Make Introduction to Macroeconomics the prerequisite for SPIA, not Introduction to Microeconomics

Imagine State Department heavyweight Anne-Marie Slaughter in 1980 or Obama-era U.S. Trade Representative Michael Froman in 1985 as students at what is now the School of Public and International Affairs (SPIA). Princeton, which address microeconomic ideas such as consumer preferences and variable costs—but not the broader, more systemic forces that drive economic recessions.

This is the current reality for SPIA students: At Princeton, every SPIA graduate must complete ECO100: Introduction to Microeconomics or have Advanced Placement credits from high school to fulfill the economics requirements of the major. However, there are no comparable requirements for a macroeconomics course – e.g. B. ECO101: Introduction to Macroeconomics.

The result? Many future policymakers learn about individual companies’ decisions to enter or exit a market, but are unaware of what causes a recession. They understand variable and fixed costs for businesses, but not how government spending affects the overall economy.

This current curriculum fails to equip our future political leaders with the economics knowledge most relevant to their roles. For SPIA majors, Princeton’s introductory macroeconomics course is arguably more useful than the introductory microeconomics course, and this should be reflected in the degree requirements.

Microeconomics and macroeconomics touch on many similar concepts, but their applications differ significantly – especially for policymakers. Microeconomics focuses on individuals and businesses and the distribution of scarce resources. For example, students learn how a consumer divides a fixed budget between two goods, concepts relevant to future business owners, and the structure of specialized markets.

Macroeconomics, on the other hand, deals with the overall economy. The focus is on total consumer spending, national income, and how government policies affect these factors. Rather than examining how an individual consumer decides between apples and oranges, it examines how the financial sector, tax policy, or interest rates affect overall consumer spending and economic growth.

Consider international trade. In micro classes, including ECO100, trade is often reduced to a cursory overview of tariffs and their impact on supply and demand curves. Macroeconomics, on the other hand, examines the reasons for trade between nations, the complexities of trade deficits, exchange rates and international capital flows. For future presidential advisers who have influence over possible tariffs — like the ones Trump has proposed and will continue to propose, partly on the assumption that they would reduce the trade deficit — this knowledge is essential.

Additionally, the introduction to macroeconomics recognizes pervasive market failures that are mostly glossed over in microeconomics and teaches prudent government responses. While ECO100 teaches that markets are efficient except in certain cases, macroeconomics addresses the reality of systemic problems such as unemployment and inflation and the critical role that government policy can play in addressing these problems, using lessons from the subprime economy. 2008 mortgage crisis and the Great Recession.

There is also the risk of teaching policymakers only microeconomics without considering the broader context that macroeconomics provides. An overreliance on micro-principles can lead to misguided policies when applied to complex societal problems. Take, for example, an idea popularized by the best-selling nonfiction books Freakonomics and Nudge, whose argument is based on assumptions common in the microworld: that small economic incentives or tweaks to systems can significantly change behavior . Although this micro-level thinking is useful in certain contexts, it can oversimplify and mislead policy if not integrated with macro-level understanding.

Nudge’s flagship story is a good example of this: Authors Richard Thaler ’73 and Cass Sunstein posit that changing the default option on organ donor forms from “opt-in” to “opt-out” will lead to more organ donations in the United States would. But that is all too small a non-solution to a systemic problem. Due to systemic barriers to organ donation, opt-out systems do not outperform opt-in systems. Furthermore, increasing the number of people choosing to donate organs does not necessarily lead to an increase in the number of organs the system can process. This idea is based on microeconomic principles – particularly behavioral economics – and proposes personal choices as a solution to a systemic problem.

It is not that microeconomics itself lacks value for policymakers – quite the opposite. For example: Understanding the “substitution effect” – a concept that describes how people consume when one of their choices becomes more expensive – is crucial in developing policies such as incentivizing electric vehicles over gasoline-powered cars. But microthinking isn’t always applicable, even to economic problems.

I understand SPIA’s desire to minimize the burden of prerequisites. Requiring both macro and micro courses would be cumbersome for SPIA students, and the economics department currently requires an introduction to macro and micro courses for every intermediate-level microeconomics course. But future policymakers who do not construct macroeconomic models based on “micro foundations” do not need much micro to understand macro.

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When I took ECO101: Introduction to Macroeconomics with Alan Blinder, there were many students who had little to no knowledge of economics. To account for this, Blinder integrated key micro-concepts—supply and demand and externalities—into the first week of lectures, ensuring everyone was on the same page. This approach could easily be replicated for middle school SPIA students by integrating the necessary micro principles into macro courses.

The world is becoming increasingly complex and the economic challenges we face are more interconnected than ever. Climate change, global pandemics, financial crises – these are macro-level problems that require policymakers to have a clear understanding of macroeconomic principles.

If SPIA aims to prepare students for leadership roles in public and international affairs, it should provide them with the tools to understand and address these challenges. Making macroeconomics a prerequisite over microeconomics is not about diminishing the importance of a field, but rather about prioritizing the knowledge that future policymakers will need most.

At a time when economic literacy is critical to effective government, it is time for Princeton to rethink its SPIA curriculum. Let us ensure that the next generation of policymakers—whether they sit on the Supreme Court or negotiate international treaties—are familiar with the systemic dynamics that shape our economy.

Eleanor Clemans-Cope (she/her) is a young college student from Rockville, Maryland studying economics. She can be reached on Twitter at @eleanorjcc or by email at eleanor.cc(at)princeton.edu. Her column, “Eyes on the Tiger,” appears biweekly on Wednesdays. All of her columns can be read Here.