Policies and politics: challenges and opportunities for economists

This paper addresses the challenges and opportunities facing economists who wish to be influential in the formation of policy. There are plenty of both. While members of other disciplines tend to view economics as being far too influential on government policy, economists are often frustrated at the blatant and pervasive policy inefficiencies that persist despite their best efforts. The aim is to help economists consider their role in the policy process, in terms of its appropriateness and effectiveness. The focus is on micro- rather than macroeconomic policy. The approach is to bring together a range of theory, empirical research and practical experience to provide practical insights and advice. The next section outlines the scope of politics as considered here, and describes the key groups of political players. A range of rationales for or against economist involvement in the policy process, including arguments around market failure, government failure and economist failure is then examined. There follows a brief overview of a range of very different theories about how policy is developed and influenced, with most attention paid to the favourite of economists: public choice theory. This flows into discussions of the specific challenges and opportunities facing policy-relevant economists, including lessons that have been learnt by economists from practical experience in the policy process. Advice about influencing policy is presented based on a survey of economists and others directly involved in policy development. Most of the material is relevant to economists (especially micro) working in any problem area, but examples are drawn mainly from the areas of agriculture and natural resource management.