Sex, Drugs and Economics: Why study economics? Tech firms want you edition...

Sunday 11 September 2022

Why study economics? Tech firms want you edition...

The Economist had an article earlier this week (ungated here) on hiring of economists by big tech firms:

Silicon Valley is increasingly turning to economics for insights into how to solve business problems—from pricing and product development to strategy. Job-placement data from ten leading graduate programmes in economics shows that tech firms hired one in seven newly minted phds in 2022, up from less than one in 20 in 2018 (see chart). Amazon is the keenest recruiter. The e-commerce giant now has some 400 full-time economists on staff, several times as many as a typical research university. Uber is another big employer—last year the ride-hailing firm hired a fifth of Harvard University’s graduating class...

For big tech, meanwhile, economists offer skills that computer scientists and engineers often lack. They tend to have a good grasp of statistics, as well as a knack for understanding how incentives affect human behaviour. Most important, economists are adept at designing experiments to identify causal relationships between variables. Machine-learning engineers usually think in terms of prediction problems, notes one Ivy League grad who recently started a job in tech. Economists can nail down the causal parameters, he says.

An e-commerce firm may want to estimate the effect of next-day shipping on sales. A ride-hailing firm may wish to know which sets of incentives lure drivers back to the city centre after they are hailed by customers attending a big concert or sporting event.

It's a point that I've made several times before (see here and here and here and here). Economics doesn't just lead to jobs in banks. It leads to a wide variety of jobs, including increasingly in tech firms. I've even made the point before that economics is a better choice than operations research or computer science. At the very least, economics and computer science are complementary.

And it isn't just economics PhDs either. An understanding of economics is an asset for undergraduates looking to get ahead as well. For more reasons why you should be studying economics, try the long list of links below.

[HT: Eric Crampton at Offsetting Behaviour, and David McKenzie at Development Impact]