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Comment by boh | Hacker News Reader

What is the point of this study? If we don't hire managers with business degrees we'd see increases in employee wages and profits?. A person with a business degree is hired because the business hired them, and they're likely doing the job they've been hired to do (cut costs). If a company is cutting costs it may be due to decreasing profitability.

Research like this just feels like tenure bait (the academia version of click bait).

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Because the goal isn't to cut costs, the goal is to make money. If hiring someone to cut costs doesn't make money, then it has resulted in nothing but the suffering of your employees and vendors, and possibly the quality of your product as you switched to shittier vendors and lost your best employees.

So the owners get no profit, the employees lose, the vendors lose, and the customers lose. Worth considering when deciding to hire consultants?

So if you hire people without business degrees none of what you described will happen? If you hire a person to cut costs, you're looking for a person who will cut costs. That's what's being avoided conceptually in how this study is being interpreted. Going to a cancer doctor doesn't increase your chances of having cancer, it makes the likelihood of you having cancer to begin with more likely (ie I'm a company that's no longer growing and I need help to die slower).

This point is actually addressed in the introduction of the study.

> These checks notwithstanding, an obvious concern with our estimates is the endogeneity of the decision to appoint a business manager—perhaps firms turn to business managers when they need to cut labor costs. To bolster the argument that our results capture causal effects of business managers on wages and the labor share, we use two strategies. First, we obtain very similar estimates when we focus on manager retirements and deaths, which are arguably less endogenous than other switches from non-business to business managers. Second, we develop an instrumental variable (IV) strategy (...)

Just having any methodology doesn't count, it has to actually serve to legitimize the model (which it doesn't). Pretty much every publicly traded firm has had MBA managers for the past fifty years, and yet somehow they still make a profit.

This report may arouse people's ingrained dislike of the business managers they've had to deal with but it doesn't actually offer any insight that can survive the least bit of scrutiny.

> Pretty much every publicly traded firm has had MBA managers for the past fifty years, and yet somehow they still make a profit.

Does the paper make a claim that's falsified by this observation?

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