The Dean’s Prize: Bettering the USC Economics Program

In response to the University of Southern California College Dean’s call for the enrichment of student academic life, I pondered upon the possible changes that could be made to enhance the economics program in which I am enrolled. After having examined the structure and courses of instruction of the most prestigious undergraduate economics programs in the nation, I identified the relative strengths and weaknesses of the curriculum offered by the USC. In this week’s entry I wish to share my evaluation of the program as well as suggestions for improvement.

The undergraduate economics curriculum at USC currently focuses on the traditional topics of economic research: microeconomic and macroeconomic theory, money, trade, and finance. While developing analytical skills in the mainstream subdivisions of the field is critical, students face very limited options in selecting elective courses. Aside from the core subjects mentioned above, the department only offers one special topic course every semester and “Economics of Happiness” once a year, and because intermediate theory classes are listed as prerequisites, it is very difficult for non-economics majors to obtain permission for enrollment. In addition, the study of market behavior often involves extensive use of mathematics, which, in economics terms, creates yet another “barrier to entry.”

Students from other academic disciplines at USC are often reluctant to take economics classes because the offered courses do not closely relate to everyday life. Other leading universities seem to have more success in stimulating student interest by having made available courses that make use of economic theory in the analysis of other social problems. For instance, the economics departments at Harvard offers classes such as “Women, Work, and the Family” and “Race in America” while its counterparts at the Massachusetts Institute of Technology (MIT) and the University of Chicago present “Health Economics” and “Economics of Sports,” respectively. The USC economics department would benefit by learning from the experience of these prominent programs. By introducing a wider array of economics electives to include especially topics that appeal to all students, USC will encourage more students to study economics. Exploring more unconventional individual topics will also help economics majors in choosing a field of specialization.

USC has a well-established tradition of encouraging students to pursue academic “breadth with depth” and honors those who excel in multiple and diverse disciplines. “Since societal problems rarely fall within the domain of a single discipline or school, collaboration that brings together different perspectives and skills may be the best means of addressing such problems,” states the USC 2004 Strategic Plan, “we must create mechanisms that remove structural disincentives to such collective efforts on problems of major significance.” In light of this Renaissance spirit, I would like to propose an interdisciplinary program that combines the study of economics and psychology.

The Role and Mission of USC emphasizes the importance of striving “constantly for excellence in teaching knowledge and skills to our students, while at the same time helping them to acquire wisdom and insight […] understanding of self, and respect and appreciation for others.” For many the most crucial “wisdom and insight” to gain in life are, precisely, happiness and its sources. And in order to understand how to acquire and retain happiness, one must take into consideration analysis from both the economist’s and the psychologist’s point of view. According to economics professor Richard Easterlin (pictured to the right), “the economics model” portrays “overall happiness […] as the outcome of experiences, good and bad, in various life domains” while the psychology or “set point model exemplifies the ‘top down’ view in which global happiness is a personality trait and hedonic adaptation in different life domains overrides the impact of life events.” (Life Cycle Happiness and Its Sources p.5) These arguments represent two extreme theories while empirical data shows that the truth lies in the middle of the spectrum. Personality and life circumstances both play vital roles in explaining a person’s subjective wellbeing. It is just as important to understand the impact of the Big Five personality traits in determining a person’s baseline of wellbeing as it is to know the fundamental properties of indifferences curves. Economics focuses on people’s behavior and psychology on the motives behind those choices made. The two disciplines are not mutually-exclusive; instead they complement each other. The economics department at MIT, which was rated best in the nation in 2005, has already recognized the strong connection between economics and psychology. It currently offers undergraduate students two courses that unify the two fields of study: “Economics and Psychology” and “Psychology for Economists.” USC should take one step further and create an extensive program that focuses on the investigation of subjective wellbeing and includes core classes from both disciplines. By providing an opportunity to examine both internal and external factors that affect happiness, the college will not only endow the students with an enjoyable learning experience but also equip them with wisdom that will enrich all aspects of their lives.

The Honorary Degree: Celebrating A New Beginning

Since spring commencement is approaching at universities across the country, I have decided to share with readers in this week’s post my nomination for the recipient of the honorary degree from my home institution, the University of Southern California. According to president emeritus of the University of Iowa and Dartmouth College James Freedman, “In bestowing an honorary degree [of which there is a long tradition in American higher education], a university makes an explicit statement to its students and the world about the qualities of character and attainment it admires most.” The Consistent with this dictum, the University of Southern California honors and celebrates individuals whose character embodies the five ideal qualities embraced by the Trojan family: faithful, scholarly, skillful, courageous, and ambitious, and who “have distinguished themselves through extraordinary achievements in scholarship, the professions, or other creative activities.” I would for these reasons like to nominate Dutch economist Bernard Van Praag, an outstanding pioneer in the research of subjective wellbeing, for Doctor of Humane Letters.

Van Praag (pictured to the right) is emeritus university professor in the Amsterdam School of Economics and founding president of the European Society for Population Economics. His studies focus on measurements of happiness, econometric methods, poverty, social security, and health. For over fifty years economists have stressed the superiority of ordinal utility measures, arguing that people’s preference is revealed through their consumption choices. Van Praag, however, was not satisfied with the “awkward position” in which the economist is placed by observing only that “individual evaluates the first situation as better than the second” but not “how much better.” He suggests that utility should be measured cardinally by using numerical values and in 1971 formulated the Income Evaluation Question (IEQ) to measure welfare derived from income. His famous claim, “only by questioning the individual himself we might be able to get information about his feelings on welfare,” boldly challenged conventional economic research methods. While the validity of what is now known as “subjective wellbeing” was rejected by economists from all major schools, Van Praag nonetheless dedicated his research to the very topic, demonstrating remarkable boldness and proving himself faithful to the pursuit of knowledge. Mainstream scholars claimed that individual’s own evaluation of their happiness cannot be trusted, but after studying data from repeated surveys Van Praag disproved this assertion by publishing results that show that self-reported happiness is consistent and unaffected by transient emotions. And despite intense pressure he persevered to design better measures of happiness and life satisfaction and to prove with empirical evidence that self-reported welfare is indeed reliable. TTTo his credit, in the past decade the study of happiness has been increasingly accepted by scholars worldwide as an academic discipline that is both relevant and intriguing. Such accomplishments are indeed “distinguished and sublime” as Freedman pronounces in his description of the qualifications for the honorary degree. By recognizing Van Praag’s achievements USC can fulfill the purpose of “elevat[ing] the university in the eyes of the world.”

Van Praag played a crucial role in promoting a transformation of the field through his teaching and many published works. Indeed, he even went one step further to suggest that subjective wellbeing deserves to be recognized by mainstream economists because its implications are of great consequence. If awarded the honorary degree by USC, Van Praag would very likely, in his commencement speech, call the graduating class’s attention to the results of his investigation into the effect of income on welfare. And the fact that more money does not necessarily bring more happiness would be surprising to most. He would probably emphasize the need for policy makers to become familiar with welfare theories and empirical evidence in order to design priorities that actually improve life satisfaction instead of merely raising the country’s GDP. His words would challenge our graduates to reevaluate their dreams and aspirations, possibly correcting for overly materialistic tendencies and in their place investing more in non-pecuniary domains such as health and family. I believe that Van Praag’s courageous character and illuminating message would be inspiring to the graduates of 2007 as they leave our university to become leaders in their fields and communities.