How should the introductory economics text change in response the financial crisis, the recession and the very slow recovery? The question will be discussed at a big economics teachers’ conference in New Orleans this week. I will be there to give a talk on the issue by describing the just released 7th edition of my text with Akila Weerapana of Wellesley. We incorporated many crisis issues in the 6th edition in 2009 (the first text to do so), and gained experience for the 7th which I will share with other teachers at the conference.
The answer to the question depends a lot on what you think caused the crisis. If you think that it shows our economic theory—especially our macroeconomic theory—was wrong, and thereby gave the wrong policy prescriptions, then you have to think about massive changes. If you think the crisis shows that our economics was basically correct and that policy deviated from the recommendation of the theory, then you want to revise the text differently, and show with example after example how this happened. It is a unique teaching moment.
While there is some truth in both of these views, my research has led me to conclude that the second is closer to the reality. Certainly room should be given for different views, but this second view must be represented. My principles text with Akila Weerapana reflects this.