Journal of Applied Mathematics and Decision Sciences
Volume 6 (2002), Issue 2, Pages 101-127
The value of econometrics to economists in business and government: a study of the state of the discipline
School of Economics, The University of New South Wales, Sydney NSW 2052, Australia
Copyright © 2002 Eric R. Sowey. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
This paper is the first ever in-depth study of the econometric practice of
quantitative economists outside academia. It goes further, to examine empirically the
often-heard proposition that academic and nonacademic economists nowadays seem to
analyse the same applied quantitative problems in markedly separate ways. Nine indicators
of separation between the approaches of ‘town’ and ‘gown’ economists are developed.
The study rests on detailed interviews with 50 nonacademic economists drawn
widely from a single area of professional activity: the Australian housing sector. These
economists' use of econometric methods, and their views on the value of these methods,
are documented and compared with the academic approach to applied econometric work,
as reported in the scholarly literature. The evidence on the nine indicators supports the
existence of a state of separation. The paper points to some undesirable consequences of
separation and concludes with practical ideas on what should be done about it. There
are lessons in the findings of this study for the future of other quantitative disciplines
that are widely practised in government, business and industry.