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Types of Economists

An economist is a social scientist concerned mainly with the collection and analysis of economic data. As social scientists, economists study the economic behaviors of people and institutions. They identify patterns of behavior, form generalizations and theories, discern economic trends, and make economic forecasts. Their specialized skills also influence economic decisions made by households, businesses, governments, global institutions, and others.

The U.S. Bureau of Labor Statistics (BLS) classifies economists as social scientists, a type of professional occupation. In 2010, there were 15,400 economists employed in the United States.[1] The Occupational Outlook Handbook 20122013, a publication of the U.S. Department of Labor, predicted slower than average job growth for economists from 2010 to 2020. As is the case for other occupations, the demand for economists is a derived demand. That is, the demand for economists is derived from the demand for the services they offer. Economists are valued for their quantitative skills, computer skills, research and critical thinking skills, and communications skills. These skills, in turn, make economists valuable human capital to businesses, academic institutions, and the government. In 2010 about half of all economists employed in the United States worked for the government at the federal, state, or local level. Job prospects for individuals with a master's degree or a doctorate in economics were considered good, far better than the prospects for job seekers with just a bachelor's degree. In 2010 the median annual wage for an economist in the United States was $89,450.[2]

Business economists are employed by private enterprises to analyze economic data and to help management make informed business decisions. According to the National Association for Business Economics (NABE), the nation's leading professional association in the field of business economics, business economists share three common qualities. They are “shrewd observers of what goes on both inside and outside the firm; enlightened analysts who can formulate and test promising ideas in an objective way; and persuasive communicators to management and others on behalf of the firm.”[3] Jobs for business economists expanded rapidly during the second half of the twentieth century as businesses redoubled their efforts to anticipate changes in national economic activity and reap the benefits of a more integrated global economy.

Academic economists are employed mainly by colleges and universities to teach, conduct scholarly research, and publish academic books and articles in the field of economics. Academic economists are also employed by private foundations, think tanks, and research institutes. In addition, they serve as consultants to businesses, government, and other organizations. Today many academic economists specialize in a defined field of study such as econometrics, economic history, industrial economics, international economics, labor economics, or public finance. One recent study showed that full professors at top universities that award doctorates in economics earned salaries in excess of $220,000 per year.[4]

Government economists are employed by the federal, state, or local government to collect and analyze data necessary to form public policy. The federal government hires government economists to work within its many departments such as Agriculture, Commerce, Health & Human Services, Labor, Transportation, and the Treasury. Many government economists are specialists. For instance, economists with strong backgrounds in money and banking are employed by the Federal Deposit Insurance Corporation (FDIC), Securities and Exchange Commission (SEC), Internal Revenue Service (IRS), and Federal Reserve System (Fed). Government economists are also employed at the state

U.S. Department of Agriculture and other federal departments employ economists. (U.S. Department of Agriculture)

U.S. Department of Agriculture and other federal departments employ economists. (U.S. Department of Agriculture)

ECONOMICS IN HISTORY: Government Economists Respond to Early Twentieth-Century Crises

The federal government employed the first government economists during the early twentieth century, an era of progressive reform in the United States. Shaken by the Panic of 1907, many reformers supported the hiring of professional economists to assist in the creation of public financial institutions and policies. During the Progressive Era, the Federal Reserve System (1913) was founded to stabilize the nation's financial system, Amendment 16 (1913) was approved to create a national income tax, and the Clayton Act (1914) was enacted to prevent monopolies from forming.

Another spurt in the hiring of federal economists occurred during the Great Depression of the 1930s. Economists helped President Franklin D. Roosevelt and Congress devise New Deal legislation, which reformed the banking system, supported family farms, created public works jobs, and initiated the Social Security system. Francis Perkins, a labor economist from New York, served as Secretary of Labor during the Depression years, the first woman to achieve cabinet rank.

Employment of government economists snowballed during and after World War II. During the war, economists were employed to mobilize the nation's resources and coordinate the nation's production and consumption policies to support the war effort. Economists were valued employees of the federal War Production Board, the Office of Price Administration, the War Labor Board, and others. Shortly after the war ended, the historic Employment Act of 1946 pledged government support for economic growth, full employment, and stable prices. This act also expanded the role of economists in public decision making by creating the influential Council of Economic Advisors (CEA). Today CEA is the inner circle of economic counselors who help the president develop and implement national economic policy.

and local levels to analyze data related to tax policy, regional economic development, urban planning, infrastructure, environmental protection, consumer advocacy, and so on.

Why Economists Disagree

Noneconomists may be perplexed as to why economists disagree about the causes or the solutions to economic problems. After all, economists tend to agree on the basic language of economics and share many common understandings about the methodology of this social science. So why do economists so often arrive at different conclusions?

One reason for disagreements among economists is that people's economic behaviors are difficult to predict. Economists, unlike their cousins in the physical sciences, cannot limit or control all of the variables in a laboratory setting. The economist's laboratory is the world of economic activity. In addition, disagreements among professional economists stem from economic modeling. The sheer volume and complexity of economic data requires that economists simplify reality. This is accomplished by constructing an economic model, which focuses attention on specific relationships among a limited set of variables. Even with the use of highly sophisticated mathematical models and computer technologies, a methodology referred to an econometrics, different economist can still draw different conclusions from data.

Finally, economists sometimes disagree because their professional views can be colored by their personal values or beliefs. Normally, there are fewer disagreements within the realm of positive economics than in normative economics. Positive economics, sometimes called descriptive economics, is concerned with “what is.” That is, positive economics deals with economic statements that can be objectively tested with data. “The national debt had climbed to $16.4 trillion by March 2013” is a positive statement because this claim can be objectively tested with data provided by the federal government. In this case, the statement accurately states the size of the national debt in 2013. Positive statements can also be proven inaccurate using the same type of testing. Normative economics, sometimes called prescriptive economics, offers a viewpoint on an economic topic or issue. Normative statements are subjective and often propose or comment on policies, programs, or other actions that “should” or “should not” happen. “The United States should initiate policies to eliminate the national debt within a decade” is a normative statement. That is, it prescribes a course of action that can be debated endlessly.

  • [1] U.S. Department of Labor, Bureau of Labor Statistics, “Economists,” Occupational Outlook Handbook, 2012–2013, 2012
  • [2] Ibid.
  • [3] National Association for Business Economics (NABE), Careers in Business Economics (Washington, DC: NABE, 1997–2001), 3.
  • [4] Charles E. Scott and John J. Siegfried, “American Economic Association Universal Academic Questionnaire Summary Statistics.” American Economic Review, 101 (3), 664–667
 
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