Economists have no defense: a critical review of national defense in economics textbooks.

Author:Coyne, Christopher
  1. Introduction

    National defense is the textbook example of a public good presented to undergraduate students throughout their education, from introductory courses to advanced theory to elective courses. This topic therefore proxies how educators teach their students about the provision of "real world" public goods. Our central argument is that economists tend to present public goods to their students in a narrow and incomplete manner.

    To understand how economists present the government provision of public goods to undergraduates, we analyze fifty texts from three widely taught undergraduate economics courses--principles of economics (twenty textbooks), intermediate micro (fifteen textbooks), and public finance (fifteen textbooks)--to assess the context and prevalence of discussions of defense and public goods theory in the classroom. We find that textbooks overwhelmingly cite national defense as a public good, but infrequently mention the possibility of government failure in public good provision. While 94 percent of sampled texts cite national defense as an example of a public good, 24 percent mention defense in treatments of government failure or public choice. Of the sampled textbooks, 96 percent discuss the "free rider" problem as an argument for the state provision of public goods. Further, 90 percent of upper level texts (intermediate micro and public finance) present a theoretical explanation of the government's optimal provision of a public good. Yet, only 42 percent of textbooks mention the public goods concept in discussions of government failure or public choice.

    We focus on national defense for three reasons. First, as noted, national defense is the standard textbook example of a public good. Economics professors expose nearly all undergraduate students to the topic at some point during their education. Economists typically present defense as if an all-knowing and benevolent government effortlessly provides the optimal quantity and quality of security to its citizens. As Dunne (1995, p. 409) writes, "the neoclassical approach to military expenditure ... is based on the notion of a state with a well-defined social welfare function, reflecting some form of social democratic consensus, recognizing some well-defined national interest, and threatened by some real or apparent potential enemy." Second, defense expenditures are significant. Fiscal year 2015 expenditures on defense-related activities by the US government exceeded $1 trillion (Office of Management and Budget 2016a, 2016b, 2016c; Center for Defense Information 2014).1 This spending has fiscal implications that will affect students as citizens for decades to come. Third, the US government has been at war for a significant portion of the lives of current undergraduate students. The traditional students entering college in the fall of 2016 were born in the late 1990s. They were three or four years old at the time of the 9/11 attacks and the subsequent onset of the ongoing "war on terror." For these students, defense-related activities are a normal part of life and public policy, and will remain so into the foreseeable future. It is therefore important that students understand the nuances of state-provided defense.

    Our analysis contributes to an existing literature that analyzes the treatment of economic concepts in undergraduate textbooks (Kent 1989; Kent and Rushing 1999; Pyne 2007; Hill and Myatt 2007; Madsen 2013; Gwartney and Shaw 2013; Eyzaguirre, Ferrarini, and O'Roark 2014; Gwartney and Fike 2015). Our work specifically builds upon prior studies of textbook presentations of government failure theory. Eyzaguirre, Ferrarini, and O'Roark (2014) review 12 principles books and find limited and truncated discussions of government failure. Gwartney and Fike (2015) analyze the prevalence and nature of public choice discussions in a larger sample of 23 principles texts. They find a sizeable disparity between the coverage of market and government failure in terms of both page length and inclusion of key concepts. Both of these papers focus on principles of economics textbooks, thus engaging teaching patterns at the introductory level. The findings, however, are clear: introductory classes disproportionally emphasize market failure, relative to government failure, to students in introductory economics classes.

    We make three contributions to this literature. First, we broaden the scope of analysis, surveying 50 textbooks from three widely taught courses. By considering three categories of textbooks, we provide a perspective of the discipline's presentation of both a theoretical (public goods) and an applied (national defense) concept throughout an undergraduate's education in economics. Second, we explore the discipline's approach to teaching a key concept associated with government: public good provision. The aforementioned literature has already identified an imbalance in economic educators' presentations of the workings of government as evidenced by the underrepresentation of government failure and public choice concepts in economics textbooks. We build on this insight by analyzing an implication of this shortfall: a misleading characterization of one traditional government function--the provision of public goods--both in theory and in practice.

  2. Methodology

    We identified and gathered selected texts using CourseSmart, an online repository that carries textbooks from over 90 major publishers. For each course, we searched for eligible books using CourseSmart's query tool, typing in the appropriate course keywords (e.g., "principles of economics"). We then selected the most recent available edition of each text. (2) For a list of textbooks, see the appendix. (3)

    We divide our results into three conceptual groups. The first group--columns one through three under the heading "Public goods discussions include ..."--documents the inclusion (or exclusion) of the traditional characteristics of public goods discussions. We check column one if a textbook lists national defense as a main example when introducing the concept of public goods. (4) Column two notes whether or not the textbook cites the "free rider" problem as the key motivation for government provision of a public good. Finally, column three notes if a textbook discusses the optimal provision of a public good by a government. Such discussion can include a suggestion of the equating of social marginal benefits with marginal cost (see Acemoglu, Laibson, and List 2015, pp. 213-16) or advanced theoretical methods such as Lindahl or Vickrey-Clarke-Groves tax schemes (see Hyman 2014, p. 151). We restrict our criteria to textbooks that discuss the government's provision of the optimal level of the good. (5)

    The second group, columns four and five (titled "Columns are qualified by ..."), captures whether or not the authors of textbooks temper their treatment of public goods and national defense with the complications introduced by the possibility of government failure. Exposing students to the range of possible outcomes associated with government action is an important step toward an effective teaching framework for public goods conceptually and in application, pertaining for instance to national defense. Column four indicates whether or not the concept of public goods is mentioned in this context, while column five indicates whether national defense is specifically mentioned in this context. (6)

    The last group ("Connection to real world ...") indicates the inclusion of two important realities of national defense provision in practice. Column six captures whether any mention is made of the "military-industrial complex," which refers to the powerful private-public interdependency in the defense industry. Scholars working in the area of defense economics emphasize how the public-private partnership that characterizes the US defense industry differs fundamentally from the standard models of private, competitive markets that are presented to students (see Lens 1971; Yarmolinsky 1971; Hooks 1991; Dunne 1995; Duncan and Coyne 2013a, 2013b, 2015). Column seven reports whether or not the textbook includes total defense expenditures by the US government as a line item, as a slice of a pie chart, or as another indicator in a table or graphic of the federal budget. Having a sense of the absolute and relative amount of spending on national defense is crucial if students are to be informed citizens who understand the magnitude of government operations.

  3. Results

    1. Principles of Economics

      The discussion of national defense in principles texts is critical, as introductory courses reach the most students and represent the only formal economic training many of them will receive. Table 1 details the results of our search in 20 selected principles books.

      These results depict a consistent characterization of public goods. As table 1 indicates, all twenty of the selected principles texts provide national defense as an example of a public good. Seven books label national defense a "pure public good": perfectly nonrivalrous, nonexcludable, and severely undersupplied absent government intervention. Additionally, nineteen of twenty principles texts cite the "free rider" problem as a central motivation for government provision of public goods. Seven books discuss an approach to their optimal provision by government (column three). This limited technical coverage is understandable given the texts' introductory nature. Regardless, the implicit (and often explicit) conclusion is that government can and does provide public goods in optimal quantities and qualities.

      The second column group addresses topics that would qualify this typical narrative; however, only a handful of textbooks do so. Six principles books mention public goods in the context of government failure. The "connection to real world" column...

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