Can Economics Save the World?

Can Economics Save the World?

The University of Chicago has been the home of groundbreaking economics research for decades. The school boasts several Nobel-prize winning professors, two of whom are currently active members of Chicago Booth faculty—Eugene Fama and Richard Thaler. In addition, the school has been a staunch advocate for free speech and has constantly empowered students to ask tough questions. Such a rich culture and history makes the school the center of active debate on pressing issues related to economics and beyond. To carry this tradition forward, the school hosted Professor Abhijit Banerjee, the 2019 recipient of the Nobel Prize for Economics to discuss whether or not “Economics Can Save the World.”

As someone who had worked in the international development sector in India and was greatly influenced by the work done by Professor Banerjee at The Abdul Latif Jameel Poverty Action Lab (J-PAL), this was a discussion that was of great importance to me. I was excited to hear not just from Professor Banerjee, but also Katherine Baicker, Dean of the Harris School of Public Policy, Wally Adeyemo, President of the Obama Foundation, and Steve Levitt, William B. Ogden Distinguished Service Professor and the co-author of Freakonomics.

Professor Banerjee interacting with students from the University of Chicago. Picture Courtesy: Becker Friedman Institute, University of Chicago.

The panelists had a robust and lively discussion touching on a variety of topics from how economists could build public trust to how the cutting-edge research they do can be made more useful for policymakers and even how academic institutions need to be revamped to incentivize implementing research for social change. Across these topics, there were three main takeaways that stood out to me:

  1. Economics needs to be made accessible. Over the years, economists have ignored how non-economists think about the world and what to them is important. This has often resulted in economists using language that treats people as objects and not human beings who have their own lives and struggles, making them less relatable as a result. Professor Banerjee remarked that he wished to use his platform to incorporate human dignity into economic research and communication and other panelists highlighted the importance of making economics research real and understandable for non-technical audiences.
  2. There is value in positioning problems as “economic problems.”  Steve Levitt highlighted another important factor in helping common people see the value of economists and the work they do. From his vantage point, the answers people come to are heavily influenced by the lens they use to solve the problem. Consequently, economists need to convey to people that many problems, such as climate change, are in fact economic problems and are best suited to be solved by economists. This perspective shift could allow people to leverage economists when working to solve some of the most pressing issues of our times.
  3. It is important to make economic research useful for policymakers. There was a wealth of talent on stage when it came to using economic research to impact policymaking. Katherine Baicker, Michael Greenstone, and Professor Abhijit Banerjee have spent a lot of time working with governments around the world to see how economic ideas can be brought to life and used to solve real-world policy problems. Their message was clear: If economists wanted policy makers to act on their research, they needed to simplify their message and lose the second or third order insights in order to make their message implementable. This is something that economists have traditionally struggled to do, since the profession is designed to reward subtlety and nuances.

Overall the session was extremely introspective, focusing on how the academic profession needs to make small but important changes that allow really meaningful research to transform into actionable policy insights. In sum, this conversation fits in nicely with a typical day at the University of Chicago, where people are constantly researching and working to solve big challenges.

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