Monday, August 29, 2005

famine and free trade

Reading about the recent famine in Niger, it is nice to see that poverty groups like Oxfam have finally joined the economists cause of free trade by calling for an end to rich world agriculture subsides. The economist in me takes heart.

However, the contrarian in me thinks it is weird that since rich world crop subsides keep the world price of food low, then abolishing them would raise the world price of food in the name of eradicating poverty and famine.

Of course, the proper economic analysis is that crop subsides are very expensive (the rich world spends tax money about equal to the GDP of sub-saharan Africa each year), and that money would be better spent on other forms of aid. Furthermore, since poor countries are more dependent on agriculture than rich, raising the world price would improve their terms of trade, effectively helping their farmers more than it hurts their consumers, encouraging investment and producing jobs.

Sunday, August 07, 2005

job search diary

The Chronicle of Higher Education is looking for columnists to talk about the job search process. The application consists of a submission for the first column. Since likely mine will never be printed, I'll post it here as well.

Little wonder my professors tend to have huge egos. The number of hoops that I have had to jump through to get thus far have been enormous. Yet the hoops through which I still have to jump are the most daunting yet. At every level, the screening of applicants is severe, and at every level, the bar is raised, soon to stratospheric heights.

Valedictorian of my high school class, I made it through MIT’s highly selective undergraduate admissions process where I breezed through four degrees in as many years (Bachelors’ in Economics, Mathematics, Computer Science, and a Master’s degree in Electrical Engineering & Computer Science). Of the many economics majors at MIT, I was one of only three in my class to make it into a top PhD program. I chose the program that easily has the best placement record for getting its students into tenure track positions at top schools. I had the highest score on the qualifying exams in my class, thankfully avoiding dismissal, breezed through another two masters’ in Political Science and Education along the way, and yet despite the fact that all these lines in my CV have clearly inflated my own ego, I am still humble enough to recognize that the probability that I will be considered qualified to take a position amidst the august faculty of any top departments is a long shot.

The vagaries of rankings means there are roughly fifteen research universities that can claim to have a top ten economics department; a tenure track position at any one of them would be a dream job. But each of these departments graduate 20 or more students each year, and each only hires around one or two, which means over 300 people vying for fewer than 30 positions.

My mathematical training tells me that since the Nobel committee chooses to award its prize to about two economists each year, then a simple flux argument implies that amongst those applying for these coveted tenure track jobs, an average of two will one day be laureates.

This is my competition.

My expectations have been fluctuating wildly over the past year as the date of the job search approaches. Sometimes I think I have a real chance. My advisor encourages these thoughts. Yet I also take care not to set myself up for disappointment. Having read the research on the prospective academic job market, I know my chances are slim. I am heartened by the fact that Economics, being one of the most popular and well funded majors, has better job prospects than English at least, where I am told admissions letters to top PhD programs often come with warnings that many of their graduates aren’t able to find academic positions at all.

Still, my friends and family don’t seem to understand the realities of the academic job market. They ask where I want to work, and I have to explain that I will have little choice. The typical candidate only has two or three offers to choose from out of the dozens he or she applied for. Of course a city in the north-east would be nice. My family is mostly clustered around New York, and my girlfriend lives in Baltimore. I’d like to plan around her, but even if I could, she will have her own geographically restricted medical residency search two years later.

My friends and family also always phrase the question as “So you want to teach?” which always amuses me because of how little teaching is emphasized, it seems, in the positions that I am seeking. I actually like teaching. Though my funding obviated my need to, I served as TA for four classes, and served as the lecturer for the fifth, managing a class of 70 students, and redesigning the course. A position at a liberal arts college actually has a lot of appeal, though given the culture by which I have been socialized, that is still seen as somewhat of a failure.

In the end, I am fairly committed to pursuing an academic career. I actually worked for a year, trying the paradoxically hedonistic yet puritanical life of a Wall St. banker. I actually enjoyed it: the excitement, the fast-paced environment, the smart people. In the end, I decided I wanted something more. I am careful though, to not let my heart get set too firmly. The uncertainties of the academic job market make such wariness a practical necessity. As my friends and family have recently had to deal with job insecurity in uncertain economic times, I now have greater appreciation of the near complete security offered by academia. Complete except for twice in your career, the second time during tenure review, and the first at the very beginning, cramming all of the uncertainty into an intense focused singularity of compressed anxiety.

Despite the stress and fears, I am still excited. This job search marks the culmination of my five years in graduate school. The first two years spent worrying about qualifying exams and class work. Then the standard third year doldrums, common in economics, as students make the transition from coursework to research and often get lost in the process. This past year has been the final push to the finish.

The job search starts for us in November. Unlike the more ad hoc process adopted by most other disciplines, economists, enamored with efficiency, have a very centralized system. Packets go out in November to around 70 schools, any you are remotely interested in. Each packet contains three letters of recommendation, your CV, and a job market paper. This paper is essentially one chapter from your dissertation, a paper you eventually intend to publish and hopefully representative of your future output. These 70 packets hopefully lead to around 9-10 half-hour interviews at the discipline’s main conference in January. The conference hopefully leads to 3-4 full day fly-outs which if all goes well leads to 1-2 offers. As I said, it is a brutal screening process.

Human institutions such as this job matching mechanism fascinate me. I suppose this is in line with my research interests which attempt to apply economics to areas where it has previously feared to tread. I am riding the latest fad in economics, one that has yet to acquire a proper name. Steven Levitt gave it the ill-advised title Freakonomics, that despite a massive media blitz, never stopped sounding stupid. The basic idea is to apply the tools of economics to questions typically reserved to sociologists, and hopefully to be receptive to their input. This “sociological economics” is still largely an off-shoot of another more dominant fad, behavioral economics, the admixture of economics with psychology. Some of my current interests are using economic tools to explain concepts such as creativity, legitimacy, opportunity, and identity.

I am happy that I seem to have caught the leading edge of this trend; few other students in my year are pursuing research in the same vein. Graduate school is all about the daunting task of producing novel knowledge the world has never seen before. After struggling over questions that very smart people have been working on for generations, I found it easier to pick easy questions that no one had been crazy enough to ask before, e.g. “What does economics theory have to say about apologies?”

I hope that the media hype has made search committees more receptive to these ideas, though the hype could just as easily help start the backlash that will return economics to more sober questions. In either case, the next year will be an interesting one. I just hope the (likely apocryphal) Chinese epithet “May you live in interesting times” doesn’t turn out to be the curse it was intended to be.

Monday, August 01, 2005

jargon and verbiage on media bias

Judge and Economist Richard Posner has an analysis of media bias in yesterday's New York Times.

An economist friend sent me that link, and below is my reply. I am impressed by how much jargon and verbiage I've been using in my replies to him recently. I think I've been properly socialized into Economics...

the theory sounds largely consistent with the recent economic papers on media bias, such as alesina and mullainatahn, groseclose, or by our fellow gsb student william minozzi. that's always been my view of things. the new york times appears perfectly unbiased to its audience, as does fox news. it's a simple case of horizontal product

william has the interesting result that regardless of the owner's bias, the profit motive is strong enough that it becomes irrelevent, and instead the bias is targetted to the audience's opinion as posner suggests. william's theory also makes the simple point that bias is not so bad so long as there is at least some competition.
someone who wanted the truth could just consume two newspapers. watch both cnn and foxnews. etc...

one problem with posner's theory is that the cost trend is not so unambiguous. network effects makes the cost of entry go up not down. hence, most towns have fewer newspapers than they used to, most now only have one. (someone has an empirical paper on testing teh bias using this fact recently). similarly, radio is now dominated by a few conglomerates like clearchannel, etc...

also, he is a little two cheerleadery for the blogosphere. the hayek marketplace for ideas myth is nice, but you could cite groseclose on valence here.

his view is again the one of horizontal product differentiation in a hotelling sense in bias space, where perfect competition by the blogs leads to a condorcet jury winner effect of finding the median. (wow, that's a lot of jargon)

but, mainstream press has other dimensions (aside from bias) that the blogs can't replicate, such as reputation, and thus accountability, and money and a budget and training, to report on iraq for example, access, increasing returns to scale... and who's to say the median view is the truth.