“Those who can …”


[T]he typical economics assistant professor makes 50% more than the typical sociologist

The author constructs an institutional model to explain the gap, but the reason is simple:

A quantitative economist can make more money outside the academy than can a sociologist. In Economics jargon, the opportunity cost of being an Economics professor is higher than the opportunity cost of being a Sociology professor. If the academy wants to keep an economist, it will have to pay more than for a sociologist.

It’s even worse for a humanities professor. What’s the alternative employment for a Gender Studies PhD?

I’m sure that pay gap generates rancor.

I’ve spent enough time in the academy to be acquainted with its utopian communitarian fancies. “It’s just as hard to get a Gender Studies PhD as an Economics PhD. It’s not fair!”

That doesn’t bother me. One doesn’t get paid for doing what one wants. One gets paid for doing what someone else wants. Ya pays yer money, ya takes yer choice.

In fact, I’m surprised that the premium to economists is only 50%.

There’s an old saw that a society that exalts philosophy and scorns plumbing will find that neither its pipes nor its logic hold water. A university that pays its professors the same will find that its Physics department can’t explain why pipes hold water and its Economics department can’t explain why California is running out of water.

My concern is different:

Can academia pay enough to retain first-rate economists? Mathematicians? Physicists? Engineers?

And if not, who will teach the next generation of economists, mathematicians, physicists and engineers?

My Love employs people with advanced degrees in quantitative disciplines: Mathematics, Statistics, Physics, Economics. She doesn’t compete with the academy for that talent. She competes with banks that need quants to analyze complex securities and strategies. The banks pay many times the salary of a tenured university position. My Love has to meet that salary expectation.

The gap in my profession (Engineering) is probably less stark. Professors can supplement their salaries with consulting fees and research grants. The range of incomes outside academia is much greater. Still, I make several times what my professors make.

There’s another, more brutal, old saw, “Those that can, do. Those that can’t, teach.” I have the utmost respect for my Engineering professors. My Love doesn’t just respect her professors, she reveres them.

But will the private sector’s premium to quantitative ability and training eventually undermine education in quantitative fields? Will those who can, quant?

Until this generation, the most brilliant mathematicians and physicists taught the next generation. In this generation and the next, will too many go to Goldman Sachs?

Then who will train the next generation?

4 thoughts on ““Those who can …”

  1. I’m a physical science professor. I’m pretty good at it — I got my PhD at an Ivy (same one as your love), and won their departmental prize for best thesis and more recently their departmental prize for best early-career researcher among their graduates. I now teach at a top liberal arts college. I know that I could be making 2-3 times more in industry, but there are two main reasons why I’m not doing that: (1) I love my job. I’ve always felt a calling to teach, and teaching smart undergrads in small classes is pretty much the optimal teaching environment for me. Also, (2) I make a very comfortable income, thanks. I make about the same as my husband, and our combined salaries put us in the top 5% of household incomes in the United States. We don’t need more. I already feel uncomfortably wealthy sometimes, since I’m already making more than the inflation-adjusted income of my single mother growing up — as an assistant professor. And our liberal arts college is in a small city, which means that cost of living is peanuts compared to a lot of other places I’ve lived.

    A comfortable income and a deep satisfaction with my job mean that I’m not motivated to go questing after that salary increase. I definitely don’t want to work in the high-pressure, 24/7 environment of the investment banking or consulting jobs that several of my classmates took post-PhD. I’m not saying there aren’t any industry jobs I would enjoy and find satisfying — I’m sure there are — but there are a lot of rewards to academia that make some of the tradeoffs worth it for me. So, I’d like to think I’m in the category of first-rate physical scientists that academia retains despite the opportunity cost of a lower salary. Enjoy your anecdata. :-)

    Liked by 1 person

    • Oh, definitely.

      I should have made clear exactly what you’re saying. The best physicists and mathematicians will probably always be academics. A first-rate mathematician or physicist has to be motivated by the pure life of the mind. I see that in my fiancee, even though she abandoned academia. And (as you know!) there are a lot of mathematicians who are simply too otherworldly to survive outside of academia.

      I’ve spent a lot of time in academia. I’ve taught undergrads (which I hated) and run grad seminars (which I loved). I loved research. But I could not be an academic. It’s not the money; I didn’t start making tons of money until I moved to New York (and I had an offer from a fund that would have paid a lot more). I just need to be out in the real world, working on concrete, practical problems. But then, I’m an engineer.

      My fiancee concluded in grad school that she didn’t have the temperament to be an academic, and saw a crying real-world need for her skills. Although she’s made a fortune, she is umotivated by money. She’s also been broke twice.

      But that doesn’t negate my basic point. Thirty years ago, the career options for a mathematician or physicist were much narrower – and much, much less lucrative. At the margins, that has to affect the academic market. As you say, some from your program – arguably the best in the world – have defected to the Evil Empire of Wall Street.

      On the other hand, maybe that promise of money draws more people into Math and Physics.

      As Bismarck is reputed to have said, “Gentlemen, the imponderables have it.”


      • Also, I suppose this applies more to practical disciplines (Economics, Engineering, Statistics, Applied Math/Applied Stats, Computer Science) than to more purely theoretical disciplines (such as Math or Physics).

        But you’re right, it is anecdata!


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