Non-academic career paths - the utility of a MA in economics

[icebear]

I previously posted something similar during the winter of 2009-2010, although it was lost in the TM crash in the spring. The post generated a good amount of discussion and positive feedback, so I thought I’d attempt to reformulate the information for future TMers.

Comments, questions or feedback are certainly welcome. Additional details on these and other career paths that non-academic economists might be interested would be great too.

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I’ve found the advice on TM to be pretty helpful, although there is at times a nearly rabid “academia or bust” attitude with the econ board. This is understandable, given that the title and purpose of the board is PhD admissions. That said, I feel the Econ PhD Admissions board is also the best venue to discuss masters programs, including their costs, benefits and trade-offs relative to doctoral programs. This is particularly relevant for those interested in public or private sector employment, rather than academia. Moreover, I’ve noticed a tendency by some to deride the value of econ masters, with the statement that stat or math masters are more valuable on the market and with regards to econ PhD admissions; I can’t comment on the later opinion, but the former isn’t accurate from my perspective.

Simply put, one does not need an economics PhD to hold a well compensated position conducting interesting economic research. An econ masters, however, is more or less mandatory to break through a low glass ceiling, and will result in significantly different positions than a statistics or applied math masters. I’ll speak specifically from my experience in consultancy and working at a UN agency over the last 3 years (with only a BA).

Consulting
I worked for about two years in a small consulting firm based in China which primarily implemented European Commission contracts. These were mostly of a trade and investment flavor, i.e. evaluating the terms of new free trade agreements, doing economic impact assessments for ongoing negotiations, sector studies relevant to ‘vulnerable’ industries in either Europe or Asia, etc. All of them focused almost exclusively on economic analysis, and brought together diverse teams of economists and sector expert from both the EU and Asia. With a BA I served as the equivalent of a junior researcher or research assistant to mid-level and senior economists, with time split between data analysis and policy research. My particular consultancy implemented EC, ADB, and WB projects relevant to Asia, especially China and ASEAN. Similar consultancies exist throughout Asia, Africa, Europe and the Americas, picking up contracts from those funding agencies as well as USAID and others.

With a BA one would hit a glass ceiling in terms of advancement in about 2-3 years, and with a MA the sky would be the limit (save very specific positions like Team Leader, a.k.a. project lead economist, which would require either a PhD or a MA with 10-15 years of experience).

Regarding type of degree, a stats masters applicant would be passed on by a small consultancy like the one I worked at, as the degree would appear overly specialized. In that type of environment you’re expected to handle your own data, coordinate a group of experts’ research, write clearly on results and implications related to policy, and present at conferences with government officials or the public; in the view of managers/directors, who typically have a background in law or business, a economics student would be more well rounded and thus better equipped to balance these responsibilities compared to a statistician. This stacking is done from the perspective of ensuring that project proposals appear well staffed in the right areas, and thus even a statistician competent in those areas might be passed on because “MA Stats” next to a name in a economic analysis proposal might raise concerns with a funding agency.

The most common way of starting a career at my consultancy (and others, AFAIK) is to take an internship. These typically pay a poverty-level wage for 3-6 months, after which you’ll be compared against a batch of interns that came at the same time, and the best (say 2/5) will be kept on as junior consultants. Without at least 1 year of relevant experience it would be difficult to skip that internship gauntlet.

International Organizations
I currently work at a UN agency as a research assistant to the lead economist (of that particular agency). With a BA and several years of relevant experience, as well as a good professional network (to inform you when junior positions open), one can make a comfortable living and conduct interesting economic research in the areas of development, health, security, trade, law (e.g. IPR), labor, etc.

With just a BA one is typically only eligible for ‘short-term’ consultant contracts, which pay similar to junior staff positions but are limited in duration to 3-12 months (you can renew and accumulate 2 years maximum before having to apply for a normal staff position or moving elsewhere). An overwhelming majority of staff positions (i.e. long term, full benefits) require a master degree and several years of experience. With a master degree one could continue to advance indefinitely, with the one exception probably being lead/head economist of any international organization or senior economist positions in ‘pure’ economics organizations such as WB or IMF (what I know about WB/IMF is much more anecdotal than for UN/WTO).

My organization employs numerous economists and statisticians. The difference between an econ masters and stats masters will be significant regarding type of work. Someone with an econ background will contribute (with a BA, or MA and limited experience) or lead (with more experience) to research, including formulation of hypotheses, assessment/modification/adoption of methodologies, analysis of results, and drafting policy documents and publications. Someone with a background in statistics will manage databases, contribute to detailed annexes on methodology, and execute methodologies selected by analysts and the lead economist - essentially all data management. Of course these divisions are not set in stone, but in general this is the case. My impression is that other agencies and organizations (e.g. WTO) operate with a similar division of labor between economic data crunchers and economic researchers.

As mentioned in other threads, those with no work experience are in a tough spot to find a paid position, as competition is fierce (most open posts receive several hundred applications). Internships are the best way in, although it would be ideal if you study in the geographic area (e.g. The Graduate Institute, or some university in DC/NYC?) and are able to do internships during your studies, and then hopefully have a position waiting for you when you finish your degree – the few able to follow this path seem to reliably find something paid in their field soon after graduation. The next best route is working in a consulting firm that specializes in economic research similar in flavor to that done by your agency of choice, implementing contracts from these agencies or other funders (e.g. USAID, EC, ADB, WB, etc). A couple years and you should be able to both get enough experience and develop the necessary contacts to find an open spot you’re qualified for. The last route is the most costly and requires the most luck – doing a unpaid internship after completing your studies. This is a potential route to employment, although I’ve seen more or less 100 interns pass through my agency in the past year and only 3 offered paid positions afterwards – the fact is most of these interns are a bit money desperate by the end of 3-6 expensive months and don’t have the patience to wait another 6 for a spot to open up – thus my suggestion of doing the internship during studies or trying to network into a paid position from a consulting job elsewhere in the sector.

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Of course, all of this is only AFAIK, although I’ve met and talked with a significant number of junior analysts/consultants/staff in both positions and feel it's generally true. It's my impression from colleagues that the rules and competition are much more stringent at WB and IMF for economist positions, although both organizations employ many experts in fields where an MA would suffice (but your title wouldn’t be economist, if that matters).

[Gecko]

This is good

[Kaysa]

Cool, got any more advice? I've been trying to get more inside information just in case >>

[econ2012]

Wow. Thanks a bunch for the great post.

[icebear]

Cool, got any more advice? I've been trying to get more inside information just in case >>

This is everything that came to mind unprompted. If you have a specific question feel free to ask.

[One on One]

What kind of salaries can you expect in these positions?

[OOIOO]

Great information for someone like myself still debating between pursuing an academic life vs. one of research outside of a university. How rigorous was your research and modeling, specifically at the consulting firm? Was it more or less data wiping/plug and chug sort of stuff, or were you actually able to have an impact on how the models would predict reactions?

[icebear]

What kind of salaries can you expect in these positions?

In China the salary for someone with one to three years experience was between 15000-30000 RMB per month at international consulting firms, which even at the bottom end provided a pretty fabulous lifestyle and easy savings; after a year or two consultants would typically earn an extra 2-3 month's wages each year due to commission from successful proposals. Within the international organizations the lowest salary for a junior consultant is about 6,000 USD per month (in Geneva), which is tax exempt; this doesn't include any benefits or paid vacation time, and Geneva is extremely expensive, so the savings are actually similar to the Beijing salary and lifestyle a little more typical. I'm not sure how that rate compares to NYC international org employees, but the pay scales and city cost of living adjustments are public information and can be found online.

Great information for someone like myself still debating between pursuing an academic life vs. one of research outside of a university. How rigorous was your research and modeling, specifically at the consulting firm? Was it more or less data wiping/plug and chug sort of stuff, or were you actually able to have an impact on how the models would predict reactions?

In consulting it varies by project, as some are entirely economic in nature and others have economics playing only a ancillary role (e.g. adding context to a project on IPR enforcement). In some cases the economic analysis is more like descriptive statistics, in others you use models that are already developed and can be modified to fit the particular needs of the project; in rare cases a model is developed from scratch for a project. Personally I had limited influence on the models' characteristics, but the more senior consultant or economists of course call the shots as they see appropriate; the influence I did have was through research into various policies and contextual information and communicating to the senior experts my interpretation of how they could translate into the model being used. The documents you write are intended for policy makers, not academia, so the methodology is typically relegated to a never to be read annex, and the results and implications are the bulk of the actual report (my impression of academic articles is that the methodology is a much larger, maybe even central focus of the paper). Typically projects will include at least one academic (who puts in maybe 5-20 days worth of work over a 6-12 month project) who oversees the methodology and final interpretation to ensure it meets a reasonable standard of rigor. In some cases, if it is allowed by the client (some projects are confidential, or use non-public data), after the project ends external experts will further develop the research to a level suitable for publication in an academic journal; typically the consultants will be busy on a new project already, and don't really care much about academic publications anyway.

[_nanashi]

It depends on the program, and what kind of quantitative skills they give. My university is big on SAS, and many of my class mates in the applied masters program are getting job offers one tier above anything they'd get coming out of a B.A., basically they start 3 or 4 year ahead of people with B.A. degrees. Econ M.A. A lot of time people say an MBA is a better use of time. But people do not do MBA at the age of 22. They do it at the age of 28 after having 5+ years of work experience.