Economics Education

Theoretical approaches

A diverse theoretical approach to the economy

Current situation >> Theoretical approaches

main findings:

  • One theory has a near monopoly; 86.5% of the weighted ECTSs of economics theory courses is devoted to teaching neoclassical economics.

  • No other approach is seriously treated; each alternative receives less than 4% of the weighted ECTSs.

  • Besides economics, Business Studies is the only discipline to receive substantial attention.

  • The history of economic thought is an obligatory part in 7 of the 9 programs.

There is a general lack of exposure to other theoretical approaches to the economy. Business studies is the only other discipline, besides economics, that is given serious consideration. All the other disciplines, like sociology, psychology and human geography are treated in less than 2.6% of theory courses.

Within the discipline of economics, one particular approach enjoys a near-monopoly: neoclassical economics. Especially in the critical first year, this field shapes students' ideas about ‘the economy’, neoclassical economics is dominant (86% of weighted ECTSs).

Distribution of multidisciplinarity in theory (economics, business and other) courses. More explanation +
The figure above gives an overview of how much each discipline is treated within Dutch bachelor curricula. Besides the 71% of the weighted ECTSs dedicated to Economics, another 22% is devoted to Business Studies. Business Studies is so prominent because in many universities, the bachelor programs 'Economics' and 'Business Studies' are joined together during the first year, after which students choose to go for either Economics or Business Economics. To the other disciplines 0 to 3% of the weighted ECTSs is devoted, which adds up to 7% in total.

Distribution of economic approaches in economics theory courses. More explanation +
Seen over the period of the entire bachelor’s degree, our results show that an average of 86% of the total weighted ECTSs (economic theoretical courses) are devoted to teaching neoclassical economic theory (see figure above). Besides a large neoclassical domination, 4% of the total weighted ECTSs on average are spent on behavioral economics. All other theoretical approaches receive on average 0-2% of the total weighted ECTSs, adding up to some 10% in total.

See Classification of economic approaches for descriptions and key figures for each approach.

Why does this matter?

On its own, any single theoretical perspective is limited in its ability to illuminate all sides and aspects of economic phenomena. Every theoretical perspective has its strengths and weaknesses. Economics curricula should benefit from this plurality, by making us as students familiar with a broad set of theoretical approaches.

Certainly, neoclassical theory accommodates a large variety of ideas and points of view. However, it does contain certain axiomatic assumptions about the role of agency within market structures, the establishment of the rules of the economic game, and the relationship between markets and governments. These are all assumptions that provide us as students with fundamental ideas about how society functions or should function (Zuidhof, 2014). Other approaches and disciplines, having completely different ontologies and axioms, could challenge these if they were taught.

More details +

The economy is a hugely complex system, consisting of many subsystems. Take for instance the market for smartphones. That market does not only consists of dynamics competing suppliers and consumer preferences, but also of issues regarding vertical integration, global value chains, technological innovation, legal structures and rules of the game, intersections with other markets, and the politics of international trade and competition. This goes for many economic phenomena: they are best understood as being composed of different dimensions and elements.

With regard to these different dimensions, every single theoretical approach has its strengths and weaknesses. The neoclassical economics approach is based on the assumption of methodological individualism, focusing on the ways in which markets work and fail (Shaikh, 2016). This approach is particularly strong in making the beneficial workings of the invisible hand visible. Other approaches in turn deal more effectively with other aspects of economic life. The bigger picture has varying elements (competition, organization, politics, legality, et cetera) and each of them requires different approaches and assumption to be understood properly. Hence, the student must be provided with different theoretical ways to study economic phenomena.

For instance, institutional and political economists study how economic actors influence the so-called rules of the game, with some having more power to shape these than others. How much competition is optimal in certain sectors of the smartphone market? That depends on where you stand. These rules of the game in turn affect how and with what players the economic game is played, of course again with some benefitting more than others. Austrian and Marxist economics provide students with insights on opposing views on the issue of structure vs. agency (with the former focusing more on agency and the latter on structure; Dopfer, 2004). Post-Keynesians emphasize the uncertain nature of the economic systems, and relate this specifically with the endogeneity of money in the financial sector (Shaikh, 2016).

In sum, one size does not fit all. Of course, it is true that any single theory can be stretched quite far. It is certainly possible to study a wide range of economic phenomena with one basic set of assumptions or one theoretical approach. However, that does not promote a student’s understanding of these economic phenomena. It is, in that light, a big handicap to be bound to one single paradigm. In a good curriculum, we should be enabled to make use of different approaches in our analysis, and not just encounter all other theoretical frameworks presented as out-dated fossils, bunched together in a single class on ´History of economic thought´.

For a proper understanding of the various dimensions that come together within economic phenomena, it is moreover needed that we as s of the economy gain familiarity with related approaches, as political science, psychology and sociology. Disciplines like economic sociology, economic anthropology and international political economy have much to offer in terms of concepts, theories and methods. These insights, built on different theoretical foundations, are substantive in understanding the economy, should be integrated within economics bachelor programs. This way, we, as students of the economy, will benefit from the best of several worlds of knowledge.

Finally, we should gain a solid introduction in the foundations of our own discipline (Backhouse, 2001; Kerr, 2002; Weintraub, 1999). To understand where the theoretical concepts come from and what axioms are built into them, it is essential that theories are not presented in a vacuum. As Nobel laureate Robert Shiller (2010, p. 403) notes: “Teachers (...) best serve their students if they refer regularly and respectfully to the history of economic thought, conveying the reasons for the theoretical constructs of other times and the tentativeness of current theories”.

Again, this does not imply that we should get a full basic training in other disciplines, nor does it imply that we should study dozens of approaches. It does imply that (1) we should learn that different approaches are available, that (2) we should be taught to see what approach to use in what cases, and that (3) we should gain familiarity with the foundations of their own discipline, to better understand the discussion and contestation about economic concepts and theories.

More findings

Proportion of interdisciplinary courses in theory (economics, business and other) courses. More explanation +
An overview of interdisciplinarity is given in the table below. This is measured by weighting the number of courses that include more than one discipline (including economics). On average 11.1% of the theory courses treat at least one additional discipline briefly in a course and 5.4% do so extensively. This indicates that most of the courses focus upon one discipline and exclude all others from the discussion.

Amount of courses devoted to History of Economic Thought. More explanation +
All universities except one do provide us as students with one or two courses which are entirely or largely devoted to the history of economic thought. As the table below shows, 4 of the 9 universities have an obligatory course entirely devoted to the history of economic thought and 3 do so extensively. This means that 7 of the 9 universities have an obligatory course devoted extensively or entirely to history of economic thought. Finally, 3 of the 9 universities have an optional course in the history of economic thought.

Proportion of pluralistic courses in economics theory courses. More explanation +
An overview of pluralism is given in the table below. This is measured by weighting the number of courses that include more than one approach (including neoclassical economics). On average 34.3% of the theory courses treat at least one additional approach briefly in a course and 10.3% do so extensively. This indicates that most of the courses focus mainly upon one approach. The approach most often solely focused upon is neoclassical economics. Besides this, the dominance of neoclassical economics in theory courses is clear when it is measured in how many courses it dominates. This shows that nearly all theory courses are dominated by neoclassical economics, namely 97.7%.

Proportion of neoclassical economics in economics theory courses. More explanation +
The proportion of the different theoretical approaches we as students gain familiarity with, generally does differ over the years. As can be seen in the table below, in the first year, 91.4% of the weighted ECTSs is dedicated to teaching neoclassical economics; in the second and third year, this proportion is respectively 84.8% and 83.9%. Although the extent to which teaching builds on neoclassical insights thus decreases somewhat over the years, neoclassical insights remain highly dominant throughout the program.

Distribution of the sub-branches of neoclassical economics in economics theory courses. More explanation +
The aim of the particular enquiry is to find out how students learn to think in these programs. With what kind of worldview and what kind of broader analytical framework do we walk away into our working life? That is why our analysis of theoretical approaches here focuses on broader currents of thought, grouped around shared axioms, rather than on individual theories. For instance, all neoclassical sub-branches share methodological individualism, the assumption that all transactions are voluntary, and the rational, selfish and all-knowing homo economicus. Radical economists, for instance, start from a rather different set of assumptions: methodological collectivism and the involuntary nature of many transactions (especially between capital and labour).

However, it is also relevant to distinguish between the variety of fields within such approaches. To give a detailed overview of the breakdown of what fields within neoclassical theory receive most attention, table 13 gives an overview of the attention paid to the different sub-branches of neoclassical economics. The three biggest sub-branches being marginalist micro-economics, public economics/welfare economics and neo-Keynesian economics, with respectively 17.1%, 13.7% and 11.6%.

See Classification of economic approaches for key theoretical mathematical models and figures for each neoclassical sub-branch.

Similar lists could of course be drawn up for every approach treated in this report. But since no other approach than the neoclassical was allocated significant teaching time, the subdivisions within other approaches didn't seem worth going into for now.

See more

Materials: Other Disciplines on 'The Economy'


Materials: Economic Approaches


Findings: Critical Thinking