What do economists do?

Ask an Economist
Question: 

I’m a student at Centennial High School in Pueblo, Colorado. I had a few questions about being an economist. What is it like being an economist? What do you do on a day-to-day basis? What benefits do you get from being an economist?

Answer: 

Economics is a science, and the goal of all sciences is to better understand phenomena that we observe in the real world. In social sciences, like economics, the focus is on phenomena related to human behavior; and for economists, the particular phenomena of interest are the decisions made by households and businesses, the role played by the market mechanism in coordinating those decisions, and the influence of government policy on market outcomes.

Economists work in a variety of different kinds of jobs. Some economists work for business firms engaged in a wide range of activities including financial service firms – like banks, insurance companies, and credit card companies – but also including manufacturing firms, health care companies, retailers, airlines, agribusinesses, etc. The job of these private sector economists is to use their understanding of consumer behavior and of how markets work to advise firms on business strategy. Many economists work for government at the federal, state, or local level. Their job is to analyze public policy proposals and evaluate them for the impact they might have on things like inflation, unemployment and wages, government expenditures and tax revenues, income inequality and poverty, natural resource use and conservation, environmental quality, economic growth, international trade patterns, and the general welfare of society as a whole, or of specific segments of society.

Another large group of economists have jobs like mine: They are professors of economics in colleges or universities. For me and for other academic economists, work responsibilities fall into two main categories: teaching and research. Classroom teaching is the most visible and best understood part of a college professor’s job, and college-level classes in economics are offered at many different levels and in many sub-fields of economics. Many college students begin and end their study of economics with just one or two basic, introductory-level classes. At Iowa State, as at many other colleges and universities, entry-level economics classes are among the most heavily enrolled classes in the entire institution. For students in these classes, the main goal is to introduce some concepts and some simple analytical tools that will help them make sense of the contemporary economic policy issues we all read and hear about in the news. Other higher-level economics classes develop the depth of knowledge and the skills and proficiencies that students will need for an undergraduate major in economics. The subject matter in these classes tends to rely heavily on mathematics, in the construction of theoretical models that can aid our understanding of economic phenomena, and on statistics, for testing the predictions of economic models and forecasting the future paths of key economic variables. A bachelor’s degree in economics provides employment opportunities in business and government. But beyond their understanding of the way the economy works, economics majors are also prized in the job market more generally for their quantitative skills, their precision and clarity of thought and expression, and their careful and disciplined use of data in seeking answers to questions. A bachelor’s degree in economics also provides a springboard to further study at the graduate level; in economics, or in related fields such as business and law.

Beyond their teaching role, most academic economists are also expected to conduct research that amounts, essentially, to a quest for answers to economic policy questions of interest. Examples of the kind of questions economic research might address include: What would be the impact on labor markets of an increase in the minimum wage? How do U.S. policies that promote renewable fuels affect the quality of the environment? What sort of changes to the Social Security system would better ensure the program’s long-run sustainability? Sometimes the research effort to answer these questions proceeds through the construction and analysis of mathematical models of the underlying economic phenomena. Sometimes the research involves the collection and scrupulously careful analysis of economic data. Research results are disseminated through publication in academic journals, so that the conclusions can be checked, validated or refuted, and possibly extended by other economists. Ultimately, of course, the goal is that the findings of economic research will help to enlighten public policy decision-making and result in more effective laws and a more rational design of government institutions. Many academic economists regularly interact with public officials in an effort to translate their research results into practical guidance for policy-makers.

What benefits do I get from being an economist? As with any other profession, there are certain material benefits. The American Economic Association has a very good website (www.vanderbilt.edu/aea/) that provides a great deal of information about careers in economics including information about typical earnings profiles.

But, also as with any other profession, some of the most important career benefits are considerably less tangible than salaries and paychecks. As an academic economist, I find both the teaching and research aspects of my job to be personally gratifying. On the teaching side, it is very rewarding to be able, through my work in the classroom, to help intellectually curious students develop an economist’s rational and organized approach to thinking about pressing policy issues of the day, and to gain a better understanding of them. Over my long teaching career, I’ve had the opportunity to watch many of my students go on to their own successful careers in business, government, or academics. To the extent that my teaching has made even a small contribution to their success, I can enjoy the satisfaction of a job well done. On the research side, I suspect that the rewards of being an economist are quite similar to the rewards experienced by scientists in any other field. Curiosity about the “how” and “why” of things leads one on a pursuit of answers. Difficult problems that initially seem intractable occasionally will, through patient and dedicated effort over time, yield to solutions, giving way to the joy of discovery that is the ultimate reward for any kind of successful intellectual inquiry. In this respect, the rewards of research in economics are no different than the rewards experienced by researchers in any other science.

Category: 
Tags: