Why Don’t More People Exercise Their Outside Options?

By Graham Peterson

The lingo on the academic job market for non-academic jobs is “outside option.”  Economists of course regularly exercise their outside options, and it’s one of the reasons their salaries are so high.  People chalk it up to the demand side of the market: “if a bunch of banks wanted to hire me to run regressions I’d have an outside option too.”  But I think that is only a small part of the story.

I think the story starts, actually, with the supply side — with us — calling outside options outside options.  In this view of the world, there is the academy — a sacred and elite discussion club that initiates ought to be pious toward — and then there is the world outside, profane and boring and useless compared to writing transcendent research (that transcends from a JStor archive to a broken CV link).

What you actually see when you read about the economy, is that the middle class is hollowing because business are hiring foreign labor, and that there is a dearth of skilled employees here at home to fill the whiz bang New Economy positions.  Maybe that’s just a neocon story dreampt up to legitimate class oppression, but I don’t think so.

If there is a dearth of skilled employees and a glut of them in Ph.D. programs — what gives?  I think the explanation is cultural.  More simply: academics do not value thinking that goes on outside the academy.  And Heaven forbid, thinking that goes toward the production or service that make another person’s  life better (lo, even a misguided and wretched consumer’s).  Truly useful work involves preaching to 19 year olds about how screwed up their parents’ values are.

The Ph.D. skills in persuasion, giving presentations, careful reasoning, desktop publishing, institutional negotiation, and attending meetings (seminars) are applicable to margins outside the academy, but those who administer the academic cartel will continue to tell themselves that their enterprise is unique.  That tells graduates that their skills are useless anywhere else.  And that is not true.

If Ph.D.s want to raise their salaries — they’re going to have to start breaking away and forcing universities to compete with private industry for their skills.  I think most people miss that point at the individual level, because they think: “if I threaten to leave the academy, they’ll just laugh at me and watch me walk away.”  That is correct. Because that is what the values look like currently.

And that is what the economics looks like too: the first gal to leave will be the one at the end of the line (marginalism!), and nobody will lament the line getting shorter at first.  But they won’t be laughing when the line outside their doors starts getting appreciably shorter.

They’ll be firing deans and diversity officers, trying to free up money to hire the ethnographers who left to go help the Chinese build factories that achieve efficiencies by taking into account local customs in Africa, and communications Ph.D.s who left to go make business meetings more efficient.

What a terrible world that would be for the humanities and social sciences.  One in which skilled people, who spent a lot of time thinking carefully about humans before they went into the world, were able to make the economy a more human and agreeable place.

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