Research Trends, Quality, Ethics and Values in Economics
Dr K. Geethanjali M.A, M.Phil, Ph. D
Lecturer in Economics
Visakha Govt Degree and PG College for Women
Economics is like science and it can be used to improve living standards and also to make things worse. This means that much of the field is based on human behaviour which can be somewhat irrational and unpredictable. For this reason, it’s a science with certain inherent limitations that prevent its practitioner from being able to predict markets’ performance accurately and know exactly that certain policies will affect different sectors and economies. It is also a social science that examines people production, distribution, and consumption of goods and services. This paper examines ethics and values in economic research. It also describes the characteristics, causes of economic instability, benefits and limitations of economic research.
Key Words: Economics, Economic Research, Econometrics,
Economics is important for many areas of society. It can help in improving the living standards and in making the society a better place to live. It partly depends on the priorities of society. It is also essential for many areas of society. Economics can generally be broken down into macroeconomics, which concentrates on the behaviour of the aggregate economy, and microeconomics, which focuses on individual consumers and businesses.
Economics provides a mechanism for looking at possible consequences as we run short of raw materials such as gas and oil. It is mainly concerned with the extent of redistribution of income in society. It also considers the necessity of inequality to create economic incentives or inequality creates unnecessary economic and social problems.
A critical divide in economics is the extent to which the government should intervene in the economy. Free market economists, like Hayek and Friedman, argue for limited government intervention and free markets. Other economists, like Stiglitz or Krugman, argue government intervention can overcome inequality and the under provision of public goods. For example the government provides health care free at the point of use or is it more efficient to encourage private health care. Politicians win elections by promising more spending and cutting taxes. This is because lower taxes and more spending to win attention-grabbing from voters. However, an economist will be aware that everything has an opportunity cost. Spend more on subsidising free university education and it means higher taxes and lower spending elsewhere. Giving student scholarship in a year to spend at university may be a noble ideal. But, is it the best use of public money or are there better uses of money, such as spending on primary education.
The free market leads to countless examples of market failure. One of the best uses of economics is to provide solutions to overcoming market failure. For example, driving into the centre of town creates negative externalities such as pollution and congestion. There is overconsumption. An economist can suggest a tax on driving into towns to internalise the externality. One of the principal job for an economists is to understand what is happening in the economy and investigate reasons for poverty, unemployment and low economic growth. Economic studies can try and evaluate the costs and benefits of free movement of labour. Economic studies can try to examine the economic effects of immigration. This can help people make a decision about political issues.
Economics is concerned with the optimal distribution of resources in society. This subject involves
- Understanding what happens in markets and the macroeconomy.
- Examining statistics about the state of the economy and explaining their significance.
- Understanding different policy options and evaluating their likely outcomes.
- Dealing with a shortage of raw materials.
- Distribution of resources in society.
- Extent of intervention of the government in the.
- Social efficiency.
- Knowledge and understanding.
- Forecasts. Economic forecasts are more difficult than understanding the current situation. However, although forecasts are not always reliable, they can help give decision-makers an idea of possible outcomes. Economic crisis. A period of economic slowdown characterised by declining productivity and devaluing of financial institutions often due to reckless and unsustainable money lending. Generally, a crisis can occur if institutions or assets are overvalued, and can be exacerbated by irrational or herd-like investor behaviour.
- Evaluation. Economics is not a definitive science like Maths. Because of many unknown variables, it is impossible to be definitive about outcomes, but a good economist will be aware that the result depends on different variables, and there are different potential outcomes. This should help avoid an overly ideological approach. For example, a government may have the philosophy ‘free markets are always best’, but an economist would be aware of a more nuanced view that in some markets, like health care, transport, government intervention can overcome market failure and improve welfare. But, at the same time, it doesn’t mean state intervention is always best.
- Behavioural economics: Behavioural economics examines the reasons why we make decisions.
- Applying economics in everyday life. Modern economists have examined economic forces behind every day social issues. For example, Gary Becker argued that most crime could be explained by economic costs and benefits. Increasing the rates of economic growth has long been the holy grail of conventional economics and politics. To a large extent, most developed economies have been highly successful in increasing economic output.
Benefits of Research in Economics
- Increased consumption: Consumers can benefit from consuming more goods and services. An assumption of economics is that consumption is related to utility, so in theory, with higher consumption levels, there is greater prosperity.
- Improved public services: With increased tax revenues the government can spend more on important public services such as health and education. Improved health care can improve quality of life through treating diseases and increasing life expectancy. Increased educational standards can give the population a greater diversity of skills and literacy. This enables greater opportunity and freedom. Education is seen as an important determinant of welfare and happiness.
- Reduced unemployment and poverty: Economic Growth helps to reduce unemployment by creating jobs. This is significant because unemployment is a major source of social problems such as crime and alienation.
Limitations of Economics
1. Diminishing returns
If a section of the population is living in absolute poverty, economic growth enables people to have higher incomes and therefore they will be able to afford the basic necessities of life such as; food, and shelter. When economic growth can overcome this type of poverty there is a clear link with improved living standards. Often as economic growth increases incomes, people increasingly save their money (higher marginal propensity to save) this is basically because they struggle to find anything meaningful to spend their money on.
2. Externalities of growth.
Economic Growth involves increased output that causes external side effects such as increased pollution. Global warming from pollution is becoming a real problem for society. The economic and social costs could potentially be greater than all the perceived benefits of recent economic growth
2. Increased inequality.
It is perhaps a paradox that higher economic growth can cause an increase in relative poverty. This is because those who benefit from growth are often the highly educated and those who own wealth. It depends on growth management. It can be used to reduce inequality.
3. Increase in crime and social problems
It is another paradox that as incomes increase and people are better off the level of crime has increased as well. This suggests that crime is not motivated by poverty but perhaps envy. One reason crime rates increase is that quite simply there are more things to steal. Economic Growth has created more goods to steal.
- Higher economic growth has led to more hours worked
In the beginning of the industrial revolution, higher growth led to people working lower hours. However, in the past couple of decades, higher incomes have actually led to people working longer hours. It seems people are unable to enjoy their higher incomes. Feeling the necessity or preferring to work longer hours. This suggests people are valuing earning money more than leisure. However, this trend may also be due to companies wanting people to work longer hours.
6. Diseases of affluence
Economic Growth has enabled improved healthcare treatments, but at the same time, there has been an unexpected rise in the number of diseases and illnesses related to increased prosperity. Modern lifestyles and modern diets have created an epidemic of obesity, with significant proportions of the population expressing a desire to lose weight. It could be argued that problems such as obesity and stress-related illnesses are not a direct consequence of growth. This is true, but, it is symbolic of the fact increased prosperity has created as many new problems.
Instability tends to reduce confidence and lead to lower investment, lower spending, lower growth and higher unemployment.
Economic instability can be caused by
- Changing commodity prices (especially oil, e.g. 1974 oil price shock)
- Changing interest rates (rise in interest rates around 2005-07)
- Change in confidence levels (e.g. worries after 9/11)
- Stock market crashes (e.g. 1929 Stock market crash)
- Black swan events (e.g. major natural disaster, coronavirus outbreak 2020)
Need for Research in Economics
Undoubtedly, timely and accurate economic research is vital for undertaking more sound economic policies for boosting a stable and non-inflationary growth and for coping with various risks under a dynamic and rapid integration of our economies. There is a pressing need for economic studies to determine the relative monetary value of various silvicultural methods. It is a matter for intensive research by the joint efforts of research and operations divisions. Economic research has been said to have four stages: explore including define the problem, develop a theory and/or a hypothesis, empirical testing of the theory, and the conclusions of the research including an assessment of their importance (Ruggles, 1952)
Research Trends in Economics
Several countries reorganized their research institutional setting to improve their research productivity. Concentrating on trends taking place since the beginning of the 1990s and rely on a very comprehensive database of scientific journals, to provide a cross‐country comparison of the evolution of research in economics. It was observed that Europe is catching up with the USA but, in terms of influential research, the USA maintains a dominant position. The main continental European countries, Germany, France, Italy and Spain, experienced some of the largest growth rates in economic scientific output. Other European countries, namely the UK, Norway, the Netherlands, Denmark, and Sweden, have shown remarkable progress in per capita output. Collaborative research seems to be a key factor explaining the relative success of some European countries, in particular when it comes to publishing in top journals, attained predominantly through international collaborations.
Ethics In Economic Research
Economic ethics combines economics and ethics, uniting value judgements from both disciplines in order to predict, analyse and model economic phenomena. It encompasses the theoretical ethical prerequisites and foundations of economic systems.
Economics is linked to both ethics and the theory of rationality. Without ethics all economic systems would fail. Economics complements and intersects with moral philosophy in both the concepts it has constructed and in its treatment of normative problems. As economists, we need to understand how ethical conduct reduces transaction costs, enhances productivity and creates the social capital that lubricates exchange. Finally, economists play an important role in trying to improve society. Normative economics examines the costs and benefits of alternative policies. The relationship between ethics and economics in the modern age is typically viewed as external. This view is usually articulated in the notion that for economic relations to be ethical, an ethic must be imposed. Otherwise, economic relations are amoral.
The study of ethics in economic life is growing exponentially. This is partly because of recent scandals at major energy, health-care and other firms. These scandals highlight the destructive power a few immoral managers can wreak on a company and on the market. These same moral failings also cause problems in government and non-profit sectors of the economy.
The outcomes-based theory of ethics maintains that the best action is the one that produces the best consequences. Duty-based ethics focuses on a set of ethical principles, duties or rules to guide actions. Virtue-based ethics emphasizes the personal qualities that enable us to do the right things that good people would do. These qualities include honesty, integrity, courage, concern for others and loyalty.
Research is about finding new things and making original contribution to the literature. It can be theoretical or applied. Economic theory is process of thinking about the economy in terms cause-effect relationship among important variables. This theory provides analytical framework, such as demand and supply functions, investment and consumption or revenue and spending or export and import functions, abstracting away from the complexity of the real world. Economic research can show how much these economic agents are able to achieve their objectives given their constraints, determines the most efficient allocation of resources in an economy and the best course of actions to maximise the social welfare.
- Gary Burtless, Senior Fellow, Economic Studies Program “Has Income inequality really increased in US?” The Brookings Institution, January 11, 2007.
- KeshabBhattarai(2016) Research Methods for Economics and Related Studies; 3rd Ed; University of Hull Business School.