One professor is arguing universities are not preparing economics students for the real world.
In early January, Louis-Philippe Rochon, professor of economics at Laurentian University, said the mainstream economics model taught at universities, known as the dynamic stochastic general equilibrium model, is becoming increasingly irrelevant. He argued that, as a result, students are not well set up for success after university.
DSGE is a popular macroeconomics model that explains how the economy evolves over time to a steady equilibrium while taking into account potential random "shocks."
“Much of the economics that’s being taught now is about mathematical sophistication and internal consistency,” said Rochon. “It’s not about relevant issues like income inequality, secular stagnation, unemployment and growth.”
Recently, the Oxford Review of Economic Policy dedicated an entire issue to addressing the DSGE model and its limitations.
Rochon believes that as departments continue to teach the mainstream model, they risk being left behind.
“Universities are graduating ‘idiot savants’: students well-versed in manipulating complex and technical models, but who have nothing to say about solving real-world problems,” said Rochon in the Globe and Mail.
Audra Bowlus, professor and chair of Western University’s department of economics, respects the limitations of the mainstream models but also believes the DSGE model has been highly influential.
“As something like the financial crisis happened, research [pertaining to DSGE model] at the time certainly did help prevent the Great Recession from becoming a Great Depression,” Bowlus said.
To Bowlus, Rochon's statements about the DSGE generalized too much. Bowlus said, although the DSGE model is used frequently, it is not the only model adopted by macroeconomics. In addition, there is an entire field in microeconomics that uses other approaches to describe the economy.
However, Bowlus still feels that Western economics students receive quality educations.
"One of the main things we try to instill in our students is to be critical thinkers," said Bowlus. "To ask questions, to try to seek out evidence, to collect data and to understand shortcomings of the theories and the models that are out there so they can make better decisions."
Fourth-year economics student, Kenneth Chau, believes that understanding the DSGE model is beneficial.
"The effects of shocks to the economy are always hard to capture for an undergraduate student who doesn't have an economics background," said Chau. "The DSGE is a really good method to let students understand how shock might cause business cycle fluctuations."
Bowlus says that students in the economics department's PhD program have a 100 per cent placement rate in the job market.
“We just finished our undergraduate and graduate review, and I do believe that we are preparing our students well for the job market,” said Bowlus.