The collapse of the econ PhD job market

This post is ridiculously partisan. The head of the Fed was Republican, the majority of the Fed has always been Republican, the money-printing response to the Covid-19 pandemic began in 2020 when the President was a Republican, the majority of all economists are Republican, but somehow this writer blames this on Democrats? The result is a self-inflicted torching of trust.

Very few outside academia are interested in vector autoregression models of inflation, DSGE or identification strategies.

Traditional macroeconomic data and all the models that complemented it is technical debt.

Here's what actually happened. The market looked pretty normal until November 5th, and then after that things went downhill. First the Fed Board of Governors stopped hiring (some regional banks kept hiring but had their offers explode on Jan 20). Then in January universities which had already done their first round interviews started imposing hiring freezes and cancelling flyouts. At the same time the Federal Government completely stopped hiring with DOGE coming in. Private sector hiring has been down for a few years since the ZIRP era ended so that part isn't new.

In the end I got a postdoc at a pretty good US university and will go on the market again in 2026-2027 with a much stronger portfolio than I had last year. Hopefully that will be enough for me, but I know for many others they may not be so lucky.

A. The bottom half of PhD Economists are not being trained in the data science/Big Data side of analysis increasingly needed

B. There is less demand for Theory-sided Economists over computationally trained ones

I came away feeling unsatisfied, is there a bigger cultural thing going on here?

---

Quick edit: I also dislike the persistent narrative of 'guaranteed' placement for certain degrees and occupations. This assumes a stagnant market and skill-set that does not at all hold for current-day markets.

https://h1bdata.info/index.php?em=&job=economist&city=&year=...

There are several conflicting market theories and no one knows how it precisely works or they would be insanely rich from the stock market.

When were economists right once before some event? They always claim they have seen it coming after the dust settles. Virtually useless job akin to future tellers

People complain bitterly about two things with research

1. That it's looking at obvious things and they could have told the answer (What's really happened is some researcher has actually looked into some common school of thought to check its reliability)

2. That there's no "use" for the thing be researched (it's absurd). This type of research is really "document phenomena, try to understand it" the use of that phenomena is often not clear for decades, or centuries (our cryptographic systems currently rely on research into math that was once considered absolutely worthless)

Trickle down economics, austerity, regressive tax policies, tariffs, appeasement, lax antitrust enforcement, slashing capital gains and inheritance tax, privatization of natural monopolies, quantitative easing instead of holding investment firms accountable, foreign aid for war instead of peace, defunding public universities to manufacture a student loan crisis, public sector layoffs, subsidizing extractive industries instead of renewables, sub-minimum wage in restaurants/farms/prisons, underpaying teachers and healthcare workers, rent seeking, payola, collusion, duopoly, usury, unpaid domestic labor, wage slavery..

And the inevitable aftermath of wishing the worst for others: stagflation, underemployment, civil unrest, eventually recession, depression and a raid on concentrated wealth if/when supply-side economics collapses because nobody has any money to buy anything anymore.

In spite of overwhelming evidence of public and private abuses, nobody cares what the experts think anymore. Because it's obvious to everyone that so much is wrong. People who try to help get blamed, people who participate in the grift get rewarded as things get worse.

Unfortunately as wealth inequality consumes us under self-colonization, all liberal arts degrees trend towards worthless. We're left with declining service work after passing peak wages and peak employment due to the rise of AI. Spending the rest of our lives fighting over scraps after the rug was already pulled out from under us due to the Dot Bomb, Housing Bubble, pandemic, private equity driving housing costs to the point of insanity and a trade war of choice.

Or we could like, follow economic theory and stuff. Do the opposite of everything I just mentioned. Can't have the Econ PhDs telling us that!

It has never been a science. You can't run controlled experiments outside of small microeconomic scenarios, so nothing is falsifiable or repeatable. It's all just arguing about correlation and causation.

1. A country specifically tailor made for scientists and engineers.

2. A country with no first class citizens

Something like Switzerland or Dubai for science and engineering, but made from scratch.

"Here’s a very short, oversimplified history of modern economics. In the 1960s and 1970s, a particular way of thinking about economics crystallized in academic departments, and basically took over the top journals. It was very math-heavy, and it modeled the economy as the sum of a bunch of rational human agents buying and selling things in a market.

The people who invented these methods (Paul Samuelson, Ken Arrow, etc.) were not very libertarian at all. But in the 70s and 80s a bunch of conservative-leaning economists used the models to claim that free markets were great. The models turned out to be pretty useful for saying “free markets are great”, simply because math is hard — it’s a lot easier to mathematically model a simple, well-functioning market than it is to model a complex world where markets are only part of the story, and where markets themselves have lots of pieces that break down and don’t work. So the intellectual hegemony of this type of mathematical model sort of dovetailed with the rise of libertarian ideology, neoliberal policy, and so on."

The logical house of cards is built upon several tenuous or flat out outrageous assumptions that do not resemble reality.

I can’t take the author seriously.

The way they used to keep them in power is by running a Nazi against them and making you choose, now people (rightfully) prefer the Nazis because at least they believe in something. So now they lawfare the Nazis so they can run unopposed (or NPC-opposed), or blackmail and bribe them into becoming centrists themselves. If we can put Al Qaeda in a suit and lap at his feet, we can certainly make Meloni into a Euro-warrior.

No need to convince anyone of anything, no need to have the support of a majority of the public, no restraints on infinite accumulation... what do you need some crypto-freshwater "why homelessness is actually the most accurate sign of prosperity" freak any more? Can't they just call Cass Sunstein? Did the numbers ever really matter? These guys specialized in telling you why the numbers were deceptive, and the real problem was any restraint on predators.

Academic economics is newly-pointless marketing of ideas popular (i.e. profitable) among elites (i.e. their bosses.) They are entirely unconcerned about the wealth of nations (nationalism!) or the wealth of citizens (communism!). When comfortable monopolies dominate, and the process of democracy is devalued ("dumb people shouldn't vote, we should follow the consensus!"), the market for marketing goes down.

It's funny how he pretends he thinks lying about inflation was decisive, as if the people affected by inflation get to hire economists, or wouldn't be more interested in becoming an economist to prove a bunch of liars wrong. Lying about inflation, or whatever else, is the job. The real message: "If you're a Democrat considering your rebrand, hire me as an advisor. I'll be your Ezra Klein, but with math!"

So, the field is being consumed by the ideology it espoused?

Automation and leaner government budgets were pushed hard by a number of schools of economic thought.

Of particular note is this section:

> REASON 4: Lying About Inflation

If you were there during the pandemic money printing, you remember the sequence all too well: first the confident insistence that government spending wouldn’t fuel inflation, then the soothing claim that inflation was merely “transitory,” and finally the outright gaslighting that prices weren’t rising at all. Each step was wrong, and each was delivered with smug certainty. Ordinary people—who watched their rent, groceries, and gas bills skyrocket—saw a profession more invested in protecting Democratic policy narratives than in telling the truth. The result is a self-inflicted torching of trust.

This isn't about protecting Democratic policy narratives. Arguably the single worst thing for inflation, the Paycheck Protection Program, happened under Trump. You had business owners taking out loans for pretty much anything and everything they thought they could possibly justify as business-related, no matter how tenuous that justification was, and then of course the government forgave massive amounts of it. Since business owners already tend to have more money and capital, this fueled their consumption of then-scarce products and services even more. Laws of supply-and-demand kicked in, which shouldn't be hard for the author to understand.

Ultimately the inflation that happened during the pandemic was due to the fact that for the last 45-ish years, the US has been running deficits not just in the public sector, but the private sector as well. Our economy is designed to run on debt that suddenly, people couldn't pay on time. They then looked to the government to offer a backstop, and since federal, state, and local governments have no "rainy day" fund to speak of, the federal government had to fire up the money printers.

Points 1-2 seem to match what I am seeing as an Econ PhD student on the market and what I am hearing from others. Point 3 may be happening, but this assumes that AI is going to be doing this in a way capable of producing research AND that there is a limited amount of research to be done. As someone who has used various AI agents as help in cleaning data, exactly what he suggested it does, I suspect that this will increase the value of the positions that use Econ PhDs because they can now do more.

The thing that bothers me most about this post is his point 4, and it seems so wrong to me to the degree it makes me wonder about the rest of it. I don't know what he got the following perspective.

1. first the confident insistence that government spending wouldn’t fuel inflation 2. then the soothing claim that inflation was merely “transitory,” 3. finally the outright gaslighting that prices weren’t rising at all

In contrast, I've seen something different.

1. I saw debate over how people would save/spend rebate checks and how that would feed through to the economy. Some people speculated that it wouldn't lead to inflation based on the results of the 2008-2009 recession. Additionally, most economists I spoke to thought that the supply shocks due to the pandemic would lead to temporary inflation. If he got the impression that there was a "confident insistence that government spending wouldn’t fuel inflation", I would like to know who he was listening to.

2. The inflation during the pandemic _was_ transitory. Take a look at [0-2], mildly different views of one measure of inflation. The high inflation period due to the pandemic is over. Persistent inflation at the Year over Year levels seen early in the pandemic would mean we're seeing 7% inflation, not the 3%ish we're actually seeing. Federal interest rate targets would probably be in the 7APY-9APY region as a result. Part of the confusion here is due to the difference between inflation and price levels. Inflation is the rate of change of price levels. Yes we underwent inflation, and the higher prices accrued[2], but inflation rates dropped and we still paid the previously inflated prices. That is normal. The 2020 inflation bout did come at the end of a period with absurdly low inflation though; the decade between 2010 and 2020 had deals such as the $5 footlong from subway and the $5 hot and ready from little ceasars last almost the whole decade. Looking at [0] again, that time had historically low inflation. So suddenly being exposed to relatively high inflation was novel and painful.

3. I can see how this might seem like a thing. There was a whole issue where the CPI levels and the costs of living (felt inflation) differed a whole lot. There are reasons for this, such as changing consumption patterns (which change faster than the CPI basket of goods), and is due to the fact that CPI is trying to measure how prices change in a method that is comparable across time. It is not trying to measure how expensive the lives of consumers are. Especially when you use the typically presented measures of CPI which does not include food or energy (these are excluded because they are volatile). Add in income cuts and rising food prices and suddenly the budget situation of most Americans was getting more difficult. So yeah, there was a disconnect between households experience and the measures of inflation. This wasn't lying, this was people not understanding how economic statistics work and then misusing them.

Finally, the author may be ideologically motivated, e.g. [3] where he stated:

"You can participate in this societal trend, dear math world, by kicking this deranged, murderous tranny out of your ranks. Don’t let him infect the next generation of students with the woke mind virus — or, at the very least, don’t hire him in your department, where he will surely be a magnet for lawsuits." > For clarity, the use of the word "murderous" is due to the discussion about some posts by a math PhD student that are somewhat threatening. The use is on topic.

I bring this up not to attack the author but to raise questions about the author's rhetorical goals. I start by stating that I don't actually know what he is trying to achieve.

If his point is that the Econ Job market is has been rough the last 3 years and is getting worse; that is well known among economists and hopefully is known by those looking at doing a PhD in economics. The point he explains at the introduction and conclusion is that an econ PhD doesn't have the same returns or guarantees it used to (e.g. compared to 10 years ago). That is true and points 1-2 are all that is needed to make that point.

It also seems like he may be trying to call into question the value of some or all of the following: academic economists, economic training, or higher education. If that is his goal, then 1-2 are beside the point, 3 is speculation and only somewhat pertinent, and 4 is applicable but wrong. The phrasing in the title seems to point to this. Is this a complete collapse? I don't know. We'll know in 5 years though.

[0]: ANNUAL CPI INFLATION https://fred.stlouisfed.org/series/FPCPITOTLZGUSA [1]: MONTHLY CPI INFLATION https://fred.stlouisfed.org/series/CPALTT01USM657N [2]: CONSUMER PRICE INDEX (Price levels) https://fred.stlouisfed.org/series/CPIAUCSL [3]: https://www.chrisbrunet.com/p/this-phd-student-at-brown-univ...

He was a trader for Citibank and for awhile their highest paid trader. He essentially made a fortune (mostly for the bank but also for himself) by betting that after the 2008 GFC inequality would only increase, that we wouldn't go back to "normal".

He says that the best economists in the world are traders. Why? Because they have this big number over their head, their profit and loss ("P&L") that everyone at the bank can see. It also defines their bonus. All the finance and econ people in college are trying to become traders.

Then you have journalists. Any of them with an econ background have basically failed to become traders. Journalists self-select to reflect the views of their organization, famously articulated by Noam Chomsky in an interview [1].

And then you have Econ PhDs. Their only paths are to go work for academia, to produce more Econ PhDs or to work for think tanks and the like, essentially no different to the journalists. They play the same role medical researchers working for the tobacco did in the 20th century.

You see this with the dominance in Western economics academia of the Austrian School [2], which isn't precisely the same as neoliberalism but the differences are nuanced.

[1]: https://www.youtube.com/watch?v=qvGmBSHFuj0

[2]: https://en.wikipedia.org/wiki/Austrian_school_of_economics

There are many careers like this, including management consulting and high finance. The hope is that AI flips the script and democratizes these important functions in society