Universität KonstanzExzellenzcluster: Kulturelle Grundlagen von Integration

‘Economists in-between’

The epistemic profile of macro-economic experts in the financial industry

Leon Jesse Wansleben


What will the European Central Bank do next - and how will markets react? Where will inflation go in Eastern Europe? What influence will elections in Russia have on its economic development? And how do demographic changes influence global economic development?

Questions like these are of practical relevance for diverse participants in financial markets. The possibility to answer them more or less correctly can open up chances for profits or can prevent losses. So how do financial market participants answer them, if at all?

A specific group of experts, called economists, is employed by global banks and financial information services to produce assessments and forecasts regarding economic developments and risks. They focus on economic aggregates like interest rates, exchange rates, inflation and growth rates and reflect these variables’ impact on markets. 

With the means of the ‘social studies of finance’, economic sociology and the sociology of knowledge, I attempt to develop an ‘epistemic profile’ (Karin Knorr-Cetina) of this expert group. This profile will allow enriching our understanding of economic observation and forecasting in practice; it will give us insight into how ‘real’ economies are related to financial markets by ‘indigenous’ experts, and it will contribute to our understanding of the information architectures of financial markets.

The epistemic profile can be sketched related to the following three aspects:

  • The position of macro-analysts in-between economies and financial markets; their sense-making of economic developments in relation to financial market movements and vice versa; their distance/proximity to the dynamics of markets.

    “Market economists, as researchers, must be careful to ‘remain cool’. If they join the crowd of traders in becoming excited by the lasted hot piece of information, they lose all perspective (...) None of this means that market economists should be cold as regards latest developments, retiring into the ivory tower of some ‘academic’ economists. They are part of the marketplace and should be alive to the continuous shifts in mood and excitement there” (Brown 1996: 172).

  • Economic observation as interpretative practice; the information used, the theories and models employed and the characteristics of what counts as evidence; the problem of forecasting; economists’ strategy of dealing with the ever-changing nature of their knowledge object. E.g.:

    “That’s the difficult aspect of our job. It’s not enough to know, especially for exchange rates, how the present situation is like. The question rather is: if you want to try to forecast exchange rates, you got to know where market expectations will be tomorrow. And that’s the difficult thing indeed“ (Interview with a macro-analyst).

  • Economists’ influence on markets, mediated by their interaction with traders and investors through stories, networks, arenas, and conversation cultures. E.g.:

    “That was the BRICs-study by Goldman Sachs, a study of the economic potentials of Brazil, Russia, India and China. It says that these countries could be very big by 2050. That was a sort of self-fulfilling prophecy because the first investors then decided to enter these markets; this step influenced other investors and then, because markets are really going up, the last sceptics also become convinced. Such a study can indeed have influence. If you look at how many BRICs-funds there are nowadays, that was a big coup“ (Interview with a macro-analyst).

The methods I employ are qualitative interviewing, participant observations and discourse-analysis.
At present, I have conducted about 10 interviews with economists of major banks and financial information services in Frankfurt, London and Zurich; A paper on the BRICs-narrative by Goldman Sachs (see quote above) as an influential, culturally concentrated piece of macro-economic research in financial markets is in preparation; Suggestions, comments etc. are very welcome!

Brown, Brendan. 1996. Economists and the financial markets. London: Routledge