Economists are scarce relative to demand. They have many lucrative outside options. The most important of these are the consulting and financial industries.
But why do economists have the option to go work in consulting and finance? The answer is simple: They have the technical skills to do so.…
The technical skill I am talking about is statistics. Economists learn a lot of statistics -- much more than anyone else except for applied mathematicians and statisticians. There is a whole branch of economics, known as econometrics, dedicated to statistics. Most of the empirical work that economists do is applied statistics.
Statistics is hugely valuable in the real world. Simply knowing how to run, and interpret, a regression is invaluable to management consultants. Statistics is now permeating the IT world, as a component of data science -- and to do statistics, economists have to learn how to manage data. And statistics forces economists to learn to code, usually in Matlab.Bloomberg View
Why Economists Are Paid So Much
Noah Smith
The technical skill I am talking about is statistics. Economists learn a lot of statistics -- much more than anyone else except for applied mathematicians and statisticians.
ReplyDeleteUh, no. The majority of economists that I run across have weak math and statistics skills (with a few exceptions like Steve Keen).
Most engineers can run circles around economists in the math and statistics department, never mind coding.
Nor is there any scarcity of economists, last I heard.
So getting back to the original question -- why are economists paid so much? Because they work in the financial sector! You know, the one that extracts rents without actually producing anything.
Yeah, I think Dan has the right of it. I see no evidence of scarcity in this particular profession nor do economists appear particularly adept; in fact it's common to find people going into economics after discovering they couldn't hack math or science.
ReplyDeleteThe model types of economists are stats nerds. Many are pretty decent too. However, I would say they are in the small minority. Many a career could be launched by simply taking down big name economists in their sloppy analysis.
ReplyDeleteI think stats can get you to correlations but then you have to have other cognitive skills to go past the correlation to understanding causation...
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