5 Powerful Attributes of World Class Economists
This article has been previously published on Research Galaxxy’s blog. It is the third article of a series titled “Are Economists Useless?”. To read the previous article, “5 Mistakes That Show That You Don’t Know What an Economist Is”, click here and join the ride.
Quality No. 1: be open to other disciplines
Social phenomena are multiple and complex. Consequently, there is room for theorization and for the numerous approaches in social science to each make their own contribution.
Economics, as a social science, is no exception. Despite the fact that the economic approach is still developing, two trends have distinguished themselves in the last few years. The first is a strong mathematical approach towards research in economics. The second tendency, related to the first, is the gradual oversight of the fact that economics remains a social science.
Indeed, economics has increasingly more in common with the “hard” sciences such as math and statistics than with the other social sciences. However, this is not enough.
After all, how can we improve the future if we do not know history? How do we understand the inner workings of human interactions if we have not studied a little psychology or sociology? How can we make society accept economic recommendations if we are not sensitive to their ethical implications, to their morals, and, more generally, to their philosophies?
Quality No. 2: know how to develop models to make better decisions
The other benefit of the growing formalism in economics is the ability to model the world. But be careful! Modeling does not mean theorizing.
In fact, even if we often hear of “theories” in economics- such as growth theory, game theory, contract theory, and so on — it is actually about modeling frameworks rather than “theories” in the proper sense of the term.
This ability to model, and to simplify the model to be both understandable and usable, is what distinguishes the economic approach most clearly from the other social sciences. It is this same capacity to model social phenomena that enables economists to structure various debates and conversations. In fact, what often appears obvious in a convincing speech must be reviewed with mathematical precision.
Quality No. 3: recognize that economics does not have fundamental law, but juxtapose models that are relative for the situation
If the economist is capable of identifying the basis for an issue and can speculate the first outcome, his weakness often lies in putting his conclusion in perspective. In fact, contrary to physics, economics does not have fundamental law and economists should not act like such laws have been discovered concerning the function of society.
This weakness of certain economists to not put their logical frameworks in perspective leads to a lack of credibility within the discipline, especially in light of recent crises.
The obvious lesson of these last few years is that the economic models are specific to the contexts for which they apply. Every model is simply a model, and not the model.
Quality No. 4: know how to navigate between economic models.
If there is a multitude of models, relative to the context to which they apply, another fundamental quality of a good economist is to know exactly how to navigate between these models. However, the navigation between economic models is very difficult because the critical characteristics of the models (would the removal of a hypothesis change the outcome?) are not always explained in research articles.
(If you would like to understand why this subject inspired us to create the startup Research Galaxxy, we invite you to click here).
Quality No. 5: work with data
Last but not least, today’s economists must (learn to) work with data. I am talking here about econometrics, as the way to apply statistical techniques to economics.
First, that’s where the current research frontier mainly is, although new research is also produced every day about theoretical approaches. Indeed, applied research by 2015 Nobel prize A. Deaton, but also techniques of randomized controlled trial whose world class pioneers are MIT’s J-PAL researchers, all put econometrics in front of the international scene. Their ability to check ex-post efficiency of public policies but also, in some case, to contribute to building better forecast models has been creating a momentum for the last 6–8 years.
Second, such statistical techniques make economists fit for other positions in finance, marketing and, more widely, in entrepreneurship. I’ll come back to this in another article coming soon.
Conclusion: if economists know that contradictory models exist, why do they have such a homogeneous image (of ultra-liberals) with the non-economists?
Economists now know that models may have different outcomes according to different contexts. Within academic debates, economists race to identify new imperfections within the market, rather than to make the best argument for the free market.
But then why is it that when a debate begins between an economist and a non-economists, the former tends to praise a free-functioning market?
“(…) economists do a bad job of presenting their science to others.” Dani Rodrick, Economics Rules — The rights and wrongs of the dismal science, preface xiii.
It is as though economists are afraid — rightly or wrongly — that the non-economists’ motives for setting limitations on the market are “bad” motives. Economists seem to believe that the non-economists who challenge the “law of the market” are inevitably lobbyists protecting their own interests, and who are incapable of a global approach.
Since the models founded on the free-functioning market are often simpler to understand than those based on the imperfections of markets, I have the impression that economists think that a non-economist cannot understand what they are talking about when they defend more regulation and a less free market. When this happens, it seems to me that economists prefer to support an inefficient, free-functioning market rather than a market regulated for “bad reasons”.
Economists must become more like educators. They must explain themselves in simpler terms, be involved in the real world, and become practitioners (and not only theorists).
Talk to you soon,
Quentin Roquigny,
Founder and CEO of Research Galaxxy
