Monday, February 18, 2008

How does economics change the world?

From a discussion thread in an online forum, someone asked a question: how do economics (and economists) save the poor of the world?
Ladies and gents, I'm on the fence here. I need some sound examples of how higher order economics has benefited the people in the LDCs. Give me proof that with all he equations formulated, and theories being expounded, the men and women on the ground in sub Saharan Africa benefit or stand to benefit from what economists publish in journals or ruminate about in their ivy tower armchairs. ... It also doesn't help when you have Muhammed Yunus, the founder of the Grameen Bank, proclaiming himself the impracticality of his academic work.
Many people responded by pointing some examples -- from Amartya Sen, Jeffrey Sachs to the Poverty Action Lab. But this is what I consider the best reply:
Honestly, if your goal is to help people, become a nurse or a midwife and move to Africa. I'm not being sarcastic, I'm being serious. That's the way to directly help people who need it, in a real, immediate, life-changing way.

Becoming an economist is at least as much about your own ego as it is about saving the world. To believe that you can help people by getting a PhD, you have to believe in a couple of things. First, you have to believe in slow, one-step-forward- and-two-steps-back progress. You have to believe that the long run matters, that it is conscionable to sacrifice today's wellbeing for the sake of the next generation. You have to be pretty optimistic. And second (this is where the ego comes in) you have to believe that you can add something to the discussion. That the ideas you have might just be the ones that change the world. And you have to be willing to spend a hell of a lot of time and energy on yourself before you will be in a position to help anyone else.

Research economics is about helping people the same way space exploration is about helping people: it contributes to our understanding of the world. And there are some short-run, oh-by-the-way findings that have practical applications that really help people, but those aren't the focus most of the time, and they certainly aren't what the training emphasizes.

And even when economists do have good ideas, there's a lot of politics between the proof and the implementation. So seriously, if your only goal is to help people, do it some other way.

But if you want to have a chance at participating in changing the way people think, at asking questions that no one else has thought of, if you think there is a chance that you will someday look at something in a completely new way, and you're willing to work your *** off just to see if that glimpse pays off -- then become an economist. If you thrive on poking holes in ideas, on asking "what if" just because you can, playing devil's advocate to your own devil's advocate, then grad school is for you. Just don't go into it believing that you are doing it for the good of mankind, or you are only setting yourself up for frustration. Coding in STATA does not save lives.
I remember someone in Exegesis and Ekonomi-Politilk Indonesia constantly asked why the knowledge of economists could not solve the problem of soybean price hike. I don't know why this guy even look for solutions in the blogsphere at all.

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