Textbook Confessions: Government Policies and Market Outcomes

Abstract

This paper focuses on how government action in the market is presented in Economics Principles textbooks. It looks at whether the government’s role (and failure) is addressed in two topics, price controls and trade barriers, which are presumed by many outside of the economics community that they are strategic uses of government resources and will be efficiency enhancing. These topics are covered in all textbooks in our sample, and are typically explained, in economic fashion, as voluntary policies that subvert the market outcome. However, the motivations provided by textbook authors for adopting these measures are woefully inadequate. In particular, while authors regularly bring up the role of special interests when discussing the implementation of trade barriers, those pressures brought to bear in favor of price controls are rarely acknowledged.