Yes, economists work for Big Tech
Read a short, and surprising, article from the Economist. They shared these startling facts:
- Amazon has some 400 full-time economists on staff
- Tech firms hired one in seven newly minted PhDs in 2022
- Heck, Uber hired a fifth of Harvard University’s graduating Economics PhD class last year
Why hire economists?
I understand why Big Tech would hire data scientists and lots of machine learning experts, but why economists? Isn’t the joke, “There is a conversation between 2 economist and there are 3 opinions.”
Economists got skillz
Turns out there are several reasons this could be a great fit.
- Yes, economists know statistics and probabilities
- Yes, they understand incentives (think: behavior economists).
- Yes, they design great experiments; “Economists can nail down causal parameters”
So, if you marry up economists (design great experiments) with machine learning algorithms with big data sets, it can create a lot of profits. Just thinking out loud:
- Netflix would love to know price elasticity of demand in ______ market before raising prices
- AirBnB would love to know price elasticity of supply in ______ market for their hosts
In fact, this is what Lyft economists did. They wanted to see what the opportunity cost of their riders were. . .namely, how much did they value their time? It turns out to be $19/hour. So, that can be a great rubric to offer slower rides (have to wait an extra 5 min) for a cheaper fare.
Sure, it makes sense
Now that I am blogging about it, of course, this makes sense. Big Tech is continually sensing demand, and adjusting their supply and prices. Isn’t that one of the biggest advantages that big tech has. . .they can A/B test different prices and product offerings and adjust accordingly?
For the aspiring economists, this is a good deal too. Great compensation, opportunity to do research, and make a difference in the world. Nice choice.
Google economist job description
Like a good consultants, I looked for the original data. Take a look at this job description from Google for an economist. (09/10/2022). So many fascinating things there. . . you will be working with the Legal and Regulatory team. So it looks like we will be building a case that Google is not a monopoly because of XYZ reasons, and we have ABC experiments to prove it.
Uber economist job description
So, what does Uber want from their economist hires? You will be helping Uber run experiments to determine STP (segmentation, targeting, positioning) and pricing. Basically, solve “ambiguous and challenging problems.”
One PPT a day
To summarize all these words into a single PPT, it might look like this:
