Economists do and say the darnedest things.

1. The AEA has this interesting new thing: they allow candidates on the econ academic job market to send two signals of particular interest in a given school. There’s a detailed explanation of the point and advice to candidates and departments. (h/t the cool new market design blog) This is, as noted, quite interesting. The pdf in the previous link makes a good case for its usefulness to candidates as well as to departments, and, really, it never hurts to introduce additional information into a market, and scarce signals are a great source of information. (Obviously, if the signals were non-scarce, their informational value would go to zero, as candidates would simply send them to everyone.)

APSA? AALS? Are you listening? This is a good idea.

It might be tweaked a little, however. First, I’m not sure what the reason is for keeping signals secret. Why shouldn’t schools know that Joe Schmoe is sending his signals to schools at a very different level of competitiveness? And that might actually make it possible to make the signals unrationed, since signals from candidates who sent out dozens could be disregarded.

I’m also not sure why their little tutorial doesn’t point out what I think is the most plausible use: for candidates to communicate private information about their own market value — that is, if top schools get a signal, it’s a sign that the candidate has enough confidence, which is hopefully based on information (i.e., from her advisor) to use a limited resource in that way, rather than by targeting a school more likely to give her an offer. So I disagree with the AEA’s suggestion that one not send signals to top schools. A signal to a top school would basically be like a more honest letter of recommendation — a way of saying “my advisor has told me my work is so good that if you take a look at it, you’ll be really impressed, and so I can risk investing scarce resources in making sure you take a look.” Obviously, those whose work is not so good have better uses for the signal.

2. On the lighter side, I don’t think that when Hayek went all in a tizzy about how markets transmit information that he meant this kind! It’s good to know that at least one walmart employee has a subversive spirit.

3. On the waaaay lighter side, apparently Larry Summers thinks economists are generally smarter than political scientists. But at least we’re smarter than sociologists. Yeah, Larry? But which discipline produced the guy who was stupid enough to say that in public, as well as to get himself basically fired for besmirching the intelligence of women? What’s wrong, Larry, did you forget to take a lagrangian somewhere? Pwn3d.

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8 Responses to “Economists do and say the darnedest things.”

  1. ben wolfson Says:

    A signal to a top school would basically be like a more honest letter of recommendation — a way of saying “my advisor has told me my work is so good that if you take a look at it, you’ll be really impressed, and so I can risk investing scarce resources in making sure you take a look.” Obviously, those whose work is not so good have better uses for the signal.

    But if it really has that effect, mightn’t a signal to a top school put someone over the top? I mean, how is that different from a letter of rec in which the recommender says “no, really, this guy is great, I mean it this time, honest”?

  2. Paul Gowder Says:

    The idea is twofold: one, that signals, because rationed, are scarce relative to “I mean it, honest” letters, and this carry more information (because the incentives on recommenders aren’t strong enough to ration “I mean it, honest” letters). And the point wouldn’t be to put candidates over the top, it would be to lower the info costs for departments – that is, if departments are willing to invest time in reading every candidate’s work, they can judge for themselves that it’s good. The function of the signal would be to permit departments to cheaply learn that it’s worth the investment to do that reading.

    Hmm… Really, the only proper way to make this sort of claim is in math. Perhaps when I get back to palo alto i’ll do so, then try and wheedle a marginal revolution link or something.

  3. Paul Gowder Says:

    But the important point is that departments can invest to get good information (read the papers), and the signal is just a way of saying “get good information on me” – this is why there’s no incentive to mimic by bad candidates – because it’ll ultimately be fruitless. If signals were costless – like effusive letters of rec – they might mimic anyway in the hopes departments would make misjudgments or get an artificially deflated impression of the candidate pool, but that carries a steep opportunity cost under the AEA system because those signals could be going to departments that might actually hire the candidate.

  4. ben wolfson Says:

    So is this signal supposed to say “I’m interested in you” or “be interested in me”? I initially envisioned the purpose of the signal as helping depts decide whom to interview and offer jobs to, since if you offer a job to someone who isn’t really interested in working for you, you risk (a) not hiring them, obviously and (b) using up so much time that you also can’t hire your second choice or perhaps anyone, which means that you’ll have to repeat the search the next year—if you get permission to! And of course no candidate is going to come out and say “actually, you’re at the bottom of my list” if you ask them if they’d really accept a position at your institution; they all, obviously, will clamor with enthusiasm. After all, talk is cheap. But if a candidate can communicate non-cheap interest to a dept, well, that could be very useful to the dept, no? And also to the candidate, since the built-in scarcity means that the declamation of interest is more likely to be sincere.

    For this purpose it really does make sense to have the signals be secret, since sending the signal to schools A and B, if public, would also send signals to schools C–Z that maybe it wouldn’t be such a great idea to make offers. Even if the differences between A, B, and C are slight. Since there’s a presumption that people want to be hired by the top schools, it also makes sense not to send your signals there, unless you anticipate being competed for by multiple top schools.

  5. ben wolfson Says:

    Regarding #3, the most plausible way to substantiate the claim that economists are smarter than political scientists is that the former use more math, but on that dimension, sociologists are also smarter than political scientists.

  6. Paul Gowder Says:

    The signal has multiple possible purposes. Ultimately, I think it, like all signals, means what the players assign to it, and in order to nail down the information that the departments can get from it, one ought to treat it as the simple investment of a scarce resource in communicating with that department. Then it can mean one thing when sent to a top school (“I’m confident enough that I don’t need to invest in signaling to lower schools + I think it’s worth my resources to get a look from you”) and something different when sent to a subtop school (“I’ll come here, really!”).

    (Right. Time to start writing the model. Or maybe tomorrow. Maybe I should sleep after driving all afternoon and evening, like a semintelligent person. [note to self: just model scarcity as a variable opportunity cost of crack at subtop job, then signal to top job will be simple decision theoretic issue based on expected utility from closer look from top dpt.])

    You might be right about the secrecy issue, however. I’m less sure about that than I am about the sometimes-utility of sending to the top schools, and you make an excellent point about school C.

    Also, your interpretation of #3 can’t be right, because then what would be done with the poor non-logician philosophers? Pity them.

  7. ben wolfson Says:

    Also, your interpretation of #3 can’t be right, because then what would be done with the poor non-logician philosophers? Pity them.

    I only said that that’s the most plausible way to defend the claim that economists are smarter than political scientists. I don’t subscribe to it. I would wager that the sort of person who would hold that view (to wit, an economist) would also take a dim view of non-logician philosophers.

  8. Uncommon Priors » My game theory brings all the girls to the blog, and damn right, it > yours, damn right it > yours. Says:

    [...] in a previous post, I took note of the AEA’s signaling innovation in the economics faculty job market: [...]

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