Teaching econometrics: an interdisciplinary method.

• Author: Wang, Yongsheng
• Position: Report

Introduction

In recent years, there have been quite a few reports indicating the deficiency of secondary school math education in America, as can be seen in the math test ranking from Program for International Student Assessment (PISA) organized by Organization for Economic Co-operation and Development (OECD). Failings in secondary school math education bring with it implied subsequent impact on higher education. As a math intensive subject, college-level economics suffers dramatically. Although considered as part of the social sciences, economics uses mathematics heavily as an analytical tool and may be the most "science"-oriented discipline within the social science realm. In order to succeed in an econometrics course, students need knowledge of several different fields of mathematics, including probability, statistics, linear algebra, and calculus. These fields are used to identify economic relationships and test hypotheses. Econometrics is a subfield of economics that utilizes statistical tools to test and discover economic relationships. It provides students a venue to connect economic theory and the real world.

Many undergraduate economics programs have an introductory level econometrics course, although some programs require a statistics or business statistics course instead. Some programs also provide upper level econometric electives for students who plan to pursue graduate studies or a data-analysis related career. Different programs may not have the same prerequisites. Many instructors choose to provide math review in class, whether programs require math prerequisites of not. It is a wonderful way to review, but it can consume a large amount of course time. Another concern among teachers arises from the fast development of computer technology and widely-available econometric and statistical software. Several studies show that technology innovation entails both benefits and challenges. (1) With software, it is getting easier for students to calculate the results, even when complex models are required. However, students may not know how to explain the answers or understand their meaning. An introductory econometrics course is usually a semester long. Instructors are facing a dilemma: how to balance the coverage of theory and empirical application (e.g. data-based exercises or lab hours). There is debate on whether teachers should cover theoretical derivation or only teach empirical applications. Patrick Gagliardini recognizes these problems and suggests that simplicity in math and essentiality in literature were the key steps for successful econometrics teaching in the modern era. (2) Some programs offer two semester sequential econometrics courses to separate theoretical analysis and empirical application completely. Ultimately, different choices come from different beliefs in the mission of econometrics in economics education, especially at the undergraduate level. Is the aim to train future economists or simply to increase economics literacy? The answer for graduate level courses is clear, but not so for undergraduate ones. Most past studies focused on statistical methods and discussed the issue of what to cover intensively, but few studies focused on how to energize the majority undergraduate students who take econometrics and are not destined to study economics in graduate school.

This study revisits the evolution of econometrics in economics curriculum and, especially, its growing importance in undergraduate economics education. It introduces a content-based interdisciplinary method and tests it on a student sample. The rest of the study describes the mission of econometrics education and its traditional teaching approach and proposes an interdisciplinary method.

Mission of Econometrics Education

In most undergraduate programs, econometrics is offered by the economics department and not an econometrics or statistics department. This study will discuss the mission of undergraduate econometrics education within this context. In order to identify the mission for undergraduate econometrics education, the following discussion begins with what the objectives of a modern undergraduate economics education are and how econometrics fit into the picture.

Over the years, economics educators have described the objectives of undergraduate economics education from several perspectives. W. Lee Hansen focuses on the learning outcome of undergraduate economics education and suggested the importance of knowledge proficiency in two of his studies. (3) In his 2001 study, Hansen mentions "interpret and manipulate economic data" as one of the six proficiencies which cannot be accomplished without econometrics knowledge. (4) Several studies emphasize the application of knowledge and suggest educational goals such as "think like an economist" and "economic naturalist." (5) John Siegfried, along with others, suggest that students need to think like an economist and they need to expand the depth and breadth of knowledge through problem analysis in an interdisciplinary setting. (6) An econometrics project is a great choice for this purpose, which normally requires students to dig beyond regular economic context.

Econometrics is not only essential in fulfilling the above general purposes of an economics education, but also in solving the recent challenges facing the discipline. David Colander notes the disconnection between what economists taught in class and what economists did in their own research...