In recent years, many "mainstream" economic educators have expressed concern over the decline in the number of economics majors as well as overall enrollments in economics. This concern has prompted some mainstream academic economists to examine their teaching methods and the American Economics Association (AEA) to expand its Teacher Training Program. (1) In contrast, economists not exclusively enamored of the mainstream paradigm see the problem as more than the method of teaching. We argue here that continuing to teach the mainstream paradigm exclusively, while adding only new technologies and pedagogies, will not change the declines that have come to alarm the profession. We will also argue that economic educators should devote their efforts to making Principles of Economics (Principles) a true general education course by incorporating explanations of economic behavior that go beyond those of the mainstream. Students will better develop and exercise their critical thinking skills in a principles course that utilizes application of a multi-paradigmatic approach to afford them a more realistic view of the economy. After all, as Alfred Marshall said long ago, economics deals with "the ordinary business of life" and, as such, its subject matter should be directly relevant to all undergraduates who are preparing themselves to enter the economy and to understand the implications of economic events for their own lives and livelihoods. (2)
After briefly reviewing enrollment trends in economics at the undergraduate level, we summarize the conventional wisdom's interpretation and assessment as presented by the mainstream economists who have examined this problem. We go on to examine the subject matter and skill set emphasized in mainstream undergraduate economics as found in most colleges and universities. We will establish that one of the key reasons for this narrowing of undergraduate training is the growing narrowness of graduate training and the failure of the profession to act on the recommendations the AEA's Committee on Graduate Education in Economics made a decade ago. We will then consider critically the role of Principles in general education. In this framework, it will be seen that Principles is in need of a ground-up reconstruction that should be informed by the ideas of economic thinkers outside the mainstream. This, we will argue, will advance Principles' role in general education. Institutional economists are one group well positioned to offer an alternative to Principles because of its rejection of the positive-normative dichotomy and, hence, the willingness of its practitioners to consider openly and integrate multiple paradigms as explanatory vehicles of economic behavior. Failure to broaden economic principles beyond the neoclassical version that dominates university courses, we conclude, will increasingly make Principles and, therefore, economics irrelevant to a majority of college students.
Undergraduate Economics: Trends and the Conventional Wisdom
The first half of the 1990s witnessed a 30 percent decline in the number of economics majors. (3) While the number of majors has since rebounded slightly, one prominent survey taken at the end of the 1990s reported that the number of economics degrees awarded annually nevertheless remains about 20 percent below the levels of 1990. (4) What makes this decline all the more troubling is that overall college enrollments have been increasing as the long-anticipated baby boom echo comes of age.
Mainstream economists have proposed various explanations for this decline. Robert Margo and John Siegfried suggested that "self-equilibrating mechanisms induce the mean share of economics degrees to a steady state 2.2 percent of all undergraduate degrees awarded." (5) Others note the increased emphasis placed on research by both graduate and undergraduate departments and suggest that academic economists are devoting less time to their teaching. (6) Some have expressed concern over the fact that academic economists tend to grant lower grades on average to students and propose that it might be important to encourage more "persistence" on the part of students by finding strategies to increase the proportion of higher grades. (7) One explanation for declining majors, particularly at the large state universities where the steepest decline in the number of majors has been observed, is that undergraduate business programs have relaxed their entry requirements and thus many students are now choosing to get the business degree that they wanted in the first place. (8) William Becker, noting that economists are "noticeably absent" from several prominent national groups aimed at improving college teaching in all disciplines, (9) assumes that the problem is the way economics is taught. Many economists, notably Becker, have moved to the use of cooperative learning and economic "games" in the classroom to get students more involved than they can be in traditional "chalk and talk" approaches. (10)
All of these are explanations that one would expect to see advanced by the mainstream of the profession: improve the incentive system for teachers and students of economics; find some market explanation for trends in the comforting language of supply and demand, (11) or, if all else fails, attribute loss of market share to the growth of business programs. Perhaps the "conventional wisdom" of the profession is best found in the AEA's proceedings. The AEA's recently launched project to improve undergraduate teaching emphasizes the use of tools and active learning to "help students 'think like economists,'" in other words, "by providing structured opportunities where they apply economic ideas to answer questions and solve problems." (12) The primary focus of the new teaching initiative as announced at the 2001 convention will be on developing alternative teaching techniques to the lecture format and identifying incentives that can be used to induce economic educators to employ these new techniques. (13) But amid the discussions of how to improve enrollments in economics courses and how to improve the economics courses being taught is scant consideration of the subject matter as the root of the problems.
An Alternative Hypothesis
While any or all of the approaches outlined above would likely improve student engagement in their economics classes and thus might enhance both the teaching and learning of college economics, we argue that it is more important to consider the subject matter of modern mainstream Principles to understand student disinterest in the course. (14) David Colander recently argued that structuring introductory macroeconomics (and by extension, all Principles) around the formal models that economists feel compelled to teach "makes the stories that we tell unnecessarily boring to students." (15) A use of history and case studies, he believes, would instead present important economic ideas to students in more compelling fashion. For example, contrast the exciting story of the Industrial Revolution and how the steam engine transformed the economy and society in England in the eighteenth century to the dry formalization found in Robert Solow's growth model. In our view, Colander is heading in the right direction. It is indeed the content of Principles that is in large part to blame for the disaffection of undergraduate students. But before we elaborate on that point, let us discuss the roots of the problem as we see it.
For at least the past decade, there has been an undercurrent of concern within the economics profession about the content of both graduate and undergraduate economics courses. In the late 1980s, the AEA set up a commission to discuss the charge that the discipline of economics had become too removed from the real world and to consider, among other questions, "to what extent the research and other skills that are learned [by graduate economics students] mesh with the demands placed upon them in their jobs?" (16) Its Committee on Graduate Education in Economics (COGEE) surveyed a broad cross-section of graduate students, graduate faculty, and recent Ph.D.s to assess the state of affairs in graduate education. A key finding was that many students and faculty bemoaned the lack of time devoted to applying the theories they learned to real world issues. (17) W. Lee Hansen summarized the major complaints of graduate students as follows: "insufficient emphasis given to real-world problems and to empirical applications and policy issues, excessive emphasis on mathematical technique for its own sake, narrowness of content, lack of attention to economic history, and the need for more history of thought and interdisciplinary knowledge." (8) These problems, it will be argued below, also plague Principles as it has come to be construed.
The moderate proposals for reform advanced by COGEE included recommendations to increase the attention to real-world linkages in the training of Ph.D. economists and to incorporate more applied work in field courses. But, as Colander has recently argued, these moderate proposals for reform have not been embraced by the profession. (19) If anything, as Colander reported, graduate education "has continued to de-emphasize reading the literature and studying economic issues outside a formal theorem-proof and technical model approach. History and history of thought requirements have declined further." (20) Moreover, Colander reported, what little product differentiation that did exist among the top tier programs has now disappeared. A handful of Ph.D. programs have established areas of special interest, (21) but according to Colander, these relatively few alternative programs have had little effect on the top twenty-five.
Colander argued, based on his informal survey of economists at all tiers of graduate education training, that the trend toward highly technical and mathematically formal graduate economics training has continued...