An overhaul of university economics teaching will begin next year in answer to critics who argue that academics failed to spot the 2008 crash because they ignored the impact of financial markets and relied on outdated theories.
A new first year curriculum will be available from the start of the 2014 academic year, which will include an in-depth review of economic history, and a look at the way financial markets can undermine economic stability.
Wendy Carlin, an economics professor at University College London, who heads the project, said several universities had expressed an interest in adopting the new curriculum, including Sydney, Warwick and UCL.
Speaking at a conference hosted by the Treasury, Carlin said students needed to debate conflicting theories of how economies work and understand that while markets often are successful, they sometimes fail.
She said some academics argued that reforms should take the form of “nicer, smarter, cooler examples of the real world”, but a more fundamental overhaul was needed to give students a deeper and broader understanding of the subject.
Much of the syllabus is being written by academics and economic consultants on a voluntary basis with technical support from Azim Premji University in Bangalore. The course materials, plus supporting teaching materials, will be available at “no cost to participating institutions”.
The project, which was launched last month, is backed by the New York-based Institute for New Economic Thinking, which was created in 2009 with financial backing from the financier George Soros.
Some academics have argued that economics has become locked in a time warp, teaching theories that ignore the advent of the internet, the end of the Cold War and the threat of climate change.
Juliet Schor, a professor from Boston College, said economics teaching needed to illustrate how a rise in fossil fuel consumption can cause damage to others thousands of miles away. “Humans share a biosphere and it is possible for people to cause huge harm to others on the other side of the world, she said, adding: “We should include environmental and carbon footprint accounting alongside GDP.”
An element of environmental economics is included in the new curriculum.
But Carlin refused to answer concerns that the project will be of limited use unless some of the largest universities adopt the new scheme.
There are fears that the dominance of mathematical modelling in the current economics syllabus will be defended by senior figures in academia because it supports candidates who want to make a career in banking and finance.
Students at Manchester University, who formed the post crash economics society earlier this year, have complained that their course is dominated by mathematical modelling based on out-dated theories.
Professor Michael Joffe, an economist at Imperial College, said space could be made in the curriculum if academics could admit that many theories were “plain wrong” and should not be taught.
