A Tale of Classical Economics and Our Education System
Adam Smith, the father of Classical Economics and author of The Wealth of Nations argued that the best result for society will only occur if every individual focuses on maximizing their own wealth, and this has come to be the belief that our modern world is built upon. Most systems in our society are now created under this assumption, and for some of these systems it can be largely problematic. Take education, for instance. If we were to translate Classical Economics to our education system it would mean that every student should focus their efforts towards maximizing grades, thus leading to a more learned and prosperous workforce. While this may seem to be an accurate prediction, there are some fundamental problems in applying this theory to the field of education.
To begin this exploration, first we must take a step back and understand how we are motivated and the most effective methods of motivation that drive us to work towards goals. If we cannot understand what would push us to achieve those good grades in the first place, then how can we trust that working toward grades is the optimal solution for a well-educated society?
Motivation can be categorized as intrinsic and extrinsic. Intrinsic motivation refers to internal drives of curiosity, which often lead to our most informal learning, such as feeling hungry and then developing an interest in learning to cook a meal. Extrinsic motivation is based on external rewards such as money, protection and of course, grades. In contrast to Smith’s popular theory, research has shown that in reality deeper learning is associated more with intrinsic motivation, while short term learning is catalyzed by extrinsic motivation.
In the context of education, this would mean that grades act as a form of extrinsic motivation to do well in school, leading to only a short term understanding of valuable pedagogical concepts. This, itself, contradicts the theories put in place by Classical Economics, since they suggest that working towards that external reward will create a well-educated society. However, research shows that a desire to learn has to be re-ignited within students as a more lasting way to educate children and achieve this goal. Therefore, here we can see the first problem with basing our education system on Classical Economics.
We also cannot forget that Smith’s theory of Classical Economics leaves us vulnerable to problems with applicability due to the assumptions his theories are based on. Classical Economics believes that individuals are all rational agents acting as price takers in a perfectly competitive market. If we were to act rationally all the time, then every action we choose to do, would lead to greater utility for ourselves. But more often than not, due to the interplay between our emotions and the emotions of others, we don’t choose to maximise our individual utility in every situation. The same can be said for students.
Students cannot be defined as individual agents trying to obtain a single ‘A’ in a class. They are one of many students within the same classroom trying to do better than other students, being scored using a curved grading scale. This means that not only do they have to work hard to do well to succeed in the class, but they have to do better than the majority of students to receive the best grade. Therefore, we cannot look at students and education without considering the interactions between them and the emotions that may be attached to competition and cooperation among peers in a classroom. Both positive and negative emotions towards peers can affect a student’s performance, despite this being a less than optimal choice for someone who is aiming to maximize their grade. This shows us the second reason why Classical Economics is not applicable to our education systems.
Lastly, we have to deal with Smith’s assumption of being in a ‘perfectly competitive market.’ If schools truly are a perfectly competitive market, then each student would have the same home environment and financial security. Each student would have the same learning capabilities and brain functioning. Each school and each class room would provide the exact same education for any given subject. But this is not the case. Students are not homogeneous - they are all unique with distinct social and economic situations and therefore each student requires specific attention to their own needs and hence we cannot push one single goal of “maximizing grades” on all students. Thus, this assumption from Classical Economics cannot be applied to our education systems.
But we are still left with a problem. If Adam Smith can’t crack education, then who can? Maybe we could take the help of John Nash and 20th century economics. Game theory, a study of strategic interdependent choices, allows us to bring back the value of intrinsic motivation through the interaction between students, while simultaneously challenging the assumptions on which Adam Smith’s economic theories are based. Game theory, and particularly the Prisoner's Dilemma, highlights our innate human drives that motivate us to make decisions, beyond external rewards and punishments, due to our attachment or aversion to other human beings, and our empathy or jealousy towards individuals and their situations.
The ideal scenario would be an education system where children could collaborate and support each other, despite having differing goals and methods of obtaining those goals. Maybe if we start to draw inspiration from more advanced and refreshed theories of economics, we will be able to create a welcoming and productive educational environment for students. We need a theory that relies greatly on intrinsic motivation and acknowledges the human emotions and differing circumstances that may cause students to act irrationally, or perhaps more rationally than we think, in the face of becoming the best educated set of students entering the workforce.
Written By Aditi Rudra, Undergraduate Economics Student
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