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A key assumption of neoclassical economics is perfect competition in free markets where price is determined purely by market forces. Of course, most economists are aware of asymmetry and in face, the assumption qualifies itself by limited the scope to the inquiry to "perfect competition," that is, symmetrical market power, and "free markets," that is, markets in which there is no administration of price. They justify not teaching this in Econ 101 since the purpose of Econ 101 limits its scope. For example in Physics 101, student learn simplified equations that assume more simplicity that is actually present, for example, calculation of the effect of friction. While this is pedagogically admissible, and it is also likely that many teachers qualify these assumptions without going into
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A key assumption of neoclassical economics is perfect competition in free markets where price is determined purely by market forces. Of course, most economists are aware of asymmetry and in face, the assumption qualifies itself by limited the scope to the inquiry to "perfect competition," that is, symmetrical market power, and "free markets," that is, markets in which there is no administration of price. They justify not teaching this in Econ 101 since the purpose of Econ 101 limits its scope. For example in Physics 101, student learn simplified equations that assume more simplicity that is actually present, for example, calculation of the effect of friction. While this is pedagogically admissible, and it is also likely that many teachers qualify these assumptions without going into
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A key assumption of neoclassical economics is perfect competition in free markets where price is determined purely by market forces.
Of course, most economists are aware of asymmetry and in face, the assumption qualifies itself by limited the scope to the inquiry to "perfect competition," that is, symmetrical market power, and "free markets," that is, markets in which there is no administration of price.
They justify not teaching this in Econ 101 since the purpose of Econ 101 limits its scope. For example in Physics 101, student learn simplified equations that assume more simplicity that is actually present, for example, calculation of the effect of friction.
While this is pedagogically admissible, and it is also likely that many teachers qualify these assumptions without going into detail that is beyond the scope of an introductory course.
But the reality is that methodological simplification can results in misunderstanding. On the other hand, I recall my class in Econ 101 using Samuelson. A lot of us were looking at each other like, WTF?
The same prof that taught Econ 101 also taught statistics. To his credit, How to Lie with Statistics, was required reading.
I also got fascinated with philosophy and grew up to be a philosophy professor. Philosophy 101 included an introduction to logic, which was actually an introduction to critical thinking. The other section was an introduction to the enduring questions and why they have not yet been answered definitively. At one time, this was a required course, but, alas, no more.
I also had a wise mentor who held that the most important thing in understanding people and the way the world works is power.
In physics there is a coefficient of friction, while in economics there is no coefficient of power. Why? Because power is difficult to quantify. So it is acknowledged but ignored as intractable.
Lars P. Syll’s Blog
Lars P. Syll | Professor, Malmo University
If something potentially significant causally is not mathematically tractable, then it is treated as if it did not exist or is irrelevant. This drastically limits the scope of the model by excluding significant factors. Keynes pointed this out. See Lars Syll, Keynes’s critique of econometrics.