Saturday, September 4, 2010

Michael Hicks: What do economists do?

I did some office cleaning during the WVU vs. Coastal Carolina game this afternoon.  While I was sorting I discovered an excellent clipping I had saved from the Muncie Star Press by Michael Hicks, who directs the Center for Business and Economic Research at Ball State.
I am frequently asked, "just what does an economist do anyway?" It is a surprising question,
especially to an economist. It is certainly worth answering.

There are about 600 economics Ph.D.s produced annually in the U.S., 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 or not 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 they help a policymaker -- so much the better.

Despite a lot of jokes, economists are largely in agreement about big economic questions. . . .


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