Innovation Economics Education

Economics is not about money, it is about relationships

What is economics about? Ask a random person and he/she will say: ‘money’. If the person is well-read, then chances are he/she will mention growth and scarcity. Unfortunately, this distorted image of economics also appears in high school text books and in academic courses on economics.

The risk of this caricatured approach to economics is that economists are trained to be mechanical modellers who insufficiently take into account the context. The financial crisis has taught us what happens when economics and economists become adrift from society.

Economics is so much more than money and self-interest

Economics is so much more than money and self-interest. We advocate the integration of economic concepts with relationships, so that economics returns to the centre of society, where it belongs. Young people’s understanding of the possibilities and constrains of cooperating with people in the social context will increase. Mutual appreciation, empathy and servitude will increase, resulting in better relationships between people and in a more prosperous economy. High school students are offered a framework for criticizing the current economy. At the same time, they get a better understanding of the achievements and opportunities in our societies.

High school students are thus enabled to make better decisions in the rest of their lives, which is for the better, since in today’s flexible labour market, people can no longer entirely count on their employer for training, pensions and social insurances.

Choosing sensibly

Economy starts with choosing sensibly. What are your goals, what can you do and how can you employ your talents to achieve these goals? If you manage to do that, you are in balance, because your choices lead to the achievement of your goals.

Good cooperation

In order to work well together, one must know not only one’s own goals and talents, but also those of others, with whom one cooperates. In this case, a win-win can be created because differences in talents and preferences between people can be exploited. However, with increased complexity, the chances of misunderstandings and mistakes increase as well.

It doesn’t just happen

The homo economicus is perfectly informed about his possibilities, and therefore he can easily determine  optimal behaviour. Normal mortals are not able to achieve this. By analysing what might go wrong, you learn what is required to close the gaps.

Cooperation is at the heart of economics. Every person is valuable because of his or her creative potential, but at the same time also limited if he/she relies only on him or herself. By working together and thus exchanging each other’s strengths, people develop their talents for the benefit of others. Cooperation bundles human creativity, particularly if people differ from each other. Prosperity accelerated when societies become more successful in preventing robbery and theft, by promoting cooperation and utilising the talents of people.

After the mistakes and distortions that have led to the financial crisis, there is a need for an economy that focuses not only on the individual self-interest, but also on ethics, empathy, cooperation and intrinsic motivation to serve each other.

An economy of relationships can be constructed by starting small in a simple world and gradually adding more and more complications to it. First, you deal with yourself, then you exchange with a friend, subsequently the group of people with whom a person develops relationships expand. Imperfect information and the dimension time create new complications and opportunities. Institutions like the market, morality and government ensure that relationships develop grow and yield mutual benefits.

Education in economics should be more fun and more relevant to the student

By learning the alphabet of social life, life becomes more unified. The principles and concepts that students already apply in their own lives are also important in areas more distant from the world they live in, such as companies, governments, international relations and financial markets. The principles apply to the micro level of the individual, the meso level of relationships between a limited number of partners, as to the macro level of the government and anonymous markets.

Consequently, by emphasizing the unity of the alphabet, economic reasoning can be taught faster with more coherence and better exam results. If we ask a random person in ten years what economics is about, he/she simply replies: ‘About relationships’. It may be a dream, but one is allowed to dream.

The team of the program ‘Economics = Relationships’ consists of Lans Bovenberg, Frank van der Duyn Schouten, Ferry Haan, Marcel Canoy and Wilma Paffen.

 

Prof. dr. Lans Bovenberg
Prof. Dr. Lans Bovenberg Professor of Economics Tilburg University