Thursday, August 27, 2009

~25% of Harvard PhD chemists go to Wall Street?

Ezra Klein of the Washington Post has a post on a Harvard economist's article about how the top-end salaries of the financial sector were pulling the brightest students towards Wall Street. Klein writes about the smart young folks who become financial wizzes:

If the financial sector is somehow shut down, or radically shrunk, they'll just go to the next most profitable industry. Doctors get paid a lot, but there are sharp constraints on supply, so you'd just have more competitive medical schools, as opposed to more doctors. We'll have a lot more lawyers. Many more management consultants. Potentially more engineers and researchers, though those gigs require specialized graduate education -- frequently in the hard sciences -- and I'd imagine there's not too much overlap between college kids interested in organic chemistry and college kids who end up in finance at 23. (emphasis CJ's)
And in the comments, a Harvard chemist (Ph.D.?) (post-doc?) sez:

As a former organic chemistry graduate student, I can say that finance/ consulting are hugely popular alternatives to academia/pharmaceutical research. I think about 25% of PhD students went in to consulting from the Harvard chemistry department during the years that I was there (2005-2008) (emphasis CJ's), and McKinsey had a very strong recruiting presence, which made it seem that consulting was the main alternative to a lab based research career.
Twenty-five percent? One in four? This can't be right, can it? Those who've been around Harvard folks or in the department itself -- is this true?

Frankly, I don't really have a problem with this, but it does seem a waste of NIH funding (where the taxpayer gets the public domain science and the trained scientist, too.) Readers, what say you -- true or just a bit of blog comment hyperbole?

UPDATE: I e-mailed a knowledgable insider who replied as such (answer slightly redacted for privacy):

I don’t know the numbers for the department, but I can tell you from my lab, the number of graduate students who have graduated in the past four years who went into business consulting was [above 25%.] I know of plenty of other students from the department who have taken the consulting route (including the author of the original comment, I think), so if 25% is an overestimate, I don’t think it’s far off.

I’ll leave the interpretation of these data to you. From an inside perspective, these people were very different from each other, and I can’t identify a common reason for their leaving research. Interestingly, I don’t know of a single postdoc from our lab (or others, for that matter) who has gone into consulting.
Wow -- that's remarkable. I'm guessing that this is something that's H-bomb related; I can't imagine greater than 10% of a PhD graduating class of most other top flight programs going to business consulting.


  1. That number is overstated, but there is a significant number who did go into finance. Because where else is a theorist (PhD & post-docs) going to go if they don't get that one professorship offered in the US this year? Industry likes chemists that can make things, but finance paid better and is full of complicated mathematical models just like the quantum calcs the theorist was doing.

  2. I know I have considered going into finance as a possible alternative career. Of course, with the recent implosion of the market, that route is less desirable.

  3. Finance/consulting outfits were heavy recruiters at Princeton, but I don't know what the numbers were there. Your insider's comment (about how the folks that went into consulting seemed to have little in common) reinforces what the original Harvard commenter said above, that McKinsey's strong presence made it seem like consulting was the main alternative so that's where people went. Most folks get jobs in areas they know about via networking, friends, etc so it makes sense that a significant # would go that route regardless of their personalities or reasons for leaving.

  4. I'm curious to know if this was a factor of geography (companies would recruit from nearby high-end universities) or reputation (if you have a PhD in the hard sciences from an Ivy, then it's pretty clear that your brain pan is in the upper tier of brain pans.)

    Don't know quite how to test this -- maybe compare recruiting at Boston College (top tier chemistry program, not an Ivy) to Columbia (also top tier program + Ivy).

  5. Chemjobber thanks for an interesting post.

    I would assume the "high percentage of PhD entering Finance" is attributed to straight mathematics. I don't know real numbers yet say a fresh PhD might get offers of $65-85K salary from chemical/pharma to work (butts off) at the bench usually without many extra perks, whereas a Wall Street "Analyst" (sitting mostly on same) job offer would be say start at $125-150K and likely include extensive perks. Further the salary scales are probably such industry bench chemist would take 7-10 years to match that initial WS level but the continued increases would probably mean an even wider gap. At the same time growth opportunity is likewise different. Another factor is too often scientists get "pigeon-holed", frequently by there own doing, so have limited career options but as Analyst they can get involved or exposed to areas for possible lateral movement (banking, IP, etc.). It does not take someone from Harvard to do these calculations (another assumption is Ivy leaguers have built in "old-boys" network since WS heavily populated by such types).

    I could probably argue that a lack of "real world" experience makes very suspect value of their analysis however after a few years in industry they would probably only learn most companies controlled by WS or WS types so may be they really are the smart ones after all. I agree that this seems waste of NIH support funds yet again unless some one goes into academia that statement applies to almost everyone IMO.

    CMC guy