By Peter Siminski*
Economics is about organising markets in ways that contribute to social welfare, which means anyone interested in anything from inequality to housing affordability, to health and education systems, or climate change to gender gaps ought to be interested in it.
But economists are far from the most trusted professionals. We are apparently among the least-trusted in the US and midway down the ranking in the United Kingdom.
In Australia, such surveys on our most trusted professions don’t include economists, which itself is noteworthy.
Nevertheless, it’s worth reflecting on why Australians may distrust economists, and the ways in which economics can better serve Australia.
1: Weak diversity and reflexivity
Diversity is imperative for a field that helps make decisions about the allocation of resources.
At high school, economics students are increasingly male, and concentrated in metropolitan and high socio-economic status locations.
Only 0.5% of Indigenous graduates identified economics or econometrics as their main discipline in the 2021 census.
Two-thirds of the Australians employed as economists are male, and although university economics departments have improved recently, they are still notoriously male-dominated.
Compounding this is that – unlike other social sciences – mainstream economics is not a tradition where reflexivity is encouraged.
Reflexivity involves reflecting on one’s background and environment.
Nor are economists often encouraged to reflect on the role of power in the promotion of the ideas they and others espouse, including in the media.
2: The media and conflicts of interest
Economists span academia, government, private and not-for-profit sectors.
But those appearing in the media appear to come disproportionately from banks, other financial institutions, management consultancies and think tanks. Particularly worrying is that some think tanks do not disclose the identity of their donors.
The media seems uninterested in holding them to account for this. In contrast, all reputable academic journals (and The Conversation) require authors to declare any potential conflicts of interest as a condition of publication.
Also worrying is that some think tanks seem particularly ideologically driven.
In my view, the media should be much more critical and discerning in its engagement with economists and potential conflicts of interest.
And more space should be made for academic and public-sector economists.
Choices as to who is quoted should be guided by informed attempts to identify genuine expertise, as well as by diversity considerations. The opposite approach, sensationalism, is irresponsible and detrimental to the public good. And it contributes to distrust in economists.
Equally, academic economists should strive to contribute more to national economic debates. A realignment of incentives within universities would help.
3: Efficiency preferred to equity
Decisions made by governments usually affect both the “size of the pie” (loosely, what economists call efficiency) and how it is shared (equity).
How to balance this trade-off is a question of values, about which economists have no special insight. But we are well placed to summarise the likely distributional implications of policies.
It is true that many economists are at the forefront of research on inequality, but it is also true that economists often focus too much on efficiency.
It is rare for economists to explicitly discuss the implications of government decisions for both. Recent examples are debates about increases to the minimum wage and to JobKeeper payments in the context of containing inflation.
4: A heavy international focus
Most of our best and most prominent economists were trained overseas, which is a double-edged sword.
We should continue to help top students to study at the world’s best institutions, and continue to recruit top economists globally. But we should accept that this can come with the price of reduced interest and engagement in Australian issues.
In my view we should balance this by also creating a truly world-class Australian postgraduate training system, perhaps through cross-institutional collaboration, drawing on strengths and creating economies of scale.
Such programs run successfully in Europe. This has been discussed many times by academics in Australia, but it requires government resolve to happen.
5: Declining economics training
It’s also hard to trust economics if you don’t understand it.
Year 12 enrolments in economics have fallen by about 70% since the 1990s. In New South Wales at least, economics has been mostly replaced by “business studies”.
The study of economics has also declined strikingly compared to other fields at universities.
Census data shows that only 1% of university graduates under 40 specialised in economics, compared to 2.5% of those now in their 70s.
Management and commerce degrees are much more popular, producing 23% of graduates across all ages.
While these degrees do include some economics, it is usually in only one or two compulsory units.
6: Overconfidence
While it was once said that every two economists had at least three opinions, reflecting the inherent uncertainties in the discipline, economists seem very sure of themselves in the media.
A large dose of humility would help, and it would help build trust.
The media and consumers of the media should seek out the voices that acknowledge the necessary uncertainties.
*Peter Siminski, Professor of Economics, University of Technology Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.
10 Comments
It is because the field itself is full of historic contradictions to its theory nonsense.
Why does the financial cycle exclude debt in the modeling? Why is change in interest rates assumed to drive growth rather than growth driving interest rates? Why is free trade lauded for development when the Americans, Germans, Japanese and Chinese grew on protectionist trade policies for industrialising. Why is the term 'free market' used to mean free from government intervention today, when it originally meant free from rentier capitalism (landlordism, parasitic toll collecting etc) to the original economists? Why does it focus on deductive reasoning from mathematical assumptions like equilibrium?
Economics is a subject of deception and misrepresentation in the contemporary world, a sort of ideological justification for the structure of our contemporary financial system. I remember asking why we were all moving to 'service' economies of selling mortgages and coffees when obviously manufacturing economies produce tangible goods when I was in high school many years ago. It was simply assumed this was true and the natural course of value growth. Yet now we see as Russia crushes Ukraine in artillery, the West can't manufacture enough to compete in artillery battles. Due to this we depreciate true wealth generation (manufacturing) for its surrogate, fiat wealth generation (service economics). China has a huge service economy to support its manufacturing because it cultivates those accountants, lawyers, software engineers etc too.
The subject can easily be shown to be nonsense, nothing more than a priesthood who cut open the liver of hares to discern the fates. If economics demonstrated how economies functioned, why do economists not become wealthy? If you could really read the fates, you could discern the future enough to make money from those predictions. Implicitly if you could do so, you would do so. Therefore anyone teaching economics or publicly preaching an economic system who is not wealthy by means of their predictions isn't to be assumed to know anything. They wear suits to give themselves legitimacy. Same with the application of higher mathematics, probability and statistics to justify whatever idea through some mathematical model.
The subject is distorted by its overreliance on deductive reasoning from assumed axioms (which aren't necessarily true), rather than inductive reasoning from historic observation.
Money and debt and how it is created are fundamental to economics and yet mainstream economists place no importance on it and none even seem understand that the banks and governments create it but money is just a circular flow in their eyes. Governments spend taxes or borrow money and banks lend out their customers deposits or other funds they believe and this is why so much of what they predict is inaccurate.
Only MMT gives us a correct understanding of banking and government finances.
'which means anyone interested in anything from inequality to housing affordability, to health and education systems, or climate change to gender gaps ought to be interested in it.'
Nope.
Those things are all dependent on stocks being available. and economists don't measure stocks. Or energy. Or entropy, except as 'funding for depreciation'; which is about as far removed as you can get from the coal-face.
Why do I give an author zero credibility when he starts spouting off on diversity and inclusion and equity? The answer is obvious. Like most economists, he is absolutely clueless as to his role. If he thinks his job is to promote his students as per the above buzz words, then he gets lots of trendy woke brownie points from the usual suspects,and his department goes down the Swanee. Maybe he should focus on teaching his students about gathering and collating information, and then passing it on to the people who pay them, without adding their own opinions. This only detracts from what they're supposed to be doing.
Why do I give an author zero credibility when he starts spouting off on diversity and inclusion and equity? The answer is obvious. Like most economists, he is absolutely clueless as to his role.
No he's not clueless. However, if you don't follow the woke agenda in tertiary institutions, you're running career risk. Virtue signaling is part of self preservation for many academics. 6 out of the 7 universities in NSW are running at a loss btw.
People distrust anyone who tells them what they don't want to hear. Nobody wants to change their mind and they will believe anything that aligns with their views, irrespective of the quality of research that went into that information.
For example, COVID vaccine side effect research. I remember speaking with two friends, one for the vaccine and one against. I said how about I share some research data without sharing the conclusion beforehand. Would they be willing to consider data based on the reputation of the medical school that produced it and the scientific journal it was published in, if I didn't tell them beforehand what the findings would be. Both of them were surprised to find they didn't want to do that.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.