My first AEA conference

Jan 13 JDN 2458497

The last couple of weeks have been a bit of a whirlwind for me. I submitted a grant proposal, I have another, much more complicated proposal due next week, I submitted a paper to a journal, and somewhere in there I went to the AEA conference for the first time.

Going to the conference made it quite clear that the race and gender disparities in economics are quite real: The vast majority of the attendees were middle-aged White males, all wearing one of either two outfits: Sportcoat and khakis, or suit and tie. (And almost all of the suits were grey or black and almost all of the shirts were white or pastel. Had you photographed in greyscale you’d only notice because the hotel carpets looked wrong.) In an upcoming post I’ll go into more detail about this problem, what seems to be causing it, and what might be done to fix it.

But for now I just want to talk about the conference itself, and moreover, the idea of having conferences—is this really the best way to organize ourselves as a profession?

One thing I really do like about the AEA conference is actually something that separates it from other professions: The job market for economics PhDs is a very formalized matching system designed to be efficient and minimize opportunities for bias. It should be a model for other job markets. All the interviews are conducted in rapid succession, at the conference itself, so that candidates can interview for positions all over the country or even abroad.

I wasn’t on the job market yet, but I will be in a few years. I wanted to see what it’s like before I have to run that gauntlet myself.

But then again, why did we need face-to-face interviews at all? What do they actually tell us?

It honestly seems like a face-to-face interview is optimized to maximize opportunities for discrimination. Do you know them personally? Nepotism opportunity. Are they male or female? Sexism opportunity. Are they in good health? Ableism opportunity. Do they seem gay, or mention a same-sex partner? Homophobia opportunity. Is their gender expression normative? Transphobia opportunity. How old are they? Ageism opportunity. Are they White? Racism opportunity. Do they have an accent? Nationalism opportunity. Do they wear fancy clothes? Classism opportunity. There are other forms of bias we don’t even have simple names for: Do they look pregnant? Do they wear a wedding band? Are they physically attractive? Are they tall?

You can construct your resume review system to not include any of this information, by excluding names, pictures, and personal information. But you literally can’t exclude all of this information from a face-to-face interview, and this is the only hiring mechanism that suffers from this fundamental flaw.

If it were really about proving your ability to do the job, they could send you a take-home exam (a lot of tech companies actually do this): Here’s a small sample project similar to what we want you to do, and a reasonable deadline in which to do it. Do it, and we’ll see if it’s good enough.

If they want to offer an opportunity for you to ask or answer specific questions, that could be done via text chat—which could be on the one hand end-to-end encrypted against eavesdropping and on the other hand leave a clear paper trail in case they try to ask you anything they shouldn’t. If they start asking about your sexual interests in the digital interview, you don’t just feel awkward and wonder if you should take the job: You have something to show in court.

Even if they’re interested in things like your social skills and presentation style, those aren’t measured well by interviews anyway. And they probably shouldn’t even be as relevant to hiring as they are.

With that in mind, maybe bringing all the PhD graduates in economics in the entire United States into one hotel for three days isn’t actually necessary. Maybe all these face-to-face interviews aren’t actually all that great, because their small potential benefits are outweighed by their enormous potential biases.

The rest of the conference is more like other academic conferences, which seems even less useful.

The conference format seems like a strange sort of formality, a ritual that we go through. It’s clearly not the optimal way to present ongoing research—though perhaps it’s better than publishing papers in journals, which is our current gold standard. A whole bunch of different people give you brief, superficial presentations of their research, which may be only tangentially related to anything you’re interested in, and you barely even have time to think about it before they go on to the next once. Also, seven of these sessions are going on simultaneously, so unless you have a Time Turner, you have to choose which one to go to. And they are often changed at the last minute, so you may not even end up going to the one you thought you were going to.

I was really struck by how little experimental work was presented. I was under the impression that experimental economics was catching on, but despite specifically trying to go to experiment-related sessions (excluding the 8:00 AM session for migraine reasons), I only counted a handful of experiments, most of them in the field rather than the lab. There was a huge amount of theory and applied econometrics. I guess this isn’t too surprising, as those are the two main kinds of research that only cost a researcher’s time. I guess in some sense this is good news for me: It means I don’t have as much competition as I thought.

Instead of gathering papers into sessions where five different people present vaguely-related papers in far too little time, we could use working papers, or better yet a more sophisticated online forum where research could be discussed in real-time before it even gets written into a paper. We could post results as soon as we get them, and instead of conducting one high-stakes anonymous peer review at the time of publication, conduct dozens of little low-stakes peer reviews as the research is ongoing. Discussants could be turned into collaborators.

The most valuable parts of conferences always seem to be the parts that aren’t official sessions: Luncheons, receptions, mixers. There you get to meet other people in the field. And this can be valuable, to be sure. But I fear that the individual gain is far larger than the social gain: Most of the real benefits of networking get dissipated by the competition to be better-connected than the other candidates. The kind of working relationships that seem to be genuinely valuable are the kind formed by working at the same school for several years, not the kind that can be forged by meeting once at a conference reception.

I guess every relationship has to start somewhere, and perhaps more collaborations have started that way than I realize. But it’s also worth asking: Should we really be putting so much weight on relationships? Is that the best way to organize an academic discipline?

“It’s not what you know, it’s who you know” is an accurate adage in many professions, but it seems like research should be where we would want it least to apply. This is supposed to be about advancing human knowledge, not making friends—and certainly not maintaining the old boys’ club.

Why is it so hard to get a job?

JDN 2457411

The United States is slowly dragging itself out of the Second Depression.

Unemployment fell from almost 10% to about 5%.

Core inflation has been kept between 0% and 2% most of the time.

Overall inflation has been within a reasonable range:

US_inflation

Real GDP has returned to its normal growth trend, though with a permanent loss of output relative to what would have happened without the Great Recession.

US_GDP_growth

Consumption spending is also back on trend, tracking GDP quite precisely.

The Federal Reserve even raised the federal funds interest rate above the zero lower bound, signaling a return to normal monetary policy. (As I argued previously, I’m pretty sure that was their main goal actually.)

Employment remains well below the pre-recession peak, but is now beginning to trend upward once more.

The only thing that hasn’t recovered is labor force participation, which continues to decline. This is how we can have unemployment go back to normal while employment remains depressed; people leave the labor force by retiring, going back to school, or simply giving up looking for work. By the formal definition, someone is only unemployed if they are actively seeking work. No, this is not new, and it is certainly not Obama rigging the numbers. This is how we have measured unemployment for decades.

Actually, it’s kind of the opposite: Since the Clinton administration we’ve also kept track of “broad unemployment”, which includes people who’ve given up looking for work or people who have some work but are trying to find more. But we can’t directly compare it to anything that happened before 1994, because the BLS didn’t keep track of it before then. All we can do is estimate based on what we did measure. Based on such estimation, it is likely that broad unemployment in the Great Depression may have gotten as high as 50%. (I’ve found that one of the best-fitting models is actually one of the simplest; assume that broad unemployment is 1.8 times narrow unemployment. This fits much better than you might think.)

So, yes, we muddle our way through, and the economy eventually heals itself. We could have brought the economy back much sooner if we had better fiscal policy, but at least our monetary policy was good enough that we were spared the worst.

But I think most of us—especially in my generation—recognize that it is still really hard to get a job. Overall GDP is back to normal, and even unemployment looks all right; but why are so many people still out of work?

I have a hypothesis about this: I think a major part of why it is so hard to recover from recessions is that our system of hiring is terrible.

Contrary to popular belief, layoffs do not actually substantially increase during recessions. Quits are substantially reduced, because people are afraid to leave current jobs when they aren’t sure of getting new ones. As a result, rates of job separation actually go down in a recession. Job separation does predict recessions, but not in the way most people think. One of the things that made the Great Recession different from other recessions is that most layoffs were permanent, instead of temporary—but we’re still not sure exactly why.

Here, let me show you some graphs from the BLS.

This graph shows job openings from 2005 to 2015:

job_openings

This graph shows hires from 2005 to 2015:

job_hires

Both of those show the pattern you’d expect, with openings and hires plummeting in the Great Recession.

But check out this graph, of job separations from 2005 to 2015:

job_separations

Same pattern!

Unemployment in the Second Depression wasn’t caused by a lot of people losing jobs. It was caused by a lot of people not getting jobs—either after losing previous ones, or after graduating from school. There weren’t enough openings, and even when there were openings there weren’t enough hires.

Part of the problem is obviously just the business cycle itself. Spending drops because of a financial crisis, then businesses stop hiring people because they don’t project enough sales to justify it; then spending drops even further because people don’t have jobs, and we get caught in a vicious cycle.

But we are now recovering from the cyclical downturn; spending and GDP are back to their normal trend. Yet the jobs never came back. Something is wrong with our hiring system.

So what’s wrong with our hiring system? Probably a lot of things, but here’s one that’s been particularly bothering me for a long time.
As any job search advisor will tell you, networking is essential for career success.

There are so many different places you can hear this advice, it honestly gets tiring.

But stop and think for a moment about what that means. One of the most important determinants of what job you will get is… what people you know?

It’s not what you are best at doing, as it would be if the economy were optimally efficient.
It’s not even what you have credentials for, as we might expect as a second-best solution.

It’s not even how much money you already have, though that certainly is a major factor as well.

It’s what people you know.

Now, I realize, this is not entirely beyond your control. If you actively participate in your community, attend conferences in your field, and so on, you can establish new contacts and expand your network. A major part of the benefit of going to a good college is actually the people you meet there.

But a good portion of your social network is more or less beyond your control, and above all, says almost nothing about your actual qualifications for any particular job.

There are certain jobs, such as marketing, that actually directly relate to your ability to establish rapport and build weak relationships rapidly. These are a tiny minority. (Actually, most of them are the sort of job that I’m not even sure needs to exist.)

For the vast majority of jobs, your social skills are a tiny, almost irrelevant part of the actual skill set needed to do the job well. This is true of jobs from writing science fiction to teaching calculus, from diagnosing cancer to flying airliners, from cleaning up garbage to designing spacecraft. Social skills are rarely harmful, and even often provide some benefit, but if you need a quantum physicist, you should choose the recluse who can write down the Dirac equation by heart over the well-connected community leader who doesn’t know what an integral is.

At the very least, it strains credibility to suggest that social skills are so important for every job in the world that they should be one of the defining factors in who gets hired. And make no mistake: Networking is as beneficial for landing a job at a local bowling alley as it is for becoming Chair of the Federal Reserve. Indeed, for many entry-level positions networking is literally all that matters, while advanced positions at least exclude candidates who don’t have certain necessary credentials, and then make the decision based upon who knows whom.

Yet, if networking is so inefficient, why do we keep using it?

I can think of a couple reasons.

The first reason is that this is how we’ve always done it. Indeed, networking strongly pre-dates capitalism or even money; in ancient tribal societies there were certainly jobs to assign people to: who will gather berries, who will build the huts, who will lead the hunt. But there were no colleges, no certifications, no resumes—there was only your position in the social structure of the tribe. I think most people simply automatically default to a networking-based system without even thinking about it; it’s just the instinctual System 1 heuristic.

One of the few things I really liked about Debt: The First 5000 Years was the discussion of how similar the behavior of modern CEOs is to that of ancient tribal chieftans, for reasons that make absolutely no sense in terms of neoclassical economic efficiency—but perfect sense in light of human evolution. I wish Graeber had spent more time on that, instead of many of these long digressions about international debt policy that he clearly does not understand.

But there is a second reason as well, a better reason, a reason that we can’t simply give up on networking entirely.

The problem is that many important skills are very difficult to measure.

College degrees do a decent job of assessing our raw IQ, our willingness to persevere on difficult tasks, and our knowledge of the basic facts of a discipline (as well as a fantastic job of assessing our ability to pass standardized tests!). But when you think about the skills that really make a good physicist, a good economist, a good anthropologist, a good lawyer, or a good doctor—they really aren’t captured by any of the quantitative metrics that a college degree provides. Your capacity for creative problem-solving, your willingness to treat others with respect and dignity; these things don’t appear in a GPA.

This is especially true in research: The degree tells how good you are at doing the parts of the discipline that have already been done—but what we really want to know is how good you’ll be at doing the parts that haven’t been done yet.

Nor are skills precisely aligned with the content of a resume; the best predictor of doing something well may in fact be whether you have done so in the past—but how can you get experience if you can’t get a job without experience?

These so-called “soft skills” are difficult to measure—but not impossible. Basically the only reliable measurement mechanisms we have require knowing and working with someone for a long span of time. You can’t read it off a resume, you can’t see it in an interview (interviews are actually a horribly biased hiring mechanism, particularly biased against women). In effect, the only way to really know if someone will be good at a job is to work with them at that job for awhile.

There’s a fundamental information problem here I’ve never quite been able to resolve. It pops up in a few other contexts as well: How do you know whether a novel is worth reading without reading the novel? How do you know whether a film is worth watching without watching the film? When the information about the quality of something can only be determined by paying the cost of purchasing it, there is basically no way of assessing the quality of things before we purchase them.

Networking is an attempt to get around this problem. To decide whether to read a novel, ask someone who has read it. To decide whether to watch a film, ask someone who has watched it. To decide whether to hire someone, ask someone who has worked with them.

The problem is that this is such a weak measure that it’s not much better than no measure at all. I often wonder what would happen if businesses were required to hire people based entirely on resumes, with no interviews, no recommendation letters, and any personal contacts treated as conflicts of interest rather than useful networking opportunities—a world where the only thing we use to decide whether to hire someone is their documented qualifications. Could it herald a golden age of new economic efficiency and job fulfillment? Or would it result in widespread incompetence and catastrophic collapse? I honestly cannot say.