Three economists from the MGSHSS— Faisal Bari, Ali Cheema and Rashid Memon—have been involved in the teaching of CORE, ‘an open- access platform for anyone who wants to understand the economics of innovation, inequality, environmental sustainability and more’. As a free, open-access courseware, it is available for pedagogical use in economics classrooms and helps students get a taste of how real-world economics is done.
CORE achieves this through content innovation and question formulation that is based on evidence and economic debates in the real world today. As a collaborating institution of CORE, LUMS has been a global forerunner in adopting the curriculum as part of its undergraduate program. Not only are Faisal Bari, Ali Cheema, and Rashid Memon engaged with the teaching of CORE at the Department of Economics, they also serve as peer reviewers of the CORE curriculum whose suggestions have been incorporated into the courseware.
In the sterile world of textbook economics, agents are individualistic in the extreme, rational to the point of being robotic and moved into action only by financial concerns. This view served a particular purpose: If all these assumptions were met, the market mechanism could achieve as efficient an outcome as a socialist/planned economy.
With the cold war over and markets firmly in the driving seat, the time was ripe to question the axiomatic foundations of this type of economics. At least three Nobels have been awarded for introducing germs from the real world into economic models. George Akerlof, Michael Spence and Joseph Stiglitz for introducing informational asymmetries, Daniel Kahneman for integrating insights from psychology and Richard Thaler for continuing in Kahneman’s tradition and ‘making economics more human’.
Despite these strides, textbook economics has remained religiously devoted to its roots, rendering it anachronistic and uninspiring.
CORE offers much respite by breaking away from this tradition and presenting ‘modern’ economics in an accessible format. First, CORE takes a behavioral approach to economics. This means that we are no longer interested in models that contribute to grand debates such as markets versus socialism, but are simply interested in modeling localized human behavior. As a corollary, the text takes behavioral facts as points of departure and teaches one how to construct models that could potentially explain said behavior. This deep connection between theory and behavioral fact is a remarkably important pedagogical tool.
Ali Cheema teaching a class.
Second, the text allows for a nuanced institutional context by moving away from the binary of capitalism/socialism to degrees or varieties of capitalism. From a modeling perspective, this allows a student the flexibility to locate economic agents in a context as close as possible to the reality being modeled but without cluttering the model with unnecessary detail.
Both these features permit the CORE to develop models of markets that are ‘imperfect’ in terms of mobility of agents and in the information and rationality they possess and allow students to explain numerous every-day behaviors. For example, whereas standard models argue that workers are paid according to their productivity, CORE’s models bring bargaining power to center stage. Students find the latter to be much more realistic. Equally importantly, the new model is constructed such that if neither the worker nor the employer had any power, the new model would collapse into the standard model. Introducing students to how economists model power in an introductory setting is CORE’s most important contribution in terms of substance as well as the tools (strategic games) required to build such models.
Finally, for the truly passionate, CORE offers a number of video clips from famous economists as well as ‘enrichment’ boxes that provide snippets from the life of eminent economists – for one must not forget the intellectual giants on whose shoulders we stand today.
Rashid Memon is Assistant Professor at the MGSHSS.
This article was first published in the MGSHSS newsletter, 'Guftugu'.