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The amount of human capital that has gone into financial engineering is depressing. Thousands of brilliant minds who are designing complex financial products in

The amount of human capital that has gone into financial engineering is depressing. Thousands of brilliant minds who are designing complex financial products instead of useful technology.

itisit 5y ago
Prompts one to ask what the incentive is?
- ceilingcorner 5y ago
  To quote Margin Call, “The money is considerably better.” [When a rocket scientist is asked why he joined a Wall Street firm.]
  - itisit 5y ago
    *rhetorically ask ;)
chii 5y ago
> designing complex financial products who's to say it wasn't useful? after all, somebody paid for this complex financial products, so objectively speaking, they must have found it useful enough to have paid for it.
- ceilingcorner 5y ago
  No, that isn’t what “objectively useful” means. Wealthy people pay for this engineering because it helps maintain and increase their wealth. That’s about it. There is zero societal benefit from something like a CDO.
  - chii 5y ago
    > There is zero societal benefit > what “objectively useful” means. what contradictory beliefs you hold. You are making a subjective value judgement (your own) on what makes something beneficial to society, and yet claim that the actual objective measure - that of using money to measure value - is not what "objectively useful" means. Value to society isn't an objective measure. Otherwise, social workers and charity would be rolling in money.
    - ceilingcorner 5y ago
      Nowhere did I say that “objectively useful = beneficial to society.” This is obvious if you consider another example. Imagine a marketplace for hitmen. Clearly some people would pay for such a thing. Does that make it useful? Maybe? Does that mean we should think it’s a good thing? Probably not.
  - carnitine 5y ago
    All the people who bought houses due to the ability of financial engineers to lower mortgage requirements by quantifying and hedging risk probably disagree.
- capiki 5y ago
  I mean, they pay for it via salaries, and the people who lose money in the market also pay them.
kvathupo 5y ago
Why work for society's benefit at the expense of your well-being? I once asked an Oxford-educated post-doc, who had worked as a quant, "are you going to go back to finance?" He replied that he simply doesn't know. He wants to do mathematical research, but both academia and industry stifle such ambitions. For the former, unless you're in the literal handful at IAS, you'll have to waste the majority of your time teaching, advising, and writing grant proposals. For the latter, one lacks not only the time, but also resources for research (seminars, journal access, colleagues, etc.). The critical difference is that working in finance (or any ad factory) provides less stress and much more financial stability. Of the professors I've known, many work obscene hours every day of the week. Society will benefit, but at what personal cost?
- ceilingcorner 5y ago
  Yes, one can’t really blame the individuals themselves. Especially when the incomes are double or triple that of academia. It is a deep structural problem.
  - kristjansson 5y ago
    That estimate seems … low
    - dwohnitmok 5y ago
      Yeah we're easily talking order of magnitude differences here if not even more (if you're not a tenured professor we might even be inching towards two).
  - mellavora 5y ago
    try 10x. Because I fell into an edge case, had I moved from my post-doc to a professorship, I would have faced a 20% pay cut. And that's not because my post-doc was well paid; after I factored in the side-costs of the position I was not that far above minimum wage. And this was at an elite European research group where the professor was doing his best to take care of me. So I moved to industry.
  - 5y ago
em500 5y ago
Useful technology like ad growth hacking, conversion optimization, engagement optimization and getting kids to open more loot boxes? Lets face it, the majority of white collar workers including software engineers are there for the money. Who can blame them, when they make twice to thrice as much as a lab virologist or three to six times as much as a school teacher?
matheusmoreira 5y ago
Frustrating, isn't it? I feel the same way about YouTube celebrities and sports players making millions while actually useful professions make significantly less. From what I've read the better paid doctors make about 300k/year. I also feel the same way about most consumer technology being developed today. It's mostly advertising and intellectual property exploitation. Nothing particularly useful, really. Yet the people involved are making ridiculous amounts of money. Actually useful technology brings us closer to a science fiction utopia, not some corporate world cyberpunk dystopia.
- jpadkins 5y ago
  here is a way to rationalize it (not sure if this helps you) doctors provide very valuable services to dozens - hundreds of people (treating disease). youtube/sports celebrities provide a small amount of value to 100k - millions of people (amusement or entertainment). so the value they get back from society is because of the number of people touched, not the depth of value for each person. If we figure out how to scale disease treatment like we scaled entertainment, then (fewer) doctors would be wayyy richer than entertainment stars.
  - lotsofpulp 5y ago
    Intersection of supply and demand curves is the only thing needed to understand prices.
  - matheusmoreira 5y ago
    That makes sense to me but it still doesn't help... It just doesn't seem right to me that some random person can make a meme video and become a millionaire off of the ads alone. A society that enables these aberrations is sick and needs to be fixed. I used doctors as an example but engineers are also comically undervalued in my country despite their extremely valuable and necessary contributions to society. It's a joke. > doctors provide very valuable services to dozens - hundreds of people I think this scale is a bit off. Doctors see thousands of patients per year.
- lotsofpulp 5y ago

The amount of human capital that has gone into financial engineering is depressing. Thousands of brilliant minds who are designing complex financial products instead of useful technology.

itisit 5y ago

Prompts one to ask what the incentive is?

ceilingcorner 5y ago
To quote Margin Call, “The money is considerably better.” [When a rocket scientist is asked why he joined a Wall Street firm.]
- itisit 5y ago
  *rhetorically ask ;)

chii 5y ago

> designing complex financial products who's to say it wasn't useful? after all, somebody paid for this complex financial products, so objectively speaking, they must have found it useful enough to have paid for it.

ceilingcorner 5y ago
No, that isn’t what “objectively useful” means. Wealthy people pay for this engineering because it helps maintain and increase their wealth. That’s about it. There is zero societal benefit from something like a CDO.
- chii 5y ago
  > There is zero societal benefit > what “objectively useful” means. what contradictory beliefs you hold. You are making a subjective value judgement (your own) on what makes something beneficial to society, and yet claim that the actual objective measure - that of using money to measure value - is not what "objectively useful" means. Value to society isn't an objective measure. Otherwise, social workers and charity would be rolling in money.
  - ceilingcorner 5y ago
    Nowhere did I say that “objectively useful = beneficial to society.” This is obvious if you consider another example. Imagine a marketplace for hitmen. Clearly some people would pay for such a thing. Does that make it useful? Maybe? Does that mean we should think it’s a good thing? Probably not.
- carnitine 5y ago
  All the people who bought houses due to the ability of financial engineers to lower mortgage requirements by quantifying and hedging risk probably disagree.
capiki 5y ago
I mean, they pay for it via salaries, and the people who lose money in the market also pay them.

kvathupo 5y ago

Why work for society's benefit at the expense of your well-being? I once asked an Oxford-educated post-doc, who had worked as a quant, "are you going to go back to finance?" He replied that he simply doesn't know. He wants to do mathematical research, but both academia and industry stifle such ambitions. For the former, unless you're in the literal handful at IAS, you'll have to waste the majority of your time teaching, advising, and writing grant proposals. For the latter, one lacks not only the time, but also resources for research (seminars, journal access, colleagues, etc.). The critical difference is that working in finance (or any ad factory) provides less stress and much more financial stability. Of the professors I've known, many work obscene hours every day of the week. Society will benefit, but at what personal cost?

ceilingcorner 5y ago
Yes, one can’t really blame the individuals themselves. Especially when the incomes are double or triple that of academia. It is a deep structural problem.
- kristjansson 5y ago
  That estimate seems … low
  - dwohnitmok 5y ago
    Yeah we're easily talking order of magnitude differences here if not even more (if you're not a tenured professor we might even be inching towards two).
- mellavora 5y ago
  try 10x. Because I fell into an edge case, had I moved from my post-doc to a professorship, I would have faced a 20% pay cut. And that's not because my post-doc was well paid; after I factored in the side-costs of the position I was not that far above minimum wage. And this was at an elite European research group where the professor was doing his best to take care of me. So I moved to industry.
- 5y ago

em500 5y ago

Useful technology like ad growth hacking, conversion optimization, engagement optimization and getting kids to open more loot boxes? Lets face it, the majority of white collar workers including software engineers are there for the money. Who can blame them, when they make twice to thrice as much as a lab virologist or three to six times as much as a school teacher?

matheusmoreira 5y ago

Frustrating, isn't it? I feel the same way about YouTube celebrities and sports players making millions while actually useful professions make significantly less. From what I've read the better paid doctors make about 300k/year. I also feel the same way about most consumer technology being developed today. It's mostly advertising and intellectual property exploitation. Nothing particularly useful, really. Yet the people involved are making ridiculous amounts of money. Actually useful technology brings us closer to a science fiction utopia, not some corporate world cyberpunk dystopia.

jpadkins 5y ago
here is a way to rationalize it (not sure if this helps you) doctors provide very valuable services to dozens - hundreds of people (treating disease). youtube/sports celebrities provide a small amount of value to 100k - millions of people (amusement or entertainment). so the value they get back from society is because of the number of people touched, not the depth of value for each person. If we figure out how to scale disease treatment like we scaled entertainment, then (fewer) doctors would be wayyy richer than entertainment stars.
- lotsofpulp 5y ago
  Intersection of supply and demand curves is the only thing needed to understand prices.
- matheusmoreira 5y ago
  That makes sense to me but it still doesn't help... It just doesn't seem right to me that some random person can make a meme video and become a millionaire off of the ads alone. A society that enables these aberrations is sick and needs to be fixed. I used doctors as an example but engineers are also comically undervalued in my country despite their extremely valuable and necessary contributions to society. It's a joke. > doctors provide very valuable services to dozens - hundreds of people I think this scale is a bit off. Doctors see thousands of patients per year.
lotsofpulp 5y ago