Read: Richard Thaler wins the Nobel in Economics for killing Homo economicus.
But despite the fanfare, Homo economicus remains a stubbornly persistent part of the economics curriculum. While it is fashionable for most economics departments to have courses on behavioral economics, the core requirements in economics at many colleges are usually limited to only two substantive courses—one in microeconomics, which looks at how individuals optimize economic decisions, and another in macroeconomics, which focuses on national or regional markets as a whole. Not only is the study of behavioral economics largely optional, but the standard textbooks used by many college students make limited references to behavioral breakthroughs. Hal Varian’s Intermediate Microeconomics devotes only 16 of its 758 pages to behavioral economics, dismissing it as a blip in the grand scheme of things, an “optical illusion” that would disappear “if people took the time to consider choices carefully—applying the measuring stick of dispassionate rationality.” The staple textbook on macroeconomics, written by Gregory Mankiw, gives behavioral approaches even shorter shrift by scarcely mentioning them at all.
Instead, the overwhelming majority of courses that students take in economics are heavily focused on statistics and econometrics. In 2010, the Institute for New Economic Thinking convened a task force to study the undergraduate economics curriculum, following up on a report from 1991. What changed in the intervening years, it found, was “an increase in mathematical and technical sophistication” that was “not sufficient to foster habits of intellectual inquiry.” In other words, Homo economicus is going strong in lecture halls and textbooks across the country.
Economists’ resistance to incorporate the wisdom of behavioral approaches may seem like a frivolous concern confined to the ivory tower, but it has serious consequences. What students are taught in their economics classes can perversely turn models and charts that are meant to approximate reality into aspirational ideals for it. Most economics majors are first introduced to Homo economicus as impressionable college freshmen and internalize its values: Studies show, for instance, that taking economics courses can make people actively more selfish. The consequences are only made more acute by the fact that business, a more preprofessional version of economics, is the single most popular major for college students in the United States—some 40 percent of undergraduates take at least one course in economics. That behavioral economics has been minimized and treated as an aberration by the mainstream has major bearings on how students make sense of markets and the world.
Read: The curse of Econ 101
What is so surprising about the hesitancy of economists today to absorb the learnings of behavioral economics is that until the appearance of Homo economicus, invoking psychology in the teaching of economics was standard. At the University of Cambridge, for instance, before a stand-alone department was established in 1903, economics was taught alongside psychology and philosophy. Only after World War II, when the center of gravity of the discipline shifted across the Atlantic, did the rupture became so stark. The dawn of the American era in economics marked a more intense commitment to mathematical analysis, at the exclusion of all else.