Saturday, March 31, 2007

My Economic Toolbox

When I started working with my dad, I only had the basic handtools: screwdrivers, razor knife, side-cutters, maybe a level and tape measure. I could only do basic tasks with the tools I had. You gotta start somewhere...I started by putting switches on windows. As I progressed in my skills, I acquired new tools. For instance, I got needle-nose pliers when I started working on phones (because you need them!). With networking stuff, I had to borrow the tools because they're expensive and it doesn't make sense to have my own set. It was always cool-and-a-half to get a new tool, because that meant that I was progressing in my abilities. Sometimes a new tool could help me get faster at a task that I used to do as well as letting me undertake an entirely different job.

Economics seems to be following the same pattern. I got to grad school without having much math. Right off the bat, I learned how to do constrained optimization (a topic I was curious about before finding out how it could be done). Now, I'm pretty good at setting up a Lagrangian to solve the constrained optimization problem. However, just like it took me some practice to be able to properly strip a wire, it took me time to learn how to interpret the constraints and write them down in a formula. While you can solve simple problems with a Lagrangian, sometimes you need to check Jacobians and Hessians (if you don't know, don't ask). I'd never even heard of Jacobians or Hessians when I entered the program, much as I had never heard of a sweep-90 before my first vacuum job. In economics, I started learning how to solve continuous time models, then worked on discrete time ones (with the envelope condition AND dynamic programming).

Just as I wasn't very productive my first few weeks/months on the job in the security market, I don't think I would be of much help to any professional economists with what I know now. However, I reached the point in my security skills that I know I could go to work for a company as a really good helper or a pretty shitty head of a 2-man crew (shitty by my standards, probably pretty average by industry standards). I think I'll probably be in a comparable position in the econ world after finishing my second year of classes.
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