Incentives Matter: How Academic Economists Respond to the Market of Ideas

One of the first principles you learn in undergraduate economics is that people respond to incentives. That core insight extends well beyond consumers choosing between two brands of cereal or firms deciding to invest in a new product line. It also holds—perhaps unexpectedly—in the world of academic economics itself. Like all rational actors, economists respond to institutional incentives, not only determining what they research and publish, but also what types of economics essay topics they set for their students

The Incentive Structure of Academic Research

Academic economists don’t work in a vacuum of pure intellectual freedom. Instead, they must navigate a landscape defined by publication incentives, grant availability, tenure expectations, and media relevance. Academic success tends to be measured by “currency,” as they call it, in publishing in elite journals such as The American Economic Review, Quarterly Journal of Economics, or Journal of Political Economy. These publications establish standards for which types of questions are worth pursuing—and which techniques are rigorous.

In 2023, The Review of Economic Studies, whose submission rates have recently soared, published a study that showed that the share of papers in economics employing machine learning, or methods associated with AI, had grown by more than 150% since 2015. This spike has less to do with a sudden explosion of interest in the ethics of automation—which remains a pretty niche— and more a reflection of the signals that elite journals and elite departments send: modern, data-intensive and tech-forward research is what counts if you want to get published—and noticed.

Following the Money: Grants and Academic Priorities

Another potent incentive is research funding. Economists, particularly those at public institutions or in soft money positions, rely on grants agencies to pay  or their research. This can ultimately (subtly or openly) control the topics that receive funding resulting in a gradual trend of prioritizing some topics over others.

For example, the National Science Foundation (NSF) and private donors, such as, the Gates Foundation, have given substantial funds in recent years to research on economic inequality and climate change. Funding for social and economic sciences with an environmental focus increased 40% compared to five years before, according to the NSF’s 2022 annual report. Unsurprisingly, departments are producing more research—and assigning more student work—in these areas, too. If instructors tend to direct students toward viable economics essay topics, topics that align with departmental grants and publications will get more encouragement.

Tenure, Prestige, and the “Hot Topic” Trap

Tenure-track faculty members have powerful incentives to publish fast, in the right journals, and on issues of relevance. The need to impress hiring committees or tenure review boards often leads researchers to pursue safe or trendy topics instead of long-term, high-risk intellectual projects. The emergence of cryptocurrency as a research theme is a classic case in point. What was once seen as an outlier, crypto is now highly studied—not necessarily because it’s the most pressing issue for society as a whole, but because it garners media attention, policy discussion, and journal interest.

A telling instance is the University of Chicago, where staff members in the economics department released several working papers on decentralized finance (DeFi) between 2021 and 2023, correlating with both media buzz and institutional investment increasing in the space.

Even Students Are Part of the Equation

This incentive structure has trickled down to the classroom as well. Focusing on economics essay topics that reflect a department’s latest research and/or funding streams is common among professors. One student in a labor economics-focused department might be nudged to write about wage inequality or minimum wage laws; another, in a tech-oriented department, might be pushed toward A.I. and the effects on job markets.

Conclusion

The idea that incentives matter explains a lot about why academic economics evolves as it does—and why certain topics rise to prominence while others fade. Just as firms pursue profit or consumers react to prices, economists— even in the classroom—are always making calculations based on their institutional incentives. Understanding this helps to demystify the academic process and reminds us that the “market of ideas” is subject to the same economic forces as any other.