Saturday, 6 October 2018

Why study economics? Economists in tech companies edition...

In my ongoing series of posts entitled "Why study economics?" (see the end of this post for links), several times I have highlighted the increasing role of economists in technology companies. In a new NBER Working Paper (ungated version here), Susan Athey (previously chief economist at Microsoft, and now at Stanford and on the board of a number of technology companies) and Mike Luca (Harvard) provide a great overview of the intersection of economics (and economists) and technology companies:
PhD economists have started to play an increasingly central role in tech companies, tackling problems such as platform design, pricing, and policy. Major companies, including Amazon, eBay, Google, Microsoft, Facebook, Airbnb, and Uber, have large teams of PhD economists working to engineer better design choices. For example, led by Pat Bajari, Amazon has hired more than 150 Ph.D. economists in the past five years, making them the largest employer of tech economists. In fact, Amazon now has several times more full time economists than the largest academic economics department, and continues to grow at a rapid pace.
Importantly, it isn't just PhD economists:
Tech companies have also created strong demand for undergraduate economics majors, who take roles ranging from product management to policy.
What is it about economics that creates value for tech firms? Athey and Luca identify:
...three broad skillsets that are part of the economics curriculum that allow economists to thrive in tech companies: the ability to assess and interpret empirical relationships and work with data; the ability to understand and design markets and incentives, taking into account the information environment and strategic interactions; and the ability to understand industry structure and equilibrium behavior by firms.
One further interesting point is that:
...Amazon was the largest employer of Harvard Business School’s most recent graduating class of MBA students.
The job market for economics graduates (or, more broadly, graduates with skills in economics) is looking stronger.

[HT: Marginal Revolution]

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