Economics in the national debate
22 February 2023
Paul Johnson, Director at the Institute of Fiscal Studies (IFS) and Visiting Professor at UCL, and Xiaowei Xu, Senior Research Economist at the IFS
This interview originally appeared in the UCL Policy Lab Magazine.
How should economists be helping to shape policy in the UK at this deeply unsettling and turbulent time? UCL’s long-term relationship with the Institute of Fiscal Studies (IFS) enables it to answer that question as well as any other university in the world. With that in mind, we asked Paul Johnson, Director at the Institute of Fiscal Studies (IFS) and Visiting Professor at UCL, and Xiaowei Xu, Senior Research Economist at the IFS and a doctoral student at UCL, to share their views.
We’re going through a particularly difficult time for the UK economy. And it feels like the public and politicians have to grapple with ever more complex issues. But let’s start by asking you to reflect on how economic expertise is viewed in the UK.
Paul Johnson: The first thing to say is that, in truth, economics covers such a large range of things. Lots of people think of economists as the people who predict what interest rates are going to be next month, or what growth will be next year. Whereas we see it much more broadly in terms of how you design policy right across the piece from education and welfare to pensions, tax, health and so on.
Thinking about broader economics, I read something recently which was quite worrying. Most people don't know what we mean when we talk about a real change, what GDP is trying to get hold of, or what falling inflation means.
Xiaowei Xu: As economists, we should recognise that we often take things for granted. I think we can all be much more conscious about the words we use and how we try to communicate what we're doing.
Economics covers just about everything and so many aspects of life. And yet, there's this sense that it's something that can be siloed, and you've got economics editors who deal with a very narrow range of topics. I guess there’s that disconnect with the public who don't see economics as something they want to engage in. And yet these debates are central to understanding our politics.
Paul Johnson: When Xiaowei talks about economics editors having a narrow remit, it can be frustrating watching the news to see what I think of as an economic story, is covered by political correspondents. It gets seen through a political lens rather than an economic lens. That’s why it’s important that as economists, we get out there and explain our work.
Do you think economists should be trying to shape the debate more? Not just helping the public understand the economy, but also in how our politics can improve it.
Paul Johnson: I'm not sure there's a big market for people to be lectured about what economic terms mean. There's clearly scope for talking very straightforwardly, and a lot of people find that difficult. If you're looking within academia, there's an enormous amount of expertise there. There are certainly people working on issues of great public significance. It would be good to see a bit more of them putting their ideas across, even if they need help translating what goes into journals into what goes in the public discourse.
Xiaowei Xu: I agree. I think it's about bringing more evidence to public debate in general. Economists work across a massive range of fields. It's not just things that we'd normally associate with the economy. So I think trying to bring some of that evidence – when we're talking about specific policy changes rather than analysing it through the political lens – would be immensely helpful.
You’ve spoken about academia and its role in helping create good policy. It feels like in the US there is more interaction between economic research and government. Do you think that’s less so here in the UK? And do you think it matters?
Xiaowei Xu: That's a really good point. I guess we don't have something like the Council of Economic Advisers here in the UK, an institution that brings in academics for a short period of time to engage in policy-making. I think that's quite interesting because there are policy institutes or similar groups within different universities, but they're not connected directly to the government in the same way as they are in the US.
Paul Johnson: It's definitely a different culture in the US. There is much more interaction between government institutions. And a small but significant number of academics in the US move in and out of government administration. It's very hard here, on both sides of the equation. There aren't institutions within the government, which would make this straightforward. It's very hard to go into one of the civil service departments in a very senior role having worked in academia, and you'd also find it very hard to translate what you're doing. The civil servants would also find it very hard to make good use of you. There aren't the advisory bodies that you have in the US, so there isn't the demand on that side.
On the academic side, people can be very focused on their careers, which is determined by their publications much more than it is by their engagement with the public sphere. So it's one of these horrible equilibriums that it's hard to get out of. But I think it's very damaging because there's all this expertise in academia and all this expertise in Whitehall. And actually, there's very little interaction or very little mutual understanding.
You both clearly believe in the important role economists can play in shaping effective policy. What would your message be to other economists and experts who would like to help inform and shape debates?
Xiaowei Xu: It's interesting to see what people actually care about and not get too lost by digging into a tiny, tiny question that people may or may not actually need the answer to. So, I think in terms of academic work, it's quite useful to check on priorities.
Pau Johnson: I sometimes think people need to remember why they got into economics in the first place. Of course, people get in for different reasons, but quite a lot of people study economics because they're interested in the impact of policy on people, and want to understand what creates growth, or what leaves us better off or worse off. But then they get sucked into a system where they have to specialise or spend their time doing particular things, and almost forget about what brought them there in the first place.
It is also true – and it’s something we emphasise a lot at the IFS – that working in public policy really helps academic work. It helps to motivate it and it helps to ensure that you're asking useful questions. It brings insights and information into your work. Similarly, doing academic work provides insights to policy, because it gives you a much deeper understanding. So, the two ought to be really quite closely linked. It’s why initiatives like the UCL Policy Lab are so important.
Read the latest edition of the UCL Policy Lab.
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