Saturday, August 20, 2011

What? Some people hate economics?

So says economist Stephen Moore in an WSJ op-ed yesterday.  Moore claims that economics is the least favorite subject of most students, although I am not sure there are any data that confirm his assertion.  He then goes on to argue that the reason economics is so unpopular is that "too often economic theories defy common sense." Most of the article focuses on macroeconomics, with Moore ridiculing numerous tenets of Keynesian theory.  As my students in MBA 505 will soon learn, this ridicule is well-earned in many cases.  In a case cited by Moore, White House press secretary Jay Carney recently was quoted as saying that unemployment insurance creates jobs.  Unemployment insurance is financed by taxing workers to fund benefits for those out of work, thereby simultaneously reducing the payoff to working while increasing the reward for being jobless.  There may be lots of good reasons to have unemployment benefits, but job creation is certainly not one of them. 

Most economists focus on microeconomics, the study of individual consumers and firms and how they interact in the marketplace.  Students should find that microeconomics, once properly understood, passes the common sense test.  Does that mean they will come to love micro?  Not sure I want to go that far. 

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