In the following post, D’Amore-McKim School of Business Visiting Associate Professor Craig Brown examines how a leader’s educational background can impact a nation’s economy.
Ever since Donald Trump became the 45th president of the United States of America, the controversial leader has claimed credit for a stock market boom, a renewed business confidence, and an acceleration in economic growth. On this particular dimension, the results are clear: In the most recent two quarters, the U.S. economy under the Trump administration has achieved growth of three percent or greater; something that his predecessor, Barack Obama, failed to achieve in the final year of his administration. Of course, President Trump has a reputation for a brash marketing style; and who would not want to claim credit when things are going well? However, if we are to attribute faster economic growth to President Trump, then what is it about the leader that has brought about better economic performance?
The answer I believe lies in his background, specifically his education background. Donald Trump attended the University of Pennsylvania and received a degree in economics. Economics, as a discipline, teaches its students, among other things, the “house rules” that support a healthy economy. In my working paper titled, “Economic Leadership and Growth,” I explore whether a government leader’s economics education background is related to his economy’s growth rate. Using education background data for 1,681 government leaders in 146 economies for the years 1950 to 2014, I find that an economy going from a leader without an economics education background (a non-economic leader) to a leader with an economics education background (an economic leader) results in roughly one percent faster economic growth when compared to the case where there is no change in the education background (e.g. the economy going from a non-economic leader to another non-economic leader). The results suggest that Donald Trump has brought about faster growth in part because of his education background in economics.
A closer look at political history reveals that some of the most successful government leaders in the U.S. have been economic leaders. Ronald Reagan, a hero of conservatives, is often credited for achieving faster economic growth during the 1980s through tax reform; whereas Bill Clinton—a Democrat—championed free trade and presided over one of the most impressive economic booms in the past 30 years. Both of these leaders studied economics.
It may be too early to declare the Trump administration as a success story. Nevertheless, a careful analysis of the record of government leaders shows that President Trump’s claim of economic leadership merits a serious discussion, because he has the education background to back it up.