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I submitted this link because I fervently disagree with the blog post. I started a Econ PhD but left soon after as I realized that much of the economic theory w

I submitted this link because I fervently disagree with the blog post. I started a Econ PhD but left soon after as I realized that much of the economic theory which is taught is not realistic and not even a good proxy for how economic systems work. Computer Science has allowed researchers to build much more realistic models using agent-based modeling. When looking for econ PhD programs, make sure this is something they will allow you to research. The best skills you can get out of most traditional Econ PhD programs are econometrics and programming skills. Outside of that it is pretty much a waste of time. Yes, you can probably get a job quickly, but you will spend a lot of the time learning none-applicable skills. I want people to read it and hopefully we can start a discussion about it on HN.

fnayr 13y ago
I'm glad you posted this. I vehemently disagree as well. I dropped out of a top 10ish econ phd program. "The risk of failure is low." Yeah right. Even his own statistics don't back that up. "which doesn't force me to work 80 hours a week" But if you're a tenure track professor, you most certainly still will be. I have many other examples of disagreements, but don't have time to point them out right now.
- aggronn 13y ago
  I like how he mentions how good job prospects are, even for mid-level schools, then cites Michigan. This article is worthless. edit: to clarify, as mentioned below, Michigan is a top program.
  - theorique 13y ago
    Why is it a bad idea to cite Michigan here? (edit: GO BLUE)
    - fnayr 13y ago
      Because it's a top econ program, and he's using it to prove that mid level programs have great job prospects.
    - zampano 13y ago
      UMich is not really emblematic of mid-level schools. While rankings don't mean a lot, UMich is still ranked #13 by US News & World Reports for graduate-level economics and thus would be either one of the lower top-tier schools or near the top of the mid-tier. It would probably be easier to get a good job from UMich than the vast majority of other mid-tier schools.
      - theorique 13y ago
        Ah, thanks. I'm not an economist so the rankings were unfamiliar to me.
- BrianEatWorld 13y ago
  I think he is referring to abject failure. As he points out, failure to get a PhD, simply results in a MA or MS. As for the work schedule, that 80 hours a week may be a case for a tenure track professor, but the bulk of economists are employed by the government. In government work, you rarely work beyond normal hours and getting a masters, let alone a PhD will automatically bump you up the GS payscale (GS11 for masters and GS14 for PhD, if I recall), to the point where you can get six figures simply working a 9 to 5 with ridiculous vacation and retirement benefits. http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2012/general-schedule/dcb.pdf http://www.opm.gov/policy-data-oversight/pay-leave/salaries-...
dr_doom 13y ago
I agree completely. I studied Finance but had a work study with an econ professor and was amazed at how much hand waving existed in their economic models. I felt like I was charting very simple things(gdp, oil prices, ect) and he would come up with his own suspect analysis off that limited info. The worst part was that this guy had had a high ranking position in the presidents cabinet!
- stfu 13y ago
  I don't really see the problem with that. The only problem I have is with people who do this and go around pretending that their numbers are neutral and speaking for themselves. From my standpoint Econ & Finance are social sciences where "reality" is always complexer than just the numbers.
jkldotio 13y ago
While it's true in his category of "PhD's that work" the most useful degree is Computer Science as it's closest to "data scientist" of all the available PhDs you still need domain knowledge to apply it. So while it's no coincidence that Physics, Computer Science and Stats/Maths postgraduates are all in high demand in the field of applied economics itself (hedge funds, high frequency traders and the like) it's also notable they aren't just trading by themselves.
washedup 13y ago
An extra note: An undergrad degree in econ can be very useful in getting familiar with the terminology and the sorts of facets that finance and economics professions are interested in. Beyond the BA/BS in Econ, there isn't much more to learn in post-graduate economics. My suggestion for anyone wanting to learn economics is to learn it in undergrad and mix it with another discipline. I am surprised Abnormal Returns picked up this link.
- smky80 13y ago
  I'd recommend instead learning this stuff through Coursera or CFA or actuarial exams instead. Way cheaper and there's no benefit to the classroom for this material.
  - jlarocco 13y ago
    For people still in school, I'd recommend taking econ classes to fill up the social science requirements. In that case they have to pay for some course anyway, and econ is much more practical than classes like sociology and anthropology.
  - TomatoTomato 13y ago
    Anyone even thinking about taking an actuarial exam brace for a world of hurt.
    - gwern 13y ago
      I looked at an actuarial textbook once, and almost all the material seemed so specialized that I don't see why anyone would recommend learning it unless they were actually going to be doing actuarial stuff.
      - TomatoTomato 13y ago
        A popular actuarial textbook like "Actuarial Mathematics" is extremely specialized (especially to life insurance) and would only relate to the 3rd exam (MLC) and beyond. However, the first two exams are much more generic to statistics and finance respectively.
pseut 13y ago
I'm sympathetic but torn. I do time series econometrics, partly because macro is important but unrealistic like you say. But I've grown more sympathetic to macro over the last few years. For better or worse, it's a field that only really gets model validation during crises, and as a field it's been pretty willing to overhaul its methodology following a crisis: Sims's "Macroeconomics and Reality" was written in 1980, basically had the message, "macroeconomists suck," and is now entrenched methodology. The RBC stuff was written in the 80s and is now also entrenched. There's been a stretch of relative calm (people learned something from LTCM, etc, but since it didn't cripple the economy it didn't inspire quite the same urgency as the financial crisis). So, as far as the agent-based modeling goes, now's the opportunity for people working on it to show that they can answer questions macroeconomists are interested in better than DSGE type models. I'm not very familiar with that literature, but I don't think that there's been much emphasis on things like predicting aggregate unemployment, output, etc. or understanding the effects of monetary policy, but there's been more emphasis on individual markets. VARs and DSGE models are ubiquitous because they outperformed the previous models, not because the underlying theory is especially beautiful or interesting. But, yeah, I definitely agree that you should not get an Econ PhD unless you want to learn how to do research in Economics. 4-6 years of salary and job advancement is a lot to give up, even if you could be sure of getting the job you want after graduation. And the celibacy. Edit: just to clarify what I meant by "as a field it's been pretty willing to overhaul its methodology." I don't expect that a lot of established people will radically change their research agenda, although some will. But I do expect to see a change in what grad students and assistant profs work on compared to what you'd see w/out the financial crisis. So the research will change, even if a lot of the same people keep putting out the same papers.
DennisP 13y ago
You'd probably like a book I just read: Debunking Economics by Steve Keen. He basically rips apart neoclassical economics, often using mostly-ignored findings of famous neoclassical economists. He advocates various more-realistic models.
- washedup 13y ago
  Thanks, I'll check it out
Steko 13y ago
"I fervently disagree with the blog post." Because you're massively missing his point, which is just talking about career prospects. Noah's criticisms of what's taught in grad school econ echo your own: http://noahpinionblog.blogspot.com/2011/04/what-i-learned-in-econ-grad-school.html http://noahpinionblog.blogspot.com/2011/04/what-i-learned-in...
- washedup 13y ago
  You are right, thanks for showing me this. I agree with his ideas about undergraduate information versus graduate information. Undergraduate programs contain a lot more history, and yet still mathematical. However, I still disagree with the current post. You don't get autonomy in a graduate program; you are tied to a faculty and the programs currently available. It can be difficult to breakout on your own. This was my experience. This mixed with the time spent learning material that is at its best, interesting; and at worst, incorrect makes it seem like a poor choice. You can get the same correct information by studying other graduate programs. Intellectual fulfillment should come from discovering how these systems actually behave. Our criticisms about graduate economic programs are similar, but our praise about their benefits differ very much.
mc-lovin 13y ago
Econ aims to capture important aspects of real world systems, not model them perfectly. You can compare it with CS: big O notation is not useless even though in principle the constants in the big O notation could be huge. Turing machines are a useful abstraction even though in real life it is impossible to build one. The criticism by mainstream economists of agent based models, is that they are so flexible you can create almost any kind of behavior you like. That said, the constraints that rationality impose on models don't prevent this either: with enough work you can get any kind of phenomenon you like in an econ model. At the end of the day, economics is hard because people, institutions and technology are complex, much more complex than atoms. If you stuck with it, I'm sure your viewpoint would have softened somewhat. Once you try to actually do economics, you'll see why people made so many assumptions that seemed stupid before.
- pseut 13y ago
  That's not my impression of the criticism of agent based models and I don't think there's a criticism of the models per se. Computationally intensive models with heterogeneous agents are used in parts of macro (an office neighbor of mine in grad school was using these models to look at efficient taxation, for example). They're not part of the core of macroeconomics because AFAIK they haven't been shown to do better than existing approaches at addressing the fundamental macro issues: the business cycle, monetary policy, forecasting, etc. (I'm not that familiar with the literature, so if there are key papers I'm missing I apologize). I'm repeating this because HN seems to have a disproportionately high number of people working on agent-based models. If you're working on that stuff and you want to take over macro, give new insights on monetary policy. That will do it.
  - mc-lovin 13y ago
    The issue is that there just isn't that much data. You collect a bunch of macro level time series variables. Ok now what? No matter how cool or sophisticated your model is, there is just too little data to tell which models actually fit reality. The criticism I describe is what most economists tell me when I bring up agent based models. In practice they mostly just ignore the field.

fnayr 13y ago

I'm glad you posted this. I vehemently disagree as well. I dropped out of a top 10ish econ phd program. "The risk of failure is low." Yeah right. Even his own statistics don't back that up. "which doesn't force me to work 80 hours a week" But if you're a tenure track professor, you most certainly still will be. I have many other examples of disagreements, but don't have time to point them out right now.

aggronn 13y ago
I like how he mentions how good job prospects are, even for mid-level schools, then cites Michigan. This article is worthless. edit: to clarify, as mentioned below, Michigan is a top program.
- theorique 13y ago
  Why is it a bad idea to cite Michigan here? (edit: GO BLUE)
  - fnayr 13y ago
    Because it's a top econ program, and he's using it to prove that mid level programs have great job prospects.
  - zampano 13y ago
    UMich is not really emblematic of mid-level schools. While rankings don't mean a lot, UMich is still ranked #13 by US News & World Reports for graduate-level economics and thus would be either one of the lower top-tier schools or near the top of the mid-tier. It would probably be easier to get a good job from UMich than the vast majority of other mid-tier schools.
    - theorique 13y ago
      Ah, thanks. I'm not an economist so the rankings were unfamiliar to me.
BrianEatWorld 13y ago
I think he is referring to abject failure. As he points out, failure to get a PhD, simply results in a MA or MS. As for the work schedule, that 80 hours a week may be a case for a tenure track professor, but the bulk of economists are employed by the government. In government work, you rarely work beyond normal hours and getting a masters, let alone a PhD will automatically bump you up the GS payscale (GS11 for masters and GS14 for PhD, if I recall), to the point where you can get six figures simply working a 9 to 5 with ridiculous vacation and retirement benefits. http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2012/general-schedule/dcb.pdf http://www.opm.gov/policy-data-oversight/pay-leave/salaries-...

dr_doom 13y ago

I agree completely. I studied Finance but had a work study with an econ professor and was amazed at how much hand waving existed in their economic models. I felt like I was charting very simple things(gdp, oil prices, ect) and he would come up with his own suspect analysis off that limited info. The worst part was that this guy had had a high ranking position in the presidents cabinet!

stfu 13y ago
I don't really see the problem with that. The only problem I have is with people who do this and go around pretending that their numbers are neutral and speaking for themselves. From my standpoint Econ & Finance are social sciences where "reality" is always complexer than just the numbers.

jkldotio 13y ago

While it's true in his category of "PhD's that work" the most useful degree is Computer Science as it's closest to "data scientist" of all the available PhDs you still need domain knowledge to apply it. So while it's no coincidence that Physics, Computer Science and Stats/Maths postgraduates are all in high demand in the field of applied economics itself (hedge funds, high frequency traders and the like) it's also notable they aren't just trading by themselves.

washedup 13y ago

An extra note: An undergrad degree in econ can be very useful in getting familiar with the terminology and the sorts of facets that finance and economics professions are interested in. Beyond the BA/BS in Econ, there isn't much more to learn in post-graduate economics. My suggestion for anyone wanting to learn economics is to learn it in undergrad and mix it with another discipline. I am surprised Abnormal Returns picked up this link.

smky80 13y ago
I'd recommend instead learning this stuff through Coursera or CFA or actuarial exams instead. Way cheaper and there's no benefit to the classroom for this material.
- jlarocco 13y ago
  For people still in school, I'd recommend taking econ classes to fill up the social science requirements. In that case they have to pay for some course anyway, and econ is much more practical than classes like sociology and anthropology.
- TomatoTomato 13y ago
  Anyone even thinking about taking an actuarial exam brace for a world of hurt.
  - gwern 13y ago
    I looked at an actuarial textbook once, and almost all the material seemed so specialized that I don't see why anyone would recommend learning it unless they were actually going to be doing actuarial stuff.
    - TomatoTomato 13y ago
      A popular actuarial textbook like "Actuarial Mathematics" is extremely specialized (especially to life insurance) and would only relate to the 3rd exam (MLC) and beyond. However, the first two exams are much more generic to statistics and finance respectively.

pseut 13y ago

I'm sympathetic but torn. I do time series econometrics, partly because macro is important but unrealistic like you say. But I've grown more sympathetic to macro over the last few years. For better or worse, it's a field that only really gets model validation during crises, and as a field it's been pretty willing to overhaul its methodology following a crisis: Sims's "Macroeconomics and Reality" was written in 1980, basically had the message, "macroeconomists suck," and is now entrenched methodology. The RBC stuff was written in the 80s and is now also entrenched. There's been a stretch of relative calm (people learned something from LTCM, etc, but since it didn't cripple the economy it didn't inspire quite the same urgency as the financial crisis). So, as far as the agent-based modeling goes, now's the opportunity for people working on it to show that they can answer questions macroeconomists are interested in better than DSGE type models. I'm not very familiar with that literature, but I don't think that there's been much emphasis on things like predicting aggregate unemployment, output, etc. or understanding the effects of monetary policy, but there's been more emphasis on individual markets. VARs and DSGE models are ubiquitous because they outperformed the previous models, not because the underlying theory is especially beautiful or interesting. But, yeah, I definitely agree that you should not get an Econ PhD unless you want to learn how to do research in Economics. 4-6 years of salary and job advancement is a lot to give up, even if you could be sure of getting the job you want after graduation. And the celibacy. Edit: just to clarify what I meant by "as a field it's been pretty willing to overhaul its methodology." I don't expect that a lot of established people will radically change their research agenda, although some will. But I do expect to see a change in what grad students and assistant profs work on compared to what you'd see w/out the financial crisis. So the research will change, even if a lot of the same people keep putting out the same papers.

DennisP 13y ago

You'd probably like a book I just read: Debunking Economics by Steve Keen. He basically rips apart neoclassical economics, often using mostly-ignored findings of famous neoclassical economists. He advocates various more-realistic models.

washedup 13y ago
Thanks, I'll check it out

Steko 13y ago

"I fervently disagree with the blog post." Because you're massively missing his point, which is just talking about career prospects. Noah's criticisms of what's taught in grad school econ echo your own: http://noahpinionblog.blogspot.com/2011/04/what-i-learned-in-econ-grad-school.html http://noahpinionblog.blogspot.com/2011/04/what-i-learned-in...

washedup 13y ago
You are right, thanks for showing me this. I agree with his ideas about undergraduate information versus graduate information. Undergraduate programs contain a lot more history, and yet still mathematical. However, I still disagree with the current post. You don't get autonomy in a graduate program; you are tied to a faculty and the programs currently available. It can be difficult to breakout on your own. This was my experience. This mixed with the time spent learning material that is at its best, interesting; and at worst, incorrect makes it seem like a poor choice. You can get the same correct information by studying other graduate programs. Intellectual fulfillment should come from discovering how these systems actually behave. Our criticisms about graduate economic programs are similar, but our praise about their benefits differ very much.

mc-lovin 13y ago

Econ aims to capture important aspects of real world systems, not model them perfectly. You can compare it with CS: big O notation is not useless even though in principle the constants in the big O notation could be huge. Turing machines are a useful abstraction even though in real life it is impossible to build one. The criticism by mainstream economists of agent based models, is that they are so flexible you can create almost any kind of behavior you like. That said, the constraints that rationality impose on models don't prevent this either: with enough work you can get any kind of phenomenon you like in an econ model. At the end of the day, economics is hard because people, institutions and technology are complex, much more complex than atoms. If you stuck with it, I'm sure your viewpoint would have softened somewhat. Once you try to actually do economics, you'll see why people made so many assumptions that seemed stupid before.

pseut 13y ago
That's not my impression of the criticism of agent based models and I don't think there's a criticism of the models per se. Computationally intensive models with heterogeneous agents are used in parts of macro (an office neighbor of mine in grad school was using these models to look at efficient taxation, for example). They're not part of the core of macroeconomics because AFAIK they haven't been shown to do better than existing approaches at addressing the fundamental macro issues: the business cycle, monetary policy, forecasting, etc. (I'm not that familiar with the literature, so if there are key papers I'm missing I apologize). I'm repeating this because HN seems to have a disproportionately high number of people working on agent-based models. If you're working on that stuff and you want to take over macro, give new insights on monetary policy. That will do it.
- mc-lovin 13y ago
  The issue is that there just isn't that much data. You collect a bunch of macro level time series variables. Ok now what? No matter how cool or sophisticated your model is, there is just too little data to tell which models actually fit reality. The criticism I describe is what most economists tell me when I bring up agent based models. In practice they mostly just ignore the field.