Three brand-new books about the Research Institute of Industrial Economics, IFN, and its history as well as a discussion on-stage about how economic research has developed during the past 75 years, was the backbone of a jubilee seminar held on November 17. The panelists were Karolina Ekholm, State Secretary, Magnus Henrekson, Professor and Managing Director of IFN, Assar Lindbeck, Professor IFN and SU, and Birgitta Swedenborg, former Vice President SNS. Thomas Gür was the moderator.
The interaction between research and policy was a central theme in the discussion that took place onstage during the seminar. What has changed in economic research, asked Thomas Gür.
“Our understanding of many important economic issues has increased enormously. Prime examples are the determinants of inflation and the importance of political institutions, said Birgitta Swedenborg, who worked as a researcher and then as deputy director at IUI (IFN's former name) from 1969 to 1981 and from 1986 to 1990.
She continued: “Today, we know more and the questions are asked in a different way. In addition, the number of subjects has exploded resulting in more and more specialization. And, the number of PhDs has increased sharply.
Assar Lindbeck agreed. He emphasized that the demand for sophisticated methods has accelerated. Today mathematical models are required both in theoretical and empirical research. “In the past, economic research was more descriptive. In the next phase, fairly simple regression analyses were sufficient. But over the past 20–25 years methodological demands have grown so that researcher can make a distinction between correlation and causality. Therefore, the research reports that were considered state-of-the-art 20 years ago would not be publishable today.
The arrival of computers
Karolina Ekholm pointed to the increasing importance of computers and information technology in all fields of research. She argued that these developments have created new conditions for analysis and given us the more stringent requirements. “Today, researchers can manage very large data sets – which are now required to publish research.
Assar Lindbeck continued: “Today it is easier to carry out high-quality research, but it is also easier to do inferior research. That’s a problem.” He explained that if a researcher manipulates and tests 1000s of regressions, one can always find a correlation, but these correlations are nevertheless misleading, since you have been cherry-picking.
The effects of globalization
Magnus Henrekson brought globalization into the conversation and its great significance to the research market. One example: in 1946 the first scientific paper authored by a researcher at IUI was published in an international research journal (in Econometrica by Erik Ruist, who was in the audience!). The next article wasn’t published internationally until 1965. Though, nowadays close to 50 such articles are published every year.
“Today, anyone who has the ability can prove themselves on the international market and in doing so they can build a strong CV without being dependent on support from a senior researcher. This means that IFN can only create a framework offering opportunities for individuals to work with issues that people are interested in. The researchers themselves apply for grants for their own research. In this sense, freedom is complete. There is no elderly professor or manager who can tell the young researchers what to do. In this sense we live in a very different world compared to the past. And it is the globalization of the research market that has given us this transformation.
The art of being relevant
During the first decades, following the foundation of the institute, a crucial task of the institute was to convey background statistics to decision-makers. Today research problems are increasingly being formulated within the research community, said Birgitta Swedenborg. “It is a challenge to focus on scholarly publishing while at the same time ensuring that research is relevant to policy-makers in the private and public sectors.”
Birgitta Swedenborg explained that IFN has formulated a number of research areas "that are relevant for Swedish policymakers and society at large." And that the institute has made “a massive effort to reach out in the public debate”. “I'm incredibly impressed when I see IFN's website and all the activities that the researchers are involved in. I am sure that IFN has worked hard to achieve this. It is not obvious that these two things can be reconciled. IFN could easily have become an institution where researchers only produced research and nothing else”.
Magnus Henrekson explained that there is a tradition at IFN "we should be relevant, and the same goes for the best American universities." He argued that there is no contradiction between relevance and quality of research. He turned to Assar Lindbeck: “Assar, you're still working after 65 years of research in economics. I believe that you do so because you have always strived to do research of high relevance, and consequently you have been inspired to press on with your research rather than escaping into administration and committee work.”
"A pool of research"
Can you choose your research topics quite freely and still be relevant Thomas Gür asked the panelists.
Assar Lindbeck explained that when it comes to implementation of research, politicians and other decision-makers might try to take advantage of individual new research studies that are "trickling down”. It will not do, he said: “A specific research project may produce nonsensical results. In order to arrive at robust policy conclusions one should always look at and judge from the entire pool of results, the whole spectrum of projects dealing with the area in question.”
With today's computer literacy it ought to be easy to analyze relevant issues, reflected Karolina Ekholm. Though, she said, there are two pitfalls: “Firstly, researchers might primarily be interested in the method developed. They are fond of a particular method rather than an issue. Secondly, when confronted with globalization and fierce competition researchers have a tendency to search for their own monopoly-niche, however minuscule. If this is the case researchers sometimes move to the fringes of their research field, thereby substituting uniqueness for relevance.”
Education and quality
Can the quality of research be safeguarded in the policy process, Thomas Gür asked. He received responses from, among others, Assar Lindbeck who pointed to the paradox that during the first decades of the Institute's existence "decisions were made on the basis of Swedish government commissioned reports (SOU)." This was during a time when methods and analytical techniques were not particularly well developed. Today, when these methods have evolved enormously, said Assar Lindbeck, "far less decision making is made on the basis of such thorough investigations."
Magnus Henrekson pointed out that there are definitely Swedish government commissioned reports (SOU) that are both extensive and thorough also today and that there are many PhDs in the ministries and government agencies. He explained that as a result of globalization some people believe that we do not need to develop talent in Sweden, as these can be found on the world market. This view is wide off the mark, he said: “Jamaica has only 2.7 million inhabitants, but still takes Olympic gold in 100 meters – both women's and men's side. This shows that there is enough talent everywhere. What we need is a system with the ability to detect and develop these talents. If we don’t do this it will be the same way as in the Premier League, which according to many is the world's leading soccer league. The English national team is, however, not very good, because instead of developing domestic talents, high-quality players are imported from the rest of the world.