53 – Thinking like an economist 17: Strengths of economists

As part of a survey of policy makers and policy advisers in 2002 I asked, “What are the strengths of economists (relative to other disciplines) in providing advice or analysis on policy?”

All of the responses, without exception, highlighted positive aspects of the economics paradigm and approach to analysing problems. Positives identified included its potential for breadth, its ability to integrate diverse technical information, its focus on trade-offs and opportunity costs, its potential to consider distributional outcomes (winners and losers), its rigour, quantifiability, and robustness.

They provide discipline and rigour that other areas often lack. Economic measures are generally well understood and many other disciplines are qualitative. [Economists] allow comparisons to be made in a more objective manner. (Don McFarlane, Water and Rivers Commission, Western Australia).

The discipline provides a robust and fairly comprehensive analytical framework for assisting policy makers to make informed decisions. The strength of economics is that it facilitates clear and consistent policy formulation, advice and analysis. It must be noted that economics has its limitations (particularly as regards non-market goods). However, a good economist should clearly recognise and work within these restrictions. (Phil Connolly, NSW Treasury)

Logical application of basic economic concepts: opportunity costs, recognition of decision makers’ incentives to maximise net benefits. (Ian Wills, Monash University).

Economics is in my opinion by far the most rigorous of the social sciences. (I am not saying that the others have nothing to teach us.) (John Hyde, former member of Federal Parliament).

Ability to integrate information from a range of disciplines, some powerful analytical tools, often genuinely interested in policy issues, at ease with “constrained optimisation”. (Ross Kingwell, Department of Agriculture Western Australia).

A sound, consistent, quantifiable theoretical framework (Kym Anderson, University of Adelaide).

The most significant is that they can provide a way of clarifying or measuring the level of agony, use of resources and tradeoffs in a systematic way. (Roger Payne, Director General, Water and Rivers Commission, Western Australia).

Economics is about interdependence and opportunity costs. Economists are stronger on uncertainty than many other disciplines. (Alistair Watson, Freelance Economist).

A focus on broader issues and outcomes. (Mark Altus, Department of Treasury and Finance, Western Australia).

Economists have a tremendous advantage in being able to understand the “bigger picture”. And we should not underestimate the advantage of having an understanding of basic economic principles. Having concepts in the back of one’s mind like “public goods”, “externalities” and “market failure” give economists an advantage over others in the policy area. (Trevor Wilson, Queensland DPI).

Ability to analyse within the context of a rational framework. (Graeme Robertson, Department of Agriculture Western Australia)

General equilibrium/an economy wide focus, not just individual isolated sector. (Neil Byron, Productivity Commission).

Economists are also able to contribute to the policy debate in ways that others in the community can not or will not do. The economic paradigm provides us with a unique capacity to do this. Perhaps, for this reason, there is a tradition of providing independent advice in defence of the public interest that seems to be stronger within economics than in most other disciplines. This point was made strongly and repeatedly in the survey responses.

The profession of economics is at its best when it is defending the public interest in the widest possible sense. (David Bennett, NRMC Pty Ltd, Natural Resource Management Consultants)

A strength of economists is our tendency to focus on public interest outcomes. (Gary Stoneham, DNRE Victoria).

I think that there is a need for economists to try to reduce “pork-barrelling” and insert a degree of economic argument into political allocations. In the end society benefits more from Governments making sensible investment decisions, rather than using money to keep the current government in power. But it is an uphill battle. (David Bennett, Natural Resource Management Consultanting)

Economists are less likely to be captured by special interest groups. (Ross Kingwell, Department of Agriculture Western Australia).

Politics is overly dominated by self-interested groups. By focussing on efficiency, we can contribute to better social outcomes. (Colin Mues, ABARE).

Professional economists should not be in the popularity business. (Alistair Watson, Freelance Economist).

Born with talent, having acquired specialist knowledge at public cost and probably enjoying very satisfactory lifestyles at public cost, economists are not justified in ignoring public policy issues while they count the angels on pinheads. Of course, it would be extremely inefficient for individuals to devote large licks of effort to things they are not good at, but being privileged members of an open democratic society they should try to contribute to it. (John Hyde, former member of Federal Parliament).

David Pannell, The University of Western Australia

Further Reading

Pannell, D.J. (2004). Effectively communicating economics to policy makers. Australian Journal of Agricultural and Resource Economics 48(3): 535-555. full paper from journal (138K pdf) also available via the Journal homepage: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8489.2004.00256.x/abstract

Pannell, D.J. (2004). Is economics hard hearted? Pannell Discussions, No. 8, 12 July 2004,

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