Thread by @PerBylund

Advanced #economics education is in a terrible, sorry state. What is taught is not actual economics, which used to be (and properly is) the economic way of thinking, but almost exclusively the practical how-to. The little economic reasoning there is, is usually taught only in

principles courses ("Econ101"), but starting from the intermediate level the economic way of thinking is swiftly replaced by pragmatic operationalizations of variables to facilitate statistical measurement and empirical testing. This becomes abundantly clear when discussing

economic matters with students (including here on Twitter). They typically cannot see a difference between the simplified operationalization of a concept and the actual concept. Why? Because they have never encountered the actual concept and what it represents. This is in fact

symptomatic of modern economics: it is a trade rather than philosophy, a craft rather than a way of thinking. So, for instance, the concept of economic good is beyond what most grad students understand. An economic good is a means toward satisfaction for the user, but the

satisfaction sought, and indeed the means too, is subjectively understood. To understand concepts such as substitutes requires that one acknowledges that a substitute must be recognized as such by the user of it. What is measurably or observably "the

https://twitter.com/PerBylund/status/1185936963263746048?s=20

same" product might not be for the actor. In fact, what is a good to someone might not be a good for someone else. It depends on what they consider to be urgent wants and their understanding of how those wants can be properly satisfied. Hotdogs and hamburgers can be thought of as

substitutes for the sake of explaining the concept. But it is an illustration that, I admit, might typically be true. But not for anyone who dislikes either or has a particular allergy. It is not the intended use of something that makes it a proper means, but how it is understood

by the actor. In other words, it is not appropriate to treat "similar goods" as substitutes in one's database to prove or disprove economic theory. Such analysis is at best an approximation, and relies on the extent to which the illustration fits actors' actual understandings and

actions. Similarly, this subjective valuation of what is a good does not mean that people have slightly different utility curves, as the operationalization of wants typically has it. The concept of utility as something measurable is a simplification intended to facilitate models,

but it goes way beyond the meaning of the concept. In fact, it does more than relaxes some assumptions--the simplification is based on assumptions that fundamentally contradict the economic concept. This is highly problematic, since teaching the former (the operationalization)

but not the concept shields the student from actual economic thinking. Worse, students are made to believe that the operationalization is the concept. Hence, students will make claims that are outrageous from the perspective of economic theory, both as it was developed and as it

was relied on by the economists who constructed operationalized models that are today taught instead of proper theory. One such claim, to sue an example, is that the law of diminishing marginal utility requires that utility is cardinal (not ordinal). This en.wikipedia.org/wiki/Marginal_…

is a preposterous claim, but it follows directly from how DMU is taught: as calculating the differences in utility (in dollars or utils) between baskets of goods. But this is some ways from what the concept of marginal utility means. That calculation, while perhaps illustrative

(I would claim it is more confusing than anything), is a simplification to facilitate mathematical analysis--and simplifications are by definition deviations from the actual concept. To properly understand economics, students need to learn (that is, be taught) the concepts

alongside the operationalized models based on the concepts, or the fundamental understanding is lost. Without such understanding, one cannot claim to be an economist. Sadly, we're educating technicians and calling them economists...