Subject benchmark statements
Economics

Subject benchmark statements

Subject benchmark statements provide a means for the academic community to describe the nature and characteristics of programmes in a specific subject. They also represent general expectations about the standards for the award of qualifications at a given level and articulate the attributes and capabilities that those possessing such qualifications should be able to demonstrate.

This subject benchmark statement, together with the others published concurrently, refers to the bachelors degree with honours.

Subject benchmark statements are used for a variety of purposes. Primarily, they are an important external source of reference for higher education institutions when new programmes are being designed and developed in a subject area. They provide general guidance for articulating the learning outcomes associated with the programme but are not a specification of a detailed curriculum in the subject. Benchmark statements provide for variety and flexibility in the design of programmes and encourage innovation within an agreed overall framework.

Subject benchmark statements also provide support to institutions in pursuit of internal quality assurance. They enable the learning outcomes specified for a particular programme to be reviewed and evaluated against agreed general expectations about standards.

Finally, subject benchmark statements are one of a number of external sources of information that are drawn upon for the purposes of academic review* and for making judgements about threshold standards being met. Reviewers do not use subject benchmark statements as a crude checklist for these purposes however. Rather, they are used in conjunction with the relevant programme specifications, the institution's own internal evaluation documentation, together with primary data in order to enable reviewers to come to a rounded judgement based on a broad range of evidence.

The benchmarking of academic standards for this subject area has been undertaken by a group of subject specialists drawn from and acting on behalf of the subject community. The group's work was facilitated by the Quality Assurance Agency for Higher Education, which publishes and distributes this statement and other benchmarking statements developed by similar subject-specific groups.

The statement represents the first attempt to make explicit the general academic characteristics and standards of an honours degree in this subject area, in the UK.

In due course, but not before July 2003, the statement will be revised to reflect developments in the subject and the experiences of institutions and academic reviewers who are working with it. The Agency will initiate revision and, in collaboration with the subject community, will establish a group to consider and make any necessary modifications to the statement.

This statement is © The Quality Assurance Agency for Higher Education 2000.

It may be reproduced by educational institutions solely for educational purposes, without permission. Excerpts may be reproduced for the purpose of research, private study, or review without permission, provided full acknowledgement is given to the subject benchmarking group for this subject area and to the copyright of the Quality Assurance Agency for Higher Education.

Electronic storage, adaptation or translation of the statement is prohibited without prior written agreement from the Quality Assurance Agency for Higher Education.

* academic review in this context refers to the Agency's new arrangements for external assurance of quality and standards. Further information regarding these may be found in the Handbook for Academic Review, which can be found on the Agency's web site.

Academic standards - Economics ¹

1 The nature and context of Economics

1.1 Economics is the study of the factors that influence income, wealth and well-being. From this it seeks to inform the design and implementation of economic policy. Its aim is to analyse and understand the allocation, distribution and utilisation of scarce resources. Economics is concerned both with how present allocations arise and how they may change in the future. Study of Economics requires us to understand how resources are used and how households and firms behave and interact. This understanding is required at both the individual (micro) and the aggregate (macro) level. The analysis is both static (dealing with output, employment, income, trade and finance) and dynamic (dealing with innovation, technical progress, economic growth and business cycles). The study of Economics requires an understanding of resources, agents, institutions and mechanisms. Moreover, since virtually no economy operates in isolation, it is important that these phenomena are studied in an international context.

1.2 Economics is a key discipline in the social sciences. Its subject matter engages with other subject areas such as psychology, politics, sociology, anthropology, geography, history and law. It also uses mathematics and statistics and is engaging increasingly with sciences such as biology, environmental science and medicine. Furthermore, since knowledge of economics is essential for an understanding of business behaviour, strategy and corporate performance, it is one of the central disciplines underpinning the study of business and management and related areas. Recognition of these interrelationships, and the increasing number of students who are choosing to study economics jointly with another subject, or as an integral part of a business and management degree, have led to new and imaginative degree programmes. Their design has been influenced by the appreciation that a training that includes Economics provides significant employment opportunities in a variety of careers in addition to working as a professional economist.

1.3 This points to certain key intellectual features that characterise the economist's approach. First there is the ability to abstract and simplify in order to identify and model the essence of a problem. Second is the ability to analyse and reason - both deductively and inductively. Third is the ability to marshal evidence and to assimilate, structure, and analyse qualitative and quantitative data. Fourth is the ability to communicate concisely results to a wide audience, including those with no training in Economics. Fifth is the ability to think critically about the limits of one's analysis in a broader socio-economic context. Sixth is the ability to draw economic policy inferences and to recognise the potential constraints in their implementation.

¹ A pilot project conducted by the standing Conference of University Heads of Department in Economics (CHUDE) under the aegis of the Quality Assessment Agency for Higher Education (QAAHE) sought to define graduateness. This project used a questionnaire to discover the views of Heads of Department in Economics on issues perceived as important to Economics. Their replies were instrumental in devising the Benchmarking Statement in Economics.

2. The aims of degree programmes in Economics

2.1 Given these defining features, the main aims of a degree programme in, or including Economics as a major component, are:

To provide training in the principles of economics and their application appropriate to the type of degree concerned: single honours, joint honours and combined studies.
To stimulate students intellectually through the study of economics and to lead them to appreciate its application to a range of problems and its relevance in a variety of contexts.
To provide a firm foundation of knowledge about the workings of the economy and to develop the relevant skills for the constructive use of that knowledge in a range of settings.
To develop in students the ability to apply the knowledge and skills they have acquired to the solution of theoretical and applied problems in economics.
To equip students with appropriate tools of analysis to tackle issues and problems of economic policy.
To develop in students, through the study of economics, a range of transferable skills that will be of value in employment and self-employment
To provide students with analytical skills and an ability to develop simplifying frameworks for studying the real world. They should be able to appreciate what would be an appropriate level of abstraction for a range of economic issues.
To provide students with the knowledge and skill base, from which they can proceed to further studies in Economics, related areas or in multi-disciplinary areas that involve Economics.
To generate in students an appreciation of the economic dimension of wider social and political issues.

3. Subject knowledge and understanding

3.1 To achieve these aims any single honours degree in Economics normally comprises the following elements.

A coherent core of economic principles. The understanding of these might be verbal, graphical or mathematical. These principles should cover the microeconomic issues of decision and choice, the production and exchange of goods, the interdependency of markets, and economic welfare. They should also include macroeconomic issues, such as employment, national income, the balance of payments and the distribution of income, inflation, growth and business cycles, money and finance. The understanding should extend to economic policy at both the microeconomic and macroeconomic levels. In all these, students should show an understanding of analytical methods and model-based argument and should appreciate the existence of different methodological approaches.
Relevant quantitative methods and computing techniques. These are likely to cover mathematical and statistical methods, including econometrics. Students should have some exposure to the use of such techniques on actual economic, financial or social data.
A knowledge and appreciation of economic data, both quantitative and qualitative. Students should also have some knowledge of the appropriate methods that the economist might use to structure and analyse such data.
The applications of economics. Students should have the ability to apply a core of economic principles and reasoning to a variety of applied topics. They should also be aware of the economic principles that can be used to design, guide and interpret commercial, economic and social policy. As part of this, they should have the ability to discuss and analyse government policy and to assess the performance of the UK and other economies.

3.2 It is recognised that, in both single honours degrees and in many degrees that involve a substantial amount of Economics, content will be adapted to suit the nature and objectives of the degree programme. In degrees that are not single honours Economics, not all the core elements in 3.1 may be covered. It is also recognised that the forms of analysis chosen may differ and may be tailored to best serve the skills that students bring with them into their degree programme. It is neither the function nor the objective of this benchmarking document to prescribe what these forms of analysis might be; this is a matter for institutional choice and decision.

3.3 The following is an indicative list of what the attainments of students might be.

Understanding of relevant mathematical and statistical techniques.
Understanding of analytical methods, both theory- and model-based.
Appreciation of the history and development of economic ideas and the differing methods of analysis that have been and are used by economists.
Ability to apply core economic theory and economic reasoning to applied topics.
Ability to relate differences in economic policy recommendations to differences in the theoretical and empirical features of the economic analysis, which underlie such recommendations.
Ability to discuss and analyse government policy and to assess the performance of the UK and other economies.
Understanding of verbal, graphical, mathematical and econometric representation of economic ideas and analysis, including the relationship between them. Also relevant might be appropriate techniques to enable manipulation, treatment and interpretation of the relevant statistical data.

4. Subject-specific skills and other skills

4.1 Some of the attributes that a graduate in Economics possesses are generic and not specific to the study of the subject. Their enhancement would be part of any degree programme. These would include general intellectual skills such as literary and information-processing skills, as well as interpersonal skills, such as communication. Economics degree programmes, therefore, provide a learning environment that facilitates and encourages the development and use of such skills.

4.2 There are three elements in the training of an Economics graduate that provide them with a coherent framework of thinking that is readily transferable and applicable to decision-making in a wide range of areas. These elements are (i) a set of subject-specific skills; (ii) a conceptual framework that offers a guide to good decision-making; and (iii) the general, but crucial, skill of numeracy.

4.3 Subject specific skills. Economics graduates also possess other, subject-specific but highly transferable, rigorous skills. This transferability is evidenced by the wide range of careers into which graduates in Economics move. The development of these skills is particularly emphasised in the course of an undergraduate degree that involves the study of economic principles and economic methods. These skills may be summarised as follows: ²

Abstraction. From the study of economic principles and models, students see how one can abstract the essential features of complex systems and provide a useable framework for evaluation and assessment of the effects of policy or other exogenous events. Through this, the typical student will acquire proficiency in how to simplify while still retaining relevance. This is an approach that they can then apply in other contexts, thereby becoming more effective problem-solvers and decision-makers.
Analysis, deduction and induction. Economic reasoning is highly deductive, and logical analysis is applied to assumption-based models. However, inductive reasoning is also important. The typical student will have been exposed to some or all of these and be able to use some of them. Such skills also enhance their problem-solving and decision-making ability.
Quantification and design. Data, and their effective organization, presentation and analysis, are important in Economics. The typical student will have some familiarity with the principal sources of economic information and data relevant to industry, commerce and government, and have had practice in organising it and presenting it informatively. This skill is important at all stages in the decision-making process.
Framing. Through the study of Economics, a student should learn how to decide what should be taken as given or fixed for the purposes of setting up and solving a problem, ie what the important 'parameters' are in constraining the solution to the problem. Learning to think about how and why these parameters might change encourages a student to place the economic problem in its broader social and political context. This `framing' skill is important in determining the decision-maker's ability to implement the solutions to problems.

4.4 The transferable concept.³ From learning economic principles, the typical student acquires a facility with some key concepts that are present in most of the decision problems that they are likely to face subsequently in their careers. These include:

Opportunity cost. A problem solver or decision-maker must routinely ask "what would have to be given up if ...", where the answer does not always involve a simply calculated financial cost. It is often the case that actions are proposed that fail to recognise foregone alternatives. Opportunity cost allows the economist to think about the costs in terms of all resources. Also, there are many examples of economic policies which enhance efficiency yet damage equity and vice-versa. All of these encourage an appreciation of inevitable trade-offs.
Incentives. Economists are trained to recognise and evaluate the incentives implied by particular rules, and how to establish sets of rules that actually lead people to react in ways that give rise to some intended outcome. The ability to think rationally about these issues is essential in the effective design of both policy and strategy.
Equilibrium, disequilibrium and stability. These are concepts that economists make heavy use of and the typical graduate will have seen these deployed in economic argument with great regularity. The concept of equilibrium is a state where no participant has any incentive to change behaviour. The ability to recognise disequilibria and appreciate their stability properties, and to think coherently about reactions to this, are essential ingredients of good decision-making.
Strategic thinking. Economists learn the importance of strategic thinking, and the roles of opportunities, strategies, outcomes, information and motivation in the analysis of strategic actions, including conflict, bargaining and negotiation.
Expectations and surprises. Economists learn that behaviour partly depends on experience and partly on peoples' perceptions of what is expected to happen. Thus behaviour may change when unanticipated events occur. Effective decision making requires the skill of reacting in a context where people's behaviour is based on expectations that may be confounded by subsequent surprises. Students in Economics will have been exposed to these issues and this will enhance their potential effectiveness as decision-makers.
The relevance of marginal considerations. Economists are trained to recognise that important decisions often relate to small variations in key variables and parameters. An action is worth undertaking if the additional benefit that accrues is greater than the additional cost incurred. The typical student in Economics will be fully aware of the importance of the margin relative to the average.

4.5 It is worth emphasising further the issue of numeracy. Economists frequently use information that is presented in some numerical form, and students should be appropriately trained in this regard. The raw data are often in tables, the processed data as a graph, an average, a correlation and so on. Numeracy, statistical and computing skills are necessary to handle this sort of information. Presentation skills are needed to communicate such quantitative information in usable ways, and particularly to give critical and coherent summary representations of data that cannot be readily absorbed raw. As well as formal manipulative and presentation skills required to deal with statistical data, economists learn not to be misled by numbers. They question whether the numbers represent what they claim (eg unemployment, price indices), they understand statistical significance (eg the margin of error in a poll or survey) and they are aware of at least some of the difficulties in sampling a population. In addition, with some understanding of econometrics, they recognise that conclusions drawn from data might be ambiguous.

² These subject-specific skills can be mapped on to the threshold levels of subject-specific knowledge set out in Section 6.

³ This idea can be found in J Craven (1993), The Skills of an Economist, Royal Economic Society Newsletter, April, 4-5.

5. Learning, teaching and assessment

5.1 There are various ways of organising and supporting the learning process so as to establish an environment that fosters learning styles that create active and deep learning opportunities. Students should be encouraged to explore and analyse information. A variety of approaches in Economics to managing the learning process may be adopted to achieve this. The menu includes lectures, seminars, tutorials, workshops and distance-learning approaches. The relative contribution of these ingredients is likely to differ from degree to degree.

5.2 The approaches to the learning process just alluded to should be supported by appropriate resource-based material. A conducive learning environment can be created through a variety of approaches appropriate to the institution, the course and the students, including the availability of libraries, IT-based resources, appropriate written materials and text, as well as learning packs.

5.3 Students should be assisted to learn actively and in depth and to develop problem-solving skills and higher-order skills of reasoning and analysis in a structured and supportive environment.

5.4 Assessment strategies should be designed to match intended learning outcomes. A variety of assessment techniques may be employed, including, for example, unseen and/or seen examinations, dissertation, portfolios, written essays, oral presentations, problem-solving exercises, case studies or other assignments. Students should be given feedback on their progress and attainment.

5.5 Assessment is a crucial signal about what study is meant to achieve and is at the heart of the process of developing student learning.

5.6 In assessing students' work, some or all of the following criteria may be adopted:

how far have students focused on questions asked and/or identified key problems?
how well have students chosen the arguments, the relevant theory or model, to relate to the area specified or question asked?
how good is the quality of explanation?
how well have students demonstrated consistency, coherence and purposeful analysis?
how successfully have students used evidence?
how well have students collected, processed, analysed and interpreted relevant data?
how deep is the extent of critical evaluation?
how well have students demonstrated knowledge of relevant literature?

6. The benchmark levels ⁴

6.1 The benchmark levels proposed below are for both a single honours degree in Economics, and for those degrees where Economics is a major component. Students following degrees where Economics is a minor component will not be expected to attain all of these benchmarks.

6.2. The threshold level. A graduate in Economics who has attained the threshold level should:

Demonstrate knowledge of economic concepts and principles.
Demonstrate knowledge of economic theory and modeling approaches.
Demonstrate awareness of quantitative methods and computing techniques appropriate to their programme of study, and show an appreciation of the contexts in which these techniques and methods are relevant.
Display knowledge of the sources and content of economic data and evidence and appreciate what methods might be appropriately applied to the analysis of such data.
Know how to apply economic reasoning to policy issues
Demonstrate knowledge in an appropriate number of specialised areas in Economics.
Display awareness of the possibility that many economic problems may admit of more than one approach and may have more than one solution.

6.3 The modal level. A graduate in Economics who has attained the modal level should:

Demonstrate understanding of economic concepts and principles.
Demonstrate understanding of economic theory and modeling approaches, and their competent use.
Demonstrate proficiency in quantitative methods and computing techniques and know how to use these techniques and methods effectively across a range of problems.
Display understanding of the sources and content of economic data and evidence and of those methods that might be applied appropriately to the analysis of such data.
Know how to apply economic reasoning to policy issues in a critical manner.
Demonstrate knowledge in an appropriate number of specialised areas in Economics, as well as an appreciation of the research literature in these areas.
Display familiarity with the possibility that many economic problems may admit of more than one approach and may have more than one solution.

⁴ In this document 'knowledge' and 'understanding' have the following meanings. Knowledge is the ability to reproduce theory and evidence as taught, understanding is a term applied to constructive and critical use and analysis of that material.

Economics benchmarking group members

Professor P Arestis (Vice-chair) University of East London

Professor JA Beath (Chair) University of St Andrews

Professor DNF Bell University of Stirling

Professor G Bird University of Surrey

Professor D Blackaby University of Wales, Swansea

Professor VK Borooah University of Ulster

Professor J Cable University of Wales, Aberystwyth

Professor AA Carruth University of Kent at Canterbury

Dr CM Davis Wolfson College, University of Oxford

Professor P Demetriades South Bank University

Professor P Dolton University of Newcastle upon Tyne

Dr J Edwards University of Cambridge

Dr L Evans University of Durham

Professor G Hadjimatheou London Guildhall University

Professor NJ Ireland University of Warwick

Professor MM Mackintosh Open University

Professor DR Osborn University of Manchester

Dr PJ Reynolds Staffordshire University

Professor D Sapsford University of Lancaster

Subject benchmark statements Economics

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