Over at EconLog, David Henderson has a great response to Noah Smith’s recent essay “Most of What You Learned in Econ 101 is Wrong.” I won’t rehash his arguments here, but I do want to address an issue Smith (and some of the commentators on David’s post) raises, but incorrectly attacks: simplification.
To call something simplified is not the same as saying it’s wrong. Of course in Econ 101 we simplify things. It’s the intro course for folks who have never studied economics before. You need to start them with the simple stuff before you work your way up to the more complex. You wouldn’t start a First Grader reading with the Count of Monte Cristo, would you?
Econ 101 is the foundation of all that follows. Saying something is wrong means it’s incorrect. Nothing taught in an Econ 101 class is incorrect (assuming a competent teacher, of course). Supply and Demand doesn’t change based upon “real world complexities.” Their slopes might (what with elasticities and all that, another thing learned in Econ 101), but Demand doesn’t suddenly become upward sloping in “the real world.” People don’t suddenly stop responding to incentives or stop thinking on the margins.
With respect, those who argue that Econ 101 (or any 101) is wrong have either misapplied the lessons from the higher-level courses, or misunderstood their foundations (or had bad teachers and should get their money back).