
Economists Adding Up at Amazon.com, Microsoft, Google - Futurebot
http://www.investors.com/news/technology/amazon-microsoft-among-techs-that-say-employing-economists-adds-up/
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huac
Was talking with an Econ PhD student recently, and it sounds like there's
still a gap between economic training and modern statistical methods (for most
students). I wonder if a large portion of econ PhD's opting for tech rather
than academia will change that (quicker).

~~~
grayclhn
Can you elaborate on that? If you mean that ML stuff isn't taught much in
coursework, that's probably true --- but getting that stuff to work for
economic questions isn't exactly trivial (e.g. we only have observational data
but want to estimate the effects of hypothetical policy interventions).

If you mean something else by "modern statistical methods" I'd be curious to
know what you mean.

~~~
huac
Well, we talked about using cross-validation and the bootstrap/bagging
methods. I was surprised that he hadn't heard of these ideas, much less using.

Deep learning variants are definitely farther out; I think the current lack of
interpretability makes for a real strenous case wrt economic applications.

I don't really want to draw conclusions from n=1 convos but a couple other
links had piqued my curiosity towards this relationship:
[https://www.quora.com/How-will-Machine-Learning-affect-
econo...](https://www.quora.com/How-will-Machine-Learning-affect-economics),
[https://news.ycombinator.com/item?id=11460412](https://news.ycombinator.com/item?id=11460412)

~~~
dmagee
These methods are not usually taught in economics courses. Why? Not enough
data. In most cases economists are dealing with survey data, time series data
and panel data. The benefits of cross validation and bootstrap/bagging grow
with data size. When you're dealing with minimal amounts of messy/misbehaving
data these methods lose their power.

Other methods become more important ie: Instrumental Variable estimation,
Probit and Tobit models, Vector Autoregressions, Vector Error Correction
models. Im sure your econ PhD student friend would know what these are.

A different tool-kit to solve different problems.

~~~
grayclhn
"Not enough time" and "harder to do inference" are bigger reasons. It's hard
to see why cross validation would do worse than the AIC or BIC for lag length
selection in VARs, the bootstrap is widely used for inference for all of the
models you mentioned, IV isn't known for its exceptional small sample
properties, etc. People are working on this stuff, but it takes a little while
to get it to work well for Econ research, and it takes some clear new
empirical findings before it becomes mainstream enough to teach it in classes.
Everyone recognizes that there's a lot of promise, though.

~~~
dmagee
grayclhn, you might find Rob Hyndman's article on cross validation helpful.
[http://robjhyndman.com/hyndsight/crossvalidation/](http://robjhyndman.com/hyndsight/crossvalidation/)

" Asymptotically, minimizing the AIC is equivalent to minimizing the CV value.
This is true for any model (Stone 1977), not just linear models. It is this
property that makes the AIC so useful in model selection when the purpose is
prediction."

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mhl113
The kinds of economists hired by these places are basically just applied
statisticians with more practical training in causal inference.
Microsoft/Google/Amazon aren't hiring macroeconomists to forecast interest
rates or whatever; they're (mostly) hiring microeconomists who can estimate
causal effects and design experiments.

Also, any applied economist at a top tech firm knows undergrad level applied
ML.

~~~
Lordarminius
I think its a bit more than that. Susan Athey did a Quora session in January
that addressed this issue. [https://www.quora.com/session/Susan-
Athey/1](https://www.quora.com/session/Susan-Athey/1)

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jorangreef
How many economists are there at Google, compared to other non-engineering
professions at Google, say chefs, cleaners, doctors, physiotherapists,
accountants, secretaries, barbers, lifeguards etc.?

"Athey says Microsoft is another company with “at least a dozen” economists on
staff. She knows of nearly 100 economists employed by tech firms, the big
majority joining after 2010."

A few dozen economists for a company the size of Microsoft or Google, and 100
across all the major firms seems few when you consider the myriad and quantity
of other non-economic non-engineering staff these technology companies hire.

~~~
bo1024
I think the point is not the absolute size of the number (would you expect PhD
economists to be comparable in number to most other professions you
mentioned?), but the recent hiring trend. I think it's interesting for a few
reasons. One is that tech companies have a bit of a historical tendency to
make economics decisions without much input from economists. Another is the
notable big exceptions such as Varian at Google and the generalized second
price ad auction. A final one is the interaction between econ and CS in terms
of methods, viewpoints, priorities, decisions. (Disclaimer: I've collaborated
with economists and computer scientists at both companies you mention.)

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aaimnr
The most amazing example of such cooperation is Yanis Varoufakis, who was
working for Valve on virtual currencies and economy of Steam Market before
becoming Minister of Finance in Greece. In his own words:
[http://blogs.valvesoftware.com/economics/it-all-began-
with-a...](http://blogs.valvesoftware.com/economics/it-all-began-with-a-
strange-email/)

~~~
chiph
I saw Gabe make a presentation at the University of Texas a few years ago, and
Yanis was sitting in the front row. Not being an economist myself, I had no
good questions for them. And I gather that Gabe was a little annoyed at all
the questions around upcoming releases and not the topic of his speech.

In hindsight, I would have asked Yanis if he was overwhelmed by the detail of
the data that Valve collects on their market - both the Steam store and the
in-game markets. Conventional public economic data would seem to have to be
used with caution, as there are people at all levels looking to sway the
numbers in different directions (ahh .. politics!), but the Valve data would
have been base numbers without any "processing". And there's a lot of it.

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tamana
They hired all the Math, CS, and Physics PhDs, so now they are hiring the tier
2 quants :-)

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nzealand
I had always presumed the vast majority of economists working in tech were
simply doing transfer pricing... shuffling profits overseas to minimize taxes.

~~~
tomrod
Some, yes. However, a lot of economist work goes into real-time ad auction
platforms, marketing, fraud detection, and many other places where human
interaction and incentives meet automated systems.

As an economist in the technology/data science space, I've found that the
training and methodology brings a lot to table, such as the feature
engineering side of ML or investigating business processes for incentive
misalignment.

~~~
roymurdock
I studied econ undergrad but don't see much reason to get a PhD outside of
academia or leveraging a public sector job such as a Fed job into a private
sector finance role. I can see some of the technical skills such as survey
construction/analysis, bayesian analysis/higher level statistics being
somewhat useful, but a lot of that is also very role specific and can be
learned on the job, no? Thinking with a game-theory/incentive-centered mindset
is something that does not require too much formal econ knowledge.

~~~
grayclhn
Econ's undergrad degree is remarkably unrepresentative of Econ grad school.
But every phd program in any subject is training you to do research first and
foremost, so don't do it for technical training.

~~~
roymurdock
Can you speak to why the gap is so large between undergrad and grad econ
programs?

~~~
grayclhn
The level of math. An Econ/math double major is about the right background for
an Econ phd program. (I was a math major in undergrad and didn't feel like a
lack of much exposure to Econ hurt me much in grad school, but it would have
given me better perspective on the field.) Many Econ undergrads want a
"businessey" degree and don't want to take math beyond calculus, so trying to
teach "real" macro (which would require coursework equivalent to differential
equations) or "real" micro (similar to but less fussy than real analysis) or
even empirical research (statistical tools that build on regression) would be
rough going. So we teach "intuition" and watered down versions of the results
and punt on justification. Plus the "core" undergrad courses have a large
service component --- we need good business students to be able to take
intermediate micro, for example, so unilaterally ramping up the required smath
wouldn't be feasible even if some of the students wanted it.

tl;dr phd programs can spend a lot of time teaching students how to use and
extend mathematical tools and can cherry pick students with the right
backgrounds. Undergraduate programs have a big service component, have to
assume a range of mathematical preparation, and have to actually teach
"economics" in their core courses -- game theory needs to teach game theory,
not how to be a game theorist.

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CullingTheHerd
i used to work at an institutional investment firm. a huge one. (say it like
trump) huuuuuge. we had lots of economists. i chilled with them. i partied
with them. and when we partied, when the booze flowed and we all shared sordid
stories about how our jobs really went down, they basically said the work they
did was, meh, adding very little, and at times no, marginal value and that
most of the time the traders did their own thing regardless.

also, lets not forget what happened to south america when the chicago school
of economics prescribed its bitter medicine. they're still recovering/reeling
both economically and culturally.

so, i shudder when i read that some of the most influential and active
corporations, those determining the way of our society/culture and economy,
are adding all these PhDs from a discipline whose track record is absolutely
crap from both a social/cultural and an economic angle. (full disclosure i
have a b.s. in economics, so, yes, i understand some of what an economist
does)

the suits are taking over.

~~~
bpodgursky
Brazil, Venezuela, and Argentina are not reeling from an overdose of Chicago
school economics.

Pay a bit more attention, or be a bit more honest.

