorded between the second and third quartiles of lecture attendance with those students who attended 7-9 lectures achieving a mean final percentage 10% and 11% higher than those who attended 3-6 lectures. Little difference Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 179179 exists in Econ1310 between the results of students who attended 0-3 lectures and 4-6 lectures. This can be explained easily. While the subject matter in both courses is cumulative, this is particularly the case in Econ1310 and so missing classes not only means less understanding in that particular topic but also affects all subsequent topics.

Table 2. Descriptive statistics relating to Econ1010

Attended Attended Attended Attended Total cohort 0-3 lectures 4-6 lectures 7-9 lectures 10-12 lectures

Number of students (% of total 101 (27.6) 102 (27.9) 111 (30.3) 52 366 in parentheses) (14.2) Mean final result (%) 42.01 49.64 59.32 62.63 52.31 1 Gender 0.42 0.59 0.65 0.50 0.55 2 Domestic / International student 0.11 0.06 0.14 0.15 0.11 3 Commencing / continuing student 0.51 0.24 0.25 0.12 0.30 4 ITI score 73.02 74.16 74.45 76.9 74.5 5 Program B Business Mgt 0.54 0.73 0.62 0.61 0.62 B E-Commerce 0.19 0.11 0.15 0.18 0.15 B Business Communication 0.20 0.14 0.17 0.18 0.17 Double deg 0.08 0.02 0.06 0.04 0.06 Notes: 1. Gender variable = 0 if male; 1 if female. Total = 166 males, 200 females. 2. Domestic / international student variable = 0 if domestic; 1 if international. Total = 326 domestic, 40 international) 3. Commencing / continuing student variable – 0 if new student for Semester 1, 2005; 1 if continuing. Total = 256 commencing, 110 continuing. 4. The ITI score is a tertiary entrance score that is designed to be comparable across Australian states. The best ITI score is 100 and the lowest is around 30. ITI scores were available for 236 of the 366 students for which lecture attendance data was available. 5. The program mean shows the extent to which a particular program is represented in a given attendance quartile and for the total cohort. In the B Business Mgt row, for example, those students undertaking a B Business Mgt = 1, otherwise 0. If therefore, the number is higher in a particular quartile than the cohort as a whole, this indicates that students enrolled in that program are over-represented in the quartile. Total = 227 were enrolled in the B Business Management, 55 in B Electronic Commerce, 62 in B Business Communication and 22 in other programs (e.g., dual degree programs). 180 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Table 3. Descriptive statistics relating to Econ1310

Attended Attended Attended Attended Total cohort 0-3 lectures 4-6 lectures 7-9 lectures 10-12 lectures

Number of students 33 31 44 59 167 Mean final result (%) 37.16 37.75 49.46 56.15 47.22 1 Gender mean 0.33 0.58 0.52 0.57 0.51 2 Domestic 0.91 0.97 0.91 0.90 0.92 3,4 Program B Business Mgt 0.58 0.61 0.70 0.66 0.65 B E-Commerce 0.39 0.26 0.27 0.28 0.30 Double deg 0.03 0.13 0.02 0.05 0.05 Notes: 1. Gender variable = 0 if male; 1 if female. Total N = 167 (86 males, 81 females). 2. Domestic / international student variable = 1 if domestic; 0 if international. Total N = 167 (153 domestic, 14 international) 3. In Econ1310 there were 108 B Business Management (Ips) and B Business students and 50 B Electronic Commerce students and 9 students enrolled in a double degree. The variables were given a value of 1 if the student was enrolled in that particular program, otherwise zero. 4. Since most students in Econ1310 are continuing students (only 7 out of 167 were first year students) and ITI scores are only available for entrance in the current year, neither the commencing/ continuing dichotomy nor the ITI scores can be used in Econ1310.

It should also be noted that the mean final percentage for the bottom quartile of attendance is artificially flattering. In both courses, we found several instances of students apparently having attended no more than three lectures yet who also performed strongly in assessment (achieving a semester percentage higher than 65%). These students were emailed and invited to let us know what their source of teaching was. Several students replied that they had in fact attended lectures, but at the St Lucia campus. Others replied noting their personal commitment to studying from other sources such as the textbook or study groups. One Econ1010 student made the comment that non-attendance had not prevented him from successfully completing the course but had contributed to his not achieving his maximum potential. By virtue of higher entry requirements, the St Lucia campus is likely to have a much greater proportion of such students who may pass having relied on their own independent learning. To shed some light on just how much of the variation in final percentage can be explained by lecture attendance, a simple equation was estimated for each course with the final percentage being the dependent variable and lecture attendance being the explanatory variable. For both Econ1010 and Econ1310, the coefficient to the lecture Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 181181 attendance variable was positive and statistically significant at the 1% level and the overall equation yielded an adjusted R2 of 0.19 and 0.22 respectively. Thus, the model indicates that around 20% of the variation in final percentages can be explained by the lecture attendance variable. The value of the slope coefficient to lecture attendance was 2.4 for both Econ1010 and Econ1310. That is, each additional lecture attended is associated, on average, with a 2.4 percent increase in the students’ final percentage. While these numbers may not seem particularly high, an explanatory variable of this magnitude in the context of the grades distribution at Ipswich (Table 1) will be of critical importance to determining whether a passing or failing grade is achieved by a great many of the cohort. As was noted in Table 2 (note 4), for Econ1010 we also had the ITI score for 65 percent of the cohort. The ITI score is a tertiary entrance score that is designed to be comparable across Australian states and ranges from around 30 (worst) – 100 (best) and it can be looked upon as a proxy for the students’ preparedness to succeed at university studies. We therefore ran the above regression again except this time we also included the ITI score as an additional explanatory variable to see if lecture attendance still exerted a positive effect even after controlling for differences in academic preparedness. As expected a priori, the coefficient to the ITI score was positive and statistically significant (at the 5 percent level) with a value of 0.6, indicating that each unit increase in the ITI score is associated, on average, with a 0.6% increase in the student’s final percentage. Of more interest to this study, however, was that the coefficient to lecture attendance remained positive and statistically significant at the one percent level with its magnitude only falling fractionally from 2.4 to 2.3. A caveat to the above regressions is that the coefficient to lecture attendance may be biased if lecture attendance is correlated with other determinants of assessment performance that escape inclusion in the model. For example, it may be argued that those students who attend lectures are also those that tend to spend more time in self-directed study. If this were the case, then the regression would tend to overestimate the impact of lecture attendance. However, it is also likely that at least some students view lecture attendance as a substitute for self-directed study. Indeed, we have qualitative comments from some students to that effect. There were 24 students in 2005 semester 1 who were enrolled in both courses and two thirds of these were male. As might be expected, the attendance pattern for most students was similar in the two subjects, but the attendance in Econ1310 was slightly better than in Econ1010 with eight students attending at least three more lectures in Econ1310. The correlation between lecture attendances for each subject was 0.7288. 182 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

4. STRATEGIES FOR INCREASING ATTENDANCE

Since a significant connection between attendance and grades has been identified, it is considered that raising rates of attendance might offer a channel through which failure rates can be reduced. The question is how might this be accomplished? It is at this point that the research would benefit from a formal model of non-attendance, and its empirical testing. This, however, would be an extremely data intensive exercise and beyond the resources available to us at this time and so we leave it for future research. Our response here is therefore restricted to a narrative based largely on perceptions from our own teaching experience. As a starting point an email was sent to all Econ1010 students who had attended six or fewer lectures inviting them to tell us the reasons for their non-attendance. The email made very clear that our interest was for research purposes only and a response along the lines of “The lectures were incredibly boring” was entirely acceptable if that was genuinely the reason for their non-attendance. Of the 203 students emailed, 37 responses were received. The most common reason given for non-attendance was connected to the physical location of the campus. That is, the cost in time and effort expended in getting to the campus was deemed to be greater than the benefits of attending lectures. Unsurprisingly, this was particularly the case for those students not living in Ipswich and for those who had to rely on public transport. Connected to the issue of the campus’ physical location were issues related to the timetabling of lecture sessions. For example, one Econ1010 lecture stream was scheduled for 8am on a Monday morning. Also, if Econ1010 was the only lecture a student had on a particular day, it was easier to dismiss the trip as not being worthwhile. Another response received from multiple students was an inability to attend lectures due to work commitments. It is worth noting that Ipswich ranks lower on the socioeconomic scale than does Brisbane (and certainly the suburbs surrounding the St Lucia campus) and although both campuses attract students from all over Brisbane and Ipswich (and further afield) the opportunity cost of attending lectures could well be more significant for the average Ipswich student. Other issues raised by just one or two respondents were personal commitments (e.g. having to look after sick children) and a lack of social attractions on the campus. Faced with these explanations, a teacher who wishes to encourage student learning by increasing the attendance rate is placed in a difficult position. A commonality of the above responses is that they reflect costs of attendance that are largely beyond the teacher's influence. For example, if Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 183183 the physical location of the campus really is an issue affecting attendance, there might be a case for offering courses in distance mode. As lecturers however, the decision made regarding delivery mode is one that is dictated to us6. What we may do is put in place practices that increase the opportunity cost of non-attendance. For example, marks could be allocated for attendance, or attendance could be made compulsory. We are reluctant to do either as expected outcomes would include: a) students attend until the roll is marked and then leave b) students attend the lecture but do not come prepared and / or do not participate, and therefore learn or retain very little c) students attend the lecture but are disruptive and prevent other students from gaining the full benefit from the lecture Other strategies that might be employed include introducing more progressive assessment to keep students working efficiently or make passing each piece of assessment (or certain pieces of assessment) compulsory in order to pass the course. With respect to the former, our reservations are two-fold. Primarily, there is already considerable progressive assessment in place. In 2005, in the case of Econ1010 there were three tutorial tests (3 × 15%) spaced throughout the semester and two optional reflective diaries (2 × 3%). Econ1310 had a mid-semester exam (25%) and six on-line quizzes (20% in total) spread across the semester. Another pragmatic consideration is that due to the sheer size of the classes, instituting yet further progressive assessment is burdensome for both academic and administrative staff. In terms of making passing components of assessment compulsory, this has been trialled in Econ1310 in past years and the experiment has yielded little evidence that it positively influences performance. In 2003 and 2004, for example, passing the final exam was made compulsory for passing the course as a whole. In these years the failure rates for the final exam were 37.5 percent and 44.4 percent respectively, compared with 41.3 percent in 2005 when there was no such requirement. What we have been striving to effect is a gradual change in culture at the campus toward more diligence with respect to class attendance and the priority students accord to their studies. Teaching staff have a role to play in this process, although at the same time we must accept that achieving such cultural change is a slow process and to a large extent is beyond the sphere of influence of any single lecturer. For our part, we are keen for the

6 One referee posed the eminently sensibly question, “If location is an issue affecting attendance, why not make distance mode an option?” and suggested posting lectures and associated materials on-line. Both courses already have a webpage where lecture notes and other materials are available to all students. More fundamentally though, UQ does not support distance education. The University of Southern Queensland has the responsibility for off-campus teaching. 184 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

word to spread that Econ1010 and Econ1310 are challenging and that the failure rate is high. We are also keen for word to spread that success is achievable under two conditions - regular attendance and consistent, appropriate application. One reason both courses are difficult is because of their cumulative nature. In order to be successful students must keep up to date. It is the lecturer’s responsibility to make sure an expectation of regular attendance and an expectation of a sizeable commitment of their time and effort is emphasised in the first lecture when almost all students are in attendance. There is some evidence that attempts at effecting cultural change have lowered failure rates in Econ1310, which has a longer history than Econ1010 of being an equivalent course run at Ipswich and St Lucia, along with the relatively high failure rates that this entails and which we hope will spur students into action. The failure rates for Econ1310 since equivalence was introduced in 2002 are presented in Table 4. The grade cut-off marks have varied slightly in each year but generally speaking a downward trend in failure rates is observable. In 2005, for the first time the failure rate dropped below 40%7. At the same time, it must be acknowledged that the scope for cultural change to impact on attendance and failure rates is also limited and is unlikely to get the numbers anywhere near where we would like. Econ1310, for example, has long had high failure rates and a reputation for being difficult and yet the rates of attendance we have documented in this paper as existing in 2005 remain disturbingly low. Table 4 Percentage of students failing in Econ1310

Fail with grades 1 and 2 (%) 2002 42.9 2003 59.0 2004 45.0 2005 37.8

5. CONCLUDING COMMENT

It is clear that more effective ‘teaching’ is required for students who are not among the top performers in the state. Top performing students respond well to traditional lecture / tutorial format but additional assistance, time and more flexible teaching modes may be required for those with a less substantial academic base. While the educational justification for providing additional resources and adopting alternative approaches to

7 Note that in these years a grade of 3 was counted as a pass. Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 185185 teaching to students at Ipswich may be relatively clear cut, there is a strong financial incentive toward uniformity because the University receives the same amount of funding per student irrespective of campus. We also have some scepticism as to whether more flexible alternatives would promote greatly improved learning outcomes as these have been tried in the past but were not found satisfactory, especially for the statistics course. PASS is one resource already provided that diverges considerably from the traditional lecture / tutorial format. Although we can do our best to encourage students and to augment their skills to achieve academic success, the stark reality is that the most effective means of lowering failure rates would be for the University to raise entry requirements. The fact that the survival of Australian universities is being made increasingly reliant on their ability to attract student sources of income however, means that this is a policy approach that is not seriously entertained by university administrators. Most likely then, the future will continue to bring high failure rates in Econ1010 and Econ1310 at Ipswich. We at least hope that funding pressures do not become so great that the pressure to lower academic standards becomes irresistible.

REFERENCES

Busato, V. V., F. J. Prins, J. J. Elshout and C. Hamaker (1999), ‘The relation between learning styles, the Big Five personality traits and achievement motivation in higher education’, Personality and Individual Differences, 26(1): 129-140.

Didia, D. and B. Hasnat (1998), ‘The determinants of performance in the university introductory finance course’, Financial Practice and Education, 8(1): 102-107.

Furnham, A., T. Chamorro-Premuzic and F. McDougall (2002), ‘Personality, cognitive ability, and beliefs about intelligence as predictors of academic performance’, Learning and Individual Differences, 14(1): 49-66.

Harris, D. (1940), ‘Factors affecting college grades: a review of the literature, 1930-1937’, Psychological Bulletin, 37(1): 125-166.

Krohn, G. A. and C. M. O'Connor (2005), ‘Student Effort and Performance over the Semester’, Journal of Economic Education, 36(1): 3-28.

Park, K. H. and P. M. Kerr (1990), ‘Determinants of Academic Performance: a multinomial logit approach’, Journal of Economic Education, 21(1): 101-111.

Romer, D. (1993), ‘Do Students go to Class? Should They?’, Journal of Economic Perspectives, 7(3): 167-174.

Woodfield, R., D. Jessop and L. McMillan (2006), ‘Gender Differences in Undergraduate Attendance Rates’, Studies in Higher Education, 31(1): 1-22. 186 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Posting of EVALS for Net Access by Students Student evaluation of academic courses is commonplace. What is less commonplace, but more controversial is public release of the results for student access in their course selections. The BEL Faculty (Business, Economics and Law) at the University of Queensland has recently resolved to publish EVAL data on the net, in the interests of promoting open and accessible feedback to students each semester. Staff representatives recently expressed concern to University Management about the practice, however, and Management requested that more feedback be provided. The feedback is overwhelmingly negative. Staff representatives contacted a large sample of Academic Staff within the BEL Faculty. Approximately 20% of those surveyed responded, and of those more than 80% responded negatively to the practice of publishing student evaluations. Staff objections focus on two issues: (i) such publication gives rise to the prospect of generating negative pedagogic outcomes; (ii) such evaluations were designed for feedback and not for performance appraisal. In respect of the first point, staff expressed concern that increased pressures would be created to seek higher scores, and this might be done not only by improving course quality but also by inappropriately reducing the cost to students of doing well in a course (with consequent incentives to inflate grades, reduce student workloads and give notice to students of exam questions). There is certainly no guarantee that publication of such results will enhance actual teaching-learning outcomes. In respect of the second point, staff expressed concern that account needs to be taken of many factors external to the person evaluated if performance is to be measured. They object that EVALS offer only a very imperfect assessment of teaching, and that even issues of timetabling and allocation of lecture theatres may impact on student EVALS, along with changes in the level of support staff and resources. Staff overwhelmingly reject the use of student evaluations as a mechanism for staff appraisal. In response to the foregoing, a series of staff recommendations has been prepared, including: (i) that University Management instruct the Executive Dean of the BEL Faculty to discontinue immediately the practice of publishing student evaluations; (ii) that University Management amend its policies to ensure that University policy prohibits the practice of publishing student evaluations, or that the University establish a Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 187 187

Joint Working Party with staff representatives to examine the use of student evaluations in the University, in the sector and internationally to determine the appropriate use of such evaluation mechanisms; (iii) that the University provide training to supervisors with responsibilities for academic staff regarding the benefits and limitations of student evaluations, and the appropriateness of such results as a proxy for teaching quality. An unambiguous statement of University policy on the point would be helpful. While a minority of staff in the BEL Faculty are untroubled by publication of EVALS, a majority appear to see it as inconsistent with the University’s core commitment to the highest possible standard of teaching quality. Those supportive of publication or unconcerned by it, recognise that students face an information asymmetry problem in making their course selections, and that in any case students already use an informal information network to that end. Word-of-mouth and discussion boards soon enough disseminate information as to which courses are pushovers and which are challenging but worthwhile. Some staff apparently accept that if EVAL data exist, they should not be withheld in a research institution such as a university. They accept that students should in fact have access to such data when selecting their courses. An extension of this position is that EVAL data should be published but staff should also be allowed to provide additional information adjacent to the published scores (e.g. whether there have been staff changes, whether the course has been re-vamped, whether the textbook or venue has been changed or such like). Should students be protected from themselves - even if there is potential for unwise use of the information, or should alternative ways of providing a broader perspective on the strengths and weaknesses of the data be provided? While publication of EVALS is one response to an information asymmetry problem faced by students selecting courses, the view of some staff is that there are so many uncertainties and information asymmetries in markets for academic courses (including changes of staff, of venue, and of support networks) that a partial response to the overall student information asymmetry problem via such publication may actually worsen the problem as a whole. They argue that students may be misled into overlooking changes in complementary factors over which individual academic staff have no control, and that students may in fact be misled into making more ill-informed decisions. Comments from elsewhere would be welcome. The Editors. 188 Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Anti-Plagiarism Software

Sutherland-Smith and Carr (2005) note concern over cheating in universities and public perception of rigour in assessment: “The media frenzy over the issues of plagiarism at Curtin University in Western Australia (Malatesta, 2001); Monash University (Madden, 2002a, 2002b) and RMIT (Hunt, 2003) in Victoria and the University of Newcastle (Davis, 2003) in New South Wales, have pressured universities to publicly react – commonly in a punitive manner. Staff have been sacked, external investigations instigated and independent commissions of inquiry held in order to allay fears of lack of academic integrity. Many universities have overhauled curricula and assessment practices, amended plagiarism or academic misconduct policies and overtly introduced technology in order to reduce plagiarism. Not only have studies overseas (McCabe, 2003) indicated that technology increases the chances of detecting plagiarism, but recent Australian studies support the advantages of anti-plagiarism software – particularly Turnitin.”

[W. Sutherland-Smith and R. Carr 2005, “Turnitin.com: Teachers’ Perspectives of Anti-Plagiarism Software in Raising Issues of Educational Integrity”, Journal of University Teaching and Learning Practice, Vol. 2, Issue 3b, pp94-101.]

A Plagiarism Detection Software Implementation Project at University of Queensland introduced a pilot programme in Summer Semester 2005/06 to trial the use of anti-plagiarism software, with a wider implementation in Semester 1, 2006. UQ adopted TurnItIn from iParadigms as their Plagiarism Detection Software tool for online submission of written assignments, while noting that other tools (such as MOSS) may be needed for particular categories of assessment. The purpose of the pilot programme was to ensure that procedures and processes for the use of TurnItIn are effective and well integrated with teaching activities in a live environment. UQ stresses that the software is intended as an educative tool as per the policy HUPP 3.40.12 Academic Integrity and Plagiarism. The University intention is to ensure that all students are informed and see this as a positive experience. [Liz Coulter et al 2005, “Plagiarism Detection Software: Report”, UQ.] The software will be made generally available via Blackboard beginning Semester 1, 2006, in the wake of the pilot study. Use of the software is at the discretion of the course coordinator – though it is strongly recommended that assessment items are created to allow student self submission and draft-review. Over summer, all staff involved in the pilot put the following statement in course profiles. “Work submitted may be subjected to a plagiarism detection process. If this process is used, then Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006 189189 copies of this work would be retained and used as source material for conducting future plagiarism checks”. From 1st Semester 2006, it is intended that that this statement also be included in Student Enrolment. Ongoing training for staff from Semester one, 2006 will be integrated into regular staff development training. Technical support for staff is provided through the same mechanism as Blackboard support though the ITS helpdesk. Training and support for students in how to submit assessment to TurnItIn and how to interpret originality reports is being undertaken by Ask IT as part of the regular student Blackboard training. Sutherland-Smith and Carr concluded that not all staff found that TurnItIn was time-saving, to the extent commonly anticipated, and some were concerned that it could be used as a punishment tool without adequate attention being given to underlying issues of academic integrity.

The Editors.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

Instructions for Contributors

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Tables and Figures should be numbered consecutively in Arabic numerals. They should not be placed in the main body of the manuscript. They should be provided on separate sheets and placed at the end of the manuscript. Tables and Figures should be centred, and numbered and titled in bold capitals. Acknowledgements should appear at the end of the main text and before the references. Any appendices should appear before the References. Footnotes should be numbered consecutively in the text and placed on a separate sheet of the manuscript. Any footnote attached to the main heading should be designated by an asterisk. References follow the author-date Harvard style. References in the text should give the author’s surname, year of publication and page number if a direct quote is included. References should be listed alphabetically after the text. Journal and book titles should be written in full. Some examples are: Baumol, W.J. (1986) Microtheory: Applications and Origins, Cambridge, MA: MIT Press. Biggs, J. (1996) ‘Western Misrepresentations of the Confucian- heritage Learning Culture’, in Watkins, D. and Biggs, J. (eds.) The Chinese Learner: Cultural, Psychological and Contextual Influences, Comparative Education Research Centre Hong Kong, and the Australian Council for Educational Research Ltd., Melbourne, pp.45-68. D’Apollonia, S. and Abrami, P.C. (1997) ‘Navigating Student Ratings of Instruction’, American Psychologist, 52(11), pp.1198-1208. Jahan, N. (1998) Changing Agricultural Productivity in Bangladesh: Its Impact and Implications for Poverty, Women, Off-farm Employment and the Environment, unpublished Ph.D Thesis, Brisbane: Department of Economics, The University of Queensland. Authors of accepted articles will be required to send the final version of the manuscript on a computer disk. The final document must conform to the format of AJEE. Proofs will be sent to the corresponding author for correction. These must be corrected and returned within a week.

Australasian Journal of Economics Education Vol. 3. Numbers 1 & 2, 2006

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