Diverse and inclusive teams bring about the best policy solutions, but the proportion of female economists – a profession key to policy-making – has stalled. Without a fix, the negative impacts could be far-reaching, Emma Richardson and Nicki Hutley write.
In October 2019, for only the second time in history, a woman took the stage to receive a Nobel Prize for Economics, along with her two fellow researchers. Esther Duflo, Professor of Poverty Alleviation and Development Economics at Massachusetts Institute of Technology, joins Elinor Ostrom as a woman being recognised by the Prizes for transformative work in economics.
This begs crucial questions: why is this only the second time a woman has received the Nobel Prize in Economics, are there enough female economists, and why does that matter?
The challenges that politicians and policymakers face today are increasingly complex and multifaceted. Just to name a few, the exponential rate of disruption caused by technological change, the climate crisis, and rising inequality are all issues that demand action.
Economics is driving outcomes for these issues, even in a rapidly changing world. Policymakers and economists alike are expected to have the capability to challenge assumptions and think laterally to find solutions that work.
Allowing unchallenged assumptions, channelled thinking, or ‘group think’ to persist is not good enough to tackle these policy challenges as well and as quickly as might be achieved with more diverse thinking. This is where diversity comes in.
The benefits of increasing diversity are far-reaching. Our research shows that the potential economic dividend from Australia having a more inclusive society is estimated to be worth $12.7 billion annually as a result of higher productivity, improved employment outcomes, and improved health outcomes.
The World Bank estimates that if gender equality was a reality – if women had the same lifetime earnings as men that is – global wealth would increase by $23,620 per person, on average, across 141 countries, for a total benefit of $160 trillion globally.
But despite these benefits, progress on gender equity in economics has stalled. In Australia, 31 per cent of employed economists are female, and this has hardly changed over the past decade.
The profession of economics is struggling to become more inclusive and the cost to society will be felt widely, from business performance to employment rates. Nobel Prize winners Esther Duflo and Abhijit Banerjee show what’s possible with a diverse team; serious progress and economic insight which makes a real difference. Australia should follow their lead.
So where are all the women in economics? In Australia, only 31 per cent of employed economists are female, or around 1,730 people.
Many female economists in Australia are employed by governments; 33 per cent are in the public service, followed by professional, scientific, and technical services firms at 24 per cent and finance and insurance at 12 per cent.
Education and training attract seven per cent overall of female economists and all other industries employ the remaining quarter.
While only seven per cent of female economists end up in education, the industry enjoys the highest rate of inclusion with women making up 41 per cent of the profession. By comparison, the female economists in the public service make up 32 per cent of the profession.
Progress toward gender equality in economics, and a more inclusive profession, has always been slow over the last 30 years, but in the last 10 years, it has completely stalled. From 1989 to 2009 female employment in economics increased from 19 per cent to 31 per cent of the profession. But in the last decade, female employment in economics was stuck at around 31-33 per cent.
In stark contrast, similar occupations in statistics, accounting, actuarial analysis, policy analysis and business are closer to gender equity than economics. Women make up 52 per cent of accountants, 43 per cent of actuaries, mathematicians, and statisticians and 41 per cent of environmental scientists.
But there is hope – younger age groups in the profession show more gender equity than older age groups. In 2006, women made up 37 per cent of economists aged 30-39. 10 years later in 2016, that percentage still held at 37 per cent in the same cohort, now in the 40-49 year old age group.
That compares to just 20 per cent in the 50-59-year-old age group. While this trend is heartening, relying on generational change is unlikely to completely address barriers to diversity, including social, cultural, and institutional barriers. The profession of economics is struggling to become more inclusive and the cost of it will be felt right across the policy spectrum.
This is because diverse teams are associated with benefits. Commercially, this includes increased sales, more effective market targeting, and better innovation and profitability. Diverse teams also bring other positive social attributes such as a sense of job satisfaction, mental well-being, trust, and a sense of belonging. Further, the mechanisms through which diversity creates these better outcomes are also translatable to government and policy.
Important differences often exist in the views of male and female economists, on issues including minimum wage, labour markets, health insurance, and on issues of equal opportunity in the labour market.
Gender diversity in policy‐making is an important mechanism to broaden the range of public policy options considered. In contrast, a lack of diversity may create sub-optimal outcomes. If analyses are undertaken through a narrow lens, it is unlikely we will achieve the best solutions.
Diversity – along with its essential partner inclusion – provides fuel for creativity and innovation. Sound economic analysis benefits from a broader range of perspectives and experiences.
Teams with diverse backgrounds, skill sets and ways of thinking about a problem have a clear advantage to think more broadly about solutions and impacts of policy.
At a time when Australian policymakers are facing the thorny challenges of increasingly rapid technological change, a climate emergency, globalisation, and an aging population, economic policy has impacts for real people, from cradle to grave.
Designing and communicating policy which is informed by economic insight has never had higher stakes – the costs of climate change alone will be felt for generations. Policy needs teams that can challenge assumptions, think broadly, think equitably, and bring a wide range of experiences to strengthen the solution, and only increased diversity will bring that.