What Should We Be Teaching in Basic Economics Courses?

Abstract

Advanced Placement economics leaves thousands of high school students with a misleading impression of modern economics. The courses fail to cover key sources of growth and prosperity, including private ownership, dynamic competition, and entrepreneurship. The tools of public choice economics are totally ignored. Government is modeled as a corrective device available to impose ideal solutions. Market failure is covered, but there is no such thing as government failure. The macroeconomics course reflects the simplistic 1960s Keynesian view of stabilization policy. Time lags, incentive effects, secondary effects of budget deficits, and other factors that complicate effective use of stabilization policy are almost entirely ignored. In contrast, the 20 Voluntary National Content Standards in Economics of the Council for Economic Education illustrate what a balanced course in modern economics would look like.

Keywords:

• AP economics
• basic economics
• public choice

Keywords:

• JEL codes
• A21
• A22

Notes

1. In a presentation to the AEA, Samuelson and Solow stated, “In order to achieve the non-perfectionist's goal of high enough output to give us no more than 3 percent unemployment, the price index might have to rise by as much as 4 to 5 percent per year. That much price rise [inflation] would seem to be the necessary cost of high employment and production in the years immediately ahead” (1960, 192).