We live in a world with scarce resources. We have limited time, money, and labour, yet there are unlimited ways we could allocate those resources. So how do we figure out which ways are best?
That's where economic research comes in. Economists study the different ways we can distribute resources to benefit the most people.
Economic research takes many different forms. Some is what you might traditionally think of as economics. For example, some people research tax systems to find ways to reduce inequality. Others might study the factors that lead to economic growth, as boosting growth can also boost wellbeing.
But economics is an incredibly diverse field. Some "development economists" look at highly targeted ways we can help people in low-income countries — sometimes at very low costs. For example, a famous study found that treating intestinal parasites in children — many of whom grew up in extreme poverty — caused those children to earn more money throughout their working lives. In another study, a Harvard health professor and Stanford economics professor found that giving away insecticide-treated bed nets for free "is both more efficient and more cost-effective at reducing malaria than charging fees." In both these cases, economic research resulted in thousands of lives being saved, and changed the way donors and charities think about fixing problems.
Economics can also be helpful in figuring out what isn't working. In 2015, Evidence Action announced a project called No Lean Season, which worked on helping the millions of people affected by seasonal poverty. In rural areas, the period between planting and harvesting can be extremely difficult; people struggle to find jobs and their earnings drop as a result. Evidence from some studies suggested that giving people small transport subsidies would enable them to go to cities and find jobs during this "lean season," helping alleviate the problem.1
Encouraged by these studies, Evidence Action decided to start a programme to give out transport subsidies in Bangladesh. But a few years into the project, a large-scale randomised controlled trial found that it likely wasn't having the desired effects. The research, along with some operational problems, led Evidence Action to shut the project down. That meant funding could be diverted to projects that were expected to be more effective at tackling extreme poverty. Future research can help evaluate whether they actually are effective, ensuring we're always helping as much as possible.
Economic research has the potential to influence change on a large scale, and history suggests that it can lead directly to positive outcomes. That said, it's not as neglected as some of our other cause areas, though we think there is room for more work to be done.
It's hard to find a single estimate of the overall impact a field as wide as economic research has had.2 But numerous case studies provide examples of economic research having a very large impact. One example is the deworming treatment mentioned above. GiveWell decided to fund deworming treatments as a result of economic research into the area, and they estimated that their recommendation led to over 319 million treatments being provided to children between 2012 and 2019.
Future economic research could lead to equally large impacts. As Open Philanthropy notes, the 2008 Great Recession cost the US around $10 trillion USD. If economic research could help develop better macroeconomic policy that would prevent such large recessions in the future, it could save lots of money and help millions of people.
Research on how to reduce poverty could help millions of people too: 700 million people still live in extreme poverty, defined as living on less than $1.90 a day.3 This is in "international dollars," meaning it takes into account that one dollar can go a lot further in some countries than others.4 We've made good progress on reducing that number in the last 30 years, and more research might help reduce it even further.
There are numerous organisations that carry out economic research with the aim of reducing poverty, including J-PAL, GiveWell, and IDinsight. Many universities also have large, well-funded economics departments. But there is likely room for even more work to be done. As Oxford philosopher (and Giving What We Can co-founder) Will MacAskill has said, we need even more economists trying to figure out how macroeconomics (the study of whole economies) works.
For example, we still don't have a good understanding of why recessions happen. If we did, we could maybe do a better job at avoiding them, thereby preventing millions of people from losing their jobs or receiving lower wages. Lots of economists are working on this problem already — the (relatively) smooth economic recovery from COVID-19 is in part thanks to their work — but with more bright and dedicated people working in the field we might find even better answers sooner. And in the still-new field of global priorities research, more economists could help figure out which of the world's problems we should prioritise.
Economic research can lead to improved wellbeing, higher earnings, and more lives saved. We have numerous examples of this, including the benefits of free malaria bed nets, the positive effects of deworming treatments, and the impact of direct cash transfers to people in low-income countries.
But outcomes aren't always guaranteed. Some research may prove to be inconclusive, and even when research does demonstrate the value of something, charities and governments might not always act on the evidence.
Many economic researchers are focused on finding ways to reduce inequality, both within a country and globally. Restructuring tax systems and foreign aid programmes, for instance, could help redistribute wealth in a more equitable way.
Economic growth is linked to people's overall welfare, so many researchers are trying to work out what drives it. This could involve promoting better institutions, identifying highly impactful healthcare treatments, creating better business environments, or reforming tax policies.
In the past 20 years, many economists have promoted randomised controlled trials, or RCTs. These studies carefully compare different groups to see the impact of specific interventions. For example, in the deworming studies, a group of people were randomly split into two groups. One of these groups received deworming treatment while the other received nothing. By comparing the two groups at the end of the study, economists were able to figure out how deworming treatment had a positive impact on lifetime earnings.
RCTs are used all the time now, and they often find promising solutions to big problems — like this study, which found that sending simple reminders about the benefits of tax credits led to increased uptake of those credits.
Economists working on global priorities research are trying to figure out which problems are most deserving of our time and energy. For example, these researchers have produced work that has helped us realise why safeguarding the long-term future is especially important, and have encouraged organisations to spend time and money on biosecurity and ensuring AI is developed safely.
Economic research can also teach us what doesn't work. Learning what doesn't work can help us reallocate resources to fund projects we know do work.
A good example of this is a study in India that found that biometric monitoring technology designed to increase doctors' attendance at clinics wasn't achieving its goals. That study led the government to scale back the project, saving millions of dollars.
Research doesn't always lead to positive, actionable conclusions. Sometimes researchers don't have the data they need to figure out what we should do, and sometimes they draw incorrect conclusions from the data they do have. In other cases, researchers might find evidence supporting a certain policy or intervention, but charities and politicians might not act on that evidence. For instance, most economists think carbon taxes are a good way to reduce emissions and tackle climate change — yet despite all that evidence, a carbon tax has still not been implemented in the US.5 That being the case, you might prefer to fund existing projects where you know your money will have a guaranteed impact.
Economic research tends to be concentrated around economic growth and development, and is particularly focused on helping humans today. Although some work is being done to improve nonhuman animal welfare, it's yet to become a major focus of the field.6 Economists also sometimes put less emphasis on the welfare of future humans, which can prevent them from focusing on safeguarding our long-term future.7
If you care strongly about nonhuman animals or future humans, you might find your money has more of an impact in one of our other high-priority cause areas, such as animal welfare or safeguarding the long-term future.
Similarly, some people criticise economists for assuming that humans are more rational than they are. Others think that the field's lack of racial, gender, and class diversity could make it blind to some of the most important issues we face. But work is being done to address both these problems: the growing field of behavioural economics is challenging traditional views of rationality, and some organisations are trying to boost diversity and broaden the field's perspectives.
Given that research is somewhat speculative, you might prefer to fund interventions once research has shown them to be valuable. For instance, rather than funding research on whether malaria nets reduce poverty, you might directly fund purchases of malaria nets.
If that sounds interesting, check out our page on improving economic conditions for tips on where to donate.
We recommend donating to GiveWell's top charities to support global health and development. Many of these charities do their own economic research to investigate whether their interventions are working, or to learn how they could be even more effective.
Some of those charities include:
Other charities and organisations that we think are promising, but we haven't yet evaluated:
If you have strong maths skills, getting an economics PhD and working on economic research could be an effective way to help. This could be a particularly good fit if you're young and trying to figure out which career to go into. Our colleagues at 80,000 Hours have a detailed guide on why this is a good career path, along with advice for how to get into it.
You could also help by spreading the word about the benefits of economic research. By sharing this page and the resources below with your friends, family, and colleagues, you'll make sure that more people know why economic research is important — and you might encourage them to donate too.
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