It seems no one really quite understands what exactly Jake does as an Econ Ph.D. student. He’s like Chandler from Friends!
Most people seem to think he does stuff with money, finance, stocks, or some sort of accounting. Cindy likes to joke that Jake just sits at his desk from 9:00am to 9:00pm writing random letters on his whiteboard that he claims are math and calling it a day. For this week’s blog post, we attempt to explain just what exactly Jake does as an economist?!
For one, he can’t predict stocks (in fact, no one really can) and while he’s pretty good with his finances he doesn’t do accounting or financial planning.
And he definitely does more than have an opinion on hot topics like minimum wage and interest rates.
Simply put, economists study how people make decisions, and how differences in what people know, what people have, and what people want shape the world around us. This covers a lot of things: from marriage and kids, who to marry & how many kids to have (which is not what people usually think of when they think “economics”) to stocks and wages (which is what people normally think of).
There are actually many fields within economics. The people talking on the news about unemployment and the Federal Reserve are typically macroeconomists (they study how things change at the highest levels – how all the small decisions add up to big things like recessions and economic growth). A few other fields, to name a few, include: econometrics (which studies the statistical tools used by the other fields), theory (which develops the mathematical models used by the other fields to describe decisions), and microeconomics (which studies the individual decisions made by businesses and people). Jake’s little corner of this big space is between theory and microeconomics: he studies the way businesses pay, organize and recruit their workforce.
Jake has several projects he’s working on, but his main project studies how businesses decide what individual workers do. As an example, at mom-and-pop stores one or two employees often do everything, from restocking to manning the register, while at big supermarkets a separate person does each task. Jake believes a number of factors, like worker skills, the type of business, and the quality of the product being sold all impact what an individual person does on their job. His project tries to design a model which captures all of these things. He then hopes to use the model to understand how changes in sales taxes or changes in human resource software shape the types of jobs available.
On a day-to-day level, this involves developing mathematical models (which involves a lot of coding, or as Cindy jokes “hacking” things). Models are the economist’s microscope. They help economists understand the complex world around us by zooming in on certain parts. The difference is that while microscopes are made of metal and glass, models are made of equations. So “developing a model” involves finding the right equations that are complicated enough to capture what is going on, but simple enough where they can be solved. It’s a little “Goodwill Hunting ” vibes, but he basically describes the world with math instead of words.
Jake thinks it is an amazing privilege to be able to explore the ideas he finds interesting and pursue the truth wherever it leads him. Cindy tries to keep up. When she really tries and focuses on what Jake shares with her about his research, it’s actually pretty interesting!
Annnnnnd that’s what Jake does! (kinda)