Teaching the assumptions in economics

   If you are my students, you may have noticed that my teaching style is quite different from other teachers'. Yes, I had avoided using PPT for class presentation for a long time until pandemic prevented me from avoiding it. But that's not my point. I mean I spend so much time on explaining the assumptions involved in a theory or model. This style is not very usually adopted.

   For example, in my macroeconomics class, when teaching the government multiplier effect, I emphasize that there are some assumptions responsible for the validity of the multiplier effect as presented in class. I explain them and warn students that if these assumptions are not satisfied, you don't have the multiplier effect as calculated by the formula presented. I then explain when these assumptions may be satisfied. Most textbooks or teachers will not do so. At least I was not taught these assumptions when I was a student. 

   I believe that my style of teaching has its value. But I am also aware of its cost: it occupies so much time that I can't cover many topics as other teachers do. Perhaps that's the reason why other teachers don't choose to spend time on explaining assumptions. My choice reflects my teaching philosophy and others' choice reflects their teaching philosophy. 

   I know my choice is not a popular choice. But recently I encounter a book that shares with my philosophy somewhat. At least I know that I am not so alone. 

   The book is entitled Microeconomic Theory for The Social Sciences, written by Takashi Hayashi. This is a very unusual textbook for intermediate/advanced microeconomics. [Very unusual partly because it shares with my teaching philosophy, which is not usually adopted.] I find it interesting. It speaks something that I want to say for long.  

   In the book above, Hayashi says (in its Preface): 

   "Professional work in economic theory is presented as a sequence of definitions, assumptions and their implications. Its result is presented as a theorem, which is a statement in the form 'If A is true, then B is true.' It is not 'B is true.' It is vital for theorists to share the understanding of what assumptions the present theory is relying on, because there is no conclusion without an assumption. If you think you are free from any assumption, it must either be that you don’t know what assumption your argument is relying on or that you know it and you are hiding it. 

   "Introductory teaching of economics, on the other hand, tends to omit giving thorough explanations of underlying assumptions and reservations. There is a good educational reason to do so, because teachers don’t want to make their students bored before getting into 'useful' stuff. This causes a danger, however, that learners do not care about the underlying assumptions and the logical process of how assumptions lead to a conclusion. As a result, learners quite often abuse a theory by applying it to situations in which its assumption does not hold, or criticize a theory on the ground that its conclusion is wrong again by applying it to situations in which its assumption does not hold."

   This is the words that I want to say, especially the last sentence about abusing a theory by applying it to where it should not be applied. This is a mistake often made by students. I truly want them to avoid this mistake and so I would rather sacrifice the time that could be used for teaching more stuffs. I would rather they know little but truly know how to use what they have learned.

   Some students may be aware that I like microeconomics more than macroeconomics (though I now teach macro). But one of the joyful thing from teaching macro is that this subject uses a lot of unrealistic assumptions. Macro models are a big abstraction from the whole economy and as such it is unavoidable to adopt greatly simplifying assumptions (otherwise, the model must be very complicated to prevent from understanding). Meanwhile, macro models are often logically simpler than micro models. Hence, I I have time to explain the assumptions (as it is logically simpler) and there is a great need for explaining these unrealistic assumptions to students (as macro unavoidably uses many such assumptions). I am happy to do this and I hope I have done something good for students in this regard.