Studying Business — The Academic Route: The Big Decision
So far, this series has focused on improving the application for a PhD in Finance or Economics. However, this last article covers the obvious question: “Where should I apply?”
The American Economics Association lists over 150 American schools that offer one or more PhDs in Economics, subfields, or in substantially similar areas like Applied Economics. When including schools in Europe and foreign countries, the number of schools increases greatly. But not all programs are equal, we already discussed the differences between most European and American programs. As a student with limited time, it is difficult to filter through the programs when making your final decision, let alone applying, but hopefully, this article will help.
The first important thing to note is that in Economics and Finance, students apply directly to the department rather than to work with a specific professor. In fields like Chemistry, Psychology, or Engineering, the cost of data collection is generally very high. Students work in a lab under a professor who has their own grants to help fund their research. As a result, students apply to the specific lab rather than the department. In these fields, it is standard to apply to fewer than five programs, as applying to too many can be indicative of not really doing due diligence on the target of each application. Professors in those fields may even flat-out refuse to write letters for students applying to a large number of programs in those fields for the same reason.
This is not the same in Economics and Finance. At a forum of first-year Economics PhD students earlier this year, the panelist was asked directly how many programs they applied for. Not a single panelist applied for less than 20 programs, with the most common answer being in the mid-twenties and only one above 30. This does not mean that every applicant will submit to 25 programs, and there are financial aspects to take under consideration but know that applying to significantly less is a higher risk choice and could result in not having any admissions based solely on random chance rather than qualifications.
With few exceptions, most programs require an application fee ranging from $50-$200. There are some ways to get a fee waiver to apply for free: by attending specific pre-PhD programs (some designed to help underrepresented minorities and women), being a veteran, being in a lower income bracket, or, in rare cases, attending admissions webinars. That being said, I would not count on receiving a fee waiver as the criteria on whether to grant one varies by institution. If one’s financial constraints would significantly limit the number of applications, the choice of programs becomes even more crucial. This is in addition to the time and effort to submit each application and tailor each one to the individual school. Two poorly done applications will be less effective than a single polished one.
The first tool many students will lean on is rankings. But are rankings really valid? When applying to undergraduate schools, nearly every single college counselor in this country will advise their new high school seniors to stay away from US News and World Report’s rankings for undergraduate colleges because of its methodology. Even before a recent scandal, it was widely known among college counselors that US News and World Report considered factors that did not matter much in outcomes, like donor participation rates, and served little to help students and families compare schools that have recently been changed after scrutiny. When it comes to picking PhD programs, rankings such as US News and World Report can be helpful because of a more relevant methodology but knowing how to use them is important.
While each has different methodologies, the most credible rankings for graduate schools focus on qualities that matter to potential PhD students. Placements and publications are the two main factors in a lot of the rankings. In order to find some publications, the AEA provides a short list of some rankings, which includes US News and World Report for “Best Economics Schools”.
In addition, RePEc is a common ranking as it parses programs by more fields. This is important as often a department will have “specialties” in certain fields they are known for over others. The ranking in an applicant’s field of interest is almost certainly more important than in the field more broadly. The important note with RePEc is that it only includes publications from authors that register with their service and thus can have some error within their rankings.
When it comes to Finance PhD programs, the options are severely limited. US News and World Report does rank Finance schools, but it is based on MBA factors rather than PhD. The list that I found helpful was Arizona State University’s ranking which is based on the number of publications in the top four finance journals and includes data since 1990. Regardless of ranking methodology, ranking is a process filled with discretion and errors that may lead some to wonder if it's worth anything and, if so, how to interpret it.
The correct way to think about rankings is buckets rather than individuals. As rankings are a noisy measure of quality, there may not be much of a difference between the number of 30th and 31st-ranked schools, but there would be between the 30th-ranked and the 101st-ranked schools.
Rankings can matter, as shown in this study, which looks at the program in which Economics faculty received their PhD. As shown in Figure 8, from a working paper titled Staying at the Top: The Ph.D. Origins of Economics Faculty, we can see that faculty tend to teach at a school in a lower “tier” than where they received their PhD from. Note that the size of the bands represents the number of individuals. There is some ability to move “upwards,” but it is not the norm.
When it comes to the type of positions at different universities, higher-ranked universities tend to focus more on research and have higher pay, but working at a teaching university or in industry could still be viable options. While rankings give an easy way to narrow down programs, much like how the GRE allows admissions committees to narrow down applications, more information can be gained from other sources.
There is more to picking a school than just ranking. One of the best ways to go about selecting schools is to talk to your letter writers, especially if they are doing work in the area that interests you. These faculty regularly attend academic conferences and have more knowledge as to the quality of the school than a student would. Most programs report recent placements of their graduates which can be a helpful piece of information if they are complete. Where do the majority of their graduates get their first job? Is it in industry, in government, or at a university? Are they doing a post-doc, or did they go straight into an assistant professorship? There are many qualities that can be understood through a program’s recent placements. As a general guideline, apply to schools where the median placement is satisfactory.
The quality of the program should be a primary factor, but it is not the only factor. Certain characteristics like specific faculty, department culture, and availability of faculty are important factors not captured by the performance of a program’s professors to keep in mind. Additionally, location, quality of life, and more can and should be a consideration. Doing a PhD is a commitment and one that spans five or more years, so these factors are likely to influence the ability to complete the program.
So far, I have discussed picking programs more generally in a way that can apply to both initially selecting schools and later picking between admissions offers. However, in this last section, I will discuss what to do once offers are received. The first important point is that most programs are signatories of the Council of Graduate Schools’ April 15 Resolution which allows accepted applicants until April 15th to make a decision. This means that, unlike in the wider job market, students can expect to consider all of their accepted offers, excluding waitlists, at the same time.
Funding is an important factor to consider. Most PhDs in Economics or Finance are fully funded for four to six years. Most often, this includes tuition remission, health insurance, and a stipend. This benefit package is likely tied to a teaching assistantship (TA), research assistantship (RA), or other fellowships that may or may not require working. While attending the best program possible should be the goal, ensuring that one is able to attend the program financially when considering the cost of living is important as well.
Some new avenues of information are available to admitted students. Whereas I, and many others, dissuaded emailing professors prior to applying, in most cases, professors and departments will reach out to the admitted students. This is a great opportunity to gauge the responsiveness of faculty and also ask more detailed questions. Programs also tend to offer the ability to talk with current PhD students in the program to get their point of view. Many programs also offer automatically, or potentially upon inquiry, the ability to visit the department to sit in on classes and meet with faculty as well as students in person. This is probably the best opportunity to observe what life would be like for the next five years upon picking that program.
In summation, there are many ways to pick programs, both before applying or after acceptance. Rankings are more reliable than for picking an undergraduate institution but still are a noisy measure of quality. Other factors like funding and quality of life also should play a role in the final selection. However, it is my opinion that talking to your own letter writers and potential PhD classmates while later attending visit days are among the best sources of unbiased information.
