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Professionals who study and analyze the production, distribution, and consumption of goods and services, as well as the behavior of individuals, businesses, and governments in the economy. Economists use economic models and data to understand and predict economic trends and to inform policy decisions related to issues such as inflation, unemployment, and international trade.

Economists

- Adam Smith
- Thomas Malthus
- Friedrich Hayek

Great Economists

In a video discussion, economists Thomas Piketty and James Heckman explain how collecting data is fundamental to their research on economic inequality and the development of policies to reduce it. Heckman argues that data is essential for testing and differentiating between competing economic theories, a capability that earlier economists like Adam Smith lacked despite their profound ideas. Piketty reinforces this by cautioning against developing overly sophisticated theories that are not grounded in empirical facts, advocating for a more systematic collection of data, especially historical data, to enable proper comparisons and inform public debate. Both economists agree that this data-driven approach is critical for understanding complex issues like economic inequality and for designing effective policies. Piketty also suggests that while data is not a cure-all for social conflict, it is a prerequisite for a more rational and informed public discourse.

Piketty and Heckman on Why Data is Fundamental for Inequality Research and Policy

Lionel Robbins was an influential British economist who, in a 1932 essay, put forth a seminal definition of economics that has become a cornerstone of the field.

Lionel Robbins

Léon Walras (1834–1910), a French economist, was a key founder of the neoclassical school of economics. After an unremarkable academic start, which included twice failing the entrance exam for the prestigious École Polytechnique in Paris, he pursued an engineering degree at the École des Mines de Paris. His career shifted toward economics when his father, also an economist, persuaded him to work on establishing economics as a formal science. Walras developed a significant mathematical model of a whole economy, premised on the idea that buyers and sellers are price-takers, which has profoundly influenced how economists view and analyze markets.

Léon Walras (1834–1910)

Imagine you are an economist hired by a government agency to investigate a sudden and significant increase in the price of gasoline over the past three months. Your task is not to propose a solution, but to outline your analytical approach. Describe the distinct categories of factors you would investigate to understand the causes of this price change and the types of data you would need to collect for your analysis.

Analyzing a Price Surge

A country is experiencing a rapid increase in the price of housing, making it difficult for many people to afford a home. A politician suggests that the problem is 'corporate greed' and proposes a law to cap all housing prices. From the perspective of a professional who analyzes economic behavior and trends, what would be the most appropriate initial action to understand this situation?

A country's government reports that the national unemployment rate has risen significantly. A professional who studies economic trends is hired to advise on the situation. Which of the following actions best represents the core *analytical* task this professional would perform to understand the problem?

A city is experiencing severe traffic congestion. Four professionals offer their initial analysis of the problem. Which statement best represents the perspective of an economist?

Match the economic issue with the primary analytical approach a professional who studies the economy would use to understand it.

As an economist hired by a city council, you are asked to evaluate the two arguments presented below regarding a proposed 'soda tax'. Critically, explain what key information is missing from both arguments that would be central to your own analysis of the tax's potential impact on consumer behavior and business revenue.

Economist's Approach to a Policy Debate

The primary function of an economist is to determine the ethical and moral rightness of a government's economic policies.

A city government is concerned about low wages for unskilled workers and is proposing to double the minimum wage. Proponents argue this will directly increase the income and living standards of the city's poorest residents. As a professional who analyzes the behavior of individuals and businesses in an economy, evaluate this proposal. Your evaluation should identify one likely positive outcome for the intended group and one potential negative, unintended consequence for the broader city economy, explaining the reasoning for each.

Evaluating a Minimum Wage Policy

A country is experiencing a high rate of inflation. Two analysts are asked to provide their assessment. Read their approaches and determine which one better represents the methodology of a modern professional who studies the economy. Justify your choice.

Evaluating Economic Analyses of Inflation

A city government proposes making all public transportation free to its residents. A politician supports the proposal, stating it is "the right thing to do to help low-income families." In contrast to this moral argument, briefly describe two distinct analytical questions an economist would ask to evaluate the potential impacts of this policy.

Analyzing a Public Policy Proposal

Economic historians are scholars who apply economic theories and quantitative methods to the study of historical events. They analyze the history of economies and economic institutions to understand long-term trends, the origins of growth, and the causes of phenomena like the Industrial Revolution and the Great Divergence.

Economic Historians

William Nordhaus is an American economist renowned for his work on the economics of climate change, for which he was a co-recipient of the 2018 Nobel Memorial Prize in Economic Sciences. He is a pioneer in developing integrated assessment models (IAMs), such as his Dynamic Integrated Climate-Economy (DICE) model, which integrate insights from economics and physical sciences to analyze climate change policies. Nordhaus is also known for his critique of the 2006 Stern Review, where he argued against its use of a very low discount rate, and for his research questioning the accuracy of standard economic growth measurements, using the history of lighting as a key example.

William Nordhaus

Michael Spence is a Nobel Prize-winning economist, best known for his job-market signalling model, which was the subject of his PhD dissertation. His work demonstrated how individuals in a market with asymmetric information, such as job applicants, can use costly signals like education to convey their private information (e.g., productivity) to uninformed parties like employers. He was a co-recipient of the 2001 Nobel Memorial Prize in Economic Sciences for his analyses of markets with asymmetric information.

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