Letters

President Higgins and economics

Measuring and addressing wider issues

Thu May 11 2023 - 00:12

Sir, – The recent discussion of the role of the economics profession promoted by remarks made by President Michael D Higgins, in a very wide-ranging speech, is in many ways helpful. The subsequent debate has highlighted the potential contribution economics can play in providing an input to evidence-based policy.

The President outlined his view that while there is now a richer discourse on economic issues than a decade ago, he criticised a focus on a narrow view of growth as an end in itself. Most economists would agree with the President on this. Economists have for many years recognised the inadequacy of measuring economic activity by a single crude measure such as GDP or GNP.

While the focus since the President’s speech, not surprisingly, has been on the reaction to some of the criticisms of the profession, there is an acceptance by economists of the importance of measuring and addressing wider issues than simply the growth in the economy. These include the extent of inequality, the health of the population, access to services, a just transition to the climate change challenge, and how to achieve and utilise sustainable growth to support employment and public services.

Another point which has not been given much attention concerns the criticism of what was called the one-trick pony of econometrics. This idea was developed previously in an underreported address by the President to the Statistical and Social Inquiry of Ireland, where he raised concerns about the increased emphasis on econometrics and quantitative methodologies.

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Such techniques should never be seen as an end in themselves. These methodologies cannot replace more fundamental analysis of the key challenges facing the Irish economy and Irish society.

An important recent book, Radical Uncertainty, by the economists John Kay and Mervyn King, outlines the use and misuse of economic models and points out that “a model is useful only if the person using it understands that it does not represent the world as it really is, but it is a tool for exploring ways in which a decision might or might not go wrong”.

Such methods however, can make an invaluable contribution in diverse areas such as measuring inequality and poverty, the costs of disability, developing planning for health sector manpower, assessing environmental impacts, identifying future skill needs, measuring the contribution of the education sector, evaluating the costs and benefit of investment in areas such as public transport, or regional development, or in the health sector or counterfactual modelling of the effectiveness of government policies.

Ireland is fortunate to have many outstanding economists working in these areas. Nevertheless, as a profession we should continue to challenge both the techniques and the intellectual framework underpinning our analysis. – Yours, etc,

ALAN GRAY,

Chairman,

London Economics,

Managing Partner,

Indecon Research

Economists,

London.

Sir, – Does President Michael D Higgins not remember, from his youth, the queues of our countrymen waiting to board the SS Cumbria and Hibernia to make their way to menial jobs in rebuilding war-torn Britain? It would take time before, inspired by Ken Whitaker’s economic development treatise published in the 1950s, our policymakers would unite government, industry, and agriculture in pursuit of economic goals which today have led us to full employment in this once disastrous economy.

Of course everything is not perfect, but economic development has furnished us with the means to do better, and to assume greater environmental responsibility.

What we need now are ecological and sociological visionaries who see how we can improve the lot of mankind. Keep the economic impetus but don’t overlook the downsides in our present model. – Yours, etc,

COLUM MacDONNELL,

Glenageary,

Co Dublin.