This year at Harvard, a new introductory course in economics (“Using Big Data to Solve Economic and Social Problems”) has proven very popular among students. The university’s standard introduction to economics, “Principles of Economics”, used to be the institute’s most popular course, but it is losing ground to this new contender. In contrast to the traditional course (and theory-heavy “orthodox” economics in general), the new course is strongly focused on real-life problems and solutions andthe use of (big) data. The popularity of this course may be the first step for a new generation of decision–makers with a different, more inclusive, perspective on the economy that will start their careers in business and politics in a few years’ time.
What does this mean?
According to Harvard, the content of the course is not new to its curriculum per se, but it is now offered in the first year because students are simply demanding more relevant and meaningful insights than traditional courses were able to offer. The professor teaching this course, Raj Chetty, is a prominent frontrunner of the empirical turn in economics and has published influential studies on the root causes of inequality in American society. While he is not a political activist himself, his work has gained prominence in political debates as it shows, by means of empirics instead of theory, how markets arefailing to address societal problems and how state intervention is warranted in ways that traditional economics would disapprove of.
The new mindset that Harvard graduates will bring to board rooms and political debates is likely to impact American society in the coming decades. First, because it ties in with the broader trend of favoring a larger role for government that we have seen reflected in ambitious plans in relation to sustainability (e.g. the Green New Deal) and inequality (e.g. Democratic plans for Medicare-for-all). Second, the rise of the sensor-based economy is likely to generate new insights in the workings of the economy, including clear cases of market failure in which governmental action is justified and possibly inevitable. That is, these graduates will be more open to such data and less so to the orthodox theory that guides many decision–makers today.