Private sector macro job opportunities

by on July 15, 2013 at 3:12 am in Economics | Permalink

A long-time reader writes to me:

Maybe this request is too specific, but I think it has relevance for some of your readers: What are the private sector options for PhD macroeconomists? I think the options for micro people are fairly well known (market design, litigation consulting, etc.). But the options for macroeconomists are less so, in part because (as I understand it) private sector macro consulting firms use models that are far from the DSGE and even VAR models that PhD programs teach. Are these firms, as well as economist offices in banks, interested in new macro PhDs? Are other kinds of firms? What sort of coursework and dissertation choices should macro students with private sector goals select? What is the pay like? Will the application process be similar to the academic market, relying heavily on the job market paper, or will it be a different kind of interview?

I ask because it is difficult for PhD students to solicit this kind of advice from faculty due to fear that faculty don’t want to work with students who aren’t on an academic track (and, for this reason, I request anonymity). Those of us who are undecided have a difficult choice to make: information about the academic job market is abundant, but information about the private sector job market is harder to find without personal contacts.

I am far from expert on this topic, so I will turn this over to MR readers in the comments section…

1 The PolyCapitalist July 15, 2013 at 5:22 am

A number of private sector options come to mind.

Certainly investment banks hire macro PhDs. Ratings agencies, like Moody’s, would also be interested.

Consultancies are another option.

Hedge funds may also be interested. Some, such as sovereign debt investment houses, may prefer that you spend time at the IMF first before they hire you.

2 OneEyedMan July 15, 2013 at 8:04 am

Depends a bit if you are one of the macro-finance types or not. My read on the market is they have more choices, but banks are often looking for staff to watch labor and interest rate markets, so the banks are likely to be interested in any articulate macro-economist. I knew several macro economists who had consulting interviews and offers but they usually had an empirical bent or work experience. Ditto with asset managers.

Unsure if they really count as private sector (they certainly pay that way) but Sovereign Wealth Funds have interviewed macro-economists at recent ASSA meetings. Again as psuedo private option but Fannie and Freddie also hire macro-finance . Technically, regional federal reserve banks are private sector but you likely knew about them. A number of lobbying groups have economics teams like FINRA, national association of home builders, or The Clearing House are interested in macro economists. Depending on your breadth and other interests (IO, computational economics, econometrics) a place like Zillow, Amazon, Google, or a high frequency trading shop might be interested.

3 Rahul July 15, 2013 at 5:33 am

Perhaps off topic, but I used to work with a petroleum firm and they had a decent sized team doing forecasting. Stuff like predicting consumption, car ownership, interest rates, cost of living, steel costs, construction indices, forex trends etc.

I believe quite a few on that desk were macro guys.

4 yo July 15, 2013 at 8:00 am

I’m not sure industrial companies need that much proprietary forecasting any more. Forecasters that consistently beat – for instance – panel forecasts from Bloomberg are expensive. I’ve seen this job either outsourced to specialized advisory companies (e.g. in “big data”, on a project by project basis) or to the consensus panels basically available online, if often for a small fee.

5 Rahul July 15, 2013 at 9:23 am

Interesting. You might be right. I’m no expert.

What about niche forecasts, though? Do many firms off-the-shelf track & reliably forecast, say, demand of Avgas in Poland or labor costs for Heat Exchanger fabrication or oil rig towing rentals.

6 yo July 15, 2013 at 9:43 am

Take it with a grain of salt unless confirmed by other commenters. My post above suffers from small sample bias.

7 Cee-Jay July 15, 2013 at 11:46 am

Most energy utilities employ a full-time Economist, perhaps with modest staff, to forecast expected load (customer energy usage). Often a Masters degree is sufficient. Economists may also be good fits in utility/energy sector roles in resource planning departments, resource acquistion departments, rate design and energy trading/procurement/structuring.

8 Andrew' July 15, 2013 at 5:51 am

2nd paragraph: wait, what?!? Well, at least they care a lot about helping undergrads.

9 cournot July 15, 2013 at 6:04 am

If you apply to a top graduate program and say your goal is to do econ for a bank or private firm, your chances of admission will plummet. The standard advice was always to lie.

10 Andrew' July 15, 2013 at 6:07 am

We might call this a “semi-known issue.”

What percentage of their PhDs go into tenure-track academia?

11 CBBB July 15, 2013 at 6:20 am

I think econ PhDs have a better chance than most

12 Andrew' July 15, 2013 at 6:36 am

But is that signaling or human capital?

13 CBBB July 15, 2013 at 7:26 am

There’s more demand for Econ PhDs then for most other kinds. Econ classes are very popular to take in undergrad and in addition you can find employment teaching MBAs at Business schools too. Econ is probably the PhD that offers the most options and opportunities right now.

14 goober July 15, 2013 at 11:27 am

Perhaps better than most social science PhD’s….

But the employment prospects of an econ Phd are grim compared to a Comp Sci PhD, or even a stats PhD. It’s ironic you often see these latter PhD’s getting hired in the private sector to analyze what are essentially economic problems, more so now that “big data” is in full swing. The general view outside academia is that Econ Phd’s are too theory-heavy, and lack the data/analytical skills that are needed in the business world.

15 Andrew' July 15, 2013 at 1:30 pm

You bring up a good point. There should be a ranking of how difficult majors are and any higher major should be be accepted into lower majors maybe with transfer credits.

16 James Bailey July 15, 2013 at 10:12 am

“What percentage of their PhDs go into tenure-track academia?”

17 goober July 15, 2013 at 11:28 am

Replied in wrong place…

18 bob July 17, 2013 at 5:52 pm

And this is not limited to economics: As a graduate, you are a resource to help your thesis director be listed as an author of more papers and get more citations. Going to industry means that you’ll stop writing papers, or at the very least, papers on the exact field as your thesis, which means less cites.

And the longer you stay getting the phd and post-docing, the longer you’ll be publishing for cheap.

Yes, it sounds just like a pyramid scheme, modern intra-party politics, and medieval autocracy. If anything, I am surprised post docs don’t poison their lab directors more often.

19 crs July 15, 2013 at 6:26 am

Check out your department’s alumni connections (talk to people) … someone (even successfully) has gone this route before you. I was just reading a private forecaster piece by a near classmate in grad school. I remember him asking a visiting alum in forecasting about the biz at a dept. event. Build your own network. Of course, faculty are going to be most knowledgeable on the path they chose, but it’s your life. Still it’s a good idea to cast a wide net when applying.

Also think of govt agencies (Fed, IMF, etc.) which give you a mix of academic and real-wold macro You may not know what you really want … including types of colleagues or work … until you try it. The pay is generally higher than academia (only speak to ibanks in forecasting/current analysis) but you have less autonomy (i.e. no independent research time). But don’t think for a minute that because they don’t only use the latest bells and whistle DSGE model that the macro is easier. Real-time, real-world macro is pretty exciting.

20 vak July 15, 2013 at 4:32 pm

I’m not sure about (i.e. no independent research time). I’m a stat Phd, but at a conference I met this econ Phd working for Bank of France doing research there. Apparently, 9 out of 12 months/year he was paid to do independent research (weal, I suppose with a econ-bend, but I wouldn’t know).

21 Steven Kopits July 15, 2013 at 8:36 am

Some thoughts for PhDs in Econ:

– macro econ research in investment banks. I think these have something of a poor reputation (at least they do with me). Have any of these guys hit a forecast in the last four years?

– commodities research. A very interesting area, also at investment banks. Can be translated into opportunity at hedge or commodity funds. This is a hybrid between macro and larger industrial and energy themes. Probably my favorite area. This is a combination of investment banks, commodity funds, equities research houses and independent consultancies. (Energy Aspects (UK) comes to mind. They do very good work.) Francisco Blanch of BoA/ML would be the epitome of what I consider a great commodities economist: elegant, urbane, good sense of humor, insightful.

– equities research. This is following the equities of a series of related companies. In our industry, it would be the oil companies or the oil service companies. Lots of macro level topics here, but primarily viewed from the industry and share price lens. Big hours, interesting work, interesting colleagues, pay pretty good, but not as a good as it was. Investment banks and research houses are the primary employers. Bernstein and Morningstar would be the top of my list here.

22 Tracy W July 15, 2013 at 8:45 am

Don’t worry about differences in models (unless you really want to work with DSGE and VAR models for their own sake), what matters is being numerate. Consultancies hire people from all sorts of backgrounds to work on forecasting jobs, including engineers and physicists.

23 Hazel Meade July 15, 2013 at 9:06 am

I could see there being demand in a large insurance firm like AIG, also ratings agencies. You want to know when the next downturn is going to hit the housing market.

24 mike July 15, 2013 at 11:56 am

Is there any evidence that macroeconomics is capable of predicting this in any dependable way? I mean, other than a million monkey economists and a million models predicting every possible outcome.

25 Hazel Meade July 15, 2013 at 1:41 pm

Do you mean in theory or in practice?

26 JWatts July 15, 2013 at 5:42 pm


27 KC July 15, 2013 at 9:45 am

-The Fed is (technically) private industry, but the money isn’t there in comparison to actual banks (still better than the gov’t though, I would guess). This doesn’t limit you entirely to NY or DC, but that’s where most of the big research, model development, etc happen.

-Independent Wall St reasearch firms like ISI offer attractive pay and the hours are not as horrific as IB’s

-All the major (and minor) IB’s have some version of ‘Office of the Chief Economist,’ but the staff is usually pretty small and it isn’t the sort of thing they recruit or advertise for.

28 John F. Opie July 15, 2013 at 10:04 am

Interesting. I actually work in a private economic research company, don’t have a PhD, but have been involved in the hiring of Econ PhDs (go figure…).

TracyW ut supra is correct: proprietary models don’t care what sort of modeling background you have and just need you to be numerate and willing to actually look at empirical results (I know, I know, that’s a tad heretical, but customers do ask…).

Why hire a PhD econ? Largely because more customers are willing to listen to whatever you’re saying when there’s a Dr. in front of your name. Banal, but oh so very true. While not having the doctorate doesn’t mean you can’t get a good job, it doesn’t hurt, especially that first one.

Two colleagues of mine got their PhDs whilst working for us. One is now running a $3bn fund, another is running derivatives. I had a family and children instead.

That said: job opportunities today are mixed. Whereas when I started out in the business some 25 years ago companies still had chief economists and an actual working group of economists up at the highest level, those days are long gone and I can’t think of any major company that employs more than, say, six economists in the entire company, usually in some sort of strategic planning division. While I can’t name names, I know that back in the day one of the best glass companies around had a 30-man economics team to do market research and forecasting: those days are gone, replaced usually by someone who had some undergraduate macro.

There’s also the predominance, in the forecasting business, of IHS, who acquired both WEFA and DRI, resulting in an effective monopoly in the business due to network effects (if you are meeting with suppliers and customers, it makes life vastly simpler if everyone is using the same forecasts…). While there are all sorts of niche companies – I work for one – out there, IHS is probably one of the better choices to look at if they are hiring (they appear to be going through a restructuring after having bought so many companies in the last several years). Of course, their corporate culture may not be that attractive: it’s usually a case of up or out, i.e. if you don’t have a string of customers after a set period who want your services, you’re usually out there looking for new work.

Now, that said, there’s actually a huge demand for good economic services: from what I am seeing in the market, those who are fulfilling the function of corporate economists (but usually aren’t) are realizing how difficult the work really is, resulting in demand from external sources so that there’s someone to blame if everything goes poorly (only half joking). The real advantage to having the PhD is knowing what will bear fruit, research-wise, rather than having to flounder around finding solutions, plus possibly a more systemic approach.

I’m glad I’m not out there looking for work now.

29 Yancey Ward July 15, 2013 at 10:38 am

Has any Cowen blog post ever begged more for snark?

30 Jack PQ July 15, 2013 at 11:04 am

PhD macroeconomics has virtually zero in common with forecasting, and very little with finance (macro-finance is a small but growing area).

Honestly, I don’t think any PhD macro training is useful for the private sector, but it might be a good *signal* because PhD macro involves some reasonably hard math, DSGE, Hamiltonians, stochastic calculus and some of it requires numerical solutions so PhDs are also trained in computational tools, at a minimum Matlab but more likely Fortran, C, etc.

However, a macro PhD is probably no match for a physics PhD in math and computation, so you also need to show you understand economic issues and can make a good pitch if you want to stand out and get hired over the physics PhD guy

31 J Dell July 15, 2013 at 11:16 am

I have a Ph.D. in economics and have been working in the private sector since I graduated (about 3 years).

A few things that make this job different from academia:
-Better pay (when you include variable bonus and perks).
-Don’t have to secure tenure, which will spare you (I suppose) a considerable amount of stress and work.
-More in control of where you live and work. For me it was a big consideration when I started looking for a job. Are you willing to relocate to a state/city where you don’t really want to live, just so that you can have an academic job? How about if you have a spouse and/or children by the time you have to move on? Will it be difficult for your spouse to find a job near the same town where you next academic job is? The road to tenure can be long and twisty.
-Opportunities to travel to conferences in beautiful places. Most conferences and other events with a PR component in the private sector seem to be held at glamorous resorts or cities, and you get to go for free if you are one of the speakers at the conference.

On the negative side:
-Little time for your own research. How you spend your time will be dictated by “what your employer’s clients want” (and even that might not be entirely clear to either you, your employer, or your clients). I do miss being able to choose a topic of my liking and dive into it.
-You may have to spend some time doing quick-and-dirty, low-quality work, which your clients will take as gospel simply because you have a “Ph.D.” attached to your name. You may or many not have the stomach for this sort of thing.
-In general, the standard of quality of research is much lower than in academia, which, again, may drive you crazy. The emphasis is on timeliness and matching the clients’ needs and requests, not on rigorousness.
-Lack of appreciation for “technical subtleties,” which in academia would be issues of paramount importance.

I can’t speak about the hours, as it seems to differ dramatically across industries and positions. I don’t work very long hours.

When you apply for a job in the private sector as an economist, research how large their economics staff is, and how economically literate your boss is. The less he/she knows about economics, the less he/she will appreciate your work, in my opinion. If you are going to work alone or in a very small group, you’ll have more independence, but little guidance. That’s the trade-off, as far as I can see.

I would agree with other comments that quantitative skills (econometrics) and being articulate (orally and in writing) are big pluses.

Another resource for non-academic economists is NABE: National Association for Business Economics ( They have a job bank, regular workshops, courses and seminars, and other events for networking. Good luck!

32 Dan Carroll July 15, 2013 at 1:28 pm

Hedge funds, mutual funds, RIA’s, but you’ll probably start as an analyst. The investment industry generally takes anyone with good analytical skills, strong math background, understands finance. Usually sink or swim, though. Breadth and flexibility is good. Be willing to learn and un-learn. Be humble – your colleagues won’t appreciate waving your PhD in their face. Physics PhD’s are good with math but not much else, so are strong in trading and derivatives. Econ forecasting is not much use, but econ knowledge is quite valuable. A PhD is good for marketing, generally trumps a CFA, but don’t expect to necessarily use much of what you learned directly. It is also a signaling device – you’re smart, work hard, and willing to fall prostrate to the higher mind (i.e., tenured faculty).

33 SS July 15, 2013 at 2:04 pm

The sort of stuff macro PhDs *would” get hired to do i.e. forecasting is easily done by undergrad STAT/MATH folks who are competent and can use R, SAS or other software packages. Even masters programs in statistics (stochastic modeling), operations research, systems engineering etc train students in software (AgenaRisk etc) that models risk and forecasting and in many cases those folks have comprehensive industry (civil, electric, mechanical, defense, computer science) backgrounds as well. Very few macro PhDs are trained in that sort of modeling and forecasting. Running regressions does not suffice! The only edge economist can bring to the table is the cost/benefit way of thinking (opportunity cost), regulatory capture etc.

34 R July 15, 2013 at 2:32 pm

You’re forgetting that they bring their degree. There’s a huge difference between “a PhD Economist said” and “Some guy with a BA said,” both for the public and for clients.

35 SS July 15, 2013 at 4:27 pm

PhD in financial engineering or MS in financial math are still ahead than macro economist

36 Rahul July 15, 2013 at 8:54 pm

Your post reeks of unwarranted hubris. Next you’ll suggest my process-plant ought to be designed by BS Stat/Maths too since, after all, fundamentally design equations are simply math too?

Forecasting by treating the system like a black box only takes you so far. Sometimes one needs people with an deep understanding of the fundamentals of the system they are working with. Most BS Stat / Math guys don’t know worth crap about the intricacies of how the economy works. No doubt they might be trained, but then again that’s what you hope that PhD in Econ. got the other guy.

37 CBBB July 16, 2013 at 4:13 am

As someone with a bachelor’s degree in Math from a pretty strong department (in Canada anyway…) I can state categorically that you learn absolutely none of this in an undergraduate math program; you sit around proving theorems much the same way a PhD Econ theory student does. Maybe those masters programs you listed are a bit more practical, I don’t know.

38 sailordave July 15, 2013 at 4:17 pm

Macro PhDs have a lot of opportunities in us banks beyond what undergrads with R can do:
* trading/strategy — fixed income requires people who understand the macro drivers of bond market moves; PhD not required and involves competition with people who learn by experience.
* stress testing, capital, and risk management — forecasting isn’t about plotting a linear trend on a graph but about creating reasonable extreme stress scenarios that can withstand aggressive scrutiny by government regulators. They have to be documented, detailed, based on firm quantitative methods, and explainable in meetings to regulators with PhDs

to be hired for either, strong empirical skills, programming skills, and an attitude of being willing to help with anything are critical. You shouldn’t expect to be paid industry salaries to do your own research and publish in academic journals without having to deal with students.. finance courses are good too.

39 Mike July 15, 2013 at 10:29 pm

For context, I am an armchair economist who has worked in banking, software, consumer products and consulting.

The most important thing to realize is what you are being hired for. #1 is smart, #2 is good at math. Everything else is secondary. Industry views experience more important that specific classes, so unless a course helps signal 1 or 2 it isn’t valuable. This is why Wall Street and hedge funds hire PhDs in Physics and Chemical Engineering. (It helps to know how Black-Sholes is heat diffusion)

Now specifics by area:
Software: Big Data is hot. Be able to explain the statistical issues of working with large real world data sets. That’s enough to get a job.

Consulting: Same as software. They also like general horsepower that can be applied to many problems, so a non-economics undergrad helps too.

Finance: You have to show math skills as good as a Physicist, an appreciation of real world problems, and a willingness to work HARD. It helps to write well and explain complex problems simply. The better Phd jobs are buy side but you may have to work 2 years sell side to get them.

Consumer Products: Don’t bother. They only have a course phd-friendly jobs for economists, and you can get paid better for the same work as a consultant.

Good luck!

40 GivCO July 16, 2013 at 1:08 am

I am far from expert on this topic…

That’s interesting; I would think otherwise.

41 D_Bachman July 16, 2013 at 9:45 am

I’m a very experienced private-sector (and government) forecasting economist. I’ve also worked in academia.

Yes, a Ph.D. can be very valuable in the private sector. And it’s not just the degree. The ability to access academic debates about economics can be of great value, and your customers will know.

For forecasting, “modern” econometric methods, however, are mostly useless when you are dealing with actual decision-makers. As a macro forecaster, you will have to be able to “tell stories” that are convincing enough to make the decision-makers act. VAR-type methods are a black box, so useless (although I like them well enough for my own purposes). The stories that DSGE models tell can be so bizarre that the technique is no help. Plus they just don’t forcast very well. So you will fall back on large-scale macroeconometric models as a disciplining device if you are good. (Bad private sector economists have no discipling device, and you can tell, although users sometimes can’t). If there is any new-type technique I would focus on, it would be error-correction models, because they come with a nice story attached.

What others have said: The pay is better, as are some of the conditions of work. For example, if you are hired in the private sector, they are invested in your success, which is very different from academia. You will likely travel, and research will be constrained by the needs of your “customers.” I rather like that, since I know my research is of value to somebody. No tenure though, and a surprising number of private sector economists I know have gone through layoffs, since the economics function doesn’t usually have revenue attached to it.

As others have said, join NABE. Join your local NABE group and go to meetings. Arrange information interviews with NABE folks in your area to ask the questions mentioned here. Business economists are actually very friendly and gregarious, and will be pleased to help you.

42 Noah Yetter July 16, 2013 at 9:59 am

“…it is difficult for PhD students to solicit this kind of advice from faculty due to fear that faculty don’t want to work with students who aren’t on an academic track…”

Boy that tells you all you really need to know about academia doesn’t it?

To that I would add, from my own experience, not only are they not interested in helping students with private sector aspirations, they’re not interested in helping students with teaching aspirations either. The only thing that’s valued is research, research, research. Which is to say, professors want to build clones of themselves.

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