One of the benefits of an academic education is the common language that is developed. A common language eases the exchange of ideas and decreases the information losses across different people. There are clear benefits in having a similar conceptual framework. Each time someone says “opportunity cost” or “decreasing marginal returns” everyone that has studied economics understands roughly the same thing. Having everyone standing on a similar ground allows a more seamless thesis/anti-thesis interplay. But, as every economist would say, there is no such thing as free lunch, i.e., there is always a cost associated with a benefit. One of the costs of having a common language is excluding those who do not share it. In general, we forget how to communicate with non-economists.
Our working relations are not restricted to other economists. Many times we have to cooperate with people with different backgrounds. It is very likely that we meet people that have never heard of models and don’t know what elasticity means. It is also possible, although hopefully less likely, that even a figure in percentage terms is not well understood. The people we communicate with may have an idea of what we are talking about, but they will certainly interpret what we say differently from what we mean.
What should we do to increase the effectiveness of our communication?
Firstly, avoid all economics jargon. If the public will, in all likelihood, not understand the concept of “marginal cost”, then it is best not to use it at all. We should try not to lose the audience in the easy things. How about using “the cost of producing the next unit”?
Secondly, remember that there is an optimal point of conciseness that depends on the public. Unlike academia, most concepts are not ex-ante defined. Therefore it is good to give the public time to get used to them. In academia, the more information you can fit into a paragraph, the better. For other types of public, explaining the same concept more than once may be a good idea. We can use 3 different and complementary explanations to help the public reach the central point. When we mean “marginal cost” we could use “the cost of producing the next unit”, and we could complement it with “the additional effort the producer will have to exert” or even “what the producer will have to forego in order to have a slight increase in output”.
Thirdly, use what you are trained for: examples. Our academic training is based in models which, in the end of the day, are stylized examples of reality. If we are at ease with examples, we should use them. The best is to use daily life examples. Try to use easy numbers and real life currencies. Make the public comfortable. Don’t say “the marginal cost is increasing” try “when you are producing 50 chairs producing one more costs you €5, whereas when you are producing 100 chairs producing one more costs you €10” instead. In this line, we can also use diagrams to illustrate our points. Just be aware that most people understand a bar diagram or a pie chart if they have clear legends, but no one will understand functions, even if they seem straightforward. The following figure could illustrate an increasing marginal cost.
Finally, note that many times we use economic jargon defensively. When we are not at ease with a certain point we start using difficult words so that the audience thinks we are really smart. Avoid this at all cost. How? There is a unique solution for all of us: know better and study harder. A good benchmark we should always keep in mind: would my granny understand this explanation?
Nuno Alvim, RBB economics
(Nova SBE Alumnus)