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April 2007
: Economics
INTRODUCTION:
Economic concepts such as market efficiency, competition, externalities, public versus private goods, and
Pareto optimality are essential to a rigorous understanding of business functioning. A strong background
in the discipline can aid managers in understanding not just corporate performance, but also offer
substantial insight into such complex- yet business-relevant- global issues as immigration and climate
change. Exposure to economic principles is a fundamental and mandatory element of MBA education
today, but students do not always recognize the importance of the field or appreciate the academic rigor it
requires. 1
In an early survey of business school administrators, respondents were divided on whether courses within
the discipline were popular or unpopular amongst students.2 For those who responded affirmatively, the
most important reason cited (42%) was the quality of instruction. On the other hand, the tendency for
Economics courses to be highly theoretical was named as the most popular response (30%) for why the
discipline was unpopular with their student body.
One current method of grounding economic theory is by supplying relevant, real-life examples that focus
on social impact management issues. When studying real-life examples is combined with excellent
instruction, student interest in the subject is piqued.3
The Aspen Institute’s Beyond Grey Pinstripes data reveal a good number of MBA classes that integrate
social and environmental themes into core and elective Economic coursework with both a macro and
micro focus. This Closer Look edition shares teaching ideas and materials that broach this pedagogical
intersection.
THE BOTTOM LINE:
■ Managerial Economics courses which “seek to merge microeconomic theory with
quantitative tools to solve managerial problems” are now conventional in the core MBA
curriculum. These courses tend to be more grounded in application than traditional
fundamentals courses, and offer much opportunity for the integration of socially and
environmentally relevant examples. 4
■ Game theory, in short the formal analysis of strategic social interaction and a current
Economics cornerstone, is being utilized in a fair amount of MBA Economics courses.
The field offers great opportunities for studying social choices amongst rational actors.
Those reporting game theory instruction in the classroom are Yale, Notre Dame,
1
For example, the Association to Advance Collegiate Schools of Business suggests that curricula address “domestic
and global economic environments of organizations” in its Standards for Business Accreditation:
<http://www.aacsb.edu/accreditation/process/documents/AACSB_STANDARDS_Revised_Jan07.pdf>.
2
Gregorowicz, Philip and C. Hegji. “Economics in the MBA Curriculum: Some Preliminary Survey Results,”
Journal of Economic Education. Vol. 29, Issue 1; pp. 81-88, Winter 1998.
3
It would be fascinating to learn if student reviews of economic professors and classes have improved over the past
decade, seeing as the high salaries and competition for Economics Ph.D.’s have only increased. See, for example,
“The Competition for Economics Ph.D.’s” from the Chronicle of Higher Education:
<http://chronicle.com/jobs/news/2002/06/2002060601c/careers.html>.
4
Quote taken from Daniel Marburger’s “Making Managerial Economics Relevant to the MBA,”
<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=471060>, p. 2.
A Closer Look at Business Education
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Stanford, Dartmouth, Columbia, Presidio World College, and Cal. Poly Orfalea College
of Business. 5
■ Fascinating topics in this space currently range from the impacts of cross-border capital
flows and distribution of wealth issues to community impacts of downsizing and
achieving sustainable economic growth at a national scale. 6
On student interest in Economics at the MBA level: “I teach macroeconomics to MBAs and they
are interested in economic crises, causes of long-term growth, global warming, unemployment,
etc. At the same time, their interest is higher with examples from India or China (where they
plan to do business) than sub-Saharan Africa or Mongolia.”
On current scholarly research: “There is a vast and growing academic literature using economics
to study environmental and social concerns. Topics range from global warming to global trade
and development to whatever you can imagine.”
On the integration of environmental and social issues in Economics curricula: “I am not sure I
see a trend, but there is extensive incorporation of environmental, ethical and social issues in the
courses I teach. We discuss externalities as they apply to environmental issues and present not
only the Coasian approach, but also the limitations of market solutions. These issues also come
up when discussing price discrimination, production in other countries and so on. We have a
large constituency of socially active students and it is fascinating and rewarding to watch them
learn and harness economic principles.” 7
NOTABLE COURSEWORK:
The following course descriptions are drawn exclusively from Beyond Grey Pinstripes, a
research survey conducted biennially by the Aspen Institute.
5
<http://www.gametheory.net> is a good resource for those interested in learning about this field of study.
6
These issues are drawn from coursework submitted in the 2005 edition of Aspen’s Beyond Grey Pinstripes.
7
For a simple description of the Coase Theorem, see the University of Chicago’s Law School website:
<http://www.law.uchicago.edu/socrates/coase.html>.
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A Closer Look at Business Education
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problems (foreign debt of the poorest counties, development aid) which affect the poorest members of
the world’s population. The course champions an international economic and financial order that
transcends the current limits of the Bretton Woods institutions (IMF, WB, WTO), and draws attention
to the general changes that should be made within these and other multilateral organizations, in
addition to the policies that the rich countries could adopt in order to ensure a fairer distribution of the
planet’s wealth. Various recent crises, such as that of Argentina, are analyzed and compared.”
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A Closer Look at Business Education
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we look at industrial ecology and pollution prevention, two approaches that are compatible with the
concept of sustainable development.”
For additional courses on related subjects, or to download select syllabi, search 1,672 descriptions at
Beyond Grey Pinstripes.
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A Closer Look at Business Education
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ONGOING QUESTIONS:
■ Do the most frequently taught economic and financial metrics give us the range of
information and tools we need to manage corporations for long-term sustainability?
■ How can/do faculty frame the lessons of macroeconomics in ways that feel relevant
and usable for individual managers of individual companies, and not limited to the realm
policy makers?
RESOURCES:
BeyondGreyPinstripes.org – World’s biggest MBA database, including detailed records on 1,672 courses,
1,730 extracurriculars, and 216 research articles at 128 schools on six continents.
CasePlace.org – A free and practical on-line resource for up-to-date case studies, syllabi, and innovative
teaching materials on business and sustainability. Created for the educators who will shape our next
generation of business leaders!
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A Closer Look is a monthly series of briefing papers on topical issues in MBA education, based on the research and programs of the
Aspen Institute. The Aspen Institute Business and Society Program works with senior corporate executives and MBA educators to
prepare business leaders who will effectively manage the financial, social, and environmental impacts of the private sector.
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