The rise and fall of economics in Australian universities

Economic Papers (Economic Society of Australia), March, 2003 by Philip Maxwell

While reflecting the level of available supply, the number and quality of economics departments also affects demand. Potential students select from available programs, typically within their own cities or states. If such programs are unavailable, they will normally select another area. The rise in the number of economics departments in the 1960s and 1970s had a positive effect on demand. The recent decline has had a negative impact. It may also be argued, however, that with a fall in the number of departments, the quality of those remaining will have increased because of greater competition for academic positions. This may offset the fall in demand as long as at least one strong department remains in each large metropolitan area

Perception of teaching quality, the final factor on the list, is also important. Guest and Dubs (2002) report poor relative ratings by students in recent national questionnaires. They attribute this to inappropriate pedagogical practices, trying to cover too much material, and lack of rewards for allocating more time to teaching. While casual observation suggests that the standard of economics teaching in Australian universities is now improving, it seems clear that this has lagged behind alternative teaching approaches to encourage co-operative and active learning in other disciplines such as marketing and management.

In summary, several factors have negatively affected demand for economics study in the past two decades. They include the growing availability of substitutes, the changing nature of the economics curriculum, a declining public image, a view that economics has only limited relevance to people's lives and little change until recently in teaching practice and quality relative to competing disciplines. An increasing university student population has partly offset these effects.

3.2. The Supply Side

In a parallel fashion one can consider the supply of economics training using a standard supply function of the form:

Quantity supplied = f(price, prices of factors of production, technology, number of suppliers)

Supply is positively related to the price received by the providers. For undergraduate courses, government allocates funded places based on agreed student quotas. These have been relatively static in the recent past. There has been an expansion, however, in full-fee places, which typically bring higher monetary returns directly to departments. This has been driven by a growing international demand for both undergraduate places and graduate programs in areas such as business administration, which require some economics courses.

The major cost of production of economics training is salaries -- particularly those of academic staff. If the price of these factors of production rises, producers will provide fewer courses. There is a similar inverse relationship between quantity supplied and the price of other factors of production. Australian academic salaries have been relatively stable for the past four decades.

Since 1960 technology has undergone rapid change. Textbooks have improved. For example the early editions of Samuelson, McConnell and similar books contained few complementary features to support chapter commentary. Current texts and study guides typically contain a wide variety of features to assist lecturer delivery and student learning.