All You Need to Know
What makes a successful economist?
A wise economist once said of new theories ‘if everybody likes your idea it means you’ve done nothing important’. Provocative? Yes, a little. Its sentiment though, rather than a clarion call for economists to adopt a wilfully antagonistic outlook, is better read as a request for bravery, for the courage to find answers to questions that may upset the status quo. Well, that is at least one possible interpretation…
Regardless of the economist’s actual intentions, the statement’s celebration of a fearless approach to research leads to a larger, more encompassing question: in our global age, what are the requisite skills one must possess to make it as a ‘successful’ economist? The answer is, of course, hugely subjective, fluctuating as economies diversify, entwine, rise and fall. Here, we will do our best to dissect the query, answer it for the now, and identify some of the age-old, must-haves—an aptitude for mathematics, for example, forever imperative—and some of the new skills expected of the next generation.
A brief interlude of encouragement
The ‘now’ is, by any standards, a remarkable time, economists across the board referring to it as one of the ‘most exciting and challenging’ moments to enter the field. Many economic models and presumptions of the past—some previously sacrosanct—are now defunct, and a consensus has grown, doubting our current capacity to tackle the pressing problems economies of the world now face. Whether it’s in confronting climate deterioration, demographic change, automation, or inequality, neoliberal orthodoxy has found itself woefully ill equipped. To borrow the words of economist Howard Reed: ‘until we ditch the old textbook, we’ll never face up to the challenges of the modern world’.
So far, there has been little sign of this happening any time soon; as Prospect editor-in-chief Tom Clark has observed of most Western governments, ‘out-dated frameworks still inform policy prescriptions’. The responsibility, thus, lies with the next generation of economists to combat this deficit of ideas. Optimistic, open-minded, not yet institutionalised, it is they that must provide the innovation and energy needed to revitalise the discipline, and guide our future path. Think you have what it takes? Let’s see.
What’s needed - the basics
To avoid getting ahead of ourselves, lets start with the basics, and by basics we mean the essentials; the ‘all economists must have these’. It will be no surprise to know (it is mentioned just above) that a talent for mathematics is vital to any aspiring economist; maths operating as it does as the foundation from which much of one’s eventual arsenal is subsequently built. In particular, this means the ability to analyse statistics; deal with myriad variables; identify patterns; and finally, utilise all of the above, to reach considered conclusions and forecasts. Competence in these areas will also help one navigate popular economic software such as ‘Matlab’, a great tool for the implementation of algorithms, and ‘R’, a useful environment for statistical computing. Variants of these software will, through necessity, become your future friends; it’s probably best to make their acquaintance as soon as possible.
For those not (yet) comfortable with handling large numerical datasets, or interpreting visual data, it is advisable to take a preparatory/refresher class in maths before the onset of any prospective study or work in the field. If you fall into this category, fear not: many undertake this recourse, and it’s arguably a sensible endeavour for anyone setting out, just to keep you on top of your game.
In addition to mathematical proficiency, it’s incumbent on any economist to be curious; specifically, to hold an interest, or better a fascination, in why things are the way they are, and as a corollary, how they can be bettered. Thinking of solutions is, of course, predicated on the ability to identify the problems, the important ones that is—unfortunately, this is not always as simple as it may sound. To aid this, one must be flexible, and to borrow a frightfully overused cliché, be able to ‘think outside the box’, looking, at times, beyond the strict parameters of economics. Avoiding isolation in the ‘ivory tower’—a common charge aimed at economists—is a great starting point.
Another simple, yet crucial skill, particularly in our information age, is communication, in a clear and concise form, both verbal and written. In their raw form, the complexities of economies, big or small, can be incomprehensible; most people, we should remind ourselves, are not economics PhDs. That economic factors underpin so much governmental policy means it is imperative that decision makers and ultimately the public are up to speed on economic issues, prospective policies and the like. Thus, sophisticated information must be distilled into understandable, accessible language. This is quite the skill, and its absence from public discourse can be potentially very damaging. Few would argue, for instance, that the British electorate had all of the relevant facts at hand when deliberating withdrawal from the European Union. Communication, accordingly, must be mastered. More detailed advice as to how this particular skill can be honed can be found in James Matthew Alston’s soft skills article.
The changing face of economics – a behavioural turn
Events of recent times have made additional demands of the economist, forcing a broadening of analytical perspective, and an increased focus on ‘behaviour’. In particular, the failure to predict or prevent the crash of 2008 exposed the inadequacies of economists’ methods. Pre-crash orthodoxy assumed people observed the following step-by step process when confronted with a risk-laden decision. First, the subject was to list all possible outcomes of all possible options, attaching a value to each, indicating its potential risk. Next, came a considered assessment of all foreseeable probabilities. And then, on the basis of this comprehensive analysis, the subject was to arrive at a decision. Rational? Certainly. Realistic? Well… of the people you know, how many discriminate by such formulaic and emotionless means? It feels distinctly non-human; in fact, it’s bordering on the robotic. Evidently, such procedural thinking was absent in the lead up to 2008; indeed, during this time many behaved in overtly irrational, and in some cases inexplicable, ways.
In response—some say belatedly—economics has taken a ‘behavioural’ turn, the field increasingly querying why people behave towards risks in ways that do not necessarily benefit them, incorporating psychological, cultural, social, and emotional factors into the inquiry.
For this reason, modern economists are expected to be capable (and willing) to depart the traditional ‘comfort zone’ of economics, and take up an interdisciplinary approach to research. The day when the mastery of mathematics was sufficient is, alas, well and truly over. Much current day economic investigation is now reliant on an understanding of psychology, political science, history, and sociology—new, yet vital, strings to the economist’s bow.
What this approach brings—the perks
Harnessing the social sciences can bring deeper insights into real-world phenomena, helping explain less predictably made choices, and allow planning for otherwise unseen outcomes—in essence, it broadens the economist’s means of analysis. As psychologist Shahram Heshmat has commented, the combination of economics and the social sciences ‘can be used to create environments that nudge people toward wiser decisions and healthier lives’. Effectively done, this can help immunise actors—be they individuals, groups, companies, etc.—from potentially confusing external factors that interfere with sound decision-making.
For competence in this area to be achieved, young economists are advised to gain a working knowledge of both the theoretical basis of these subjects and some of the methods they employ. While at university this can be easily obtained through wisely selected electives and online courses in the respective fields. It should be remembered that the skills covered here are just a few of the fundamentals; there exist disparate fields of economics that will also require more nuanced abilities. Nonetheless, if you’re confident you’ve got the above covered, you’re well on your way.
Economics appears to be at something of a crossroads, aware of the need for a new direction and yet unsure of which path to take. With the stakes so high, rarely has making the right choice been so important. Much responsibility now lies with the coming generation of economists to bring about the ideas economics requires to ensure the next steps taken are the right ones. If you possess the attributes listed, now could be your moment.
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