Freeing Econ 101: Beyond the Grasp of the Invisible Hand

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An explanation of behavioral economist David Laibson's Economics 101 textbook, and how it attempts to avoid the usual mistakes of 101ism.

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All models are cartoons, but the standard model is particularly cartoonish, especially as it’s taught to students in Econ 101. They’re introduced to a fantasyland where perfectly rational people with perfect information in perfectly competitive markets come together in a beautiful dance of supply and demand -- with the “invisible hand” perfectly maximizing the welfare of society... The world of the standard model is a place where the free market is so perfect, government interventions only do harm; where workers are paid their marginal product, so exploitation doesn’t exist; where everyone is so rational, people are always best left to their own devices; where culture, history, institutions, identity, norms, emotions, and morals fall to the wayside, and human beings become cold equations narrowly maximizing their own pleasure (or “utility”). To critics, it’s a cocktail of fantastical ideas profoundly divorced from the real world—and textbooks force kids to slurp it up for crude ideological reasons... The fact that the standard model not only doesn’t accurately describe the world but also supports right-wing policies has led progressives to argue that the reason it remains central to Econ 101 is ideology.
Greg Rosalsky, "Freeing Econ 101: Beyond the Grasp of the Invisible HandFreeing Econ 101: Beyond the Grasp of the Invisible Hand"