Does economics education bias one toward a free market perspective? Patrick Emerson thinks it might:
I think a little economics education leaves you with the impression that the answer to all public policy questions is free markets. This is because in intro classes, we often only have enough time to study and understand markets and their wonderful aspects and about the distortions that taxes and price controls create, often leaving very little time to talk about market failures. This can be true of intermediate classes as well. Later in economics classes, market failures come up all the time and you start to get an appreciation of the limits of markets. But those that only take one or two economics classes will be inclined to believe that market failures are really not that big a deal, after all they were just a quick end note in the class… But I also believe that students self-select into economics classes and that those with free market, anti-tax attitudes will find a lot to like in economics classes. In general I think that professors have very little influence on the core beliefs of students and that mostly student gravitate to professors that teach things that resonate with those core beliefs.
For the most part I agree; if studying economics doesn’t make one appreciate markets, then one probably hasn’t been paying attention. But there are some biases pointing the other way as well.
Perfect competition — Introductory economics begins with the concept of perfect competition, an unrealistic model that nonetheless helps us think clearly about how markets work. Sometimes this is misunderstood to mean that all of economics rests on an weak foundation. A post at Blue Oregon is typical:
Free market economists use models that assume that people are given complete information and make rational decisions. How absurd. No one has complete information, most people have terribly unreliable information, and people make stupid decisions all the time.
Well, I guess we can just ignore economists then!
Market failures — The models taught in econ 101 make it easy to find market failure everywhere in the forms of monopolies, unprovided public goods, and positive and negative externalities. Some of the more compelling defenses of free markets stress that markets are needed precisely because our information is imperfect, but I don’t think that perspective gets much emphasis in introductory economics courses.
Government solutions — When these failures do crop up government intervention is assumed to be the answer. Break up or regulate monopolies, provide public goods, subsidize or tax the activities that create externalities, and voila! Problems solved. Government is rarely treated as being run by self-interested individuals with limited information and therefore susceptible to the same sorts of errors as the private sector. There are lots of government solutions, rarely government failures. How many intro courses even mention public choice theory?
I think Patrick’s right in saying that “professors have very little influence on the core beliefs of students.” If one is inclined toward free markets there is plenty in econ 101 to support those views. If one is inclined toward government intervention econ 101 also makes it easy to find roles for it. A richer education would place more emphasis on putting the simplified models taught in class into their proper context.