Academic journal article
By Silverman, Jon D.
Business Economics , Vol. 32, No. 3
Many of the articles that have appeared in this space have been written by corporate economists, who have redefined the role of the economist in their organizations so that the economist acts in the role of internal consultant to many different parts of the organization. This new perspective of the role of the economist as consultant is bound to have positive benefits for the economics profession as well as for our clients. But this is not a new phenomenon. Economists for consulting organizations like KPMG Economic Consulting Services (ECS) have been doing this for many years, albeit at arms-length. In the process, we have been constantly appraised of the value that we have added as reflected in our clients' willingness to pay for our services and by the additional engagements we secure from repeat clients. These signals determine how we focus our services and invest our resources.
We do not typically perform work for other economists. I previously worked for a firm that specialized in doing just that - selling economic consulting services to other organizations' economists. Surprisingly, this was an easier job than selling economics expertise to those unschooled as economists. You did not always have to make your analysis relevant to the organization you were serving. This was viewed as the job of the economists for whom the analyses were developed. The fact that the analysis or data came from a model seemed justification enough for corporate economists to purchase these services. Frequently, these analyses sat on bookshelves, collecting dust, waiting to be used.
It was not that these analyses were poorly done or not relevant. On the contrary, they were developed by very knowledgeable, dedicated people. But they were prepared primarily for the wrong audience, i.e., other economists and not the decisionmakers within the organization. We depended on economists within these organizations to make these analyses relevant to their organizations. This was not the prescription for a successful consulting strategy. It generally conflicted with the problems that most companies began to face in the information age. It was not that they needed more information to make decisions; rather, they were deluged with information and faced the problem of distilling the important information from the enormous amount of data that poured into the firm. It was uncertain how to utilize that information to impact the corporate bottom line.
Turning, however, to the present and the future, let me share a few examples of the kind of work that we do at KPMG. These examples show how economists can use their skills to provide concrete benefits to all organizations.
WHO WE ARE
KPMG's Economic Consulting Services Group is made up of 120 professionals. Approximately 25 percent of these have Ph.D. degrees, primarily in economics and fewer in statistics and operations research. Approximately 40 percent have M.B.A. degrees, with the majority of these having a focus in finance. We have a direct presence in KPMG offices in thirteen U.S. cities and in London and Amsterdam. We also have a more global presence due to the fact that KPMG has offices worldwide. Our practice focuses mainly on U.S.-based clients or the U.S. subsidiaries of foreign corporations.
WHAT WE DO
The services we provide cover a fairly wide area. The group started out in the late 1980s by providing economic analysis for transfer pricing issues. Assisting companies in complying with section 482 of the U.S. tax code regarding the transfer of tangible and intangible property is a natural area for economists to apply their skills, because the work requires a thorough understanding of markets. The group quickly began to branch into other areas as a means of diversifying the business and because of the special talents and focus of the personnel. The group has some very advanced skills in quantitative methods, especially econometrics, statistics and operations research. …