A Letter to Students of Economics – 2024

Dear student, 

This is my fifth annual letter to students of economics. You’ve chosen an interesting and important subject to study and I wanted to pass on my own experiences of studying – and working with – your subject of choice.  

Why study economics?  In my case, I chose it because I wanted to better understand the world and how to improve it.  I started at school and university and graduated from studying it to applying it in practice when I entered the workforce.  I have been a public servant throughout my working life so, one way or another, I have spent all my professional life working in institutions that are involved in public policy or, as I see it at least, looking for ways to increase the wellbeing of communities.

Economics allows us to better understand the world and how to improve it.  It is, as Alfred Marshall wrote over a century ago, “the study of mankind in the ordinary business of life” or “the study of human welfare” as Angus Deaton described it more recently.  It exists as a distinct discipline because every person, as well as every society, faces an 'economic problem' arising from the fact that individually and collectively we have limited resources (in the widest sense of the term, including our own time and capabilities) to meet unlimited wants.  Public policy looks to identify different ways to increase available resources – for example of human or financial and physical capital – and ration the allocation of these resources to their highest valued uses. 

But, while being a distinct discipline, economic analysis works best when its insights are developed in collaboration with other disciplines. I have always thought of an economist as a ‘weaver’, someone who is able to bring together various strands of evidence and insights and weaves them into baskets to carry forward public policy and develop solutions to today’s and tomorrow’s challenges. 

I have been fortunate to have been involved in a lot of ‘weaving’ and have learned – and am still learning – some things along the way and, as you start the academic year, I thought I would share some of them with you.

First, to state the obvious, make sure you know what you’ve chosen to study.  For me, economics is best understood in the way Alfred Marshall and Angus Deaton described it. Economics provides a disciplined way of thinking about “the ordinary business of life” but it is, as John Maynard Keynes wrote, "essentially a moral science and not a natural science”.  An economy is complex and can’t be packaged into a neat box; it doesn’t provide the type of certainty you might associate with physics. Instead, we must weave the various threads that reflect individuals, cultural norms, globally interconnected societies in constant – and increasingly rapid – change to come to outcomes that improve the wellbeing of our communities (with all the complexity of motivations, behaviours and values this entails). 

Second, being “a moral science” means that economic analysis and its insights and recommendations are most effective when developed and applied in collaboration with other disciplines. Be open minded and curious to better understand, embrace and respect the perspectives that other disciplines – anthropology, biology, ethics, psychology or sociology for example – bring to thinking about, and solving, economic problems.  We need to gather the best evidence we can and that means being open to other insights.  A basket can contain many different types of thread!  

Third, economists have various tools and models to help them think in a disciplined way in order to understand and solve problems. Technological advancement has led to significant improvements in that toolkit over the years but it’s important to avoid confusing the models and techniques developed to think systematically about economic problems with the reality being addressed.  At the end of the day, conclusions need to be anchored in the real world, especially if they are to be turned into policy decisions.   

Fourth, there is a rich history of – and diversity in – economic thought that is worth exploring.  Read some of the old classics (Aristotle’s "Politics, Adam Smith’s The Theory of Moral Sentiments") as well as more modern ones (Keynes’ "General Theory", George Akerlof’s "The Market for Lemons", Daron Acemoglu and James Robinson’s "Why Nations Fail" and many others).  Diversity of thought is essential for our collective ability to analyse, understand and tackle difficult public policy problems. It matters for the Central Bank but also for good public policy.  We need to avoid the temptation to stop at economic ideas that leave us feeling comfortable (which means that it’s also important to understand arguments that you don’t agree with.  As John Stuart Mill wrote, someone “who knows only his own side of the case doesn't know much about it.  His reasons may be good, and no-one may have been able to refute them; but if he is equally unable to refute the reasons on the opposite side, and doesn’t even know what they are, he has no grounds for preferring either opinion”).

Fifth, I strongly encourage you to study economic history.  It’ll help you understand how we arrived at today’s world.  And it’ll also show you that some of the world’s problems aren’t new: the better we understand the past, the greater the chance that we will learn from it (or, as Keynes put it, “study the present in the light of the past for the purposes of the future”).  History may not repeat but it certainly teaches and we should observe, listen and learn its lessons.

Sixth, do follow Keynes and study the present.  Don’t take the views of one academic paper or lecture, a newspaper or magazine commentator, a radio or TV broadcast as representative of all there is to know about an issue.  Being aware of current affairs matters but reading and listening widely and broadly will help you to understand an issue or problem better.  (Robert Shiller’s "Narrative Economics" is an interesting look at how popular narratives have an impact on the economy.)

Seventh, and finally, a practical but very important point.  Learn to write well; which means writing clearly, simply and succinctly, however complicated the subject.  It’s a great skill to have, especially if you’re planning to go into public policy work in a government department or the Central Bank.  It’s also hard to do and takes time to learn but developing the ability to do it well is worth the effort.  (George Orwell’s "Politics and the English Language" is worth reading and his six rules of writing are worth following.)

PS - If you are interested in working for the public good, we want to hear from you. Applications are now open for the Central Bank’s Graduate Programme 2025 and you can apply on our website, before 20 October 2024, and start your career journey with us! Find out more about the programme.

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