I’ve long been puzzled by the almost complete disconnect between real-world businesses and academic economics. After I graduated from college, I went to work as a management consultant. Almost nothing I learned as an economics major proved helpful to me in that job. Then, when I went back to get a Ph.D., I thought what I had learned in consulting would help me in economics. I was wrong about that as well!
Ever since, I’ve felt that both business and economics would benefit from a greater connection. Why don’t businesses set prices the way economics textbooks say they should? Why are randomized experiments so rare in business? Why do economists write down models of how businesses behave without spending time watching how decisions are actually made at businesses? The list goes on and on.
It’s taken a while, but the business/economics connections are finally starting to happen with greater regularity. John List and I wrote an academic piece about field experiments in businesses a few years back that focused on how partnering with businesses could help academics with their research.
The benefits are also going the other way. The Economist has a nice article about how microeconomists are adding value to businesses. (I’m sure the economists mentioned in the article are delighted to be included; I’m almost as sure they will hate the cartoon likenesses that accompany it!)
For what it’s worth, I’m trying to do my part to improve philanthropy and business through a little firm called The Greatest Good. But, damn, it turns out to be a lot harder to make things happen in the real world than it is in the ivory tower!