Why do we need economists and the study of economics?
A question or a challenge? From a personal perspective, the study of
economics has provided me with a systematic framework for analyzing, researching,
writing, and teaching about a wide array financial and regional economic
issues. Economics has provided me with a methodology for understanding
and making sense of our complex environment. As a Federal Reserve economist,
one of my responsibilities is to share that knowledge through publications,
presentations, and Web-based products, so that it may be beneficial to
However, enough from Dr. Econ. Let's defer to Professors Paul A. Samuelson
and William D. Nordhaus, who define economics as follows in the 1998 edition
of their well-known text, Economics:
Economics is the study of how societies use scarce resources to produce
valuable commodities and distribute them among different people.
Behind this definition are two key ideas in economics: that goods
are scarce and that society must use its resources efficiently. Indeed,
economics is an important subject because of the fact of scarcity
and the desire for efficiency.
Samuelson and Nordhaus also provide some insights into the role of economists
in Chapter 1 of their book. They declare that, "Throughout the world
economists are laboring to collect data and improve our understanding
of economic trends." Moreover, as they note, economists are studying
and trying to explain a wide and expanding array of activities, ranging
from international trade to unemployment and inflation, from investing
retirement funds to controlling pollution. Economic analysis, both theoretical
and empirical, can generate important insights into individual and aggregate
behavior and relationships, and help in society's efforts to use scarce
resources in a more efficient manner.
Samuelson and Nordhaus also have an answer to the second part of your
question about the need for economists, when they write:
You might well ask, What is the purpose of this army of economists
measuring, analyzing, and calculating? The ultimate goal of economic
science is to improve the living conditions of people in their everyday
lives. Increasing the gross domestic product is not just a numbers
game. Higher incomes mean good food, warm houses, and hot water. They
mean safe drinking water and inoculations against the perennial plagues
Thanks for asking!
Samuelson, Paul A., and William D. Nordhaus. 1998. Economics.
Boston, The McGraw-Hill Companies, Inc., Chapter 1, pages 3-7.
Baumol, William J., and Alan S. Blinder. 1988. Economics: Policy and
Principle. Harcourt Brace Jovanovich, Inc., Chapter 1.
Education, FederalReserveEducation.org, 2003