Thursday, August 17, 2006

Painting by numbers

Many 18-year old students in the UK will today be contemplating their future.

They have found out if they can go to university to study the subject of their choosing.

They may think that this is the most important day of their life.

In fact, the most important day of their life has already passed.

It was the day they made a choice. The consequences of that choice are already being realised.

Whether they can go to university or not is out of their control. Whether they can afford to go and study is also out of their control.

Economists understand this distinction between an action and the consequences of that action.

So, why not choose to study economics?

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Economists have a great job. Let me explain why.

When you ask someone for advice, you usually do this because there is something you want to do but aren't exactly sure what that might be. So you seek the opinion of an expert.

In the case of medicine, the person you will ask has studied biology or chemistry and a number of years of medicine to be in a position to offer a suitable suggestion.

With legal matters you will ask someone who understands the legal system and how it affects your individual rights.

In both of these cases you seek an objective solution to a problem. There is a right and wrong response. The right response will lead to a healthy or just outcome. The wrong answer will lead to ill health or worse.

When you ask an economist for advice, you are not going to get a right or wrong answer. You will get a logical argument that helps you to understand more about the question you are asking in the first place.

An economist can't tell you how to make money. That's what investors do. However, an economist can give advice to an investor.

If an investor wants to know if the economy will deteriorate next year, an economist can explain why this might happen or why it might not. It is up to the investor to choose which of these arguments are the most convincing to them. After all, everyone sees a painting in a different way.

An economist paints the picture and others observe it.

Painting by numbers. How many other professions let you do that all day long?

4 comments:

Anonymous said...

i want to be an economist but do i need to get a ph.d. in economics? that seems like alot of work and alot of time.

Wesley Fogel said...

anon: you don't need a ph.d. to be an economist. you just need to be interested in following economic data and relating trends in this data to average people. the more you do this the better you will get at 'being' an economist. if this prospect doesn't interest you then you shouldn't embark on studying the subject.

Anonymous said...

ive never heard of anyone calling themselves an economist who didnt have a phd.

Wesley Fogel said...

you might get that impression from talking to academic economists but most "wall street" economist just need both exprience and a good instinct for identifying trends to be one.