Bias in economics

Nature

Bias in economics refers to systematic errors in judgment or decision-making that can distort economic analysis and policy outcomes. It can arise from various sources, including cognitive biases, cultural perspectives, and institutional frameworks. Such biases may lead to misinterpretations of data, flawed economic models, and inequitable policy recommendations, ultimately affecting resource allocation and social welfare. Recognizing and mitigating bias is crucial for ensuring that economic theories and practices are equitable, accurate, and reflective of diverse societal needs, thereby enhancing the effectiveness of economic interventions and promoting inclusive growth.

Incidence

The widespread misconception that economics is essentially business and commerce creates a major hurdle to attracting students into economics. Since high schools introduced business studies in 1991, enrolments in Year 12 economics have fallen by almost 70%.

The lack of female participation in high school economics is equally stark. A 2016 study for the Reserve Bank found only about one-third of Year 12 economics students were female in 2016, down from around half 25 years ago. At Australian universities, women account for between 25% and 45% of undergraduate economics students.

Low female participation in economics at school flows on to a lack of women in economics, especially in academia. Less than 10% of economics professors at Group of Eight universities are women.

Too few high schools teach economics. Even when it is taught, its importance in solving social issues is neglected. Most high school students don’t get to know what an economist actually does and what the potential of economics can truly be.

Moreover, economics is offered mostly in private and boys’ schools. That helps explain why mostly students from a certain gender and socioeconomic background choose it as their career. This contributes to the lack of diversity in economic leadership and the related consequences for public policy and business decisions.

Claim

Bias in economics is a critical issue that undermines the integrity of the discipline and perpetuates inequality. When economic models and policies reflect the biases of their creators—whether based on race, gender, or class—they fail to address the real needs of diverse populations. This not only distorts our understanding of economic realities but also leads to harmful decisions that affect millions. We must confront and eliminate bias in economics to ensure equitable and effective solutions for all.

Counter-claim

Bias in economics is often overstated; it’s a natural part of any social science. Economists are trained to analyze data objectively, and while personal perspectives may influence interpretations, the rigorous peer-review process mitigates significant distortions. Moreover, economic models are tools that evolve with new data, reflecting changing realities. Focusing excessively on bias distracts from more pressing issues like policy implementation and economic inequality, which require immediate attention and action.