Careers in Health Economics: Think Tanks

By David Powell

The price elasticity of medical care is -0.2 (Manning et al., 1988). Any discussion about health economics at the RAND Corporation should probably start with this indisputable and still relevant fact. Aside from intimate knowledge of our field’s most critical structural parameter, how is working at a think tank different than all the other possible places a health economist can work nowadays? While many economists, especially graduate students approaching the job market, probably have a general idea about what an academic economics department position is like, the reality of life at a think tank may be less understood.

Part of the confusion is because think tanks vary widely. Some have political leanings, some don’t. (RAND is nonpartisan.) Some primarily operate based on funding from foundations while others rely on grants or contracts or both grants and contracts. It can be confusing. Working at a place called RAND adds another layer of confusion—I’ve been asked about how I became interested in maps (Rand McNally) and, separately, why I would dedicate my life to promoting wealth inequality (Ayn Rand). It’s difficult to talk generally about think tanks so I’ll focus on my experience at RAND and, in anticipation of Reviewer 2, try to sprinkle in some thoughts about external validity when I can.

At RAND, research is largely funded through grants or contracts. Grants are often researcher-generated ideas submitted to the National Institutes of Health, National Science Foundation or other agencies. For contracts, it is more typical for a government agency to ask a specific set of research questions, which researchers answer to the best of their ability. Consequently, there are parts of RAND which operate much like an academic economics department, parts which work like a public health school, and parts which look like traditional “policy shops.”

In fact, most economists at RAND spend at least some time in each of these areas and have self-selected into RAND because they want to publish in economics, medical, and/or policy journals while also directly interacting with stakeholders and informing policy. However, there are significant differences across economists in terms of how much time they decide to spend in each of these categories – some strongly focus on publications in economics journals while others dedicate most of their time to working directly with policymakers. This flexibility is one of the major appeals of RAND and similar places.

Think tanks will generally provide researchers with considerable opportunities to brief policymakers on the implications of their research. In many cases, the goal of a project is to try to publish in a good journal and advance the field in that way. However, important policy-relevant research questions often may need answers from economists even if that research may not result in an academic publication. Economists at RAND tend to place significant value on that type of policy contribution as well. Research at RAND is usually empirical and directly related to policy concerns. It is also more likely to involve interdisciplinary teams than in an academic economics department, but you will also encounter a relatively large number of researchers with similar interests. RAND has about 75 applied microeconomists among its nearly 1,200 researchers.

When considering working in an environment like a think tank, here are some points to consider: What are the expectations for bringing in money (and what are the consequences of not meeting those expectations)? How much freedom is there to select projects and pursue your own research ideas? For example, RAND generally considers acquiring funding as a collaborative process (though there are benefits to bringing in your own funding), and researchers independently select which projects to pursue. But the equation varies from place to place.

While there are lots of benefits to working at a think tank, there are tradeoffs. There are limits to what you can study in any environment which depends on outside sources funding your research. If you wake up one day and decide you want to do theoretical macro, you might find it hard to follow through on this life-changing and surprising pivot. A related issue: It takes time to write proposals and secure funding for your research ideas. To my best approximation, this part of the job is equivalent timewise to a standard teaching load (As a side note, many RAND economists also opt to teach at the Pardee RAND Graduate School).

Health economists with special interest in informing policy should consider think tanks as a viable option for pursuing their research. I have found it is possible to replicate a traditional “academic economics” environment, but with the flexibility to pursue other types of research that may not be traditionally valued as much in an academic department.

David Powell is Economist at RAND and a member of the Core Faculty at the Pardee RAND Graduate School.  He has a Ph.D from MIT.