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The Economics of Life

Wednesday, July 22, 2015

As the world is becoming diversified and yet integrated, society needs people with skills applicable to a wide variety of problems ranging across multiple disciplines. And that is the reason for the increasing demand

By Garima Singal, Assistant Professor of Economics, Indian School of Business and Finance (ISBF), New Delhi


Firms such as Ernst & Young, McKinsey, Price Waterhouse Coopers, Deloitte, KPMG often hire economists as consultants to analyze the economic activities of business organizations and to propose changes that would make their structure more efficient.

Investment Banking:
Investment banks—institutions that assist individuals, corporations, as well as governments in decisions related to trading of derivatives and securities, mergers and acquisitions, and other investment decisions require people with skills to understand varying market conditions and make predictions about valuation of different assets conditional on this information. Economists best fulfill this role. Some of the investment banks that hire economists are Goldman Sachs, JP Morgan, Barclays, Citigroup and Deutsche Bank.

Data Analysis:
Given the training in data-intensive fields such as econometrics, an important skill that economists acquire is the ability to analyze and decipher patterns in numbers. Consequently, the demand for data analysts is geared towards those with a major in economics. Companies hiring data analysts are McKinsey Knowledge Centre, Absolute Data, NVDIA Corporations, and CRISIL among others.

Marketing Specialists:
Marketing Managers identify potential customers by calculating the  demand for products and services offered by a firm or its competitors. They develop pricing strategies while ensuring the firm’s customers are satisfied, and maximizing the firm’s profits. They also examine trends that indicate the need for new products or services. Given that demand, pricing, and profits are all subject matter of economics, economists happen to be the obvious choice for this profile. As can be  inferred from hiring decisions of firms such as Procter & Gamble, Johnson & Johnson, Pfizer etc.

The interdependence of several global economies, as well as the foray of economics into other fields such as technology, psychology and even physics, has made it important and essential for the press to bank on employees with economic expertise. Economists are indispensable to the leading dailies and news channels.

Policy Analyst:

Decision-making in the context of public policy must be guided by economic rationality. Public policy requires economic advice, economic administration, as well as guidelines for implementation of development policy and programs. Therefore, the government has posts for economic advisors in all ministries and departments that require inputs on economic implications of policy-related matters. To become an economic advisor for the Government of India, one must enter the Indian Economics Services Division in the Department of Economic Affairs, Ministry of Finance; and to do so one has to clear the IES test conducted by UPSC. The eligibility for appearing for the test is a master’s in Economics.

Again, owing to data-heavy training of economists, they often fulfill the role of statisticians for the government. The Ministry of Statistics and Programme Implementation specifically requires econometricians to conduct careful analysis and appraisal of different government policies and their performance on ground.

To supplement the rising demand for economics as a discipline, there has been an increasing demand for economic expertise. Academic economists are expected to possess in-depth knowledge of the subject matter as well as the ability to apply analytical tools to various context. One can become an ad-hoc Professor for the University of Delhi after doing an MA in Economics and clearing the National Eligibility Test.

However, this profile is not limited to teaching as academic economists also undertake research in one ormore of the everexpanding sub-fields of economics. Research in economics is both empirical—deriving its conclusions fromdata, and theoretical. Both the private and the public sector covet research economists, major employers being the World Bank and other UN subsidiaries, J-PAL, Genesis, National Bureau of Economic Research, FICCI, Competition Commission of India. While an education in Economics does open a multitude of avenues, one must not lose sight of the fact that to be a successful economist one must undergo a rigorous training that emphasizes on ability to apply fundamental concepts in different scenarios even as underlying assumptions are tweaked and twisted. This calls for an education that takes its roots in application-based learning and consciously aims to move away from rote and memorization centric learning.

In this respect, international universities such as the London School of Economics, Harvard University, Massachusetts Institute of Technology fare much better as their curriculum focuses on building a sound foundation through emphasis on solving problems that mimic the kind onemay face in real life and by constantly questioning the students’ understanding of the principles of economics by asking them to apply these principle to a myriad of unconventional contexts.

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