Lessons from 35 years as a professional economist

As reported in the New Economist

Dr John Llewellyn, chief global economist at Lehman Brothers, has recently turned sixty. In the 7 August issue of The Observer he says this turning point led him to ask: "what, over the past 35 years as a professional economist, I have learnt that is of real use". Ten useful lessons for a sexagenarian is his answer. New Economist summarises his ten points below as:

1) Economic events - what economists call 'shocks' - seldom produce just one consequence. Usually the effects ripple on for years.
2) Good economic policies do not guarantee good economic performance; but bad economic policies inevitably result in bad performance.
3) It is structural, not demand-side, policies that most influence economic performance over the long term.
4) People respond powerfully to economic incentives.
5) Economic and social policies have to be considered as a whole.
6) Competition is one of the most powerful of forces that motivate the perpetual quest for more efficient ways of doing things.
7) History seldom, if ever, repeats itself precisely. Economies have the habit of producing new mixtures of circumstances that require new approaches.
8) Complicated economic policies whose rationale is hard to explain usually fail.
9) Some of the biggest, and most important, economic issues remain unresolved.
10) Just because professional economists don't always have a confident answer, it does not follow that all proffered solutions have equal validity. ...often the biggest contribution [they] ..can make is to demonstrate why the current fad or nostrum is wrong and will fail.

Its definitely worth reading the article and also the New Economist has an interesting summary of the latest evidence about migrant workers coming to the UK and the largely beneficial effects of this: In praise of foreign workers

RESEARCH MUST BE DEMAND- OR NEEDS- DRIVEN

Take a tip from a professional, experienced researcher and analyst – take some time to build a sound reason and rationale for a piece of work. Talk to people – especially the ones who are looking for intelligence or analysis to help them make a decision. Try and understand the context and needs from other people’s points of view. Remember – if you don’t supply them with intelligence or analysis that they can use, your work (and you) will not be valued.

Your needs: be clear about – The research question – what do you want to find out?
– What’s it for? What use will be made of the answer?
– Who is it for? Is it for a specific group of people?

The ultimate value of research is to help people make better-informed decisions. Sometimes its hard to determine exactly what those needs are if other people are involved. Often they don’t know about research in a particular field to be able to articulate exactly what they want.

How do you become a good analyst or economist?

The best way to learn about how do perform analysis, is to look at real life examples and have a go at doing analysis yourself. Also you need to get someone more experienced to review your work. This is the way I personally learnt how to do this. For this kind of work you need a critical eye, patience and concentration. Personally I think anyone with a sufficient level of education or motivation could do it. The rewarding thing about this is you will get better incrementally, and the economy is so diverse that you are constantly learning. Personally, I am still learning and hope to be in 50 years time.

Another issue is that to successfully triangulate and cross-examine, you can’t do this alone. You need other people to scrutinise information and your initial analysis. A few heads are better than one. Other people may spot something you didn’t. A lot of economists get hung up and precious about their work and do not like criticism. A good analyst welcomes criticism and embraces the pedant. I like nothing better than the most pedantic, nit-picking, irritating proof reading and reviewing of my written work and outputs. I like someone who can at one level, pull apart an analytical point and tell my when I am wrong, and at the other level, identify a mistake in one of my table headings. High quality control yields even higher quality at the end. Some economists don’t like this – I always think that they have something to hide. Its my suspicious nature.

Analysis – how to learn and get better

1. Doing: Have a go – learn by doing
2. Learning together: Learn off someone experienced – read their work, have them review yours
3. Reflection: Be your best critic – analyse your own work – ask if your analysis and conclusions are watertight
4. Validate: Always ask yourself – ‘what is the evidence telling me, what can I confidently say from it? Is there anything I am saying that the evidence doesn’t justify?’
5. Peer review: Always get an experienced person to proof-read, review and validate you final report. Get them to provide constructive feedback.

The professional challenge as an analyst is that your piece of analysis is of high quality, robustness and is valid before you give it to anyone else to proof read or check. You will learn, as you become an analyst that there are few things more insulting than wasting your time checking a piece of work that has not had enough thought, care and attention put into it.

That old chestnut Market Failure...

Does anyone believe or use it any more!? Here is a list of the "ususal suspects" of market failure as relating to business support (SMEs usually).

Big problems for me in trying to apply market failure:
- lots of theory, little evidence - rarely is there good robust evidence that MF is occurring
- poor monitoring and evaluation - so we can't decide that if there was a MF in the first place, whether we have cured it or not

Quite a bit of business support is actually fairly closely related to MF. But some of it isn't. Personally I think its going to be useful to look into it in more depth. I have a lot of surveys and statistical things and my disposal and it looks like its time to dust off the SPSS manual...

Rationales for business support

Its basic, yes I know but have I covered off all the angles here? it might seem like teaching grandma to suck eggs but round here we really are getting back to basics after inheriting 3000 seperate projects from the Government Office!

Anyone got anything to add?



Another one in market failure will be posted soon.

Do small businesses really care about regulation or is it another red herring???

Been taking some evidence from some business people - mostly people on business representative organisations. Someone was moaning that regulation is the curse of small business.

I am not convinced really. What difference would less red tape make to the bottom line of a business? When I have seen decent research ranking the challenges that businesses face themselves - competition and market conditions are always number one and regulation is way way down, below skills, transport etc.

I think a danger is that red tape could be something else we get lumped with but can do feck all about.

Red tape would be an easy win for the public sector. Surprised Gordon Brown isn't into doing more about it. But he likes to create it too.

Also - are we headed for a recession? does this kybosh Gordon B's plans to become Prime Minister if he presides over an economic catastrophe? the public's memory tends to be myopic in the face of mortgage reposessions.

Anyhow meandering thoughts continue to permeate my brain...