Joining the Conversation
3. Economics as a profession

So as you can see, answering the question "what is economics?" is not especially simple. One famous response - "economics is whatever economists do" - suggests, anthropologically speaking, a place to begin.

What economists do typically depends upon where they work. Although precise data are hard to come by, we estimate that 65 percent of economists work in business and industry, 20 percent in academia, 10 percent in government, and the remainder in the non-profit sector and elsewhere. Altogether, in 1993*** repeats from Preface around 125,000 people in the United States reported their occupation as "economist" to the Bureau of Labor Statistics.

Most people who call themselves economists are employed by private sector firms. Business economists are the least likely to have advanced degrees in economics, and they are often trained in business schools or hold baccalaureate degrees. Their work product is principally internal memoranda and briefings prepared for firm management. Business economists are also called upon to conduct forecasting. Government economists typically collect statistical data, and write internal memoranda and or public reports to assist decision-makers in their policy choices. Of economists who work for government, roughly half are employed by the Federal government, and the rest work for state and local governments and for quasi-governmental organizations like the World Bank and the International Monetary Fund.

Of the five percent of economists who work in the "non-profit" sector, a few work for "think tanks," which are a bit like universities without students. Most, but not all, are situated in Washington, DC. Examples include the Brookings Institution, the Rand Corporation and the American Enterprise Institute. The research at such institutes is aimed at influencing Washington policy making, and "think tankers" are often viewed as governments in waiting. Their research is more policy-oriented than that of academic economists, but more academic than that of government economists.

Klamer: When I taught at George Washington University I must have been in the square mile with the highest concentration of econ Ph.D.'s anywhere in the world. There were not only my colleagues in the economics department and the business school but also the economists at the IMF, the World Bank, the White House, the Interior Department and various other government agencies; then there were quite a few at the Federal Reserve plus a bunch at various think tanks.

Academic economists do a rather different kind of economics than their cousins in industry and government. One important difference is that the great majority of academic economists hold Ph.D.s. Doctoral training makes for intellectual output ("research") that usually looks quite different from that produced by business and government economists. Academic economists teach students, do committee work for the college or university that employs them, and carry out research, which typically takes the form of articles for publication in refereed journals. "Refereed" means that the articles are read by other academic economists who, with the editor, determine whether a submitted article represents a contribution to the body of economic knowledge, and therefore merits publication.

All economists think of themselves as professionals. But the economics profession is different from most. Unlike doctors or lawyers, for example, economists require no license or other legal certification in order to practice economics. One can also legally claim the title of "economist" without advanced graduate training. Of the roughly 125,000 people who reported their occupation as "economist" to the Bureau of Labor Statistics in 1993, only about 15 percent have earned Ph.D.s. The profession, however, is dominated by academics, virtually all of whom have a doctorate. And within academia, one is not considered a proper economist until he or she has earned a doctorate.

Even including as economists those without special training, at 125,000 members, the profession is a small one. Only one in a thousand U.S. workers is an economist. In 1993, there were, by comparison, about 600,000 physicians, 780,000 lawyers and 1.7 million engineers. More people work as photographers (135,000) and public relations specialists (155,000) than as economists. About 45 percent of economists are women, although academia and other areas that require advanced degrees are disproportionately male. Of the 853 economics doctorates awarded in 1991, for example, only 20 percent of them went to women. African-Americans and other minorities are also underrepresented within economics, again especially at the Ph.D.-level.

Despite their small numbers, economists are typically well compensated. The median economist in the United States earned about $72,800 in 2004, well above the average American worker's median earnings of $44,400. Imagine "deciles" of earnings, that is, the splitting up of the earnings distribution into tenths (as we did in Chapter 18, on "Wealth and Poverty"). Looked at this way, the lowest ten percent in economics earned less than $41,000 and the highest ten percent earned more than $129,000. The middle fifty percent earned between $53,000 and $96,000 a year. Of course it takes a Ph.D., or some years of experience, to get to these higher levels. But they're nice levels to get at, and equal to or exceeding what one gets in physics. In 2005 new graduates with a bachelor's degree in economics earned on average between $24,000 and $31,000 a year, many in the private sector earning a great deal more than that, depending on the quality of academic preparation and the nature of the work. Remember the Rule of 70.

Caption: Economics Majors: John Stuart Mill (1806-1873, distinguished economic theorist, philosophical spokesman for utilitarianism, and celebrated author of On Liberty); W.E.B. Du Bois (1868-1963, economic historian, sociologist, journalist, and emancipator of people of African descent); Frances Perkins (1882-1965, social worker, labor economist, activist, and first female Cabinet member in U.S. History: Perkins was appointed Secretary of Labor by Franklin D. Roosevelt).