Tuesday, December 07, 2004

That Irrational Economics Job Market

by Tom Bozzo

Another interesting recent post at Crooked Timber reviews some sociological research into the mechanisms of academic job "markets." Why the scare quotes on "markets"? The sociologists claim to be able to show that grad students are exchanged according to status hierarchies that may or may not reflect a rational assessment of all job candidates' performance. Kieran Healy notes that, according to one paper, the discipline with the least economic market-like behavior is... economics:

My own intuition is that uncertainty about future productivity creates sufficient anxiety that departments tend to choose the safer candidates in the short run — i.e., the ones coming out of their peer-group departments... Indeed, according to Han’s paper [no longer available at the UIUC link provided, darnit -- MU ed.], the discipline that does the most to take the market out of the market — to make it more like a hierarchical queueing procedure, instead, where the top departments get first pick of the candidates — is Economics. This is also a field where it’s conventional for candidates go on the market without any publications.

I think this rings true, though I wish I could readily access the source paper (short of a trip to the UW library) to see how one might empirically identify the "hierarchical queuing" hypothesis from what could be characterized on the economics side as a signaling/screening procedure -- assuming it isn't already a feature of the analysis.

Certainly, my alma mater, which embarked on a reputation enhancement program starting around the time of my arrival (1990) and bought its way up, or sought to, now has a junior faculty drawn from a narrower and higher-prestige array of economics graduate prorams (MIT, Chicago) than the "legacy" senior faculty (Johns Hopkins, Duke, Wisconsin).(*)

What's also interesting is how private sector economics jobs seem to fit into the hierarchy, which appears to be below even some lower-tier academic jobs.(**) Among other things, I'd expect that the lower-tier academic jobs don't come with especially high salaries relative even to unglamorous consulting gigs, and the signaling consequences of failing to get tenure in such a position are potentially more serious than failing to get tenure at a Harvard or MIT, which I expect often results in a soft landing in a tenured position at a lower-tier department.(***) I think the explanation here is not within the realm of rational choice, as I've both been leaned on to seek academic employment and seen the effects of such leaning on job candidates at the office.

So it's probably the case that decent economists are leaving $20 bills on the floor -- stacks of them, in fact. Does this make them less good economists?


(*) While there were some old-timers from Harvard and Stanford, both still high-prestige economics departments, they were generally not highly mathematical economists in the contemporary sense. So a consequence of the transition was that classmates who based their studying patterns for the macro prelims from the warm and fuzzy old macro prelims to the detriment of their understanding of dynamic optimization methods got very nasty shocks.

(**) Jobs within the Federal Reserve System and some high-prestige regulatory positions seem to be on par with upper-tier academic appointments, as may be some highly remunerative Wall Street jobs for time series jocks so inclined.

(***) The case of one job candidate I can recall from a few years back was not at all helped by his failure to get tenure at a snowbound low-tier university despite a good pedigree. Though it was his weak job talk that actually ended his chances.

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