Economists use statistics and mathematical equations to analyze data on employment, supply and demand, inflation, and other economic topics. They identify and control for variables to predict changes and causal relationships. They work in government, consulting, and private sectors, and often hold advanced degrees in economics or statistics.
An economist is a specialist in economics who uses statistics and detailed mathematical equations to understand and predict situations. He or she analyzes data on employment, supply and demand, inflation, company earnings and many other important economic topics. By applying rigorous statistical techniques to real-world data, an economist is able to produce objective and highly accurate results. Econometricians are employed in many settings, including government offices, real estate companies, consulting firms and large corporations.
In most real-world situations, dozens or even hundreds of variables can contribute to the current economic state of affairs. Econometricians carefully identify and control for as many variables as possible in an attempt to identify causal relationships. For example, if an econometrician wants to create a model that predicts changes in consumer spending in a given city, he or she will have to account for many points. The expert would consider historical spending statistics, recent unemployment and job growth rates, supply data, changes in inflation, and average wages of workers.
Using proven quantitative methods and careful equations, the economist can discover spending trends and explain what-if situations if one or more variables change. He or she can determine the relationship between two of the variables using a statistical technique called regression analysis. The practitioner gathers a large set of sample data, enters values into a regression equation, and graphs the resulting points. The plot is used to predict how changes to one variable will affect a different dependent variable.
An economist working for a local, regional, or national government agency might consult with legislators on public policy decisions such as setting the minimum wage, adjusting tax rates, and implementing stimulus plans. Professionals employed by private companies and consulting firms are responsible for quantifying information about sales, production rates and customer needs. Some qualified economists decide to become university professors, where they can teach courses in statistics, economic theory, mathematics, and business administration.
Most professional economists have advanced degrees in economics or statistics. Some schools even offer degrees specifically in econometrics. A master’s degree is usually the minimum requirement for working as a government official, while college professors, business consultants, and consultants often need a doctorate. New economists often start their careers as interns or assistants to other researchers to gain supervised experience. With time and proven skills, practitioners can begin to work independently to formulate theoretical models and devise practical applications of economic research.
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