Chalk + Talk: What can economists learn by thinking like an engineer?

Engineering doesn’t always get the fame it deserves according to Guru Madhavan.

His telling of how penicillin came to be widely used is a good example. The discovery of penicillin was an accident, the result of an experiment that went slightly awry. The implications of the discovery were, of course, enormous. Yet it took time and effort to make a product that could be mass produced. Supplies were initially very limited: in 1942, doctors used up half the US’s supply in treating just one patient.

A chemical engineer, Margaret Hutchinson, was responsible for developing the technique that allowed billions of doses to be produced. But the name ‘Margaret Hutchinson’ barely even graces the footnotes of history. It is a story worth thinking about in the UK, where a common worry is the low translation rates of our excellent track-record in discovery and innovation into mass produced, globally-conquering products and services.

Guru Madhavan, however, has more in his sights than the need to better recognise and promote the role of engineers in bringing new discoveries to market. As set out in his talk at the SMF, he also believes that there are a number of ways in which economic and social policy makers can better solve problems by borrowing ways of thinking from engineering.

Three key aspects of this way of thinking are:

  1. Systems analysis: engineers have a “modular” way of thinking. They start by breaking down a complex system to its constituent parts; fully understanding each components of that system, and then putting those components back together again and seeing how that changes things. They do this through testing, data and real world analysis. Going through that process produces better design.
  2. Failure analysis: how to understand the causes of failure and learn from failure is an important element of engineering teaching. In public policy, a blame culture can often get in the way of properly learning from failure.
  3. Human factors: engineers are focused on developing solutions that reflect the demands (and cope with the foibles) of real human beings. That has meant fruitful collaboration with psychologists and anthropologists.

To be fair, public policy is slowing moving in this direction. The behavioural economics revolution has happened. Testing – through natural experiments and randomised control trials – is becoming more common. As it becomes easier to generate and analyse data, it should get easier to develop insights about how to better design public policy.

Perhaps the key challenge, though, is developing a clarity of purpose. Whilst engineers do have competing trade-offs – and indeed, the skill is in how those trade-offs are maintained, it is often relatively straight-forward to clearly define the fundamental objective. That means success or failure can be more easily measured. Either a plane flies or it doesn’t, and we usually have some idea of how much we want to trade-off, say, cost, against health and safety.

In public policy, it is often much less clear-cut. We’re often operating in a world where we’re not even sure what the constraints are.  Do we want to maximise economic growth or smooth growth through time, and share the proceeds equally? There is much debate as to whether these objectives are even in conflict with each other or not.

At the micro-level though, there are useful lessons to learn. Guru Madhavan points out that defence policy borrows much from engineering, taking a rigorous approach to strategy and spending decisions. One could easily imagine that taking such a systems-based, in-depth approach to other areas, like health and social care, could be fruitful, helping us work out how different parts of the system impact on each other, and where scarce public funds would deliver the best value for money.

You can listen to a recording of the event below:

Chalk + Talk is the SMF’s popular lunchtime seminar series, run in partnership with the ESRC. Chalk + Talk brings the best policy output from the world of academia into the heart of Westminster.

Image Sponsor Logo ESRC


Related items:

Page 1 of 1