The Future of Managerial Economics
| Peter Klein |
The December 2010 issue of Managerial and Decision Economics features an editorial by Paul Rubin and Tony Dnes on the state of the field, “Managerial Economics: A Forward Looking Assessment.” As they note, the “traditional approach” — basically applied neoclassical microeconomics, production theory in particular — has been augmented by new developments,
particularly in areas such as globalization, the economics of organization, information economics, strategic behavior, the learning organization, risk management, business ethics, and behavioral economics. All of these topics are hot in modern managerial economics and are slowly feeding through into MBA and similar courses.
The modern trends are often referred to as “the new managerial economics.” Some modern texts even use the term explicitly (Boyes, 2008) and focus on questions of “organizational architecture” including areas such as incentive structures in personnel economics. There are increasing numbers of specialist works emerging in these areas, which are coming to feature in influential handbooks (Lazear, 2009). Personnel economics, for example, applies economics to human resources topics, including information interactions, problems of team coordination, morale, and seniority systems. . . . In managerial terms, this field is a natural development of the economics of organization and of labor economics, and we hope to see much future research coming through.
In the “new” managerial economics, I think, the lines between managerial economics, competitive and corporate strategy, organization theory, HRM, and other applied topics in business administration are increasingly blurred. I teach an undergraduate managerial economics course that is more like a strategy and organizations class. I use the Brickley et al. text, Managerial Economics and Organizational Architecture, and could just as easily use Economics of Strategy by Besanko et al., Lazear’s personnel economics text, or any of the standard undergraduate strategy texts, without changing the focus of the course.
In short, I like MDE (and sit on the editorial board) but wonder if there really is a “managerial economics” field any more. Many papers appearing in MDE might fit just as well at SMJ or Organization Science or, depending on the technical economics content, the RAND Journal or an operations journal.