Thursday, December 27, 2012

What I have been reading: Quotes from "The Guide"

In the last two months, I have been spending most of my "recreational reading" time on advice for the economics job market.  Not a bad idea for a nearly-PhD economist who is on the job market.  In this post, I have selected John Cawley's Job Market Guide for its best quotes and advice.

The guide is extensive, and covers all aspects of the job market.  Moreover, this is extraordinarily detailed advice.  There is much more in the original guide (including detailed statistics), but I found the following quotes most helpful (so far).  This post merely presents these quotes, but at some point in the future, I will annotate these quotes, indicating why they've been especially helpful to me.

On preparing to go on the job market (page 6):
Your dissertation advisors will helps you determine whether you are ready to go ton the job market.  You should not go on the market without their approval, and you should have that approval by the Spring before you will apply for jobs.
On pre-job market presentations (page 7):
Present your job market paper at seminars and conferences.  You will quickly learn what other people think are the weak points; work to strengthen those areas.  Practice will also enhance your presentation skills.
On applying for jobs (page 15-16):
It is expected that you will apply for some jobs you are unsure about; the job market is a learning process for both applicants and employers with interviews and campus visits used to gather information about the quality of match.  However, do not apply for jobs that you are certain you would not accept; it is a waste of resources for you and the employer.  Moreover, there is no point applying if your field is not close to any of those listed.  Search committees will roll their eyes and throw away packets that come in from people whose work is unrelated to the advertised fields.  Trust employers to accurately describe the scope of their search in the JOE ad.
On the objective of the job market (page 18):
The goal of your search is not a job in the highest-ranked department; your goal is a job in a department in which your work is understood and appreciated and in which you can be productive and grow and improve.
On your list of schools (page 20):
Show your letter-writers the list of jobs for which you plan to apply and ask their advice.  Make sure they are aware of the types of jobs you think are the best match and of any restrictions on your search.  You might ask if they would be able to write a better letter if you limited your search to certain departments.
On the number of letter writers (page 20):
You may want to have more letter-writers than is required.  That way, even if one is late, the consideration of your application is not delayed.
On timing of "things"... arriving at the ASSA conference, submitting packets, coordinating with department secretaries, receiving calls (pages 20-23):
Plan to arrive a day before your interviews begin so you can scout hotel locations and register for the conference.  This will also help avoid disaster if your flight is delayed. 
Try to mail your job market packets by November 1.  They must arrive by Thanksgiving. 
By early November (at the latest) give an electronic mail merge file to the secretaries in charge of mailing your letters of recommendation.  Some employers will require each letter be individually uploaded to their website.  You should check with the secretaries periodically to make sure the letters have been mailed and uploaded.  You should be very nice to, and appreciative of, these secretaries because they are performing an important service for you. 
[E]xpect to get your first requests for interviews in the first week of December and most of them in the second and third weeks of December.  However, the variance is larger and you may receive requests from before Thanksgiving right up to the ASSA meetings.
On updating your advisors on your interviews (page 26):
After Thanksgiving, give your advisors frequent updates on your list of interviews.  If you aren't getting any calls by the second week of December, ask your advisors if there is anyone they can email or call on your behalf.
On scheduling interviews (page 26):
When scheduling interviews, leave a minimum of 15 minutes between them so that you can move from room to room and hotel to hotel.  You might want to study a map of hotel locations in the convention city and try to schedule interviews in the same hotel in adjacent time slots and leave extra time between interviews that are distant.
On the awkwardness (and fatigue) of interviewing (page 32):
Interviews held in small hotel rooms may feel quite crowded, with interviewers perched on beds or learning against walls.  In the course of the ASSA meetings, departments may interview several dozen applicants for each job; the search chair (or entire committee) may sit in on every interview and as a result your interviewers may be more fatigued than you.
Prepping for interviews (page 32):
Before the meetings, review your interviewers' publication records and research interests. Take careful note of any papers in your area; understand how your work relates to theirs.  Also, learn about other members of the department, the department itself, and the University.  The internet makes this easy.  Know what degrees the department offers and the relevant units on campus.
On ASSA nutrition, eating and hydration (page 33):
If you tend to eat a light breakfast, do the same at the meetings.  If you drink the same tea every morning, you may find it reassuring to bring some with you.  Don't overindulge in caffeine; you may not find convenient bathrooms.  [...]  If you have a lot of interviews, you may have little time to eat or drink.  Bring granola bars or other portable snacks with you in your briefcase and eat between interviews.  One professor advices that you carry a bottle of water in your bag, in particular because sometimes you will have to take many flights of stairs because of the long lines for the elevators.  You must make sure to eat and stay hydrated in order to remain responsive, cheerful, and relaxed.
On bringing a list of questions (page 38):
Don't be afraid to refer to a list of questions that you want to ask.  Doing so will help you remember to ask the important questions, allow you to keep track of the answers, and it signals to the interviewers that you've done your homework and are taking the interview seriously (Do not refer to notes when responding to their questions!)
On the "repeat game" (page 41):
Your interaction with potential employers is the first stage in a repeat game.  The people with whom you are interviewing will be in the same profession as you for decades.  Be courteous and friendly and even if they never make you a job offer they will remember you well.  If you are arrogant or abrasive you will make things harder for yourself in the future -- some of your interviewers (yes, even those in poorly-ranked departments) will be refereeing your papers, evaluating your grant applications, and perhaps writing your tenure letters.
On campus visit interviews (page 43):
Before departing for your campus visit, request a detailed itinerary of your visit.  Visit the department web page and familiarize yourself with each faculty member you are scheduled to meet.  In particular, look through their CVs to see if they have ever published in your area.  Make notes and list a few things to chat about with each person.  Itineraries for job candidates are often fluid, so be flexible and prepared to meet with members of the department who are not on the original schedule.
On the job market presentation:
(page 27) Before you depart for the ASSA meetings, have your job talk ready, you may be invited for campus visits immediately after the ASSA meetings. 
(page 46) Have backup copies of your presentation available.  Save it to your laptop and to a USB pen drive, and also email it to yourself. 
(page 46) At the beginning of your talk, provide an outline of the talk and quickly summarize your findings.  You might be tempted to wait until the end of the seminar to announce your findings, but a seminar isn't a murder mystery in which knowing the ending ruins the show.  You want people to know your findings as soon as possible.  Moreover, some people will have to leave your talk early, and you want to ensure that they too understand your results. 
(page 47) It is important to come across as a nice person.  That said, a little fire in the belly is a good thing.  If someone harasses you during your seminar or in an interview, you don't need to keep a smile plastered to your face; you can and should stand up for yourself and your work.  Uncontrolled outbursts of anger or frustration are always bad.  This is a fine line to walk.
On dinner with faculty (page 48):
Brush up on your dining etiquette.  Your hosts will take you to a nice restaurant and you may be confronted with issues of etiquette that you rarely face. 
At dinner drink what others are drinking (probably wine) but in moderation.  Do not order a cocktail like a martini and do not have more than one or (at the most) two drinks.  You may not do or say something stupid every time you're tipsy, but you are more likely to do so or say something stupid when you're tipsy.
On salary (page 53):
The average salary offered to new Ph.D.s last year by Ph.D.-granting departments in the sample was $98,542, but the standard deviation was large ($15,791).  Departments ranked in the top 30 offered on average $115,000, while the average salary offered by non-Ph.D.-granting departments was considerably lower: $75,612.  
On "exploding offers" (page 61):
Departments generally allow a candidate to consider the offer for 10-14 days.  (An offer with a short, inflexible deadline is an "exploding offer.")  The amount of time a candidate is given to consider the offer is typically shorter the lower-ranked the offering department, and the later in the job market season.  Feel free to wait until the deadline, especially if you expect to receive offers from other departments.  It is also acceptable to ask for a brief extension to the deadline so you can finish your campus visits.  You have the most leverage after the department has made an offer but before you have accepted. 
Once you have an offer, call the other departments you visited that could dominate the offer you received and tell them that you're hoping to hear from them soon because you already have an offer.  Many departments move slowly and they may need a stimulus like this just to get the recruitment committee to meet.
On learning by doing (page 62-63):
Some say that the first academic job involves as much human capital acquisition as graduate school, so be sure to choose a job in which you can learn from your colleagues.  Domowitz (2001) makes the important point that the distribution of quality faculty across departments is less skewed than you think but the distribution of quality graduate students across departments is more skewed than you think.
In case you're curious, here are some notes/impressions on where I am in the process.

  • The meetings are next Thursday through Sunday (January 3rd through 6th) in San Diego.
  • I have scheduled most/all of my interviews.  As Cawley says in his guide, calls can happen all the way until the ASSA meetings.
  • Because I applied only to positions that I deemed to be a good fit (Cawley's advice; see "On applying for jobs"), my set of interviews consists entirely of positions that excite me very much.
  • I am currently undergoing the process of reviewing my interviewers' CVs.  As I read more about these people and their research, I have become more excited about the prospect of interviewing with them.
As there's a lot more for me to do before the meetings, I will get back to it.  In case you are wondering, my motivation for writing this post was somewhat self serving -- I needed to think about the big picture of the job market.  What better way to do this than to re-read the best guide for advice on the job market?

Thursday, December 20, 2012

The Coase Theorem, Landsburg and Pigou

In response to a New Yorker article by Elizabeth Kolbert, Steve Landsburg recently wrote a post on externalities that caught my attention, not necessarily for what it said, but for what it did not say.

For background, here's what Kolbert said (the part that is quoted by Landsburg):
A man walks into a bar. He orders several rounds, downs them, and staggers out. The man has got plastered, the bar owner has got the man’s money, and the public will get stuck with the tab for the cops who have to fish the man out of the gutter.
The man pulls into a gas pump. He sticks his BP or Sunoco card into the slot, fills up and drives off. He’s got a full tank; the gas station and the oil company share in the profits. Meanwhile, the carbon that spills out of his tailpipe lingers in the atmosphere, trapping heat and contributing to higher sea levels. As the oceans rise, coastal roads erode, beachfront homes wash away, and, finally, major cities flood. Once again, it’s the public at large that gets left with the bill.
Here is Landsburg's response:
Coase’s key insight is that all of these externality problems are fundamentally symmetric. The question is never “how do we stop A from harming B?” but instead “should we let A harm B, or should we let B harm A”? A consequence of that symmetry is that no abstract principle — including the abstract principles that guided Pigou and still guide Kolbert — can possibly be used to guide policy. Any purely abstract argument for preventing harm from A to B is an equally good argument for preventing harm from B to A.
Kolbert seems to believe that Pigou settled this question 100 years ago. So he did, just as Newton settled the issue of absolute space. But we now know that Pigou was wrong (although his insights laid the indispensable foundation for later, better insights).
Landsburg is right.  An important insight in Coase's fantastic article (The Problem of Social Cost) is that externalities are fundamentally symmetric, but he didn't just stop with that insight.  

Coase continued the article by proposing an alternative solution: let those who are involved with the externality bargain with one another. If they could bargain at no cost and the terms of bargaining were well understood, Coase deduced that there would be no externality problem because the all parties would realize what the efficient outcome is, and would agree to a system of side payments to support that outcome.

This "no cost bargaining" ==> efficiency result is known to economics students today as the Coase Theorem.  Despite its apparent conceptual simplicity, the Coase Theorem is one of the hardest concepts to get students to appreciate.  This is because the Coase Theorem is about cause and effect -- IF bargaining is costless, THEN agents will bargain to an efficient allocation.  Students often forget the IF, and just jump straight to the conclusion ... even in scenarios when bargaining is expensive.

This mistake by students is not what Coase had in mind.  In fact, Coase spent most of his article describing the contrapositive of the Coase Theorem -- if there is an inefficient allocation of resources due to an externality, then there must be high cost bargaining.  In this environment, how policy is enacted matters a great deal.  This was Landsburg's point in a follow up post on carbon taxation in which he provides some numerical examples on how policy can matter.

Because it gets at some subtleties in the analysis of externalities, I was glad that Landsburg followed up on his original post. On the other hand, Landsburg's follow up post assumes away a role for transaction costs is silent about the role of transaction costs (making an implicit assumption; see comments below), and the costs of coordinating the interests of (b/m)illions of stakeholders.  In the real world setting of carbon taxation, these costs are of first order importance.  There isn't a single laundromat that absorbs the brunt of the carbon externality of a single plant.  Carbon pollution affects billions of people (some positively, some negatively, but I think most science suggests a negative effect on average).

On the other side of the externality, industries that emit carbon are much easier to identify, to regulate, and to tax.  Thus, from a practical standpoint, it makes sense to start with policy that affects these industries.  If we think that too much carbon is emitted, a carbon tax is a simple policy that pushes the quantity of carbon emitted "in the right direction" without having to coordinate a billion-person negotiation.  If you don't like a carbon tax, an alternative that gives industries and out-of-industry stakeholders more say is Cap and Trade, but that is more complicated, and it is more politicized.

Landsburg and I agree on one thing.  There are no simple answers, especially once political considerations come into play.