Tuesday, September 13, 2016
The Big Sellout: Economists succumb to the lure of big money and big data
If you want to know where retailing is heading, look at Amazons job postings. Amazon has defined internet retailing in the US and the world for the past 20 years. Their immense profitability means they will continue to denominate.
I was dazzled by the more than 16,000 open positions. The jobs are broken down in 32 different categories. Many are plum jobs in categories you don't see advertised any more such as medical, supply chain management, and quality control. They have 5600 job open in software development. They also have 460 spots in their business intelligence division include 35 jobs for economists.
35 economist positions
Amazon has figured out that economists are the right people to bridge the gap between big data and detailed consumer behavior. They are trained in finding patterns in large and confusing data sets. And Amazon certainly has the data. Their data gathering operation is among the best in the world. The have Pizzabytes of data (a 1 followed by a million zeros made of pepperoni).
If you look at the job postings, the positions for economists are in the area of consumer behavior such as evaluating the success of marketing plans, determine merchandising strategies or forecasting and evaluation.
The jobs pay well. I would guess they pay two or three times what an assistant professor of economics makes when they start their careers. We assume the people at Amazon are smart (and good looking), the data is awesome and the facilities top notch ("hey, it's 6pm, do you want to get some free beer and food in the cafeteria"). How can you beat fairy-tale-data-land,
Well, the good news for the rest of us is that many of the problems the economists might work on at Amazon are boring, and simple and based on selling more stuff. Problems like knowing if Bill, will respond to a 4am coupon on cat toys, or Mandy will abandon her shopping cart after 107 seconds, are not going to lead to great journal articles or books.
Opportunity Costs Wasted
What's concerning is that Amazon may hire a great economist who's work we will never see. Amazon's hiring of economics could lead to a case of opportunity costs wasted. Amazon could scoop up some brilliant Piketty, Friedman or Stiglitz before they construct their initial, core ideas. Before they can discuss and argue with peers, before they can present at conferences or publish. They can deprive the profession of some of it's best thinkers, some of it's "seed corn."
The economic profession is one of the few fields where most of the results are for the public good. We should try and keep it that way.
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