Economists study how society distributes scarce resources, such as land, labor, raw materials, and machinery, to produce goods and services. They conduct research, collect and analyze data, monitor economic trends, and develop forecasts. They research issues such as energy costs, inflation, interest rates, exchange rates, business cycles, taxes, or employment levels.
Economists devise methods and procedures for obtaining the data they need. For example, sampling techniques may be used to conduct a survey, and various mathematical modeling techniques may be used to develop forecasts. Preparing reports, including tables and charts, on research results is an important part of an economistís job. Presenting economic and statistical concepts in a clear and meaningful way is particularly important for economists whose research is directed toward making policies for an organization. Some economists also might perform economic analysis for the media.
Many economists specialize in a particular area of economics, although general knowledge of basic economic principles is useful in each area. Microeconomists study the supply and demand decisions of individuals and firms, such as how profits can be maximized and how much of a good or service consumers will demand at a certain price. Industrial economists or organizational economists study the market structure of particular industries in terms of the number of competitors within those industries and examine the market decisions of competitive firms and monopolies. These economists also may be concerned with antitrust policy and its impact on market structure. Macroeconomists study historical trends in the whole economy and forecast future trends in areas such as unemployment, inflation, economic growth, productivity, and investment. Closely related to macroeconomists are monetary economists or financial economists, who study the money and banking system and the effects of changing interest rates. International economists study international financial markets, exchange rates, and the effects of various trade policies such as tariffs. Labor economists or demographic economists study the supply and demand for labor and the determination of wages. These economists also try to explain the reasons for unemployment and the effects of changing demographic trends, such as an aging population and increasing immigration, on labor markets. Public finance economists are involved primarily in studying the role of the government in the economy and the effects of tax cuts, budget deficits, and welfare policies. Econometricians investigate all areas of economics and use mathematical techniques such as calculus, game theory, and regression analysis to formulate economic models that help to explain economic relationships and that are used to develop forecasts related to the nature and length of business cycles, the effects of a specific rate of inflation on the economy, the effects of tax legislation on unemployment levels, and other economic phenomena. Many economists have applied these fundamental areas of economics to specific applications such as health, education, agriculture, urban and regional economics, law, history, energy, and the environment.
Most economists are concerned with practical applications of economic policy and work for a variety of organizations. Economists working for corporations are involved primarily in microeconomic issues, such as forecasting consumer demand and sales of the firmís products. Some analyze their competitorsí growth and market share and advise their company on how to handle the competition. Others monitor legislation passed by Congress, such as environmental and worker safety regulations, and assess its impact on their business. Corporations with many international branches or subsidiaries might employ economists to monitor the economic situations in countries where they do business or to provide a risk assessment of a country into which the company might expand.
Economists working in economic consulting or research firms may perform the same tasks as economists working for corporations. Economists in consulting firms also perform much of the macroeconomic analysis and forecasting that is conducted in the United States. These economists collect data on various indicators, maintain databases, analyze historical trends, and develop models to forecast growth, inflation, unemployment, or interest rates. Their analyses and forecasts are frequently published in newspapers and journal articles.
Another large employer of economists is the government. Economists in the Federal Government administer most of the surveys and collect the majority of the economic data characterizing the United States. For example, economists in the U.S. Department of Commerce collect and analyze data on the production, distribution, and consumption of commodities produced in the United States and overseas, while economists employed by the U.S. Department of Labor collect and analyze data on the domestic economy, including data on prices, wages, employment, productivity, and safety and health. Economists who work for government agencies also assess economic conditions in the United States or abroad in order to estimate the economic effects of specific changes in legislation or public policy. Government economists advise policy makers in areas such as telecommunications deregulation, Social Security revamping, the effects of tax cuts on the budget deficit, and the effectiveness of imposing tariffs on imported steel. An economist working in State or local government might analyze data on the growth of school-age or prison populations, and on employment and unemployment rates, in order to project future spending needs.