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DominicConnor
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September 17th, 2005, 2:17 pm

One thing that I've figured out is that there is a persistent low-level war between HR and managers. Managers will ignore HR in making hiring decisions about experienced people. (Leaving resumes on websites are also useless). HR seems to run the programs that get summer interns and undergraduates into the system, but they are worse than useless in dealing with experienced hires.Actually our pitch to HR departments is basically "we will stop the pain". HR don't want this war, and get very little fun from senior business types who ask them why thet've been sent "chimps", but without specialist knowledge themselves they find it hard to evaluate either the quality of candidates or the firms that submit them.Many people share the same kind of experience of HR, and this reluctance to even take a CV because it's one more bit of paper that they don't have an easy process to handle.Their incenitives rarely include a bonus for find a highly skilled person who precisely fills a slot, instrad they have projects with highly defined goals.
 
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jksaid
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September 17th, 2005, 5:04 pm

Guys,Thank you for all your input, I must say that I am beginning to agree with SanFranCA2002 that this is not productive.In regards to MFE and MA in Math Fin, I usually tutor these guys in Math Finance and Stochastics, I find it hard to believe that an employer would find that if I had an MBA I would be unacceptable in comparrison. I know Quant MBA's from MIT that would make many PhD quants blush in embarrassment.Outside of Analytical Modeling the kind of technical thinking that you get sucked into as a PhD in theoretical Math Finance is not useful from what I have heard and in fact the damage that it does to one's social skills is detrimental to a long term career in a non-quant environment.I know managers who will recount with glee the number of PhD's that they have hired and fired.There are PhD havens out there, I am just not sure if this is the sort of environment that I would like to work in.Best,J.
 
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dc
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September 18th, 2005, 7:13 am

QuoteOriginally posted by: jksaidIn regards to MFE and MA in Math Fin, I usually tutor these guys in Math Finance and Stochastics, I find it hard to believe that an employer would find that if I had an MBA I would be unacceptable in comparrison.The basic point that it is the substance/underlying skills that count and drive on-the-job work performance is a valid one, but unfortunately, not necessarily the driving factor in a job search competition. It assumes that one has actually made it to the point where a manager is sceening/evaluating skills as opposed to superficial benchmarks on a CV. For a competitive job placement where the employer may receive hundreds of CVs from qualified candidates and have limited time to evaluate candidates, extremely stringent criteria may be applied in screening the CVs before the candidate is even interviewed. It is quite difficult to get to the point where you can make your case and then it is not clear if the hiring manager will take the time to directly assess your skills or your exceptional circumstances...i.e. that you have very strong math/quant skills in addition to the broader management education that an MBA offers...when the employer has set a Master or PhD in a quant discipline as a minimum criterion...
Last edited by dc on September 17th, 2005, 10:00 pm, edited 1 time in total.
 
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twofish
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September 18th, 2005, 6:04 pm

I realize this is getting far afield of jksaid's original question, and we may want to start a new thread, but....I think that jksaid making the mistaken assumption that the job searching system is rational. The system itself is quite irrational. But it is irrational for an deep reason which is that human beings are remarkable intelligent and creative, therefore for a given job there are more than enough people who have the competence and qualifications needed to undertake it, therefore a large part of the process is to use "stupid and irrational metrics" to try to narrow down the number of people that they want for the position. The letters behind your name is one of those stupid and irrational metrics. The trouble with the system is that if you try to come up with a better one, it's really hard. What you end up with most of the time is simply replacing one set of stupid and irrational metrics with another set. Occasionally it does make things better. Doing the first cut based on an academic degree or credential is a hell of a lot better than doing it based on what your father did or what your skin color is which is how things were done a century ago.But you still end up with an irrational system, which puts more emphasis on credentials than perhaps it should.Also, I don't think that Ph.D. kills your social skills. It's just that people who don't have social skills and don't want to accquire them can survive and thrive in a Ph.D. environment whereas they would die out elsewhere. The Ph.D. does sharpen your social skills in one sense that it does let you understand the social production of knowledge and social means of argumentation. Also, dealing with academic politics and bureaucracy is surprisingly good training for the "real world." One other thing that physics and mathematics Ph.D. is good at is to bring home the point that there is such as thing as objective truth, even if marketing types don't see things that way.It does hurt you sometimes. People do tend to assume once they find out that you have a Ph.D. that you don't have social or managerial skills. Also, you can get yourself a fair amount of resentment if you flaunt it. Also, as with anything else, you need to be very careful in a management position that you don't do anything that tends to initimidate people into not challenging you when you should be challenged.
 
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SanFranCA2002
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September 18th, 2005, 7:58 pm

I think you guys need to give it up. Jksaid is a little too smart for you. He may or may not pursue the PhD, but he is not buying into all this junk. Two things, dc, one is that I left a reference for home equity data at the other place if thats what you wanted. Also, in your response here you again stress the more is better thing. I remember leaving off one of my degrees when I was sending out resumes early on in my career during a recession. And it worked. It was much easier to get an entry level job. Right now I would not bother interviewing a trader with a new PhD because we would all know he was just looking for some experience so he could rabbit out of there later with our trading floor on his resume. And twofish, I think you will find that much of the "glamour" if you can call it that for quants evaporated the same way it did for computer programmers in the silicon valley bubble burst. I have talked with many that are just assigned very specific very supervised duties by more senior others. They are seen as just a tool to get something done. The point is to get a career and lifestyle you want and not to try to impress a collection of anonymous quants on this forum.
 
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twofish
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September 18th, 2005, 9:16 pm

 
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propertyrights
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September 19th, 2005, 5:04 pm

First of all, I should explain why I am posting here instead of under the "continuation thread" that twofish created. twofish titled the continuation thread "Value of a Ph.D." However, jksaid's question is not so much about the value of a Ph.D. but the value of an ABD. In other words, he is asking about the opportunity cost of a Ph.D.Here's his question again, for reference:"If I choose not to complete the PhD, what opportunities are open to me?"My guess is that jksaid was aware of the value of a PhD when he applied to his PhD program.That said, let's take a moment to look at the value of a PhD before we go on to jksaid's question. Let's think of the PhD as a project that one can invest in. Let's approximate the PhD as a project that pays CF1 per year for five years then CF2 for 40 years. (Or, more realistically, CF2 could grow over time, or even grow, reach a peak, then decline) To calculate the NPV, we also need to know how to discount the cash flows. These cash flows are not risk-free - let's choose some rate r that is appropriate for the level of risk as the discount rate. (Alternatively, we could imagine a futures market where people could wager on jksaid's cash flows, and the prices of these contracts would provide us with risk-neutral probabilities. Then, we could find the expectation of these cash flows under risk-neutral measure, and discount at the risk-free rate. However, the problems of asymmetric information and moral hazard would be severe for this futures contract - for example, if jksaid completely hedged himself in this market, he would have no incentive to work.)So now we have enough information to calculate the NPV. Do we have enough information to decide whether to do the project? In this case, the answer is no because haven't considered competing projects. (Also, jksaid cannot clone himself, so he cannot take on all positive NPV projects.)This is also ignoring another aspect of the project - there is a real option to terminate the project. This option, of course, enhances the value of the project.What I wrote above would be appropriate for deciding whether or not to start a PhD, but jksaid has already completed his coursework and passed his orals. The opportunity cost of the time that he has already spent is, of course, a sunk cost, so we should exclude it from our analysis. So, starting from where jksaid is today, should he continue the project or should he exercise his option to terminate it?A key consideration in valuing the termination path is whether he will have a Master's degree on this path. It is my understanding (correct me if I'm wrong) that in most PhD programs, if you quit when you are ABD, you can get a Master's degree as a consolation prize. jksaid, is this true for you?Let's explore the "risk" of a PhD in greater detail. Part of the risk is that the cash flows upon completion of the PhD project are uncertain, but part of the risk is that not everyone finishes a Ph.D. in five years. I know someone who took more than 8 years to finish his degree in a quantitative discipline. I know someone who couldn't complete his Ph.D. and had to leave after 5 years with only a Master's degree. These are atypical cases, but it underscores the fact that the PhD is not risk-free. And if you dislike your research, the probability of never finishing is not negligible. jksaid, what do you estimate to be the probability that you can finish the PhD in one more year? two more years? three more years? etc.Implicit in the above analysis is that jksaid seeks to maximize a NPV stated in terms of dollars. But, people are more like utility-maximizers rather than profit-maximizers (though money does play a big role in most people's utility functions). If jksaid doesn't enjoy the PhD program, this should be accounted for as well. Of course, he also might not enjoy the jobs he can get without the PhD. Then again, maybe he would - this is uncertain. What does seem to be certain is that he doesn't enjoy the research he is doing now. twofish also had some remarks about the thinking skills one develops in a PhD program. We can include the value of these developed thinking skills (beyond their ability to generate cash) as "utility."Also, I have a comment on twofish's statement "I think that jksaid making the mistaken assumption that the job searching system is rational" and his associated analysis. I recommend the book "Game Theory for Applied Economists." (but be sure you finish Hull before you start this one) pp. 190-205 cover job market signaling - in particular, the signaling role of education. It's true that the job market seems to place undue emphasis on credentials like an academic degree, but does this mean it is irrational? If it really is irrational, we ought to be able to devise a better system, but as twofish stated, "The trouble with the system is that if you try to come up with a better one, it's really hard." If employers could quickly and costlessly determine all of the attributes of each job seeker, then it would be irrational to rely on academic credentials when a superior measure of ability would be available. However, it takes time to read through resumes (and it is easy to lie on resumes) and it takes time to interview people, and given these costs, it is rational to look for some kind of short-cut (academic credentials) to narrow down the pool of applicants to a group of interview candidates. Academic credentials are a good "short-cut" because they are relatively costly (in terms of effort - especially expensive in terms of effort for people with low ability) for job seekers to obtain and easily verified. twofish, maybe you meant to say that the job market system is not perfect rather than not rational. Whether something is rational or not has a special meaning in economics.
Last edited by propertyrights on September 18th, 2005, 10:00 pm, edited 1 time in total.
 
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SanFranCA2002
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September 19th, 2005, 6:09 pm

I don't know there guy. You sound like a classically trained economist. That is not a complement. One could memorize everything in the economist's flagship publication American Economic Review and would still be completely clueless in analyzing the economy. I cannot think of a profession in such disarray, although I am open to suggestions. I've read that the physics profession can't agree on how ice cubes melt. One detail, your book reference should be, based upon your writings, more like Dixit and Pindyck's Investment Under Uncertainty. Anyway, to continue, what economics evolved into is creating models based upon assumptions not necessarily realistic in order to generate conclusions. Here, you've got immediate assumptions of some measurable utility, structural form and references to possibility of a futures market in jksaid's potential income. Really. And if you were standing in front of a movie theatre showing two similar movies, you probably could also do the mental gymnastics to put your choice into a real options model. But is that really the best framework, or are you using that to justify your having to read that material in school?
 
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propertyrights
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September 19th, 2005, 6:34 pm

"One could memorize everything in the economist's flagship publication American Economic Review and would still be completely clueless in analyzing the economy."I actually agree with this."One detail, your book reference should be, based upon your writings, more like Dixit and Pindyck's Investment Under Uncertainty."That level of detail is probably not necessary for most people. I think Brealey and Myer's Corporate Finance provides an adequate treatment of project NPVs and real options for practical purposes. Game Theory for Applied Economists was in reference to job market signaling rather than investment under uncertainty."Here, you've got immediate assumptions of some measurable utility, structural form and references to possibility of a futures market in jksaid's potential income. Really."Alright, the futures market discussion is gratuitous (but hey, this is a quantitative finance forum, so I thought it would be fun to slip some risk-neutral probabilities in there), but I'm not assuming that utility can be precisely measured. Rather, I was making the point that the NPV framework can be still be used even if you think "money isn't everything." Basically, I'd advocate that jksaid estimate how much money he can make along each path (while taking into account the risks) and then make some (subjective and imprecise) adjustments for "how fun" he thinks each path would be."And if you were standing in front of a movie theatre showing two similar movies, you probably could also do the mental gymnastics to put your choice into a real options model. But is that really the best framework, or are you using that to justify your having to read that material in school?"I suppose you do have the option to exit the theater if you really hate the movie. But, this wouldn't be a criterion for choosing a movie because you have this option regardless of which movie you see. So, this part of the framework wouldn't really be useful in this situation. But how about utility maximization? Let's re-phrase utility maximization as "do whatever you think will make you happiest" - and then, yes, I'd choose the movie that I'd thought I'd most enjoy (or that my significant other would most enjoy, since I'm happy to see her happy). But, let's talk about my basic point - until now, much of the discussion has been about the value of a Ph.D. I'm saying that we should address jksaid's question directly, which is more about the opportunity cost of a Ph.D. Don't you think this is a valid point? Plus, I didn't see any discussion of the risk of failing to complete a Ph.D. or of completing a Ph.D. after a very long time - wouldn't you agree that this is a risk that should be considered?
Last edited by propertyrights on September 18th, 2005, 10:00 pm, edited 1 time in total.
 
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SanFranCA2002
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September 19th, 2005, 6:48 pm

Its good that you are not taking yourself as seriously as I had inferred from your writings. OK, to address some of this....You wrote; "Plus, I didn't see any discussion of the risk of failing to complete a Ph.D. or of completing a Ph.D. after a very long time - wouldn't you agree that this is a risk that should be considered?" Actually, if you go back and re-read the discussion, I am the person who raised this issue. You wrote: "I'm saying that we should address jksaid's question directly, which is more about the opportunity cost of a Ph.D."Jksaid never ever asked about that. He asked about alternative jobs using an ABD. DCFC ignored his question and answered the question DCFC wanted to answer, and that was a question that was never asked.
 
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propertyrights
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September 19th, 2005, 6:58 pm

OK, I looked through the thread and now I see where you brought up the point about the risk of failing to complete the Ph.D.But about the other thing you said:"Jksaid never ever asked about that. He asked about alternative jobs using an ABD. DCFC ignored his question and answered the question DCFC wanted to answer, and that was a question that was never asked."An alternative job with an ABD is, at this time, the opportunity cost for jksaid of finishing the PhD. Right? If finishes the Ph.D., what opportunity is he giving up? He is giving up the opportunity to look for (and probably find) a job with an ABD.
 
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SanFranCA2002
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September 19th, 2005, 7:28 pm

You wrote: "An alternative job with an ABD is, at this time, the opportunity cost for jksaid of finishing the PhD." Interesting sophistry. I'll delete the rest of my answer as unresponsive.
Last edited by SanFranCA2002 on September 18th, 2005, 10:00 pm, edited 1 time in total.
 
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propertyrights
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September 19th, 2005, 7:49 pm

Why do you call it sophistry? What would you say the opportunity cost is? If he finishes the Ph.D., he is giving up the opportunity to get a job with an ABD - seems rather plain and straightforward to me. All I'm saying is that in this particular case "opportunity cost of finishing a Ph.D" is just another label for "getting a job with an ABD."
 
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SanFranCA2002
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September 19th, 2005, 8:03 pm

So you want to argue that the question "what is the opportunity cost of not finishing the PhD" is the same as "tell me about the kinds of jobs I can get with an ABD". Darn. Right after I sort of complemented you by indicating you weren't taking yourself seriously. I think anyone would reasonably believe that the answers to those two questions would be far different. I'll leave the discussion of what is "reasonable" and such to you. Good luck with it. Bye.
 
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propertyrights
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September 19th, 2005, 9:12 pm

Let's rephrase "what is the opportunity cost of finishing a PhD" (BTW it is the "opportunity cost of finishing" not the "opporunity cost of not finishing") as the equivalent "what are the best alternative opportunities I am giving up by staying in the PhD program until I finish?" How would you answer this? One answer might be "well, if you were to quit and were granted a consolation Master's degree maybe you could work as a junior-level quant in a hedge fund - this is the opportunity you are giving up." Now, let's answer "tell me about the kinds of jobs I can get with an ABD." One answer might be "well, if you are granted a consolation Master's degree maybe you can work as a junior-level quant in a hedge fund."You claim "the answers to those two questions would be far different" - OK, show me. Answer these two:"what are the best alternative opportunities I am giving up by staying in the PhD program until I finish?""tell me about the kinds of jobs I can get with an ABD."Have you worked with the opportunity cost concept before? I could come up with other examples of opportunity costs, but it sounds like you're not interested. "Opportunity cost" is a jargon-y term, but still basic enough to be a core component of MBA and undergraduate economics curricula (as opposed to being a strictly PhD type of thing). If you just think of an opportunity cost as the best alternative that you have to forgo in order undertake something, then it should be straightforward.
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