Economics without Entrepreneurship or Institutions?

This article is based upon a readying of Dan Johansson’s article from Econ Journal Watch December 2004 titled “Economics without Entrepreneurship or Institutions: A Vocabulary Analysis of Graduate Textbooks.”

When most people think of Economics they think of supply and demand. Some people depend upon economists to tell them why some countries succeed and others fail. One thing that was interesting to me is that the latter has nothing to do with what is basically taught as the purpose of economics, which is the study of choice under scarcity. While at the same time people do really want to know why some countries succedd and others fail. Adam Smith’s book “The Wealth of Nations” started that. It is almost impossible to have this conversation without talking about institutions. When talking about institutions, it will directly relate to talking about innovation or entrepreneurship.

The main problem is many economists are not trained in these things. In the study from the paper above, Johansson finds that there is very little mention of any of the keywords like entrepreneur, innovation, invention, tacit knowledge, bounded rationality, institutions, property rights, and economic freedom. He finds of the 19 leading textbooks, 16 contain fewer references to any of the entire set of right terms. There were only 8 references to property rights. This coming from an student from George Mason University, which I believe does a good job of teaching these terms, outrages me.

We need more pro-entrepreneurship/institution/property rights professors to write textbooks for graduate students. This brings into question how long does it take for someone to incorporate a term or idea in mainstream Economics. These ideas are definately important and need development. The only way they can be developed is to start with teaching them to everyone.



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  1. I’m immediately skeptical of this study because the data set has at least one error: Mas-Colell, Whinston, and Green (the leading micro text) mentions property rights 6 times within three pages on their chapter on externalities and public goods (ch 11). The paper says the count is 0, wrong. This immediately gives me suspicion to their other numbers as well.

    Regardless, I do agree with the main point: the basic ideas of institutions, property rights, competition, entrepreneurship, etc are not given nearly as much face time as they deserve in graduate econ programs.

    There are several books (one by Sam Bowles) that do not suffer from this problem, but they are not popular in top graduate programs.

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