The Telegraph
Since 1st March, 1999
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- Economics is more than common sense made difficult

Economics deals with problems and issues that are both familiar and of vital concern to everybody. This may be expected to make the subject attractive and the task of introducing it to beginners relatively simple. The teacher or writer of an introductory textbook may motivate the students by drawing on everyday or contemporary economic events while explaining the underlying principles. However, the very familiarity of economic problems and their wide coverage in the media can create difficulties in the serious study of the subject. Economic issues and their resolution may seem so obvious that training in economic theory is often considered unnecessary, and the subject dubbed as common sense made difficult. Herein lies the challenge of writing for or teaching students at the elementary level.

While introducing the subject-matter, examples from actual economic phenomena are no doubt extremely useful in fixing ideas and making the students interested. But at the same time, it should be recognized that before students can appreciate the nature of factors at work behind most commonly observed economic events, meticulous study lasting over a number of years is necessary. This is especially so in macroeconomics, where close interaction among different sectors and markets is of the essence, and common sense is liable to prove nonsensical.

It is in this context that the role of introductory texts acquires enormous significance — in whetting students’ appetite for learning; helping them think through issues on their own; and avoiding “explanations” or results that are not fully spelt out. One way of doing this is to draw examples from the real world appropriate for the topic under discussion. No less important is exposure of students to the beauty and elegance of economic reasoning, starting from elementary principles and building on them for understanding and analysing economic phenomena of increasing complexity. For such an exposition, a step-by-step presentation, aided by a mathematical treatment of the issues involved, is essential.

Fortunately for the beginners and writers of introductory textbooks, fairly simple and rigorous analyses of factors governing major macroeconomic variables like gross domestic product, employment, budget deficit, the price level and the current account balance are possible with mathematical tools with which school students are already familiar, such as simple diagrammatic presentation and solution of simultaneous equations. The more important part of presentation lies in making the students appreciate the underlying economic principles or rationale behind the diagrams or equations and in making them aware of when and how to use them for analysing economic phenomena.

It is hard to overemphasize the need for careful selection of topics and their proper sequencing in an introductory text. It is enough if students learn some core elements of the subject and can clearly discern how they are related with one another and form an integral part of an overall analytical framework. Indeed, a text can be most damaging if it tries to cover a whole host of topics whose interconnections are not spelt out or which are difficult to explain to the beginners. There is a large number of economic phenomena — inflation, stock-market volatility, cross-border capital flows or financial crises — which hogs the media limelight but is difficult to explain adequately in terms of a simple macroeconomic framework. Some of these familiar events may be referred to along with an intuitive explanation; but students should be made to understand that the explanation given is far from satisfactory and that a reasonably clear exposition of the topics lies beyond the scope of the book.

The foregoing observations may sound like labouring the obvious. But they do seem to require some labouring in the context of the disjointed syllabi and poorly written introductory texts approved by the authorities in charge of school education in a number of states. The reason behind this mess in the teaching of economics at the school (as also the college) level appears to be that faced with the decline in the number of students opting for economics, and the consequent threat of redundancy facing teachers of the subject, the authorities, goaded by the teachers’ lobby, have tried to make things ‘easy’ with a view to attracting more students. This is an eloquent testimony to how a poor understanding of the basic principles of economics or learning is common among our education czars. The purpose of education, it bears repeating, is not to create employment opportunities for teachers, but to instil in the students a spirit of enquiry and enable them to use, on their own, appropriate analysis and evidence in examining some issue.

There is also a lack of proper appreciation of how the chosen process of making the subject popular is, in fact, making things extremely difficult for the students. The prescribed syllabi and the textbooks are student-friendly only in the sense that under the prevailing examination system they enable students to score high marks without having to master the elementary concepts or basic principles of the discipline. What is much more damaging is the serious obstacles such ‘learning’ poses to the students’ proper understanding and pursuit of the subject in their higher studies. Lost in a maze of unconnected topics and half-baked and often inconsistent ideas and ‘reasoning’, on leaving school, students need a thorough process of unlearning in order to learn the subject properly.

Given the existence of such a dismal scenario in most parts of the country, I was pleasantly surprised to go through Introductory Macroeconomics, a text-book for Class XII brought out by the NCERT. In a refreshing departure from most Indian texts on the subject, the book focuses on the core area of macroeconomics, clarifying basic concepts like gross domestic product, value added investment and saving, and explaining the relations among them. In the process, the author makes clear and emphasizes the distinction between income and transfer payments, stocks and flows, and current and capital account transactions — concepts and distinctions that come up over and over again in practically all branches of macroeconomics, including national income analysis, economic growth, budgetary operations of the government and balance of payment problems. It is hard to overemphasize the importance of a thorough grasp of these basic concepts if students aspire to analyse economic phenomena on their own and avoid gross errors in their reasoning.

The other, and no less important, strength of the book lies in the multi-pronged mode of making students learn the basic ideas. Apart from the simple literary presentation of the core concepts and themes, appropriate examples, including data for relevant macro-variables of the Indian economy, are given as and when necessary. The use of diagrams and school-level algebra makes the presentation rigorous and provides students with tools that are easily manipulable as well as necessary for checking the validity of economic reasoning. As an essential complement to the discussion in the text at the end of each chapter is given a large number of carefully chosen exercises. The importance of working these out can hardly be exaggerated. It is only through these exercises that students can see whether they have properly grasped the subject, and if not, rectify the deficiency before proceeding further.

Not that the book leaves little scope for improvement. Practically no use is made of simultaneous equations though even in elementary macroeconomics students need to learn the nature of interdependence among major sectors of the economy. In some instances, the interdependence is sought to be explained in diagrammatic terms. However, supplementing explanation with algebraic analysis would not only deepen students’ comprehension, but also enable them to handle more complex problems.

The other and more serious deficiency of the book is its exposition of open economy macroeconomics. The chapter contains a number of topics, such as exchange rates and their management, which, given the time constraint, cannot be properly explained to beginners. Nor can the connection of the topics to those covered earlier be made transparent. Here the author seems to have abandoned the earlier practice of sticking to issues that not only belong to the core but are also capable of being clearly explained with the help of elementary tools. However, the blemishes are rectifiable, and the book’s approach and exposition should be of great help in learning macroeconomics in school.

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