
If you get a PhD, get an economics PhD - washedup
http://noahpinionblog.blogspot.com.au/2013/05/if-you-get-phd-get-economics-phd.html
======
washedup
I submitted this link because I fervently disagree with the blog post. I
started a Econ PhD but left soon after as I realized that much of the economic
theory which is taught is not realistic and not even a good proxy for how
economic systems work. Computer Science has allowed researchers to build much
more realistic models using agent-based modeling. When looking for econ PhD
programs, make sure this is something they will allow you to research.

The best skills you can get out of most traditional Econ PhD programs are
econometrics and programming skills. Outside of that it is pretty much a waste
of time. Yes, you can probably get a job quickly, but you will spend a lot of
the time learning none-applicable skills.

I want people to read it and hopefully we can start a discussion about it on
HN.

~~~
washedup
An extra note: An undergrad degree in econ can be very useful in getting
familiar with the terminology and the sorts of facets that finance and
economics professions are interested in. Beyond the BA/BS in Econ, there isn't
much more to learn in post-graduate economics. My suggestion for anyone
wanting to learn economics is to learn it in undergrad and mix it with another
discipline.

I am surprised Abnormal Returns picked up this link.

~~~
smky80
I'd recommend instead learning this stuff through Coursera or CFA or actuarial
exams instead. Way cheaper and there's no benefit to the classroom for this
material.

~~~
TomatoTomato
Anyone even thinking about taking an actuarial exam brace for a world of hurt.

~~~
gwern
I looked at an actuarial textbook once, and almost all the material seemed so
specialized that I don't see why anyone would recommend learning it unless
they were actually going to be doing actuarial stuff.

~~~
TomatoTomato
A popular actuarial textbook like "Actuarial Mathematics" is extremely
specialized (especially to life insurance) and would only relate to the 3rd
exam (MLC) and beyond. However, the first two exams are much more generic to
statistics and finance respectively.

------
zissou
There are some truths in this article -- for example, it is generally true
that economics PhDs don't have a hard time finding jobs. Don't want or can't
get an academic job? No problem, there are plenty of
consulting/industry/government jobs to go around for economics PhDs.

I'm an economics PhD dropout (after 2nd year) from a top ~40 program. Unlike
the authors school, my former PhD program did not have the prestige of his top
10-20 school. I left my program because I didn't have a research match with my
professors. Now I'm a computer programmer at a top ~1-5 ranked school and I'm
infinitely happier than I was in graduate school. I may eventually go back for
a PhD, but it will most likely be in a business school rather than an
economics department because I enjoy applied work more than theory.

The main ridiculousness in the current coursework taught in most economics PhD
programs is the macro course (e.g. freshwater/Minnesota macro). DSGE (Dynamic
Stochastic General Equilibrium) is just stupid. For the uninitiated, here is
why DSGE exists and what it means: A while back there was this thing called
the Lucas critique, which was the observation that the models used in
microeconomics and macroeconomics are very dissimilar -- that is, micro models
say 1 agent will make a certain decision, so why isn't it that all agents will
make that decision? Macro theorists took this criticism way too seriously and
decided that their models needed to have micro foundations, hence giving rise
to the macro modeling technique known as DSGE. How does the
typical/introductory DSGE model work? It goes something like this: at the
beginning of time, everyone in the world meets in a parking lot. At the
meeting, they decide on the price of all K goods in the economy at all T
periods of time by assigning a present value to each good at each period of
time. Once all the prices have been decided, the world starts. That is the
gist of this model, but if you want to read more about how silly it is, look
up the idea of a representative agent DSGE model.

Anyways, my point here is that depending on what you want to do with an
economics PhD, it may or may not be a waste of time. For example, if you study
micro and econometrics and emphasize in industrial organization + game theory
+ experimental, you will make a great candidate for a cushy research scientist
job at one of the big tech companies. If you study macro, well, you'll make a
good candidate for a job.... doing macroeconomics?

TL;DR If you're going to do economics, don't do macro.

~~~
agravier
Isn't your criticism of DSGE a little too easy? I don't see the silliness.

Here's my understanding (I am not an expert): DSGE is designed to give an
approximate response to exogenous shocks for NL models. For that, it needs to
start from an equilibrium.

You seem to say that shocking from an equilibrium is silly. Can you explain me
why? I wonder what alternative solution you have in mind that could improve
DSGE.

~~~
zissou
The underlying reason I think most DSGE models are absolute hogwash is that
they do economics backwards. Economics is supposed to test theories against
data. Instead, in the world of calibration in macroeconomic models, the
creator of the model is now testing data against theory by tuning parameters
to values they think are good. It is completely backwards.

While I appreciate the attempt to make macroeconomics more computational, I
believe DSGE goes about it in the wrong direction. In an ideal world, I'd like
to see models like the Leontief Input/Output model come back to fruition. In
Leontief's model (which is often given as an example in many undergrad linear
algebra classes), the economy is divided into many sectors. Data is organized
on each sector to estimate its influence on other sectors. In an age where
data is so vast, I just don't understand how one can decide that building
deeper macro theories is a good idea. We need better empirical models, not
better theoretical models (we have enough of those).

~~~
thomaspaine
>in the world of calibration in macroeconomic models, the creator of the model
is now testing data against theory by tuning parameters to values they think
are good. It is completely backwards.

This is a little inaccurate, the purpose of these macroeconomic models is
either to make future predictions or run simulations to see what happens when
exogenous shocks occur. They're not "testing data against theory", the data is
used for parameter estimation and then verifying the accuracy of the models.
It's actually very similar to the way certain AI models are developed and
trained.

I do agree that these models are usually pretty inaccurate and somewhat
useless though.

------
throwaway1979
1) I'm not sure what he means by PhDs that work?

2) I don't necessarily disagree with this. I know there used to tons of cushy
analyst jobs and world bank/IMF/UN positions that hired Econ PhDs. Not sure if
the world has changed in this regard.

3) One of the things that make life easy for Econ PhDs is the lack of a
publishing treadmill. In CS, if you don't get 3 [magic number alert!] papers
at a decent conference, few respectable advisors let you graduate. In Econ, my
understanding is that exceedingly few people publish a journal paper by the
time they graduate (please don't argue about Econ grads that write conference
papers ... Econ Journal papers are equivalent to CS Conference paper when it
comes to metrics like credit). Many people can write a hundred pages that
their advisor+committee is happy with. It takes an order of magnitude more
effort to get 100 pages that make your advisor+committee happy and also three
random reviewers in your field.

An important, ending thought: the reason I didn't pursue a career in Economics
was that I didn't get to build stuff. This is how I get my kicks in life. A CS
PhD isn't designed to make you a better builder but it often does! Frankly, my
biggest problem is that I need to stop building and get into the higher-level
business of managing others to build, and higher value algorithmic stuff. The
love of building is what holds me back I fear :(

~~~
pseut
I think you underestimate how long it takes to write a single Econ paper. I
don't know enough about CS to make a comparison, though.

~~~
throwaway1979
The key point I wanted to make is that writing a paper is easier than working
on it until it is accepted.

------
andyjsong
Former economic consultant here. Speaking as a lowly analyst with a BA, I got
to work with many PhDs in Economics/Finance.

Companies are always looking for ways to back up their economic
damages/projections with data provided by a third party aka an economic
consulting firm. I got to work on some very cool projects like defending a
pricing fixing case in the consumer electronics industry and calculating the
number of jobs created if the company injected $35B in the US economy.

These reports were not cheap and PhDs could bill ranging from $600 to $1,200
per hour. A 15 min phone call costed $150 to $250 and we billed EVERYTHING. As
long as you had a good reputation and played both sides of the fence
(Plaintiff/Defense) you always had a job.

I could have gone on to get my PhD, but I wanted to dream bigger. It's still a
salary job and the hours you put in is what you get out.

~~~
DennisP
Do you have to stick with neoclassical macroeconomics, or can you go into
heterodox approaches and still do well? (Like, say, dynamic modeling, or
agent-based models.)

------
dbecker
I don't think an econ PhD is inherently the right thing nor the wrong thing
for people. But this post is just a mix of weak arguments and factual
incorrect assertions.

Regarding point 1, one reason most econ PhD's get jobs is that many advisors
won't sign off on someone until they have a job (because it looks bad for the
advisor). This results in students sticking around for years when they would
be better served by having graduated.

Reason 3: "Do it for intellectual fulfillment." If you want intellectual
fulfillment, study something you personally enjoy. Maybe that's econ, maybe it
isn't. A blogger you've never met is in no position to advise you about this.

Reason 4: Low risk of failure It's true that you get the consolation masters
if you fail out of an econ PhD. That's worth something.

On the other hand, it's a field with an extremely high failure rate. Where I
did my PhD, many people invested 4+ years before determining they'd never get
their PhD. The completion rate was about 30%. If anything, the risk of failure
is exceptionally high.

Not to agree or disagree with the conclusion. Just surprised to see the use of
such flimsy arguments.

~~~
washedup
It is inherently wrong in the sense that the models can either misdirect
policymakers into doing things that are not helpful for economic growth or
that are easy to manipulate, creating false proofs. If one desires to do so,
they should study economics. It could be good, because they may discover what
things are wrong with the discipline and how they might be changed.

~~~
dbecker
There's a well known saying by statistician George Box that "All models are
wrong, but some of them are useful."

Economic models are like maps, physical models, and every other type of models
in that they are gross simplifications of reality.

Like every other type of model, those simplifications can be cause a decision
maker to reach false conclusions. When that occurs, we should try to figure
out how to improve the models so they are more useful.

The fact that economic models aren't perfect isn't news to the economics
profession, but it isn't a realistic expectation either.

~~~
washedup
But they aren't useful because they are very bad at predicting. There are
other tools that are more suited to model the complex and emergent properties
of individual actions leading a market place and what its conditions may be.

------
guylhem
_"Econ is one of the few places in our society where overtly racist and sexist
ideas are not totally taboo"_

Maybe because economics doesn't care about taboo, but rather understanding and
seing the payoff. Yes some ideas and concepts are overly simplified - but one
has to make shortcuts to reason. Mainstream economics provides reasoning, and
the means to test if it works against real life data (econometrics) - that's
much more than most social sciences.

I am saying that as someone who is deeply interested in the "logical"
underpinnings for racism and sexism. I love complex things - mainly to
understand how they works.

Here, if these behaviours were illogical and had a negative payoff in all
cases, they may not have existed in the first place- or persisted. But they
do. Why?

To the best of my current understanding, they are related to tribalism (as in
parochialism). If you prefer, there is a nash equilibrium with cooperative and
non cooperative behaviour.

The external characteristics of the agent are used by the other agents to
guess whichever is more likely - being cooperative or not - and to play
accordingly.

Basically, in both cases the external characteristic of an agent are used in a
"best guess" function, which becomes self reinforcing, yet there seems to be
more than self reinforcement, or these ideas would not be so prevalent. (So
the interesting theories about say how agriculture helped the development of
modern sexism are then developed, and tested in regressions)

I find that very cool - at a "theory of knowledge" coolness level. Different
paradigm coexist (because there are more than one explanation) so you can pick
up your "school" (Chicago, Austrian) and see how well it works, ie test it
against new concepts in an experimental way - like bitcoin and check its
predictive power. That's challenging, especially when it is counterintuitive
in your personal biais (ex: I'm so surprised Keynesian theory works well)

Anyway, should you care about avoiding taboo (omg the n word! run!) or should
you understand why and how it works?

EDIT: They are not mutually exclusive, but when you study a concept, the taboo
associated with it quickly goes away. Yet it remains in other persons, which
makes it funny and interesting

~~~
glesica
> Here, if these behaviours were illogical and had a negative payoff in all
> cases, they may not have existed in the first place- or persisted. But they
> do. Why?

In my opinion, that is not a meaningful question because the answer is simple:
people are not always totally rational, they do not make all of their
decisions based on logical analysis. In fact, many of the opinions they hold
are not even based on conscious choices.

I agree that racism, sexism, and bigotry in general are probably rooted in the
distant past and that, in some cases, they provided evolutionary advantages.
But it is partially for this reason that their persistence needn't be logical
or advantageous.

A child socialized by its parents to be racist doesn't usually face a
conscious decision later on whether to become (or continue to be) a racist.
This is, in my very humble opinion (MA in econ, take from that what you will)
one of the weaknesses of the field: economists seem to think people and social
dynamics are icky.

Why accept the obvious explanation that parents teach their kids racism and
some of the kids, for various psychological or social reasons, continue to be
racists? It is much more interesting to make a bunch of crazy assumptions
about people so that you can plug the whole thing into a nice clean
mathematical model.

------
crayola
PhD in economics here from a top 15 uni, completed a couple of years ago. No
regrets, even though I realized, after a few years, that I would probably not
enjoy a career as an economist (in academia or policy). I successfully
'converted' into data science. Most of my cohort found jobs they love. Some,
though, had to settle for post-docs (sometimes for terrible pay) and are still
in academic limbo.

There is always the question of the opportunity cost, of the road not taken.
What would I have done of those 5/6 years? Perhaps I would have learned more,
perhaps not. Many PhD students who end up outside of academia may have made
better use of those years. I think the bottomline is, for every PhD, that you
should only start it if you are passionate about the field and would like to
work as a researcher (in academia or, say, IMF / World Bank). That may no
longer be the case at the end of the PhD, but it probably should be at the
start.

------
s0rce
I'm finishing a PhD in Materials Science at a top 5 US institution with mostly
experimental work. I don't do someone else project, I do my own project and I
direct it, this is true for most of my peers.

------
pseut
It's funny, because my advice is basically the opposite for getting an Econ
PhD. You get paid very little during grad school; it seems to exacerbate
depression, etc. and is bad for relationships (no formal data to back those
up, just my experience and observations); you work an ungodly amount if you
want a prestigious job, and peer pressure will probably convince you that you
do no matter what you believe entering the program; most likely you're not as
smart or as good as you believe; etc...; an MA/MS in econ is nearly worthless,
since it's widely known to be a consolation prize for failing out of a PhD
program (and most top programs don't even offer a terminal masters); etc.

And the only benefit is that you get to spend all of your time learning about
economics (or, in my case, econometrics), and, if you're lucky, get a job
where you're expected to do that _for the rest of your life_.

So, that had better be one big fucking cherry to compensate for what you're
giving up. And my thought process is, if my discouragement is enough to stop
someone from going to grad school, they probably shouldn't go. Which is why I
tell everyone not to go to grad school, even though I'm very grateful that I
had 6 years to learn about and think about econ and wouldn't trade it for any
other job experience.

------
brendano
I thought a long time about whether to do economics or a computer science PhD,
eventually deciding on CS / machine learning. The usefulness of both is very
appealing, and economics is full of interesting problems, a wonderful analytic
method to approach thinking about society, and fascinating ideas and
techniques you don't see much of in CS or statistics. The smartest economists
are _really_ smart and great at just thinking about the world.

But economics is also saddled with crazy non-empirical theories they force
everyone to learn in the first two years, and an anemic journal-centric
research culture that requires years to get an article published. I mean, from
the OP:

 _And after you pass the prelims, there is little risk of not finishing a
dissertation; unlike in most fields, you do not have to publish to graduate._

That is insane. Talk about tyranny of low expectations.

I wonder if their centrally-planned job market hurts academic productivity. It
lessens the risk to spending years with mediocre research -- everyone gets a
job eventually.

------
juanre
Those of you with an interest in economics and a programming background might
find this amusing:

<https://github.com/juanre/econopy>

It's a python implementation of a bunch of classical economics models I wrote
as a way to avoid actually doing the exercises in Caltech's Economics for
Scientists at Coursera. I think having the models as functional code does
indeed provide an interesting perspective and understanding, and it simplifies
exploration. Haven't had time to publish the docs, though.

------
snikolic
Argued like a true economist...

------
ojbyrne
"Econ is not as intellectually deep as some fields, like physics, math, or
literature."

I took 2 years of Econ in my undergraduate, along with courses in each of
those other fields. My memories of economics was that do the work, you get an
A, but its so incredibly boring (especially in contrast to the 3 fields
mentioned) that the biggest challenge was staying awake in class.

~~~
pseut
Undergraduate econ is nothing like the PhD work. This is a little bit of a
problem sometimes in graduate admissions...

------
physicsyogi
There is some truth in this article. But, I know many physics PhDs, myself
included, that had no real trouble getting jobs outside of academia or
industry research. Of course, most of us are also programmers and now do R&D
related to simulations, machine learning, etc, because our research prepared
us for that.

------
white_devil
Don't get an economics PhD. As some have pointed out, a lot of the "status quo
economics" is just hand-wavy nonsense, and there might not be much demand for
that stuff five years from now.

~~~
stfu
I wish I could share your optimism when it comes to _hand-wavy nonsense_.

I am convinced that this is hard wired in human kind, and no matter if it was
back then when were were sitting around the fireplace talking about out last
animal hunt or today listening to talk radio/tv, humankind will always enjoy
subjective perspectives and interpretations of reality.

~~~
white_devil
> humankind will always enjoy subjective perspectives and interpretations of
> reality

Sure, but that's a bit different from Keynesian economics being taught as
gospel for decades.

------
huherto
So, if you are a M.S. CS graduate. Which PhD program would it be best? I guess
somebody with good software skills should be useful in many places.

------
chrismealy
Long-time readers of Noah's blog will remember that most of what he learned in
grad school is bullshit.

------
arctangent
He didn't take into account the law of supply and demand...

------
xradionut
How do you greet a PhD in economics?

"Hey cabbie!"

(True story...)

