Facebooktwitterredditlinkedin

This piece was written by Lucien Schaffhauser, a recent history and economics graduate, and prized Copylab intern, whose competency in commas is finally complete.

Can economics belong to everyone?Picture the scene: it’s the first term of my third year at university and I have two successful years of economics behind me. I’m confident that I can handle whatever this year has to throw at me.

Then I sit down to read Frank Smets’ and Raf Wouters’ An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area, and my confidence deserts me.

This text was the basis for my entire central banking course and still serves as the foundation for modern thinking around central bank modelling. With its dense jargon and reference to names and theories I’d never heard of, it left me rattled.

Following Kollmann (1997) and Erceg, Henderson, and Levin (2000), the model exhibits both sticky nominal prices and wages that adjust following a Calvo mechanism. However, the introduction of partial indexation to the prices and wages that cannot be reoptimized results in a more general dynamic inflation and wage specification that will also depend on past inflation. 

As I struggled through this text, I was facing an entirely different experience in my history class. For my course on French history between 1719 and 1914, I was reading Eugen Weber’s Peasants into Frenchmen. From this learned tome came the following anecdote:

“You don’t need to go to America to see savages,” mused a Parisian as he strolled through the Burgundian countryside of the 1840s. “Here are the Redskins of Fenimore Cooper.” 

The contrast could scarcely have been more evident. In one, we had turgid, life-sapping prose; in the other, a rousing, vivid evocation of historical thought. Indeed, throughout my university career, history emphasised engagement in argument and analysis, often requiring colourful primary sources. In economics, by contrast, repetition of the prevailing orthodoxy and references to well established reviews was the format for a successful (read: well-marked) essay.

While economics remains mired in complex theoretical discussions, historical debate is accessible to all through exciting history books, documentaries, dramas – such as the HBO mini-series Chernobyl – and films designed to attract mass, rather than just academic, consumption. Historians such as Simon Sebag Montefiore can expect their deeply researched, highly readable books to the top the bestseller lists and line the shelves of university libraries.

Children no longer revise dates and royal names to learn history, but instead enjoy the gripping and grim Horrible Histories, that since 1993 has made history fun rather than stuffy. Mainstream books such as Blitzed: Drugs in Nazi Germany by Norman Ohler, with its dedicated study of previously unknown stories, further the appeal of history as a study of how people really used to live.

And economics? With a few honourable exceptions, it has failed to generate the mainstream appeal that has made history such an accessible, exciting topic.

Library of old books

History belongs to us all

Perhaps, as my high school history teacher used to suggest, this accessibility of history has its roots in the mass publishing of Great War poetry from the trenches. Here was literature that emphasised the suffering, sorrows, and successes of the ordinary person rather than that of generals and political leaders, in a conflict that affected everyone.

The trend of highlighting the experience of the everyman continues to characterise historical content, with academically inclined texts increasingly dedicated to social history. Consider Stuart Macintyre’s Little Moscows, which provides a detailed and personal account of working-class hotspots of militancy in inter-war Britain by engaging with the people who experienced it first hand.

Increasingly, historical content aims to include the general public in the debate because, ultimately, history belongs to everyone.

Doesn’t economics belong to everyone as well?

In contrast to the openness of historical content, economic literature remains slow to change, even in the post-2007/8 crisis environment where public interest in the subject is high. While some economists – such as Mervyn King, former Governor of the Bank of England, in his book The End of Alchemy – increasingly emphasise their intention to make their writing understandable to all, most still use jargon and complex models that leave your average reader cold.

John Lanchester, author of How to Speak Money, and Mervyn King both argue that this could reflect a general unwillingness by economists to open themselves and their discussions up to public scrutiny. Consequently, economics is frequently too difficult for those without a keen interest or an academic background. As Charles Calomiris and Stephen Haber note in their book Fragile by Design:

[The public] know that they should be deeply concerned about banking regulations; they know that there are links between politics and banking; but they are unsure what those links are and even less sure what to do about them.

Person holding open book in handsThe invaluable power of stories

But the sporadic success of some “economics for the masses” – such as The Big Short, which largely succeeded in explaining the head-bangingly complex reasons behind the financial crisis – shows how the “dismal science” can generate mainstream interest, even excitement. Given the well-documented consequences of public ignorance of economic and financial concepts, this development is enormously welcome.

There are four traits, in particular, that have elevated history to mass accessibility. And the best economics communicators are already learning those lessons:

1. Storytelling

Manias, Panics and Crashes by Charles Kindleberger and Robert Aliber (2005) stands out as an excellent example of economic storytelling. Often humorously discussing how factors such as tulip speculation caused a massive crisis, the book engages the reader to understand the nuance of financial crises throughout history, with only occasional descents into jargon.

2. Junk the jargon

Both as a book and as a podcast, Steven Levitt’s and Stephen Dubner’s cult hit Freakonomics avoids technical jargon and instead introduces complex economic theories in quirky, easy-to-understand ways.

3. Know your audience

Tim Harford’s podcasts 50 Things That Made the Modern Economy is a master class in understanding your target audience. With discussions on everything from the iPhone to concrete, Harford relates the broader economic significance of these products in compelling, inclusive terms.

4. Relatability

All of the above examples reflect that to make economic concepts and theories accessible, they have to be relatable to the public’s experiences. Kindleberger and Aliber talk about crises in practical and understandable terms; Dubner and Levitt discuss the economics of drug dealing, among other things; and Tim Harford explains topics such as how shipping containers make your bananas more affordable.

While historical events and current affairs continue to define our lives, economics influences our lives in ways that many do not fully understand.

This is a consequence of economic literature’s reluctance to make itself more understandable. But there are signs that this is changing. In line with the way that the telling of history has changed, the growing use of storytelling and layman’s language is broadening the appeal of economics and, hopefully, ushering in a whole new era of something even Mr Smets and Mr Wouters may not have foreseen: exciting economics.