7 ms·

Economists Adding Up at Amazon.com, Microsoft, Google

64 points by Futurebot 11y ago

huac 11y ago
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).
- neffy 11y ago
  Since most of economics treats the real world as a special case - I can't see this working out well for industry.
- grayclhn 11y ago
  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 11y ago
    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-economics https://www.quora.com/How-will-Machine-Learning-affect-econo..., https://news.ycombinator.com/item?id=11460412 https://news.ycombinator.com/item?id=11460412
    - dmagee 11y ago
      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 11y ago
        "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 11y ago
        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."
    - grayclhn 11y ago
      Thanks, that's a bit surprising, but definitely helped me make up my mind on what I'll teach in the last few weeks of my class next year. The bootstrap is a weird omission, but economists usually only see it for variance estimation and inference, not in other contexts.
nzealand 11y ago
I had always presumed the vast majority of economists working in tech were simply doing transfer pricing... shuffling profits overseas to minimize taxes.
- tomrod 11y ago
  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 11y ago
    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 11y ago
      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 11y ago
        Can you speak to why the gap is so large between undergrad and grad econ programs?
        11y ago
tamana 11y ago
They hired all the Math, CS, and Physics PhDs, so now they are hiring the tier 2 quants :-)
CullingTheHerd 11y ago
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 11y ago
  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.
mhl113 11y ago
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 11y ago
  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
jorangreef 11y ago
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 11y ago
  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.)
aaimnr 11y ago
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-strange-email/ http://blogs.valvesoftware.com/economics/it-all-began-with-a...
- chiph 11y ago
  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.

64 points by Futurebot 11y ago

huac 11y ago

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).

neffy 11y ago
Since most of economics treats the real world as a special case - I can't see this working out well for industry.
grayclhn 11y ago
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 11y ago
  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-economics https://www.quora.com/How-will-Machine-Learning-affect-econo..., https://news.ycombinator.com/item?id=11460412 https://news.ycombinator.com/item?id=11460412
  - dmagee 11y ago
    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 11y ago
      "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 11y ago
        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."
  - grayclhn 11y ago
    Thanks, that's a bit surprising, but definitely helped me make up my mind on what I'll teach in the last few weeks of my class next year. The bootstrap is a weird omission, but economists usually only see it for variance estimation and inference, not in other contexts.

nzealand 11y ago

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

tomrod 11y ago
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 11y ago
  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 11y ago
    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 11y ago
      Can you speak to why the gap is so large between undergrad and grad econ programs?
      - 11y ago

tamana 11y ago

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

CullingTheHerd 11y ago

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 11y ago
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.

mhl113 11y ago

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 11y ago
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

jorangreef 11y ago

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 11y ago
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.)

aaimnr 11y ago

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-strange-email/ http://blogs.valvesoftware.com/economics/it-all-began-with-a...

chiph 11y ago
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.