Economic Data Analysis

Economic data analysis is a broad area of study within economics and management that deals with using economic thinking and statistical tools to investigate data. Specialists in various managerial and economic functional disciplines may find exposure to such methods provide significant value added.

Data analysis can be used to solve many day-to-day problems that arise in a business environment and in organizations generally. The key ingredient, however, in making decisions to affect change within your organization is to understand the process and the relative importance of its corresponding factors that are currently at play. For example, if productivity within your firm or organization has been falling over the past few quarters, then the challenge for management is to reverse this trend. In order to reverse such a negative trend, we first need to understand the factors that give rise to productivity, and identify which of the factors is contributing to the falling productivity. Only with this understanding can effective management strategies be implemented.

Trends can pose both challenges and opportunities to management. The general prescription here is to reward strategy/behaviour that yields positive outcomes for the firm, and penalize strategy/behaviour that yields negative outcomes. The difficulty of course is identifying these strategies. Some may be obvious, but many are not. Statistics allows managers to identify both the process that gives rise to measurable performance outcomes and the relative importance of the factors that enter into that process. Statistics is therefore an important tool used by managers to improve the operations of their organization so that the objectives set out by management are achieved.

In short, therefore, statistics allows management to identify which component of the process within your organization that is contributing to any emerging trends, and hence allows management to implement policy to reverse negative trends or reinforce positive ones.

Economic Data analysis allows for a rigorous understanding of the organization or business by uncovering the underlying process driving certain outcomes. Only with this understanding can optimal managerial policies (responses) be formulated and implemented. This would be true regardless of the functional area – that is, the tools developed in this Data Analysis Stream are applicable in all areas within management.

Very often, management is confronted with a challenge or an opportunity that arises which requires a managerial response. It is commonly the case that management think they understand or better still know the cause or remedy of the challenge or opportunity that has arisen. It is often the case that management’s beliefs are not correct, or at least partly incorrect. Nevertheless, before a policy recommendation can be made, those beliefs must be confirmed or rejected. The tools developed in the Data Analysis Stream allow management to test their hypotheses about the organization. As such, those who have these data analysis skills will be better positioned to make optimal managerial decisions.

NOTE: The department also offers a Specialist Program in Economics for Management Studies (B.B.A.). The aim of this program is to prepare students for careers as business economists or prepare them for graduate level education in economics. This program requires completion of slightly more economics courses than the Economic Data Analysis stream does. Students in the stream are welcome to complete the additional requirements of this program if they desire to.

In order to truly benefit from the study of Economic Data Analysis, it must be integrated into economics courses, otherwise it would be difficult to understand the issues at hand and what the possible causes are for the outcomes under analysis. A rigorous understanding of economic theory would inform the analysis. 

Recommended Courses include:

• ECMC02 Topics in Price Theory
• ECMC06 Topics in Macroeconomic Theory
• ECMC11 Introduction to Regression Analysis
• ECMD50 Workshop in Economic Research

There are opportunities within all large corporations, banks, investment houses, and government ministries for those who focus exclusively on economic data analysis. It is now widely understood that there are benefits associated with a detailed analysis of economic and business data when designing optimal managerial and government policies. As such, there is an increased reliance on formal data analysis.

But there are careers within all functional areas within management for which training in data analysis would serve as a competitive advantage for your career. I (Professor Hejazi) have had several students who, in the process of doing their job after graduation, have conceptualized a data analysis project that has allowed them to develop a deeper understanding of the issues under consideration. Some examples are:

• Explaining variations in time to completion for IT projects at one of Canada’s major banks.
• Explaining why marketing spending have differential impacts within stores across product lines, or across stores for a retail chain.
• Explaining differences in earnings within a Canadian pharmaceutical company.
• Explaining why even though crime rates fall with increased police budgets, there is a positive correlation between crime rates and police budgets across neighborhoods within Canadian cities.

Studies in the Data Analysis Speciality allow employees to ask and conceptualize these questions, which are themselves very useful in being an effective manager.

Graduate programs in Economic Data Analysis alone are rare. However, virtually all graduate programs have a data analysis component. Certainly, MBA programs and graduate programs in economics, marketing, strategy and finance have extensive economic data analysis components. Having developed these skills at the undergraduate level will ensure you are one step ahead in the event you decide to pursue a graduate degree.