Tom Green was working as an environmental consultant for a native group when he encountered a question he hoped the economics field could help him answer: Why was a nearby highway that seemed to make little environmental sense being built? Throughout his work he came across this type of scenario, where environmental interests interacted (and often conflicted) with economic ones. Thinking back to his own education in economics, he began to wonder what students were being taught about the environment in the economics classroom.
Dr. Green became obsessed with that question. “Every time I was at a university, I would look in on economics classes, scan the textbooks,” he said. “I wanted to know how the relationship between the economy and the environment was conceptualized.” His answer, which took Dr. Green several years and a PhD at the University of British Columbia to come to: The environment, for the most part, wasn’t discussed in any meaningful way.
In one way or another, every university in Canada has publicly pledged its intention to address the environmental challenges facing the planet. So if students destined to become business and academic leaders with influence over how the economy works weren’t encountering the environment in their studies, it seemed to Dr. Green to be a glaring inconsistency. “It’s almost as if the economy occurs in this mystical space where the environment is assumed to be fine and can provide all of the resources needed,” explained Dr. Green, now an ecological economist.
Business is arguably one of the leading departments (outside environmental studies, of course) when it comes to efforts to integrate sustainability into the curriculum. However, business schools also rely heavily on theory from economists. So if Green’s environmental criticisms of conventional economics classes are legitimate, are business schools truly educating students in sustainable principles of practising business?
Mike Moffatt, an assistant professor who teaches economics at the University of Western Ontario’s Richard Ivey School of Business, says that business schools do a better job of teaching economic theory that takes the environment into consideration than economics departments. Environmental interests are accounted for in conventional economic theory as externalities, which are unintended costs or benefits of an interaction incurred by a third party. “To me, it borders on academic misconduct to do an introductory economics class and skip over externalities. That’s how important they are,” Dr. Moffatt said. “In my introductory economics course for MBAs, externalities typically take up 15 to 20 per cent of the course.”
In his research for his PhD dissertation, Dr. Green looked at the content of introductory economics classes by analyzing economics textbooks and interviewing students and professors. Most business school students are required to take economics and, depending on their program, introductory classes may be the sole source of their education on economic theory. Dr. Green found that mention of the environment typically didn’t occur in these lower-level economics classes.
Consider this example: most textbooks use an analogy such as a bakery to illustrate the concept of diminishing returns. Simply put, the connection is made between labour, capital and output. “But there’s never any raw material going into this bakery or waste coming out,” Dr. Green explains. “Magically, you add labour and you get more bread without needing more flour.”
Yet, Dr. Green agrees that business schools teach economics more pragmatically when it comes to the environment. “The theory of the firm that the students might learn in an economics department may have little to do what actually happens in a corporation,” Dr. Green says. “But what students learn in business school has to be more grounded in reality because students won’t tolerate it if what they’re learning is completely unrelated to what they’ve experienced in their own professional lives.”
Some business school students are seeking out alternatives to conventional introductory economics courses. Simon Fraser University is one of the few Canadian universities that have introduced a class in ecological economics. Jonn Axsen, an assistant professor in the School of Resource and Environmental Management who teaches ecological economics, says, “My concern is that it is still easy for business schools to address the environment in a flippant manner.” That said, Dr. Axsen believes that real efforts to make meaningful change are happening in most business schools.
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