Economists research, analyze trends

November 10, 2008
I am frequently asked, "Just what does an economist do, anyway?" It is a surprising question, especially to an economist. It certainly is worth answering.

There are about 600 economics Ph.D.s produced annually in the United States, and about of a third of them are American students. Most work at colleges and universities, though a significant number also go to state and federal government (including the Federal Reserve banks). A smaller number go to work in industries or think tanks. Of course, lots of folks actually perform economic work without having a Ph.D. We don't give licenses.

Most economists spend some time teaching, but the vast majority of our time is spent doing research. Most research that economists perform consists of very narrow studies of a particular issue. For example, we might evaluate whether tax incentives have altered the rate of purchase of electric cars, or what the effect of a mother's educational achievement is on her children's earnings. The narrow focus of these studies is necessary to isolate and statistically test the relationships of interest. There are obviously lots of things that could cause people to buy electric cars; teasing out the effect of tax rates is the scientific part of the process (and truth be told, pretty darned fun, in a twisted sort of way).

Economists also run forecasting models of economic activity in regions, or for specific industries or occupations. Whatever research we do, the goal is to understand a problem and, if possible, draw general conclusions from analysis. Most of the rewards to academics (I call them Scooby snacks) come from having your work stand up to lots of external scrutiny. If the work helps a policymaker, so much the better.

Economists are largely in agreement about big economic questions. This does not necessarily translate into agreement about the right policy choices. For example, two economists can work out a mathematical model that evaluates the effect of income taxes on small business. They can obtain the right data, run the right statistical tests, and agree on the effect. They might agree on the exact amount of economic activity that will be lost to a tax increase. But they might differ on whether the tax increase is a good idea.

Differences in policy recommendations among economists occur for lots of reasons. Like all of us, economists engage in enlightened self-interest. And, as hard as it is to believe, economic policy isn't always the most important issue in the voting booth.

Economists are, I think, better about sticking to what they know than most other academics. That's why you'll never catch me writing about chemistry, sociology, music theory or best practices in early childhood education. Universities would be happier places if we spent more time learning outside our own fields but spent less time pretending expertise outside of them.

Truth be told, economic analysis is a bad place for partisan politics. That suits me fine. I'm not very good at it.


Hicks is director of the Bureau of Business Research at Ball State University. His column appears weekly. He can be reached at bbr@bsu.edu.
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