A Letter to Students of Economics - 2026

Dear student,

This is my seventh annual letter to students of economics and, in keeping with many of the previous six, I am writing against the backdrop of extraordinary economic events. Since my letter last year, we have moved from trade tariff anxieties to more widespread geoeconomic and geopolitical fragmentation, all the while overlaid with ongoing structural transitions arising from demography, technology, and climate change.

The attack on Iran delivered a new shock to the global economy and raised inflation in the euro area and elsewhere. Monetary policy has responded. In Ireland growth has been resilient (despite volatility in the numbers which at times have even impacted euro area figures), with significant momentum from a wave of AI-related investment by multinationals in particular. This leads to a slightly uneven growth picture, with the domestic economy expanding at a more moderate pace than the headline numbers suggest. (Of course, it’s important to always look beyond the headline numbers and identify what is driving the dynamics underlying the aggregate picture, whether with growth, inflation or indeed any economic indicator.)

What does this mean for you?

But this isn’t a letter about monetary policy or the domestic economy but about the study and understanding of economics itself.

I chose to study economics because I wanted to better understand the world and how to improve it. I have spent all my professional life working in institutions that are involved in public policy or, as I see it at least, looking for ways to increase the wellbeing of communities.

Economics is, as Alfred Marshall wrote over a century ago, “the study of mankind in the ordinary business of life”. It exists as a distinct discipline because every person, as well as every society, faces an "economic problem" arising from the fact that individually and collectively we have limited resources (in the widest sense of the term, including our own time and capabilities) to meet unlimited wants. Public policy looks to identify different ways to increase available resources – for example of human or financial and physical capital – and ration the allocation of these resources to their highest valued uses. 

But, while being a distinct discipline, economic analysis works best when its insights are developed in collaboration with other disciplines. I have always thought of an economist as a "weaver", someone who is able to bring together various strands of evidence and insights and weave them into baskets to carry forward public policy and develop solutions to today’s and tomorrow’s challenges.

I have been fortunate to have been involved in a lot of "weaving" and have learned some things along the way and, as you start the academic year, I thought I would share some of them with you.

First, to state the obvious, make sure you know what you’ve chosen to study. For me, economics provides a disciplined way of thinking about “the ordinary business of life”. Moreover, it is, as John Maynard Keynes wrote, "essentially a moral science and not a natural science”. It doesn’t provide the type of certainty you might associate with physics. Instead, economists need to weave the various threads that reflect individuals, cultural norms, globally interconnected societies in constant – and increasingly rapid – change to come to outcomes that improve the wellbeing of our communities (with all the complexity of motivations, behaviours and values this entails).

Moreover, economists need to be comfortable with genuine uncertainty, not just risk.Textbooks teach us how to model risk, a known range of outcomes with assigned probabilities. But economic policymaking increasingly demands something more: judgement about uncertainty – the distinction Frank Knight drew a century ago – where you might not know the full range of risks or how they interact, let alone the probabilities. (Research in this area has grown rapidly and you might have heard of metrics such as Economic Policy Uncertainty and Trade Policy Uncertainty. I also encourage you to look at the Central Bank’s Quarterly Bulletins and the ECB/Eurosystem staff projections, where scenario analysis is one way we explain the uncertainty around the outlook.)

Second, being “a moral science” means that economic analysis and its insights and recommendations are most effective when developed and applied in collaboration with other disciplines. Be open minded and curious to better understand, embrace and respect the perspectives that other disciplines – anthropology and ethics for example – bring to thinking about, and solving, economic problems. We need to gather the best evidence we can and that means being open to other insights (as we did in our climate work, for example, where we worked closely with engineers, earth scientists and climate scientists to help us understand the impact of climate events).

Third, economists have various tools and models to help them think in a disciplined way in order to understand and solve problems. Technological advancement has led to significant improvements in that toolkit over the years but it’s important to avoid confusing the models and techniques developed to think systematically about economic problems with the reality being addressed. At the end of the day, conclusions need to be anchored in the real world, especially if they are to be turned into policy decisions.

It is probably worth saying something about AI. I have been asked more than once whether it is sensible to build a career in economics in an age of artificial intelligence. My answer is a resounding yes. You should certainly learn to use AI well. And by "well", I mean you should know what the tools do not do. They do not decide which question is worth asking; they do not always recognise when output looks clean but the underlying data is bad; they struggle with judging how much weight a policymaker should put on projections built on assumptions that history and experience tell us are fragile. And, when it comes to articulating difficult trade-offs to the public in trusted language, they come a distant second to humans.

In my view, AI will shift demand to those parts of an economist’s job that are hard to automate: framing the right question, sense-checking the answer against reality, and explaining the trade-offs in a trusted manner. Using Luis Garicano’s language, being an economist is a "messy job":  it involves a bundle of tasks, some of which AI can replicate and some of which are not easily replicated.

Fourth, there is a rich history of – and diversity in – economic thought that is worth exploring. Read some of the old classics (such as Adam Smith’s The Theory of Moral Sentiments) as well as more modern ones (for example Keynes’ General Theory and George Akerlof’s The Market for Lemons). Diversity of thought is essential for our collective ability to analyse, understand and tackle difficult public policy problems. It matters for the Central Bank but also for good public policy. We need to avoid the temptation to stop at economic ideas that leave us feeling comfortable (which also means, as John Stuart Mill wrote, that it’s important to understand arguments that you don’t agree with).

Fifth, I strongly encourage you to study economic history. It’ll help you understand how we arrived at today’s world. And it’ll also show you that some of the world’s problems aren’t new: the better we understand the past, the greater the chance that we will learn from it (or, as Keynes put it, “study the present in the light of the past for the purposes of the future”). History may not repeat but it certainly teaches and we should observe, listen and learn its lessons.

Sixth, do follow Keynes and study the present. Don’t take the views of one academic paper or lecture, one newspaper or magazine or YouTube commentator, one radio or TV broadcast or the output of Claude or Qwen as representative of all there is to know about an issue. Being aware of current affairs matters but reading and listening widely and broadly will help you to understand an issue or problem better. (Robert Shiller’s Narrative Economics is an interesting look at how popular narratives have an impact on the economy.)

Seventh, and finally, a practical but very important point, learn to write well which means writing clearly, simply and succinctly, however complicated the subject. It’s a great skill to have, especially if you’re planning to go into public policy work in a government department or the Central Bank. It’s also hard to do and takes time to learn but developing the ability to do it well is worth the effort. (George Orwell’s Politics and the English Language is worth reading and his six rules of writing are worth following.)

Conclusion

Economics has rarely been more needed, or more interesting. If you want a sense of how we use economics in a policy institution, have a look at our Quarterly Bulletin, Financial Stability Review, or Research Publications. And if you’re coming to the end of your studies, have a look at our Graduate Programme 2027 (and we are not just looking for economics graduates!). The Central Bank will be at the Graduate Careers Fair at the RDS in Dublin today, where you can find out more.

I hope you enjoy the year ahead.

Gabriel Makhlouf