What I would like economics majors to know

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Please cite the paper as:
Hemenway, David, (2013), What I would like economics majors to know, World Economics Association (WEA) Conferences, No. 2 2013, The economics curriculum: towards a radical reformation, 3rd May – 14th June 2013



I have been teaching microeconomics for more than four decades, and over the past months I have been seriously thinking about this question: “What are some of the most important things I would like economics majors to know before they graduate?” At first I was leaning to such important and well-known ideas as opportunity cost, marginal analysis, moral hazard, externalities, and the prisoners’ dilemma game. Instead I decided on five ideas that are usually not well-covered in economic textbooks:

1. people are not solitary creatures but social animals;

2. tastes are malleable and particularly so for children and adolescents;

3. there are lots of children and adolescents in the world (though few in economic textbooks);

4. retail purchasers rarely have detailed information about the products they buy;

5. large corporations (and other economic institutions) often have a substantial social and political power.

These ideas are discussed generally and illustrated with respect to the market for cigarettes.

2 responses

  • Haiyun Zhao says:

    Cigarette is a special luxury product, and a very good example. However, how about the implications of a necessary product to the arguments presented in your paper?

    Haiyun Zhao

  • David Hemenway says:

    Using the income elasticity demand as the defining criteria, cigarettes would probably be considered a necessity rather than a luxury. But I suspect for most products or services, whether luxuries or necessities, some of these 5 concepts would be important to remember. For example, clothes. Clearly what one wears is determined largely by what others are wearing (e.g., whatever the broad fashion is. Few today wear what was fashionable in 1913). Tastes are malleable (e.g., what width of tie looks good). Most people know little about many aspects of their clothing (e.g. who actually made it, how flammable, cancerous is it), etc.