This video can be viewed at the below link.[1]

What is the Securities and Exchange Commission’s Division of Economic and Risk Analysis, and what do economics have to do with the SEC?

Economics is that course in college you may … or may not … have taken. I have to admit, I took a lot of them. You could say I had to in order to complete my degree in economics. 

More seriously, economics is the study of markets, pricing, and incentives. It’s about costs and benefits.

On the micro level, it’s imbedded in every business – they have to think through their revenues and costs. And we all have to think about the economics of our own households, income versus spending.

Then there’s macroeconomics of the entire economy.

The SEC, which oversees the $100-plus trillion capital markets, has a critical role for both individuals as investors, and businesses as issuers—microeconomics.

It also has a critical role regarding the overall U.S. economy—macroeconomics.

The Division of Economic and Risk Analysis, with more than 100 PhD economists, is at the heart of this. They have a seat at the table for all of the SEC’s critical decisionmaking, whether it’s monitoring markets, enforcement, or policymaking.

In the enforcement context, the Division’s staff is instrumental in identifying potential wrongdoing, assessing ill-gotten gains, determining the size of fines, and working to return funds to harmed investors.

As it relates to policymaking, Congress passed a law in 1996 that said that the SEC’s, in its rulemaking, had to consider efficiency and competition as well as capital formation, in addition to investor protection and the public interest.

Thus, the Division takes the lead on this. They provide impartial economic analyses that consider the costs and benefits as well as effects on efficiency, competition, and capital formation. Importantly, the SEC also is informed by economic research outside of our agency.

The SEC engages with the public to receive input on all of our proposals, including on the Division’s economic analyses. We greatly benefit from all the feedback.

I am proud to serve along the Division’s terrific team of more than 170 economists, statisticians, data scientists, engineers, attorneys, accountants, and other staff. They are at the heart of everything we do.