His research focused on the design of efficient markets, an important and growing field that has influenced such things as Treasury bill auctions and decisions on who receives organ transplants. He even got to work with Alvin E. Roth, who won a Nobel in economic science in 2012.
But prestige was not enough to keep Mr. Coles at Harvard. In 2013, he moved to the San Francisco Bay Area. He now works at Airbnb, the online lodging marketplace, one of a number of tech companies luring economists with the promise of big sets of data and big salaries.
Silicon Valley is turning to the dismal science in its never-ending quest to squeeze more money out of old markets and build new ones. In turn, the economists say they are eager to explore the digital world for fresh insights into timeless economic questions of pricing, incentives and behavior.
“It’s an absolute candy store for economists,” Mr. Coles said.
The pay, of course, is a lot better than you would find in academia, where economists typically earn $125,000 to $150,000 a year. In tech companies, pay for a Ph.D. economist will usually come in at more than $200,000 a year, the companies say. With bonuses and stock grants, compensation can easily double in a few years. Senior economists who manage teams can make even more.
Businesses have been hiring economists for years. Usually, they are asked to study macroeconomic trends — topics like recessions and currency exchange rates — and help their employers deal with them.
But what the tech economists are doing is different: Instead of thinking about national or global trends, they are studying the data trails of consumer behavior to help digital companies make smart decisions that strengthen their online marketplaces in areas like advertising, movies, music, travel and lodging.
Tech outfits including giants like Amazon, Facebook, Google and Microsoftand up-and-comers like Airbnb and Uber hope that sort of improved efficiency means more profit.Continue reading the main story
At Netflix, Randall Lewis, an economic research scientist, is finely measuring the effectiveness of advertising. His work also gets at the correlation-or-causation conundrum in economic behavior: What consumer actions occur coincidentally after people see ads, and what actions are most likely caused by the ads?
At Airbnb, Mr. Coles is researching the company’s marketplace of hosts and guests for insights, both to help build the business and to understand behavior. One study focuses on procrastination — a subject of great interest to behavioral economists — by looking at bookings. Are they last-minute? Made weeks or months in advance? Do booking habits change by age, gender or country of origin?
“They are microeconomic experts, heavy on data and computing tools like machine learning and writing algorithms,” said Tom Beers, executive director of the National Association for Business Economics.
Understanding how digital markets work is getting a lot of attention now, said Hal Varian, Google’s chief economist. But, he said, “I thought it was fascinating years ago.”
Mr. Varian, 69, is the godfather of the tech industry’s in-house economists. Once a well-known professor at the University of California, Berkeley, Mr. Varian showed up at Google in 2002, part time at first, but soon became an employee. He helped refine Google’s AdWords marketplace, where advertisers bid to have their ads shown on search pages, based on the words users type into Google’s search engine.
But prestige was not enough to keep Mr. Coles at Harvard. In 2013, he moved to the San Francisco Bay Area. He now works at Airbnb, the online lodging marketplace, one of a number of tech companies luring economists with the promise of big sets of data and big salaries.
Silicon Valley is turning to the dismal science in its never-ending quest to squeeze more money out of old markets and build new ones. In turn, the economists say they are eager to explore the digital world for fresh insights into timeless economic questions of pricing, incentives and behavior.
“It’s an absolute candy store for economists,” Mr. Coles said.
The pay, of course, is a lot better than you would find in academia, where economists typically earn $125,000 to $150,000 a year. In tech companies, pay for a Ph.D. economist will usually come in at more than $200,000 a year, the companies say. With bonuses and stock grants, compensation can easily double in a few years. Senior economists who manage teams can make even more.
Businesses have been hiring economists for years. Usually, they are asked to study macroeconomic trends — topics like recessions and currency exchange rates — and help their employers deal with them.
But what the tech economists are doing is different: Instead of thinking about national or global trends, they are studying the data trails of consumer behavior to help digital companies make smart decisions that strengthen their online marketplaces in areas like advertising, movies, music, travel and lodging.
Tech outfits including giants like Amazon, Facebook, Google and Microsoftand up-and-comers like Airbnb and Uber hope that sort of improved efficiency means more profit.Continue reading the main story
At Netflix, Randall Lewis, an economic research scientist, is finely measuring the effectiveness of advertising. His work also gets at the correlation-or-causation conundrum in economic behavior: What consumer actions occur coincidentally after people see ads, and what actions are most likely caused by the ads?
At Airbnb, Mr. Coles is researching the company’s marketplace of hosts and guests for insights, both to help build the business and to understand behavior. One study focuses on procrastination — a subject of great interest to behavioral economists — by looking at bookings. Are they last-minute? Made weeks or months in advance? Do booking habits change by age, gender or country of origin?
“They are microeconomic experts, heavy on data and computing tools like machine learning and writing algorithms,” said Tom Beers, executive director of the National Association for Business Economics.
Understanding how digital markets work is getting a lot of attention now, said Hal Varian, Google’s chief economist. But, he said, “I thought it was fascinating years ago.”
Mr. Varian, 69, is the godfather of the tech industry’s in-house economists. Once a well-known professor at the University of California, Berkeley, Mr. Varian showed up at Google in 2002, part time at first, but soon became an employee. He helped refine Google’s AdWords marketplace, where advertisers bid to have their ads shown on search pages, based on the words users type into Google’s search engine.
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