Economists research, analyze trends

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.

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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.