Why economists should beg for a pay cut

Economics as a field is incredibly hard to define. There are the more econometrically inclined who emphasize the science side, and the more humanistically inclined who emphasize the social side. But as a social science, it has leaned more to the latter than the former in recent years, partly because models have the patina of predictability and reliability that cannot be easily replicated with non-empirical qualitative assertions.

Both sides do agree on one thing: they love efficiency. If all economics can trace itself back to one idea, it is Utilitarianism’s drive for greater efficiency. This is of course difficult to define, but when it comes to the microeconomic issues of revenue, earnings, and expenses, efficiency is simple: it means getting more earnings by reducing expenses. This is ultimately the goal of technology, of every business owner, and, of course, of economists the world over.

So if economists really want greater efficiency at all costs, this week is a great opportunity to put their money where their mouths are and demand a pay cut.

Why? To start, the BLS is probably not going to release a jobs report on Friday due to the government shutdown, leading to this tongue-in-cheek article on Bloomberg. Today, we don’t need economists to work as much as normal, because we lack the data to analyze.

So what should we do to make the world more economical and efficient? Perhaps we can begin by taking a book from the universities and colleges, which have been shifting their models to performance-based pay for years. Let’s calculate their gross annual wage by how accurately they have analyzed the data, subtracting for the lack of data today.

A good start, but it’s not enough. To squeeze more efficiency out of our legion of economists, let’s take a another page from the private sector’s treatment of low-skill labor and transition these individuals to hourly pay instead of salaries. Hourly pay and part-time jobs have been rising sharply since the subprime mortgage crisis (the one that few economists expected or predicted). With our economists on a much more efficient hourly-based pay, we can tell them to go home a bit early today, and just to bill us for 35 hours for this week instead of the usual 40.

Alternatively, we could perhaps read Tyler Cowen’s latest book and start thinking about new ways to adapt eighteenth-century ideologies to a twenty-first century world.