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Economists Know the Price of Everything
In other disciplines to leave your university because another offers to pay you more entails personal humiliation and status degradation to a not inconsiderable degree: you are supposed to value ideas and colleagues and students, not cash. In economics, however, the thrust of the discipline makes a failure to respond to market forces a moral fault in itself.
Brad DeLong explaining why public universities are having an especially difficult time hiring and keeping economists now that the privates are boosting salaries to a tremendous degree. Experience at GMU is consistent. See David Warsh (here and here) for the backstory.
Posted by Alex Tabarrok on May 20, 2008 at 01:39 PM in Economics | Permalink
Comments
so...ah...are you all going to be there this fall, and for the following two years? My MA won't be as valuable without the GMU Mafia.
Posted by: shawn at May 20, 2008 2:02:40 PM
Any decent economist knows that product differentiation complicates a simple price response.
GMU is just cooler.
Posted by: liberty at May 20, 2008 2:36:31 PM
How much are we talking about in private US universities? I know recent PhDs won't get as much as Robert Barro, but ball parks?
Posted by: Enda at May 20, 2008 3:24:33 PM
Well, GMU is certainly trying to steal my alma's (wash u) economists...that's for sure.
Posted by: 1-2 at May 20, 2008 5:13:11 PM
...and the value of nothing. Isn't that the response?
I've seen a few profs jump ship -- for more $$ and prestige -- and how their ex-colleagues felt betrayed. (These were neo-classicals.) As usual, something true in theory doesn't always work out.
Just let Brad know that I am willing to take his place, should he decide to take 7 figures at Columbia or Stanford, e.g., the Sachs treatment....
@Enda: about $100k. Look here: http://www.bluwiki.com/go/Econjobmarket_offers
Posted by: David Zetland at May 20, 2008 6:18:45 PM
Presumably, the higher salary is due to a low availability.
And looking to economists for an answer to this supply problem is a good place to start.
Increase supply! Then demand will go down.
Economists: fungible or not? Discuss.
Posted by: Allan at May 20, 2008 6:23:07 PM
Geore Mason U. keeps getting raided by upstart Chapman U. in Orange County, losing Nobel Laureate Vernon L. Smith and four of his younger colleagues, who have moved as a team to Chapman.
Now Chapman has taken away a team of five physicists from GMU to start its physics department.
The president of Chapman, by the way, is an economist, James L. Doti. He's been among the most successful college presidents of the last two decades, taking Chapman from absolutely nowheresville. Just as GMU was built up on the strategy of providing a more conservative than normal college in a wealthy part of the country, Doti is following a similar strategy in Orange County, where there are a lot of rich conservative potential donors.
Posted by: Steve Sailer at May 20, 2008 6:34:42 PM
Wait a sec, who cares about your status degradation at the place you just left?
If you felt the love, you wouldn't have left. Loyalty is a two way street, the bigger side of the relationship seems to always forget that.
After the checks are cashed, does anybody really owe anyone anything? Maybe you feel that way, and that's fine, but you better not feel that way if the other side doesn't.
And what's this about professors valuing students? When did this happen? Noone told me!?! Maybe I should let our folks know about this.
Btw, It's the grad students who really get the shaft when a professor leaves.
Posted by: Andrew at May 20, 2008 8:06:14 PM
I used to be a social sciences dean at a large public university. Every year there was a meeting of the A&S deans from all the schools in our conference. And every year the conversations would go like this: "We just have to stop getting into bidding wars for one another's star faculty." Followed by a chorus of "Yes!" and "Hear, hear!" Followed by yet another year of getting into bidding wars for one another's star faculty. It's an arms race, and often a pretty mindless one at that.
Posted by: Old Prof at May 20, 2008 9:07:04 PM
because another offers to pay you more entails personal humiliation and status degradation to a not inconsiderable degree
As I said over at Brad's, this just seems empirically false to me.
There's a great story about a famous economist being lured back to a university from the private sector. They throw a reception for him and the Chair gives a speech, saying "We're really thrilled and delighted that Prof X has joined our department." Then Prof X steps up and says, "I obviously didn't negotiate hard enough --- you ought to be indifferent."
Posted by: Kieran at May 20, 2008 10:37:48 PM
Increase supply! Then demand will go down.
I'm used to seeing a lot of economic illiteracy, but this is a bit of a cake-taker.
Posted by: bartman at May 20, 2008 11:51:57 PM
"Increase supply! Then demand will go down."
That's true of some type of bubbles. For example, US automotive production capacity expanded greatly over the last few years, arriving on-stream just in time for automotive demand to shift downward.
It was true of the academic market in the late 1970's -- lots of PhD's minted from expanded programs just in time for the end of the baby boom to cut demand for junior faculty.
But I agree with Bartman that this isn't the way the system is supposed to work.
Posted by: zbicyclist at May 21, 2008 1:57:51 PM
Zbicyclist--I believe Bartman was pointing out that Supply does not *lead* to a change in demand--as the "then" suggests in the said economic-illiterate statement.
The examples you give are instances of the supply curve and demand curve shifting at the same time; they are not cases providing "exceptions to the rule" as you seem to suggest.
Posted by: anon at May 21, 2008 3:06:01 PM
Would you go for:
Increase supply! Prices will drop.
?
Posted by: Allan at May 21, 2008 4:08:48 PM
As an aside, note that it's also difficult to "increase supply" in a way that would weaken these bidding wars. The relevant supply is of top economists from top programs with strong reputations and publications in the top journals. The sudden arrival in the US of one thousand econ Phds with a few pubs in Eastern Yutopian Journal of Underwater Studies would have no effect on the Star Wars. However, it would put pressure on the visitor and adjunct market which would, amusingly serve to widen the gap between the poorest paid journeymen and the Sargents and Shleifers of the world.
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