Back to School, Part 2: Advice for Freshmen

A couple of days ago I tweeted about Greg Mankiw's latest New York Times column in which he gives advice to incoming college freshmen about what to study and learn.  I agree with what he says in general (I am likely to as a fellow economist), but I think he misses perhaps the most important one of all.

Here is a heavily edited excerpt:

Here is my advice for students of all ages:

LEARN SOME ECONOMICS

The great economist Alfred Marshall called economics “the study of mankind in the ordinary business of life.” When students leave school, “the ordinary business of life” will be their most pressing concern. If the current moribund economy turns into a lost decade, as some economists fear it might, it will be crucial to be prepared for it.

There may be no better place than a course in introductory economics. It helps students understand the whirlwind of forces swirling around them. It develops rigorous analytic skills that are useful in a wide range of jobs. And it makes students better citizens, ready to evaluate the claims of competing politicians.

Not convinced? Even if you are a skeptic of my field, as many are, there is another, more cynical reason to study it. As the economist Joan Robinson once noted, one purpose of studying economics is to avoid being fooled by economists.

LEARN SOME STATISTICS

High school mathematics curriculums spend too much time on traditional topics like Euclidean geometry and trigonometry. For a typical person, these are useful intellectual exercises but have little applicability to daily life. Students would be better served by learning more about probability and statistics.

One thing the modern computer age has given everyone is data. Lots and lots of data. There is a large leap, however, between having data and learning from it. Students need to know the potential of number-crunching, as well as its limitations. All college students are well advised to take one or more courses in statistics, at least until high schools update what they teach.

LEARN SOME FINANCE

Few high school students graduate with the tools needed to make smart choices. Indeed, many enter college without knowing, for instance, what stocks and bonds are, what risks and returns these assets offer, and how best to manage those risks.

LEARN SOME PSYCHOLOGY

Economists like me often pretend that people are rational. That is, with mathematical precision, people are assumed to do the best they can to achieve their goals.

For many purposes, this approach is useful. But it is only one way to view human behavior. A bit of psychology is a useful antidote to an excess of classical economics. It reveals flaws in human rationality, including your own.

Let's start with the obvious: I believe strongly that some basic economics training is an invaluable tool to take with you in life. The understanding of how behavior is influenced by incentives and how behavior shapes markets and the world is extraordinarily useful. In fact, once you understand these basic forces, you start to see patterns everywhere and start to anticipate how tweaking incentives might lead to intended and unintended consequences. Robert Frank at Cornell calls this becoming an economic naturalist.

I also think the statistics advice is spot on - and let me emphasize the part where Mankiw says that students need know both how to do statistical analysis AND understand its limitations. In fact, I think basic statistical skills are some of the most marketable for exiting students.  But statistics are easily and often abused to make wrongheaded conclusions and policy, we need more folks out there who can understand what can and cannot be concluded from statistical analyses.

Finance and psychology are also good to understand at a basic level and all of this is why an economics major is so marketable. It is a basic set of knowledge and specific skills that are very valuable and versatile. Many students are drawn to business for this reason, but I would argue that an economics degree is a much better way to go for students that care as much about the "why" as they are in the "how."  And it is not just me saying so, studies have shown that an econ degree is one of the most valuable degrees in terms of incomes.

But the most important skill that college students need to have upon exiting college, by a very large margin in my opinion, is the ability to write effectively. I am not a fantastic writer, but I am a competent one, and though I am a professional economist my success as a researcher has as much to do with my ability to communicate my work through words as my mastery of economic theory and statistical analysis. It is also a skill that is getting short-shrift in the ever more consumer-driven model of higher education. My abilities as a writer come from being made to write endlessly at my undergraduate college. It was an emphasis from the moment I walked in the door until the moment I left. It has been by far the most valuable skill I developed as an undergrad.

So by all means become an economics major, or at least take some economics and statistics, but make sure you learn to write and communicate effectively. [And as an aside, I have found Oregon's high school graduates much better trained in writing and composition than their counterparts in Colorado - so way to go Oregon high school teachers, and thanks]

I will see all you new students on September 27th.