Ed Rice, one of my former Finance professors, was once telling me how teaching Economics is different from teaching Physics.
Not exactly about how the science differs, but about how people react when being taught.
For example, a Physics professor walks into a lecture hall, puts some formulas on the whiteboard and states: “let’s assume we’re in a vacuum and all surfaces are frictionless”. Students obediently copy the formulas and start working with them, learning about the interactions between their terms. They soon start imagining their applicability in the real world, where these conditions don’t hold.
An Economics professor walks into a lecture hall, puts some formulas on the whiteboard and states: “let’s assume consumers have rational preferences, which are defined as…”. Ten students storm out of the lecture hall. Two students start crying. A more outspoken student yells from the back: “Surely people aren’t rational!”
The professor tries to explain: “you know, rational preferences mean…” Another student chimes in: “Rational? Are you even watching the news? Half the people in this country aren’t rational”. All students agree, not immediately realizing that they would disagree about which half.
A student wearing a designer Burberry t-shirt steps up: “Why are you implying that we’re all consumers? That’s predatory capitalism. Consumers is a no-no word, and from now on, please just refer to it as the c-word!”, while recording the interaction in their Swarovski encrusted iPhone for their TikTok followers.
At this very moment, the Physics professor steps into the Economics lecture hall: “Hey, you are being too noisy and disturbing my class. We’re doing science next door, can you please be quieter?” This helps. People start to calm down.
The Economics professor takes a deep breath. “As I was trying to explain, in Economics, rational preferences mean…”, but Burberry interrupts again, to the general agreement of other students: “We know what rational means - it means somebody who uses dispassionate logic and reason to make decisions. I did a survey among my Twitter followers and over 90% of them agree that people are not rational. Hashtag EconomistsSuck”. (Note: I don’t know if TikTok has hashtags).
Disheartened, the Economics professor tries their final weapon. “Ok, I know you’pre not cons… I mean, c-words, you are people. Do you people want to learn how to make a lot of money in the stock market so that you can buy whatever you want?” Everybody gets real quiet.
Spoiler alert: he’s going to tell them to invest in an index fund. Spoiler alert 2: they’ll buy crypto.