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The collapse of the econ PhD job market

chrisbrunet.com

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Re: The collapse of the econ PhD job market

#31

Post by ls612 »

I was on the market last year as a fairly strong candidate, my advisors expected me to get a good tenure track job in a Finance department. I had first round interviews at multiple top 10 departments before things really went pear-shaped.

Here's what actually happened. The market looked pretty normal until November 5th, and then after that things went downhill. First the Fed Board of Governors stopped hiring (some regional banks kept hiring but had their offers explode on Jan 20). Then in January universities which had already done their first round interviews started imposing hiring freezes and cancelling flyouts. At the same time the Federal Government completely stopped hiring with DOGE coming in. Private sector hiring has been down for a few years since the ZIRP era ended so that part isn't new.

In the end I got a postdoc at a pretty good US university and will go on the market again in 2026-2027 with a much stronger portfolio than I had last year. Hopefully that will be enough for me, but I know for many others they may not be so lucky.

Re: The collapse of the econ PhD job market

#32

Post by ls612 »

DebtDeflation wrote: post #20
DisKarlito wrote: post #10

Economics academia has become its own only client. Very few outside academia are interested in vector autoregression models of inflation, DSGE or identification strategies. Traditional macroeconomic data and all the models that complemented it is technical debt.

This. My undergrad was in Economics (a long time ago). There was a time I thought about doing a PhD, but ended up doing an MS in Quant Finance instead. It's hard to believe that anyone can take a DSGE model seriously as a model of how the economy works. For the unaware - graduate level Economics is nothing like pop Economics, it's essentially an applied math degree. But the math in question is extremely wonky. Mostly…

The theory you are discussing (grad micro 101 equilibrium existence) is not actually crazy if you think about what the mathematical assumptions actually imply. Really the economic assumptions boil down to "small changes in prices lead to small changes in demand" and the math is just rigorously defining small in terms of a general topology.

Re: The collapse of the econ PhD job market

#33

Post by cjbgkagh »

bee_rider wrote: post #22
cjbgkagh wrote: post #18

Earlier quoted context omitted.

My sampling of my interactions with young PhD economists is that they were all Neo-Keynesian, the only people I’ve met who are of the Austrian school were Engineers. I don’t doubt that the economics profession has been shaped by politics but it appears they are and have been rather willing participants.

Economics involves studying how the economy should be managed, it is an inherently political field. Declaring one school political and another non-political is itself a political sleight of hand.

> Declaring one school political and another non-political

If I were to make a distinction it would be that Austrian is a Positive Theory and Neo-Keynesian is a Normative theory, and I think it’s fair to say that normative theories are more open to political influence than positive ones.

Re: The collapse of the econ PhD job market

#35

Post by contagiousflow »

_9ptr wrote: post #28
llmslave wrote: post #21

Economics is largely a prestige circle jerk. Anyone outside the top ivy departments has near zero chance of publishing research that gets traction. There is a small cabal of people that perpetuate this behavior. The field also just isnt that useful There are many careers like this, including management consulting and high finance. The hope is that AI flips the script and democratizes these important functions in soci…

One of the more salutary effects of AI will be the removal of bad journalism and bad science (bad in the sense of slop).

Can I ask you why you think that will happen?

Re: The collapse of the econ PhD job market

#36

Post by DebtDeflation »

Onavo wrote: post #23
DebtDeflation wrote: post #20

Earlier quoted context omitted.

This. My undergrad was in Economics (a long time ago). There was a time I thought about doing a PhD, but ended up doing an MS in Quant Finance instead. It's hard to believe that anyone can take a DSGE model seriously as a model of how the economy works. For the unaware - graduate level Economics is nothing like pop Economics, it's essentially an applied math degree. But the math in question is extremely wonky. Mostly…

Then why aren't all the quant shops snapping them up? It's not like their hiring needs are affected much by changes in the macro economy (except maybe trading volume and liquidity).

Because it's a very different type of math than that used in Quant Finance. Econ PhD programs don't want people with broad math skills, they want people who know the very narrow slice of math needed to solve these very unusual models. Quant Finance mainly uses PDEs and Brownian Motion stuff that all Math and Physics majors learn.

Re: The collapse of the econ PhD job market

#37

Post by ActorNightly »

logicalfails wrote: post #9

My first thought is wondering if it's one of two things: A. The bottom half of PhD Economists are not being trained in the data science/Big Data side of analysis increasingly needed B. There is less demand for Theory-sided Economists over computationally trained ones

Its C. the market doesn't follow traditional models anymore.

The whole profession was basically centered around putting a dollar amount on risk.

For example, lets say I give you a chance of either taking $1k now, or playing a game where you have 1 in 10 chance to win $200k. What would you do? The right answer is "sell" the risk to someone. For example, on the average, if I "buy" the game from 10 people, at a price of $10k each, I can realistically win twice what I spend.

Repeat that over x number of steps and more complex games, and that is what the PhDs worked on in terms of pricing.

For most of the time it worked ok. In a few instances (most notably the Gaussian Copula that was a large reason for the subprime house market crisis in 2007) it didn't.

The problem is that now, its impossible to predict whether orange man is going to throw a hissy fit and cause the market to go up or down, or if large investors are going to artificially prop up stock like they did with Tesla.

Re: The collapse of the econ PhD job market

#38

Post by nextworddev »

_9ptr wrote: post #28
llmslave wrote: post #21

Economics is largely a prestige circle jerk. Anyone outside the top ivy departments has near zero chance of publishing research that gets traction. There is a small cabal of people that perpetuate this behavior. The field also just isnt that useful There are many careers like this, including management consulting and high finance. The hope is that AI flips the script and democratizes these important functions in soci…

One of the more salutary effects of AI will be the removal of bad journalism and bad science (bad in the sense of slop).

Wrong. The bad journalism just now uses AI.

Re: The collapse of the econ PhD job market

#39

Post by ls612 »

krackers wrote: post #26
Onavo wrote: post #23

Earlier quoted context omitted.

Then why aren't all the quant shops snapping them up? It's not like their hiring needs are affected much by changes in the macro economy (except maybe trading volume and liquidity).

Borrowing a line from Rentec, probably because they'd rather prefer pure-math or physics people not "tainted" by economic dogma

On the other hand Cliff Asness and AQR are perfectly happy to rake in money by using the "dogma" as you describe it to analyze and trade in financial markets.
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