Hacker News new | past | comments | ask | show | jobs | submit login

This question comes up in most discussions about finance and trading. I think it's the wrong question to ask. Academic research jobs, despite poor pay and conditions, are still some of the hardest positions to get. The demand for those jobs far, far outstrips supply. It's hard to get into a decent PhD program and then basically impossible to get a decent faculty position (or join MSR or whatever).

Candidates aren't draining away—they're being pushed away, either at the selection stage or through terrible conditions. (When taking on real firm-wide risk with millions of dollars is less stressful than basic research, you know something's gone terribly wrong!) The macroscopic problem isn't that finance and industry are luring people away, it's that so many more people want to do research than the system can possibly support.

You could argue that finance is luring away the most qualified candidates, but I don't think that's true. More importantly, since research careers are so impacted, institutions can get away with really noisy selection processes—if you thought tech hiring was bad, just look at how faculty members are selected.

The other part, of course, is that trading is not useless. I recently started a job working on supply chain optimization, and the problems we solve and the models we build actually look a lot like what certain kinds of traders do. I don't think anybody would argue that doing math to eke out a 10% reduction on spoilage at grocery stores is socially useless, and yet that's very similar to the sort of efficiencies that come out of better markets—it's just that the value is more abstract, in large part because the public markets are much more decentralized and abstract than physical supply chains.

Look, I'm not saying trading makes a marginal impact on par with basic research, either at an individual or a global level. But it's not useless, and I wouldn't be surprised if a trader at some small firm was just as useful to society as the 10,000th engineer at Google. (Not that we can really measure that.)

The markets, after all, are a gigantic, distributed coordination system running large swathes of the economy. That's pretty important too!




> It's hard to get into a decent PhD program

Is it though? I got into the (top 2 or 3) program for my field with a middling GPA and a decent GRE. Compared to e.g. law and medicine, I think it was substantially easier for a given level of 'prestige'.

> just look at how faculty members are selected

In my experience, nepotism, later-career candidates, and some shiny publications. All the talk about hiring some younger candidates, even gasp someone with just a few years of postdoc, was just that: empty talk. I've seen tenured faculty threaten to leave if their girlfriend wasn't hired (seriously, fortunately he failed), candidates get fast-tracked because they were friends with the son of one of the faculty, etc.

Out of the 30 or so people I got to know decently well during my PhD, only two of them are off to strong starts. Interestingly, both of them have parents that are well-regarded senior faculty in fields identical and quite similar (respectively). Don't get me wrong, they are both very capable and, in their cases, have earned the positions, but despite being far from naive, the degree of nepotism in science has impressed me.


> Is it though?

I think it is. That's certainly my experience with CS. You need some combination of GPA, recommendations from known researchers in the field, research experience/accomplishments and a strong undergraduate school. You don't need all of these always, but they all have an effect.

Most of the grad students I knew at Berkeley CS came in with at least one good publication and high GPAs. Similarly, some very capable people I know from less-well-known universities (in the US and internationally) were rejected from most programs they applied to. My observations combined with the low % acceptance rates lead me to believe it's definitely difficult—especially if you come from an even slightly non-standard background. And this is in a field where most people don't pursue PhDs—I don't even want to think about what Math and Physics programs must be like.

On the other hand, you can get some pretty deep (and well-paying!) positions in industry without having a degree at all, and people won't even look at your GPA. It's a lot more flexible.


> Academic research jobs, despite poor pay and conditions, are still some of the hardest positions to get. The demand for those jobs far, far outstrips supply.

Well that's exactly the problem. We as a society have decided that our brightest minds should be working in finance. I think that's outrageous, and that we should be utilizing their minds for the greater good instead. In other words, we need to increase the supply of these research jobs, and make them more attractive then working in finance.

Of course certain fields of finance benefit society. That doesn't mean their talents wouldn't be better off to society elsewhere. Also, certain jobs like proprietary trading are the equivalent of gambling and on a net basis don't make society any better off.


> In other words, we need to increase the supply of these research jobs, and make them more attractive then working in finance.

That's a fair summary. My core point was that it's far more a matter of constrained research positions rather than finance being so alluring. It's not hard to make a research position more attractive to most bright minds than finance: you just have to offer autonomy, a bit of prestige and working conditions that aren't absolutely terrible.

> certain jobs like proprietary trading are the equivalent of gambling

The proprietary trading firms I'm familiar tend to be risk averse and specialize in things like market making and arbitrage. This is probably some of the most unambiguously useful activity on the markets: it's companies like that that make things like ETFs and less liquid securities work efficiently. Without market makers, various useful but niche securities would be significantly more painful to trade in practice.


I agree.

Regarding prop trading, prop trading itself is the betting of the firm's own money for profit. I equated it to gambling because that's what it is. On a net basis, this doesn't really benefit society because it's essentially a zero sum game.

Market making on the other hand does benefit society by providing/ensuring liquidity.


Most market makers are prop trading firms, though -- I think it's incorrect to act like these classifications aren't highly correlated.


>Well that's exactly the problem. We as a society have decided that our brightest minds should be working in finance.

That's not it at all. The best and brightest people have decided what they'd really love to do is take a tenured position at a prestigious university and do research.

Since finance companies that need really smart people can't offer that kind of life they have to compensate with cash.

This says nothing about what "we as a society" have decided. What this tells us is finance is boring.


> The best and brightest people have decided what they'd really love to do is take a tenured position at a prestigious university and do research.

Except we are slowly getting rid of tenure, and "that kind of life" is in no way glamorous for 99% of researchers. You have to be passionate about research to the detriment of nearly every other aspect of your life, or independently wealthy, so live comfortably (again, for most people).


> our brightest minds should be working in finance

The amount of people who recommend that is staggering.

Lesson learnt: I need to get into finance...


We didn't decide it; it just happened. The intro to "The Big Short" covers this quite well - Lewis S. Ranieri, all that.

but what can I say? We're a culture that in 1969 went to the moon, but by 1974/5 we were cutting everything we could.


> We as a society have decided that our brightest minds should be working in finance

"society" hasn't decided anything. Under capitalism, money flows towards where it is allocated most efficiently and gets the highest rate of return, which is apparently to employ researchers in the finance sector. If you have an issue with that, take it up with capitalism.

> we need to increase the supply of these research jobs, and make them more attractive then working in finance.

Barring the revolution I vaguely implied above, these two things would require lots of money and lots of money, respectively. Have fun asking for it in 2016's political environment.


You're being pedantic. We our the ones who govern ourselves and dictate our own economic system, and this system is responsible for our current situation.

We don't necessarily have to move off capitalism. We simply need to address the flaws of capitalism, say by increasing research funding or not bailing out large investment banks every time they make awful bets.


> just look at how faculty members are selected.

Plus, they typically only post openings once a year. If you miss the fall interview rounds (to start the following fall), you pretty much wait until the following year. So, you're looking at 2 years out if you don't have something lined up after your postdoc, or if you "finish" (whatever that means) your postdoc in late winter.




Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: