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Thread: Profile Evaluation Phd Econ or Finance

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    Profile Evaluation Phd Econ or Finance

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    Hi all,

    I am in my senior year and will be working in finance after I graduate (due to family reason), but eventually I would like to apply for phd in econ or finance in a year or two, and I would like to post my profile for evaluation

    Undergraduate: Top 10 US university, major in applied math and minor in econ
    Undergraduate GPA: 3.87 overall, 3.98 in applied math/econ
    GRE: 332 (170 quant + 162 verbal + 4.0 writing)

    Econ course: intermediate micro (A-), intermediate macro (A+), intro econometrics (A), game theory (A+), behavioral finance (A), time series (A+), corporate finance (A), advanced macro (A-), advanced econometrics (A-), three econ seminars (all A+)

    Math course: multivariable calculus (A), linear algebra (A), ODE (A), PDE (B), dynamical system (A), real analysis (A-), complex functions (A+), probability theory (A+), statistics (A), stochastic processes (A), optimization (A+), financial engineering (A-), simulation (A+), numerical methods (A-), discrete math (A)

    LOR: one from econ professor I RAed for, one from econ professor I took seminar with and wrote research paper. These two from my university. Another one from finance professor in top 10 business school where I RAed for summer. All of them know me very well and expect the letters to be strong.

    Research experience: 1.5 year RA for one of my letter writer, coauthoring a paper which we aim for top journal. 1 year RA for another econ professor. Summer research at top 10 business school. Two econ seminars with research papers, with one presented at an undergraduate econ conference.

    Working experience: will be working in a quant hedge fund doing research related to empirical asset pricing

    Research interest: asset pricing, macro-finance, econometrics

    Aim to apply for top 10 econ programs as well as some top finance programs in business school

    Questions and concerns:
    (1). I am expecting my profs to write strong letters as they all indicated. However, the professors I worked for are all assistant professors without tenure. Would this be a concern and if so should I swap one with a full professor but may not be very familiar with me?
    (2). I understand many applicants nowadays have taken phd level econ classes during undergrad. However due to institutional reason my university does not allow me to take. Would this affect my chance of applying for top programs, especially when I only got A- for advanced macro and metrics?
    (3). How should one keep in contact with professors after working in industry? I am afraid right now they know me very well but maybe after some time such memory will fade away if I don't keep in contact with them.
    (4). Related to (3), as I will be working in a research division of a hedge fund, where many coworkers have phds in finance and econ from top programs, does it make sense to get LOR from my supervisor who have phds from top places but are not in academia?

    And I also appreciate any other advice. Do you think I have any chance for top 10 programs (or maybe top 5 just to dream bigger)?

    Thanks.

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    Re: Profile Evaluation Phd Econ or Finance

    1) APs aren't worse to get recs from - at my school and a few others I know, APs actually handle the bulk of PhD applications so they have a good grasp of what a great recommendation needs (especially since you're at a top 10 school). Econ is a small world especially at the top 10 so name recognition isn't a worry. Obviously all else equal a recommendation from a famous professor is nicer but the difference is not so large.

    4) Accepted wisdom is that this is a very bad idea, because recommendations are about your potential as an academic and professors who've seen you in a research context will always be better placed to speak to that

    This looks like a pretty strong profile, but more experienced posters can speak to a specific range

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    Re: Profile Evaluation Phd Econ or Finance

    (1) What therealslimkt says is very sensible.

    (2) Be sure to talk to your recommenders before you graduate about your plans. Ask them what material would be useful to send them 18 months from now when you need a letter. Then send them an email every six months or so letting them know how you are doing.

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    Re: Profile Evaluation Phd Econ or Finance

    Thank you so much. I have already talked to them about my plans and sending them emails seems to be a good way to keep in touch. I am also thinking about doing research part-time with my current professors. Is that what professors will consider i.e working with former students who work in industry?

    Quote Originally Posted by startz View Post
    (1) What therealslimkt says is very sensible.

    (2) Be sure to talk to your recommenders before you graduate about your plans. Ask them what material would be useful to send them 18 months from now when you need a letter. Then send them an email every six months or so letting them know how you are doing.

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    Re: Profile Evaluation Phd Econ or Finance

    Quote Originally Posted by therealslimkt View Post
    4) Accepted wisdom is that this is a very bad idea, because recommendations are about your potential as an academic and professors who've seen you in a research context will always be better placed to speak to that
    This may be accepted wisdom in applying to Econ PhD programs, but for Finance PhD programs things are a little more complicated.

    The job is in the research division (not a trading desk) of a HF and depending on the HF this may be serious research work. Also, depending on the HF some of those finance PhD's might be publishing in good or even top tier finance journals and be attending major conferences. Such a person would be good for finance LOR's.

    Lots of finance professors including some "big" names in finance either consult for HF's or float back and forth between academia and industry, and depending on the HF you may get to know some of these professors. For example, Kent Daniel spent a number of years away from academia doing quant research work for Goldman and Joel Hasbrouck consults for HFT's.

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    Re: Profile Evaluation Phd Econ or Finance

    Thanks for sharing. In fact one of the interviewer I had at the HF used to be finance professor at top 20 business school, so I will definitely consider your suggestion.

    In the meantime, do you think I have a shot to top finance phd programs?

    Quote Originally Posted by zshfryoh1 View Post
    This may be accepted wisdom in applying to Econ PhD programs, but for Finance PhD programs things are a little more complicated.

    The job is in the research division (not a trading desk) of a HF and depending on the HF this may be serious research work. Also, depending on the HF some of those finance PhD's might be publishing in good or even top tier finance journals and be attending major conferences. Such a person would be good for finance LOR's.

    Lots of finance professors including some "big" names in finance either consult for HF's or float back and forth between academia and industry, and depending on the HF you may get to know some of these professors. For example, Kent Daniel spent a number of years away from academia doing quant research work for Goldman and Joel Hasbrouck consults for HFT's.

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    Re: Profile Evaluation Phd Econ or Finance

    Quote Originally Posted by studywell View Post
    Thanks for sharing. In fact one of the interviewer I had at the HF used to be finance professor at top 20 business school, so I will definitely consider your suggestion.

    In the meantime, do you think I have a shot to top finance phd programs?
    It depends on what level of prof they were at the top 20 B-school before they went to the HF. If they were an assistant prof who was denied tenure and chose to go industry vs moving to a lower ranked school, then unless they continued publishing in top journals such an LOR would probably not help as much as econ assistant prof at your school who knows you well. If they were tenured and chose to go industry either for the money or to spend a few years "getting their hands dirty" on the practical side of finance before going back to academia then it would be a very good LOR for finance programs.

    The really excellent LOR for Finance PhD programs is the one from the finance prof at the top 10 B-school you RA'd for, especially If they truly know you well and can speak to your research skills. This is true even if they are only an assistant professor.

    Your profile should make you very competitive at top 10 finance programs, though due to their smaller size (2-4 for at most programs, 5-8 for a few top 10's) finance programs admissions are a little more competitive than econ. On the other hand, finance PhD placements are better on average than econ placements since pretty much everyone graduating from any finance PhD program is getting is getting a B-school placement where salaries are usually higher. I have also been told, but can not confirm, that getting tenure in a top 50 finance department is easier than getting tenure in a top 50 econ department. My advice in general is that if your primary area of interest is in a finance subfield and your secondary interests are other finance subfields or in related areas (such as in your case), you are better off going to a finance PhD even if is slightly "lower ranked" as opposed to a slightly higher ranked Econ PhD.

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    Re: Profile Evaluation Phd Econ or Finance

    Its worth noting that the OP seems to have pretty extensive research experience at top 10 departments. Even if a hedge fund researcher from a top 20 might be a good recommender in an absolute sense, its worth explicitly comparing with whose letter they would replace, especially since the OP thinks their professors know them very well and would write very strong recommendations. Unless finance PhD programs give higher weight to LORs from finance PhDs/professors in industry (which is possible), should that be discounted?

    The other possibility is to use a LOR from your supervisor in applying to finance PhDs but keep your three professor recommendations when applying for econ PhDs.

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    Re: Profile Evaluation Phd Econ or Finance

    Quote Originally Posted by therealslimkt View Post
    Its worth noting that the OP seems to have pretty extensive research experience at top 10 departments. Even if a hedge fund researcher from a top 20 might be a good recommender in an absolute sense, its worth explicitly comparing with whose letter they would replace, especially since the OP thinks their professors know them very well and would write very strong recommendations. Unless finance PhD programs give higher weight to LORs from finance PhDs/professors in industry (which is possible), should that be discounted?

    The other possibility is to use a LOR from your supervisor in applying to finance PhDs but keep your three professor recommendations when applying for econ PhDs.
    The OP will be spending 1-2 years at the HF before applying, so they will be working with the HF researchers for quite a while and will get to know them well.

    Finance PhD programs do not give higher weight to PhD's in industry, but if they publish regularly in top finance journals they will have almost equal weight to active finance faculty with similar publication records. A rough analogy in econ would be an actively publishing fed economist. One of the most important factors in LOR's, especially at top programs, is whether the adcoms know and respect the letter writer as a researcher. so when applying to finance PhD program, an active researcher publishing in top finance journals and regularly attending top finance conferences while working in industry would be more valuable in finance applications than an econ AP doing work in an unrelated area and who will likely not be known to the adcoms. Finance is a smaller field than econ and the networks of relationships are more closed and more clustered, so a member of the network who is respected within the network (by publications in top finance journals) will be more valuable than an outsider. That does not mean you need finance LORs to get into a good finance PhD (I got into a top 50 finance program with one econ LOR, one stats LOR and one industry LOR with very few publications) but it helps a lot especially at the top schools.
    [As an aside, I find finance to be a little less elitist than econ. It is not uncommon for a top 20 or even top 30 finance PhD program to place a student in a top 10 and equivalent school placements are common in the top 50, but such placements are much more rare in econ, though some but not all of this effect is due the smaller size of finance PhD programs.]

    Whether a hedge fund researcher is publishing in top journals depends on the attitude of the researcher and the hedge fund. AQR encourages their researchers to publish and probably has 5 or 6 people who could be tenured at top 10 finance departments (not including Toby Moskowitz and Lasse Pedersen whose primary jobs are in academia).

    For econ PhD applications, I don't think even an excellent finance industry LOR will help much with the exception of Bus Econ at Harvard/HBS which is essentially Harvard's Finance PhD or someone who want to do finance at Princeton via the Bendheim Center which is essentially Princeton's Finance PhD.

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    Re: Profile Evaluation Phd Econ or Finance

    General response: You're in great shape, and will almost certainly be admitted to multiple top 15 econ/finance programs.

    Specific responses:
    (1) No, I don't think tenure status is important; academic econ is a fast-moving discipline, and financial economics is especially fluid as a subfield. Assistant professors may often have more credibility w.r.t whether you're quantitatively equipped for current research. I think you should choose your 3 best letters, and avoid paying attention to any connections they might have (unless they explicitly offer to help you with their network).

    Additionally, among elite applicants, you're actually often doing a favor to assistant professors who recommend you. For example, if an assistant professor at Kellogg sees you as a very strong talent, they may benefit from recommending you to Stanford GSB or HBS, and continuing to co-author projects with you. If you are accepted and do well, they can eventually take credit for your success - e.g. get invited back for seminars, visiting positions, perhaps even a tenure-track position. Even if you don't do well, they still incur benefits from the fact that you're a grad student at a top department (with the counterfactual being you're a grad student at a second-tier department). In this sense, an assistant professor has a much stronger incentive to get you into a top program, compared to a tenured professor with everything else equal.


    (2) Yes, PhD courses matter. If you're a US undergrad, taking a PhD econ course is the best way to signal your ability to finish the first year. The undergrad economics major is taken by a very wide range of students in top U.S. universities - including athletes and legacy admits. As a result, most undergrad econ sequences are simply not sufficient as a prerequisite for PhD-level economic theory.

    With your excellent grades in undergrad advanced math/econ, I don't think the lack of PhD econ courses will matter significantly. These signals are, in a sense, substitute goods (i.e. adcoms may perceive you have 95% chance of passing first-year prelims; if you took PhD econ they might perceive 99%). Also important to note that the top 10 programs do not necessarily have a stronger quantitative requirement than the #10-30 programs.

    But make no mistake (I say this for other readers), OP is at a slight disadvantage compared to an otherwise identical candidate who took first-year PhD econ sequences, because that is an almost perfectly accurate signal that they will eventually pass first year prelims

    (3) Easiest way to keep in touch is to have an actual reason to talk to each other - e.g. a research-related connection to each of the writers. You can (implicitly) promise to do a small amount of free work (such as lit review) for these professors, in return for being kept in the loop.

    (4) No, generally, you shouldn't rely on an industry letter. Some non-zero subset of adcoms have a strong prejudice against industry as a career option, e.g. they believe only failed PhD students would continue going to the industry.

    As a rule of thumb, an applicant should assume that an industry letter from a PhD in fiannce/econ in the industry has the same authority as a generic character reference from someone who knows you --- Among some adcoms it may be viewed more favorably; among some adcoms it will be more negative; but in most cases they will simply throw away the letter and focus on your two academic references. (Many econ/finance programs filter out non-academic letters during the initial screening phase, by secretaries).
    Last edited by chateauheart; 05-02-2019 at 04:02 PM.

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