[bblcla]

Tyler Cowen did an 'ask me anything' at Jane Street when I interned in 2016. One of the interns asked him exactly this: "What do you think of the fact that we all work here instead of, I don't know, curing cancer?"

He replied with, roughly, "Those of you who work here probably couldn't do anything else other than perhaps math research. Arguably, working here is the economically efficient use of your time."

I think about whenever I see a comment like this. Quant firms select for a very specific set of skills. In particular, I've found that many traders/software engineers in quant are very smart but not very self-directed. Places like Jane Street work well for people who can excel, but only when given a lot of structure and direction. I think this is not unrelated to why so many people 'accidentally' end up as traders after going to an Ivy League school!

[arthurofbabylon]

Tyler Cowen, master of the ‘cum hoc ergo propter hoc’ fallacy. He frequently mistakes the occurrence of phenomena for causative proof of that phenomena. He particularly exhibits this inclination when his confidence rises amid scant data (like the rest of us).

This error seems to be a particularly common (and often lauded!) trait among those who work in high-conjecture low-evidence fields (eg, economics). The prominent thinkers become skillful at deploying this fallacy: “see, it’s there, therefore <insert-personal-belief> is certainly the cause!”, using their credentials and esteem to mask the error. Listeners think, “well he’s a smart, respected guy,” and nod along despite the missing logical link.

I greatly appreciate Cowen’s podcast, and I definitely respect him as a thinker and inquisitor – so I don’t mean to discard his work or opinions (in fact, I appreciate his occasional brashness because it exposes the underlying thought/principle). However, many of his aggressive-yet-speculative statements (like the one you roughly quoted) are best received with an understanding of the error.

[jxjnskkzxxhx]

> He replied with, roughly, "Those of you who work here probably couldn't do anything else other than perhaps math research. Arguably, working here is the economically efficient use of your time."

Complete garbage. The same way that Jane Street hires smart people that don't know anything about trading and those people contribute, the same would be true if there was money in curing cancer.

[andrepd]

Plus, this post is about someone who quit being a doctor to work in trading!

[Barrin92]

General intelligence is overstated sometimes, but it is a thing. Someone who is smart enough to work for Jane Street probably could at least be an intelligence analyst or software developer at the NSA contributing to national security. (Jim Simmons literally was a code breaker during the Vietnam War)

I don't think there's a gene for playing esoteric minigames on the options market while you literally suck at everything else

[rtpg]

While I’m sympathetic to the “people working hard to build out ad markets instead of cancer research” argument, I only believe in a weak version of this.

Why? I have met many “smart with computers” people. Many of them have terrible people skills, don’t show up to things on time, are unable to keep their workspace clean, don’t know how to explain anything, and cry about how they can absolutely never ever be interrupted because their workspace is so hard. There are also people who are “good at it all”, of course, but I have the impression that the math/computer people tend to be fairly unwilling to deal with even mild inconveniences.

People who can barely deal with the tyranny of daily standups probably would struggle a lot in a world where you need to write grant proposals continuously to justify your existence.

I’m being glib for effect, but there’s so much involved in getting work done beyond “being smart”!

Besides… it’s not like the reason we don’t do more cancer research is because smart people didn’t go into that. “Cancer research” is limited by funding for positions into that domain!

So “this quant should have been a cancer researcher” is saying “this person who decided to become a quant will be a better cancer researcher than a cancer researcher who went into that domain directly”. I don’t know the prestige vectors there but it’s a stretch in my book!

[pinkmuffinere]

Ya, I’m very surprised by the argument “you’re some of the best at numerical analysis and high frequency trading, and you’d be bad at anything else”, lol. That said, I think there are better reasons to work at such a place. Providing liquidity to the market is a good thing, and has real world value, it’s just hard for us to connect it to concrete outcomes. But as a simplified “toy” example, when they orchestrate a trade for/with a retirement fund, they help the fund improve its holdings at very low cost. That benefits everyone impacted by the retirement fund

[elefanten]

I didn’t take that to be his point. I assume he says “economically efficient” because he means their strongest skillsets don’t have (m)any other uses and they wouldn’t be realizing their potential by leaving those skills unused.

He probably overstates that case, especially talking to early career interns that haven’t yet narrowed their specialization and could pivot to other highly quantitative roles that use other high level math.

He’s also probably flattering his audience, to whom “math research” is more likely to be status-bearing.

Doubt he’s saying they’d suck at anything else.

[alfiedotwtf]

I would rather people work in trading than for the NSA

[Grimblewald]

To build on / extend on this - quants / finance folks need to cultivate an image of only taking the very brightest, to justify the shit working conditions (even if pay is often decent) but honestly the brightest tend not to apply. Working in those environments is neither rewarding nor stimulating.

[owl_vision]

I plus-one the last paragraph, well explained.

[lysecret]

Do you have a link to this talk by any chance?

[bblcla]

Unfortunately, no. It was a private talk.

[ackbar03]

Oof. Interesting take.