Thursday, September 12, 2013

Unhedged economists are vulnerable economists

People the econ job market is pretty good. So it seems surprising that the University of Florida is defunding, and thus effectively killing, their PhD program in Econ as reported here.

But, it is perhaps not so mysterious when you consider the unhedged financial position of that department. As the article points out, it generates a lot of credit hours and tuition money from its classes, but most of those hours come in the Arts and Sciences College. Meanwhile, the Econ department is in the business school.

So its revenues accrue to one accounting unit while its costs are borne by another. No wonder the department has shrunk from 38 to 11 and there are plans to shrink it further still to 6!**

This is a classic case of unhedged risk, the academic equivalent of a firm who earns its revenues in Pesos but pays its costs in Dollars.

Note that the department was offered the option of moving to Arts & Sciences, "where, deans say, the Ph.D. program might have survived. The faculty voted not to move because, they say, the liberal-arts college has its own financial problems, and they were concerned about salaries, research budgets, and teaching loads."

My department at OU was in the B-school back in the day and faced a similar situation. They decided to move (or got kicked out, depending on who is telling the story) to A&S and our program lives to this day!

**Mrs. Angus says that if she was one of the 11, she'd be very careful about accepting a drink or any food from the B-school dean!

Hat tips to PrisonRodeo and RKG


zxz said...


I'm not sure what the "take away" is from this article.

I was always under the impression that economists in the B-school got higher salaries than in LA&S.

Also, the quality of colleagues, and chances to work with people in areas like finance, seems greater in B-school.

And ... if you are in LA&S, some of your colleagues in other disciplines may be hostile to you and possibly just plain loco.

It also seems like the Florida econ folks should have been more aggressive. If they, like my department (in the business division), generate lots of $ in teaching undergrad LA&S, then they should argue for more support.

My division is a cash cow for the university and we refuse to be taken advantage of just because of some accounting rule.

What do you advise your new PhDs when they go on the market?

At least Florida is not cutting the football budget.

Unknown said...

So what's the big deal if children wants cheese without doing any hard work.this is a human tendency.

Sanola Jerry

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