Employers, are you in the IQ business?

Hiring college graduates and looking for someone with brains? Hire an economics major.

From The American, a new business magazine:

Rich Karlgaard, the technology entrepreneur who is publisher of Forbes, tells the story of a trip he took with Microsoft’s Bill Gates in the early 1990s. On the flight, he asked Gates, “Who is your chief competitor?”

“Goldman Sachs” was Gates’s surprising reply.

Gates went on to explain that he was in the “IQ business.” Microsoft needed the best brains available to make top-shelf software. His primary rivals for the smartest kids in America were elite investment banks such as Goldman or Morgan Stanley.

“Microsoft must win the IQ war,” Gates said, “or we won’t have a future.”

If trends hold, then Microsoft’s future in the war for IQ looks bleak. The brightest students these days are headed into finance, but Microsoft is fighting back, targeting colleges with an innovative strategy. The answer may be a little robot.

First, what do the trends say? Recent enrollment figures are ominous. The number of smart kids studying computer science peaked a few years ago and has dropped dramatically since. The number of new computer science majors today has fallen by half since 2000, according to the Higher Education Research Institute at UCLA. Merrilea Mayo, director of the Government-University-Industry Research Roundtable at the National Academies, says the drop-off was particularly pronounced among women.

Meanwhile, elite schools are reporting that the number of economics majors is exploding. For the 2003–2004 academic year, the number of economics degrees granted by U.S. colleges and universities increased 40 percent from five years previously. Economics is seen by bright undergraduates as the path to a high-paying job on Wall Street or at a major corporation.

Read it all here. Emphasis added.

Want to prove to employers that you are intelligent? Pursue an economics degree.

How to think

Reflecting on an essay in the Nation, Dani Rodrik writes:

Some years ago, when I first presented an empirical paper questioning some of the conventional views on trade to a high profile economics conference, a member of the audience ... shocked me with the question "why are you doing this?"

On the other hand I have never found neoclassical methodology too constraining when it comes to thinking about the real world in novel and unconventional ways. .... To me it represents nothing other than a methodological predilection for deriving aggregate social phenomena from individual behavior--and as such it is a very useful discipline for any social science. You say people have some preferences, they face certain constraints, take others' actions into account, and go from there.

Neoclassical economics teaches you how to think, not what to think. So it has always been a bit difficult for me to understand the critique that neoclassical economics is necessarily driven by ideology or leads to foregone conclusions.

Rodrik is the Rafiq Hariri Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University.

Another new blogger, labor economist George Borjas (Harvard), also notes The Nation article and remarks:

The article leaves unexplored one interesting anthropological aspect of Life Among the Econ: its herd mentality. The kind of research many economists do is motivated by, well, by the fact that other economists are doing it too.