Higher Ed Risk and 'An Economist Walks into a Brothel'

What risks have you taken in your academic career?

May 1, 2019

An Economist Walks into a Brothel: And Other Unexpected Places to Understand Risk by Allison Schrager

Published in April of 2019.

What risks do you face in your academic career?

What would you say are the big risks faced by your institution?

After reading An Economist Walks into a Brothel, I’m confident that I’ll be able to have a more informed discussion about these two categories of academic risk.

Allison Schrager is an alternative academic (alt-ac) economist.  A PhD from Columbia University, Dr. Schrager chose to go into journalism (The Economist, Quartz) rather than academia.  (Although she also teaches some at NYU, in true alt-ac fashion). Her academic field is the economics the retirement, with expertise in savings issues and pensions.

The study of the economics of retirement is, at its core, the study of risk. When we save for retirement, we must make many risk calculations.  How much we save depends on much money we think we will need each year after we stop working, and how long we think we will be alive.  These calculations drive our choices in how much to save and what sorts of investments to put our money towards.

Not surprisingly, we are not good at calculating risks. Our brains are poorly organized to understand probability.  We tend to systematically discount future needs and are overly influenced by immediate goals. Unable to project our current selves into our future selves, we save too little and invest what we do save unwisely.

The genius of An Economist Walks into a Brothel is that Schrager takes theories and research from retirement economics and applies them to other areas of life. She looks for places where people do a better job at managing risk than we do in our retirement plans.  She finds these places in legal brothels, among big wave surfers, and by hanging out with celebrity paparazzo photographers.

What all of these people  have in common is that they need to manage high levels of risk. To manage risk, it must be visible, understood, and priced.  Legal brothels manage risk for both sex workers and customers.  The high prices charged by establishments such as the Moonlite Bunny Ranch in Nevada provide protections against arrests (and loss of privacy), disease, and violence.

Should academics be paying attention to legal brothels?

Academic careers today feel particularly risky.  Tenure may be an effective risk reduction strategy for those diminishing few able to secure tenure-track jobs.  But the downsides of pursuing tenure would seem to outweigh the benefits of choosing this path, given the increasingly small odds of reaching this goal.  For alt-acs and other staff, tenure is not even a possibility.

What are the systematic and idiosyncratic risks that one faces in trying to build a traditional or alternative academic career? Will academics start to reduce their risk by diversifying employment patterns, bundling together several income streams to guard against the loss of wages from a single university?  Or is this already starting to happen as adjuncts work at multiple schools (by necessity and not by choice), and alt-acs move in and out of university and non-university jobs?

On the institutional side, what is the biggest risk that your school faces?  How much of the campus discussion is about managing risk?  Do you see your job at your university as one of, in part, contributing to institutional risk management?

Reading An Economist Walks into a Brothel can help give us a language, and a set of frameworks, to talk about risk. Schrager emphasizes that managing risk is not the same as avoiding risk. A healthy career or institution (including a university) requires intelligent risk taking.

What risks have you taken in your academic career?  (Beyond the risk of deciding to enter academia in the first place).

When have those academic career risks worked out well, and when have they gone poorly?

What books might you recommend on risk?

What are you reading?


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