CORE Econ is 10 years old: a message from Director Wendy Carlin

By Wendy Carlin | 3 January 2023

On 3rd January 2023 was the 10th anniversary of CORE Econ. Wendy Carlin, Professor of Economics at University College London and Director of CORE Econ, said:

“It’s exactly 10 years today since CORE Econ was born – at a small meeting at the NBER offices in Cambridge Mass. The outcome of the meeting was a project to transform the ‘core’ of the undergraduate curriculum and a possible name was mooted. The note of the meeting records: ‘Branding is important because others will propose curriculum interventions with a quite different (and we think less constructive) logic and motivation: CORE Curriculum Open-access Resources in Economics’. As background to the January 2013 meeting, an informal survey of some leading textbooks at principles and intermediate levels was done by two UCL undergraduates. The survey revealed:

  • Macroeconomics. The most widely used textbooks and associated courses focus on real-world questions but use models that are not fit for the purpose. The dominant models are IS/LM and AD/AS, which omit the financial sector and cannot be used for analysing economies with inflation-targeting central banks. They make little if any use of the new microeconomics of non-clearing credit and labour markets. The combination of real-world questions and poor models means the models are then not used directly when it comes to analysing specific policy episodes. Students are prevented from developing their own ability to interpret real-world events by the failure to integrate modelling with application. In other words, the textbook writer and sometimes the instructor can come up with real-world examples and talk informally about them but the student does not have a model they can apply to a policy episode of relevance to them. More broadly in current courses, students typically do not encounter the idea that they are learning about capitalist economies with specific features that affect long-run growth, distribution of wealth, unemployment and cyclical behaviour.
  • Microeconomics. In contrast to macro, where important questions are posed and then addressed with inappropriate models, in widely used micro texts, important questions are relegated to the end of the course, or not asked at all.  For example, in the most widely used intermediate micro book, market failures make their first appearance in Chapter 34 out of 37. Economic rents, information problems, instability, increasing returns, modifications of the standard behavioural assumption of calculative self-interest, and coordination problems are treated as special cases, introduced as add-ons late in the course – rather than what microeconomics should be about and essential for understanding how the economy works. The challenge here is to present a new benchmark that will change what the students get as the “normal case” so that they think of the economy as an arena of strategic interaction among heterogeneous rent-seeking individuals with incomplete information, resulting in a range of both successes and failures to coordinate interactions efficiently.

Responding to both bullet points, The Economy was first published in beta in 2014 and in the 1.0 version in 2017. It’s been tested against the initial motivation for curriculum change arising from the financial crisis by how it teaches positive feedback processes in markets for assets and how it integrates the financial sector into the teaching of macroeconomics. Both have been strengthened by the CORE Insight Too big to fail from a team led by Claudia Buch of the Bundesbank and Financial Stability Board.

Harder tests have come from challenges unforeseen when The Economy was written such as the COVID-19 pandemic. However, the central role of non-market as well as market relationships among economic actors in the new benchmark model served well for the analysis of disease transmission and its economic consequences. Our commitment to creating new ways of learning was evident in the COVID-19 simulation tool through which students can teach themselves a simple SIR-epidemic model and explore the economic and inequality consequences of the pandemic and of interventions to slow transmission of the virus.

More recently, students have needed a way to think about the causes and consequences of inflation. Workers care about their post-tax real consumption wage, and their willingness to accept a wage offer will be affected by the tightness of the aggregate labour market so higher energy and food prices will mean firms have to set higher wages – or unemployment has to go up to reduce the wage workers can expect to get if they are to supply the required effort. In turn, firms set prices to maintain their markups given competitive conditions. The squeeze in living standards from higher energy prices sharpens the distributional struggle between firms and workers, which is at the heart of the model of inflation taught in The Economy (articulated in these terms – interestingly – in the 1973 Annual Report of the Bundesbank). Students can draw their own lessons from similarities and differences between inflation in 2022 and in the 1970s.

CORE Econ’s work is far from done. We have spent much of the past year addressing weaknesses in The Economy.  One criticism was that Unit 1 ‘The Capitalist Revolution’ presented an overly positive or ‘Whiggish’ view of the dynamism of capitalism. With the help of economic historians in the CORE Econ community, we have sought to address the part played by colonies and slavery in the uptick of history’s ‘hockey stick’ of GDP per capita in the British Industrial Revolution. Units 1 and 2 in The Economy 2.0  to be published in 2023 are more balanced in their treatment of the role of coal (and carbon more generally) and colonies, as well as of capitalism in transforming the world.

Since CORE’s inception, instructors in the US have highlighted the need for a sustained treatment of the economics of persistent racial inequality. A major effort to fill this gap has been coordinated by Suresh Naidu with co-authors Eric Bottorff and Trevon Logan. Lisa Cook was part of this project before joining the Federal Reserve, when she also stood down as a Trustee of CORE Economics Education. The newly published CORE Insight Persistent racial inequality in the US features a novel model for teaching the intergenerational transmission of inequality in any context. It is used to analyse the intergenerational transmission of racial inequality using the linked parent-child data on incomes produced and made public by Harvard’s Opportunity Insights. As with all CORE Econ resources, there are questions with immediate feedback to develop and test understanding, as well as questions prompting further research and data analysis.

The concepts of positive and negative feedback and associated unstable and stable equilibria are needed to analyze financial crises (including public debt – on which, see the new CORE Insight by Barry Eichengreen and Ugo Panizza Public debt: threat or opportunity?), persistent inequality, and environmental crises. The old benchmark in economics teaching focuses on stable and unique equilibria. A student wanting to understand the contemporary world – as well as how it arose – needs to understand unstable and multiple equilibria as well as stable and unique ones. We have shown that these concepts can be taught from a first course in economics, and we are making this a more consistent theme of The Economy 2.0.

As researchers and educators, we are gripped by content and pedagogy but for CORE Econ to succeed in changing who takes up economics and how it can be used to improve the world, we have to make bigger inroads into more classrooms around the world. We have shown that major change is possible with the widespread adoption of CORE Econ in the UK and elsewhere in Europe as well as in several other countries. This has been done without a marketing strategy. However, high switching costs and the need to persuade instructors that the way many economists think about pressing research questions can be brought into the classroom means that providing free access to high quality instructional material does not on its own produce mass take-up. For the first time, led by our head of operations, Luka Crnjakovic, CORE Econ is approaching marketing in a systematic way (and as always, we welcome suggestions and contributions to make this more effective).

Our often half-baked ideas prompt continuous innovation at the forefront of digital-first educational publishing because of the creativity of our ebook-production partner Electric Book Works and our website developer, Bravand.

Two new projects are underway. The first is the enCOREage project funded by the Sloan Foundation. Led by Margaret Levi, former Director of CASBS at Stanford and Roby Harrington, former Vice Chairman of W. W. Norton (both new Trustees of CORE Economics Education), this project aims at making economics accessible for those 2 and 4-year US institutions that are less well-resourced, to improve equality and opportunity in higher education. Simon Halliday is the first CASBS fellow at Stanford working on the enCOREage project. To facilitate this mission, CORE has partnered with Honor Education, a new, mobile-first integrated teaching and learning platform, which will host a new course based on The Economy. A pilot course will run in January 2023, with the launch for general audiences in September 2023.

The second new project is TEACh, University of Chile (Ford Foundation).  Former Trustees Oscar Landerretche and Camila Cea are leading a new project to convene researcher teams to write a set of CORE Insights from the global south that take as their motivation policy problems and experiences that rose to prominence during COVID-19 (hence The Economy After Covid).

CORE Econ’s work in its second decade is on a sounder financial footing because of the support from the James M. and Cathleen D. Stone Foundation through the Stone Centre in the Department of Economics at UCL (which I co-direct with Imran Rasul).

To all those who contribute research, data, teaching ideas, criticism, and vast amounts of time as writers, reviewers, trustees, and advocates, we are very grateful. Those who contribute financially make all of this possible.

Best wishes for 2023.

Wendy and the CORE Econ team”