Story & photo by Rizal Raoul Reyes @brownindio
SOME find economics a “dismal science”. They do not include Jan Carlo Punongbayan.
Punongbayan, 27, finds economics a very fascinating subject with lots of questions he said are asked for a lifetime. Being passionate on economics is manifested on his achievements. He finished summa cum laude and valedictorian when he acquired an economics degree from the University of the Philippines [UP]. Punongbayan, currently gunning for a doctor of philosophy degree, also worked as a senior lecturer in UP and research assistant at the World Bank.
In an e-mail interview with the BusinessMirror, Punongbayan shares his thoughts on the various facets of economics.
How do you react when people tell you that Economics is a “dismal science”?
The phrase dismal science has a fascinating origin. It came from Thomas Carlyle, a Scottish writer and philosopher who in 1849 advocated the reestablishment of slavery in the West Indies.
Carlyle justified this stance using arguments in disparate fields of study, but he could not find any in the field of economics. Instead, he found that the field often prescribed “leaving people to their own devices” and minimal intervention from government.
Since these did not advance his cause, Carlyle bitterly attacked economics and called it “dismal”. Therefore, I’m not really bothered when people call economics a dismal science. It’s only derogatory to those who don’t know yet the phrase’s origin.
What made you pursue a degree in economics and a career as an economist?
Both my parents are practicing lawyers, and an economics degree was originally meant to be a prelaw for me. Indeed, after graduating from the UP School of Economics in 2009, I went straight into UP Law.
But after a year I found that I was not enjoying it very much [although I did make wonderful friends there]. To make the long story short, I missed data crunching and the economic way of thinking.
Of course, law and economics now have some considerable overlaps, but I still missed doing original research and investigating economic questions, especially about Philippine development issues.
I decided to leave law school in 2010 and went back to be a research assistant to UP professors. Since then I never left economics again.
After obtaining my master’s degree [2013], I’ve alternated work in academe, the government and the development sector. I find that there are enough interesting questions in this field to last me a lifetime.
You have a solid science background in science back in high school. Since economics also deals a lot with numbers, did you think back then that Economics was going to be an exciting course for you?
My favorite subjects back in my QueSci [Quezon City Science High School] days were physics and astronomy. Later, I realized just how many economics concepts were inspired by, analogous to, or drawn directly from physics.
Today many continue to accuse economists of having “physics envy,” since economists often construct models of the economy like how physicists and other natural scientists develop theories about the natural world.
But economists often struggle at this because they deal with human behavior, rather than the behavior of, say, atoms or animals. In the words of physics Nobel laureate Murray Gell-Mann, “Imagine how hard physics would be if atoms could think.”
[For] me, that’s what makes economics all the more beautiful and interesting as an intellectual pursuit.To be a good economist, is it necessary to have above-average abilities in mathematics?
Many people are often surprised at how mathematical economics could get. The level of mathematics in economics education increases exponentially from high school, college, to graduate education.
This seeming obsession with math comes from a wave of “mathematization” that started in the 1940s. Ever since, the use of math in economics has only become deeper and more widespread.
Is this generally good? On the one hand, the use of mathematics is a neat way of presenting theories systematically. Also, estimates of economic relationships can only be derived by using mathematical and statistical techniques.
On the other hand, many theories and models can easily become abstruse to the point of being largely removed from reality. Most important, when economists talk in terms of mathematics, it hinders them from communicating their ideas to the broader public.
This somehow diminishes economists’ relevance to societal discussions, no matter how useful or interesting their insights are. Nor are there enough incentives for them to reach out to the public: economists often write for each other in the form of seminars and journal articles, since these activities are key for promotion and tenure tracks. As in many other fields, this is one area that needs rethinking, especially in light of modern and digital ways of propagating knowledge and information.
What economic theories excite you?
As one economist said, economic theories and models are best treated as fables: their primary purpose is to highlight stories from which we can draw lessons. And some of the theories I love teaching the most are those in microeconomics and development economics.
In microeconomics, consumer-choice theory, comparative advantage and game theory are all fun to teach and have widespread applications, which students can easily relate to. These theories highlight the fact that learning just a few economics models can go a long way in understanding many social phenomena in the real world.
In development economics, I’m drawn to theories explaining why some countries are richer than others. My current research dwells on the idea of “structural transformation,” or an economy’s evolution from agriculture, manufacturing, to services. For instance, what does the rise of tradable services [e.g., BPOs] mean for the trajectory of the Philippine economy? Is a “manufacturing renaissance” feasible and desirable? And what prevents the rapid growth of agricultural productivity? These are important questions which remain largely unresolved today, and are fertile areas of research.
In this knowledge-based economy, what are the prospects and potentials of the Philippines? Do you think the Philippines can achieve significant strides in economic development, considering that our digital infrastructure needs a lot of improvement?
The Philippines’s vast exposure to the internet and other digital technologies is changing not only the way we consume things [e.g., news, TV, music, e-commerce] but also the way we produce things [e.g., the growth of business-process outsourcings, ride-sharing services like Uber].
But in all these, there’s a need to bridge the digital divide that remains in the Philippines. Thankfully, such divide is not as large as in other countries.
For instance, Internet access is broad-based, especially among the youth, and nearly half the population have Facebook accounts.
But to further expand access, we need to invest more in our telecom infrastructure and increase our broadband speeds to match those in our neighbors. Democratizing the Internet also necessitates lower prices.
One critical way to bring about these reforms is by promoting more competition in the telecoms sector.
Economists, particularly those coming from the World Bank and IMF, are often blamed by people around the world for the so-called “antipeople” policies, especially during an economic crisis. What is your take on this issue?
Over many decades there has been no shortage of criticisms of the World Bank and IMF, which are frequently derided for advancing the so-called Washington Consensus, or a set of 10 policies that developing countries “ought to” adopt in order to progress.
Both these multilateral institutions have also been chided for conditioning their loans heavily unto governments’ adoption of these one-size-fits-all policies.
But since the 1980s many changes have occurred that have transformed the role of these respective institutions. For instance, in contrast to the “laundry-list” approach of the Washington Consensus, many governments now employ the technique called “growth diagnostics”, which involves identifying key constraints to growth and development while considering the peculiarities and idiosyncrasies of the country in question.
The World Bank is also now contending the fact that today’s developing countries are growing fast and catching up with developed nations. They are also finding alternative sources to finance their development projects.
Hence over time, the WB and IMF have found it necessary to adapt to the times.
As an economist, what is your stand on the view of the Opus Dei that a huge population is not a hindrance to attain economic development?
Indeed, a huge population is not a hindrance per se to economic development. The more people you have, the more innovators, scientists and geniuses a country can produce in absolute terms.
Couples should be free to decide how many children to have. But the issue here is that couples precisely want fewer children than what they usually have. As the economy grows and people become more affluent, having more children becomes more expensive in the sense that it limits people’s ability to pursue their own endeavors as workers, professionals and entrepreneurs.
And one way to improve the choices of couples, especially women, is to allow them to have greater control over their own fertility in the form of family planning and contraception. This is especially crucial for poorer women who have a high unmet demand for contraceptives and are, therefore, among those with the highest incidence of unintended pregnancies.
The issue is more about freer choice, more than anything else.
Philippine economists have been debating what’s the most viable economic roadmap for the country to attain genuine development. Do you think the country is still searching for the ideal economic model for development?
I find this one of the most fascinating questions in Philippine economics. Contrary to popular thinking, there’s no single theory that suits any one country best. Instead, economics works best when you exploit the diversity and variety of theories and models out there.
One of the most important debates for the Philippines is which sector to promote more in the future: industrial growth or services growth? Across the globe, the typical story of development is that a country moves from being predominantly agricultural to being predominantly industrial (manufacturing-centric). Later on, countries become dominated by services, such as banking, telecoms and trade.
In this part of the world the Philippines is one of the countries which “leapfrogged” or skipped manufacturing and and jumped right into services. In other words, we have deindustrialized prematurely, and recent research shows that many other countries are experiencing the same divergent path.
Should we maintain the momentum of services growth or should we revive manufacturing as time-tested ladder to faster growth? These issues are far from resolved, though right now I am inclined to favor the former view rather than the latter.
Who are your favorite economists?
I look up to many economists here and abroad, either for their pathbreaking works or effectiveness as communicators. Among the economists long gone, I admire Adam Smith, Paul Samuelson and Milton Friedman. Among the older living economists, I admire Paul Krugman, Dani Rodrik and Greg Mankiw. Among the younger generation, I admire Daron Acemoglu, Steven Levitt and Esther Duflo. Among Filipino economists, I admire National Scientist Raul Fabella, Monetary Board Member Felipe Medalla, UP School of Economics Prof. Emmanuel de Dios and Philippine Competitive Commission Chairman Arsenio Balisacan.
Moving forward, do you plan to develop a Nobel Prize-caliber economic theory?
I’m not sure if my work will ever qualify to become Nobel-worthy. But to begin with, the odds are very slim (close to zero) since Nobel laureates typically come from the top universities in the West. Nevertheless, this Western bias shouldn’t prevent Asian economists from pushing forward their own views of how the world works.
Filipino economists certainly have a lot of material from which to draw inspiration. More generally, one need not win the Nobel Prize to make solid contributions to both the economics profession and to society at large.
How did you find the movies The Big Short and A Beautiful Mind?
The Big Short was a good way of popularizing the concepts and financial instruments which drove the recent global financial crisis. But I liked A Beautiful Mind much more.
I was in high school when it premiered, and throughout my years in QueSci they made us watch that film at least three times. John Nash was a fascinating figure, indeed: for instance, he won the Nobel Prize based on his PhD dissertation, which was just 26 pages long.