One last hammer blow — there it hangs, my college degree, neatly framed and a little lost on my otherwise blank wall. In a mix of feeling relieved and somewhat taken by surprise, I look back on my past four years as an undergrad. Like many of my peers, I have spent a considerable amount of time worrying about my professional future. Now, after a bit of thinking, I have set the sails towards a career in economic research. As an economics major, I know that peer pressure can be quite disillusioning at times. The goal of this blog post is to share some reflections on an alternative career path, hopefully encouraging one undergrad or the other to consider some less conventional courses of action.
Disclaimer: I am merely a recent graduate, not an experienced professional, so it’s good advice to take the following with a grain of salt. My reflection is a result of four short years studying between German and the U.S., some work in research, consulting, and government, and my wish is that sharing what helped me may (hopefully) help others.
Some definitions might help to correct some common misperceptions. Usually, the field of economics is thought of as the study of scarcity or the study of decision making. It can be divided into the study of individual behavior (microeconomics) and the study of an economy as a whole (macroeconomics).
Research in economics consists of a theoretical and an empirical branch (although a lot of work involves both). Theorists try to better understand reality by reducing it to a simple model. This often means leaving out important details and making strict assumptions. Think of these models like a city map: they only show the most important points and that is precisely why they’re helpful. A city map as large as the city itself would be of no help to anyone; that is why we reduce it. Empiricists test these models and assumptions using real world information. With the ever-increasing access to data, enhanced technology to store and process it, as well as improved methodologies of quantitative analysis, the field of empirical economics has experienced a boom over the past decades. While some studies use data that is already out there, others create their own data by running experiments in a lab or in the field.
Economists work in virtually any entity. Upon graduation, most are hired by universities, think-tanks, international organizations, central banks, banks, consultancies, governments, or tech-companies. While many of these institutions contribute to the economic literature, they tend to do so with less of an academic focus further down the list. Let me say some words on each of these potential employers.
In the case of pursuing a purely academic university career, Ph.D. graduates usually enter either a phase of post-doctoralship or assistant-professorship (which is basically the same thing). Both positions offer the opportunity to develop a proprietary research agenda and to produce work that leads to an offer for a professorship (most often at another institution).
Think-tanks often cooperate with universities and provide similar opportunities. Their work may sometimes be more driven by the demand of practitioners as they are known to provide actionable advice for public policy, businesses, and beyond. Much of the forecasting of key economic indicators takes place in think-tanks.
The largest international organizations with a focus on economics include the International Monetary Fund, the World Bank, and the Bank for International Settlements. From an employment perspective, they can be thought of like institutions at the intersection of research and government. Their academic output consists of an extensive body of literature of (mostly empirical) studies that are relevant to a variety of stake-holders. On a more practical basis, their work includes large-scale investments, issuing loans to governmental institutions, and fostering international policy coordination.
Central banks are usually independent of governments when making monetary policy decisions. While the key instrument to doing this is controlling the interest rate of an economy, the toolkit of central bankers has grown substantially after the global financial crisis. Central banks, similar to international organizations, author many publications in areas relevant to their work.
Governments conduct fiscal policy and issue economic legislature (among many other things). Most economists therefore work in a country’s financial, economic, or developmental ministries or consult the government in related questions.
In business, economists’ primary assets are structured thinking, quantitative skills, and an understanding of how to reduce complexity.
How can you succeed?
As I mentioned earlier, there is plenty of advice on how to make a great early-career economist (e.g., Chris Blattman’s blog). Fundamental requirements (besides a strong interest in the field) probably include the ability to tell interesting stories, a talent for writing, the needed creativity to think up novel research ideas, strong mathematical and statistical skills, and a high frustration tolerance.
Often there are also more formal requirements. For some institutions, it may suffice to hold a master’s degree (obviously the less academic ones), in others it may be virtually impossible to climb the career ladder without a Ph.D. Most professionals advise you to complete a Ph.D. only if you aspire to a position in research. If you look for a job in politics or business, a Ph.D. may not be the most worthwhile (or necessary) investment of your time.
To figure out whether research is for you, my personal advice is to work as a research assistant for several professors. Spoiler altert: You will end up with the less glamorous work most of the time. Almost all research assistants work in empirical research because that is usually where most of the assistance is needed. As such, you will be able to collect and clean data, conduct preliminary analyses, review literature and common methods, manage databases, and do some PowerPoint-magic. What is definitely helpful is an eye for detail, the ability to focus on your work for several hours, coding skills (e.g., in STATA, Matlab, Python, R, etc.), a knack for breaking down complex problems, a strong understanding of math, and the necessary curiosity to think things to an end. Sometimes, you might even get to prepare workshops or seminar presentations.
Besides that, try to sit in research seminars at your university as often as you can. At first, you will likely feel a little lost among all the unknown literature, weird economic jargon, and cumbersome mathematical expressions. The more often you attend, the faster your vocabulary and understanding of what is presented will grow. Jot down some notes, google recurring concepts, and try to build a feeling for what makes a good paper.
Obtaining an overview of current topics in economics may help getting started, too. Besides the obvious reads like The Economist, The Walls Street Journal, or The New York Times, there are some pretty interesting blogs you might want to follow:
- On Project Syndicate, some of the world’s most influential leaders publish opinion pieces on a regular basis. I see VoxEU as the economists’ counterpart.
- The blogs of Larry Summers, Timothy Taylor, Mark Thoma give you a good glimpse into current debates in economics and politics.
- For more quantitative stuff, follow the blogs of Dave Giles and Marc Bellemare.
- The Journal of Economic Perspectives dedicates entire issues to topics that dominate the current research landscape.
- By signing up for email alerts on new publications of the most influential journals (QJE, JEL, JPE, AER) and institutions (NBER, IMF, World Bank, BIS), you are ensuring you will not miss the next big thing.
What makes such a career rewarding?
I personally believe that research can be incredibly rewarding when you work with the topics that you care about most. While your success will of course be dependent on the relevance of the subject you study, I can hardly think of any other field that offers such a high degree of independency.
Additionally, much of the work produced by economists has helped us to better understand what makes people’s lives worthwhile and how to improve the functioning of societies. The topics range from poverty and economic development to climate change and public health. By the end of your degree, your education will equip you with the frameworks necessary to think about the most complex problems. This is why economists are able to make an incredible impact on society.
While all of this may sound as if there was a narrow, straight, and clear notion of what makes a successful economic researcher, I believe there is plenty of room to shape this career to your interests. For example, there is a growing need for compelling story-telling to better communicate research to non-economists. Over the past several years, there has been a surge in popular scientific work including books (two names: Malcom Gladwell and Steven Levitt), podcasts, movies, documentaries, and other formats. Other fields where you might find your perfect intersection with economic research may be in or between the above mentioned sectors.
Whether this blog post has pushed you a small step towards looking into a career as an economist or not, I hope it has at least encouraged you to broaden your view for potential career perspectives. I believe that, more often than not, we lack awareness of our opportunities, not the opportunities themselves.
About the author: Lukas Althoff, Graduate in Economics. Pursuing a career on the intersection of economic reserach and public policy. #Macroeconomics #InternationalFinance #GlobalAffairs