My advice to new PhDs on the job market

My 42 years of experience with economists have taught me much about academic economics. Here are four points you should consider.

1: Be prepared for the ignorance of your interviewers

A student of mine was asked about the computational method he used. He tried to explain the interior point method he was using, but the interviewer declared that the algorithm had to be using NFXP. My student earned a PhD in computational mathematics after 2000, whereas the interviewer received his PhD before the interior point revolution in math programming. That did not matter to the economist interviewer. He had the common belief that NFXP was the only way one could solve a dynamic discrete choice empirical problem. Of course, this has also been declared to be true by many leading economists in their Econometrica papers.

I have had the same experience in seminar presentations. One of my favorite presentations was on the MPEC approach to structural estimation to an audience that included a pack of hyenas with PhDs from elite universities constantly barking about how what I had done was impossible. I enjoyed it because I am old and knew what to expect.

Economists are poor at mathematics and some become very hostile if you try to help them do better math. When you criticize existing work, the authors may view your work as undermining their case for a Nobel Prize. Not all economists are a problem. There are some economists, such as theorists, who generally value the introduction of better mathematical methods into economic analysis. There are also many economists who have no delusions of a future Nobel Prize and are eager to learn better methods. I think I have given you sufficient information regarding who to worry about.

2: Read the fine print

There is a common belief that the first appointment is a three-year contract, and that you can be fired after one year only for cause. Verbal descriptions of your job are irrelevant. BEFORE YOU TAKE A JOB, READ THE FINE PRINT. Only the written document matters.

3: Be careful when sharing ideas

You will be presenting your job market paper in your seminar but you will be asked to describe your other research ideas in your office visits with individual professors. You need to be careful about what you tell people because there is no record of what you say in those interviews. If you tell someone about an idea you have, but then see that person writing similar work, you have to remain silent. No one will believe you. I have no example I can share with you regarding a student’s discussion of research ideas, but I can speak to journal attitudes. One editor told me that once you put something out there, any one can use it in their own work, with or without attribution. I know of (and can document) two cases where authors made errors in their paper, other people identified the errors and provided the correct analysis, and the editor thought it was fine for the authors to incorporate the corrected analysis — done by others — into their published papers without acknowledging or thanking those who did the correct analysis.

4: Consider industry jobs

People like me want the academic life and would never consider going to industry. I used to tell young people with mathematical and computational skills about the great opportunities in academic economics for their skills. I no longer do that. Many people my age have stopped doing serious research in favor of consulting because they are unhappy with the current situation with journals and academics in general. I am unhappy about the brain drain to industry but I must admit that academia has lost much of its appeal. One old guy told me that economics is corrupt and always will be, and that no amount of criticism by me or anyone else will change that.

It is clear to me that the past 40 years has seen a substantial decline in the intellectual standards in economics along with an increase in opportunities in industry. If I were a new PhD, I would probably still go into academia but it would be a much more difficult decision today than it was 42 years ago. I recommend that you keep an open mind regarding non-academic jobs.

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