Grad Programs

This is my personal take on academic and professional grad programs with a Canadian focus, meant for undergraduate students at the UofT/UTM.

Follow my advice at your own risk.

Professor at the University of Toronto; spent 12 years are the economics department, and another 10 at the management department/business school. I advised a number of UofT PhD students at economics formally and informally as well as advised some visiting students; I have not formally advised PhD students at the business school; I’ve been on finance/financial economics hiring committees for 10+ years; I’ve been closely involved in admissions for a professional graduate program (UofT’s Master in Financial Economics (MFE)) for 10+ years and I formally served as program director for the MFE; I’m married to a past and present program director of a professional graduate program at a different school.

·      Doctoral programs (PhD)

o   Meant for people who can see themselves as university researchers and who want to publish academic papers.

o  Not meant for people who "want to teach"

·      Preparation for doctoral programs (mostly: Masters in Economics, but there are dedicated research masters)

o   Meant for people who consider pursuing a PhD but who believe they need more formal training in economics (that’s almost everyone with a North American BA).

·      Pre-doc programs (full-time paid positions; at the UofT they are called “research associate”)

o   Meant for people who consider pursuing a PhD but have no idea if they can do research or what it really is.

·      Pre-experience professional programs

o   Meant for people who want to improve their CV after undergrad, who feel they lack formal training for the demands of the modern workforce, and who are willing to spend a lot of money.

·      Post-experience professional programs (really only MBA and Executive MBA (EMBA))

o   Meant for people who have worked for a number of years and

§  who feel that another 3 or 4 letter acronym improves their career prospects;

§  or wish to change careers by going all in to business;

§  or wish to become managers but who feel they need a better understanding of the wholesome operation of a large business;

§  or who wish to transition from a “normal” firm to a bank or consultancy (note: not everyone who does an MBA manages to snatch that kind of job).

o   Not meant to be taken right after UG

I will graduate in a year. What should I do?

Get a job. Nothing teaches you more what you want than sitting in a cubicle for 10-12 hour per day working on someone else’s problems.

I want to follow my passion and become xyz. What’s the best way to get there?

Ignore advice like “follow your dream/passion.” Instead, find something that you're good at and become great at it. If you are great at something, you will get respect and recognition and you’ll likely enjoy your work and life.

Also, stop talking about being “passionate about [insert mundane thing]”. (“I am so passionate about options pricing”.) Best case: it bores people. Worst case: it makes people want to puke.

I want to improve my leadership skills. How should I go about it?

A leader has the others’ respect. Respect is earned, not given, not an entitlement. Leadership derives from competence and a willingness to sacrifice your own ambitions for a greater goal. That means doing hard work for others, setting an example to others. It doesn’t mean being loud and seeking positions where you can direct others. It doesn’t mean comparing yourself to others and then trying to complain your way up. It means stepping up when there is no immediate reward dangled in front of you. It means doing more than others and doing it better. It means having earned the respect of your peers. See also: “following one’s passion” – become great at something that you’re good at.

I’m in year three. What’s your advice for the next two years?

Spent all your non-school efforts on getting an internship in the summer after year three. Spent all your in-school efforts on analytical and data-centric courses (coding, econometrics, data analytics, machine learning). This is the time in your life when it is easiest for you to acquire skills that you will 100% need in your professional life.

Should I take course that improve my GPA or should I take hard courses that signal my abilities?

That's a really tough one. Some grad schools, e.g. law or med school, very strongly go by GPA, which is terrible. Other programs like the UofT's MFE will not even look at you if you take too many soft courses. For your own sake, this is the time in your life when it is absolutely easiest to dedicate yourself to learning something tough. Picking up econometrics, game theory, or algorithms & coding while you're working 60 hours per week is impossible. 

Should I go do an MBA right after my BCom?

Absolutely not*. An MBA covers more or less the same topics as a BCom – so you will see little new content. The key value proposition in doing an MBA is learning from classmates who bring their experiences to the classroom. An MBA that takes (mostly) pre-experience students cannot offer this experience is and thus has no value for you. Just don’t do it. Responsible programs won't accept. Those that do, show their cards: they are in it for the money only.

*There are MBAs with a coop component. That may work for you because it’s a) like getting a job (see above) and b) getting a coop may be a lower hurdle than getting full time employment. I still think it’s not the best way to spend your (or, rather, your parent’s) money, but it may not be a total waste.

What is the cost of a PhD for me?

I am not going to sugarcoat it - the cost is enormous: completion takes 6 to 7 years. During this time, you will barely have enough money to support yourself. No savings, no money for vacations, fun, weddings, etc. No savings for a house. No car. No money for nice clothes or for going out. Just work. You will get your first “normal” salary by the time you’re close to 30. The opportunity cost is, therefore, very high (and if you do not understand the concept of opportunity costs, then a PhD in an economics field is not for you). Let's face facts: to complete a PhD at a great school, you’ll have to be in the top 1-5% of your cohort in terms of general capabilities. In other words, you are someone who in “the real world” likely has very high earnings potential for the same level of effort. The present discounted cost of a PhD is therefore at least half a million dollars. It doesn’t stop there: although economics professors are well paid and finance professors are very well paid, your earnings potential outside of academia is even higher. Moreover, getting a well-paid faculty job is far from certain. In terms of lifetime income, an academic career will therefore cost you well over a million dollars in opportunity costs. You're friends will drive Porsches while you ride a bike. If that matters to you, think twice about a PhD is a tough sell.

Do I have to take advanced calculus/econometrics/linear algebra to get into a PhD?

Technical/mathematical competency in a PhD is a necessary condition to make it through the program and to become an excellent researcher. So yes, you need to acquire a high level of competency in the mathematical toolset for academic research. And a PhD program will either assume that you have the tools or that you will acquire them. In undergrad there is a whole system of pre-requisite requirements that are there to make sure that you can do the course. In the “real” academic world, it is on you to know what you need to know to go through a course and to answer the research questions that you want to answer. You are responsible, nobody else. And you need to enjoy these courses (not all, but if you hate it all, then stop and forget about an econ PhD). Why all the math? Mathematical models are tools for us to conceptualize important economic questions. The maths ensures that B follows from A if we say so. A model ensures that you state your assumptions, which creates transparency and a level playing field in intellectual terms (pretty works and credentials are trumped by mathematical logic). In other words: maths creates intellectual discipline.

What’s the hardest part about a PhD?

You have to go through the first-year courses and pass the comps, and they are technically demanding. But the main challenges in economics are not technical or mathematical, they are conceptual (John Cochrane). The hardest part about research is coming up with good research questions: something that’s interesting (to you and the profession), something that has not been done, something that is do-able, and something that has an interesting, non-obvious answer. Research is a creative process, and it requires you to be curious. It also takes a very long time, can be frustrating, and things can go wrong at every stage of the process. Research is lonely work, and it’s hard to uphold one’s excitement for a project. Even though the reality of the research world is teamwork, for your PhD you will be expected to work on your own idea. Truth be told, I absolutely hate working on a project all by myself.

Should I do a pre-doc?

Very tough to answer. I dislike this development as it lengthens the time to PhD but I understand why it happens. Looking at myself, when I started with my PhD, I was miles ahead in terms of research experience and technical training compared to today’s undergrads - sorry. My high school maths and computer science training was more extensive than what you get as an undergrad today. Truth be told and I’m sorry to say, but after a BA/BCom, you simply don’t nearly know enough to embark on a PhD, in terms of life experience (economics requires the study of real-life problems!), technical/mathematical training, maturity, and research experience. A pre-doc may help you sharpen your skills and profile, but it comes at a cost: although these are paid positions (I think we pay $80K p.a.), you may make more elsewhere, skills learned may not transfer to non-university jobs, and you need to find one of the few positions! A few top schools in the US have developed a set of standards and a common resource to find such positions: https://predoc.org/. There is nothing equivalent yet in Canada.

How long does it take to get a PhD?

The programs say 4 years, but it is impossible to finish in 4 years and be ready for an academic job. Impossible! You need to budget for 6 years, and it may well turn out to be 7. With a 2-year predoc, it’s 8. And a number of people do a 1-2 year postdoc between the PhD and their first job as an assistant professor (people often land the job first and then postpone it for a postdoc). So, it could be 9-10 years before you have the first “real” job with a real salary. I know this is a bit depressing, but I don’t make the “rules.”

What will the academic job market look like when I graduate?

The key decision variable for you to go for a PhD must be always be your interest in research and your ability to deliver original ideas. 

But the availability of academic jobs depends almost entirely on the demand of non-PhD students for our field - no university hires you to teach PhDs or do great research (though they expect you to deliver it!), they hire you to teach undergrads and MBAs. No, I am not contradicting myself.

I don’t have the data for future jobs, and there are many unknowns. Let me lay out the issues. There are three decisive factors: future enrolments (demand side), retirements (stock of jobs), and PhD enrolments (supply side).

About enrolments: Birth rates in Western countries are down, which means that, all else equal, university enrolment will decline. Smaller schools in North American (and Northern Ontario) already feel the pinch. There are also questions regarding the demands of the job market for BA and MBA grads – jobs in industry are becoming more technically demanding which may depress the enrolment in undergrad commerce & economics and also the MBA. Then there are questions about economics as a field: many once promising fields in social sciences have become too inward looking and self-centered (instead of asking questions that matter to the outside world; examples are anthropology and sociology). There is a danger that economics moves into that direction, too, which could cause declining enrolment. Economics in North America has been very successful because it plays such a big role as a subject that people generally take irrespective of their chosen major. With the rise of demand for grads from technical fields (computer science) and a possible inward-looking discourse, economics may lose that status (no more econ 101). Economists are the highest paid social scientists and are sometimes considered a “luxury” department. Deans will question this status if demand for economics declines. In other words, there is a risk on an unravelling. Finally, a major war in Europe or Asia, or a serious US-China trade-war could further depress enrolments. Or you can have a government like the Canadian one that significantly depresses international enrolment to score cheap political points. In summary, although not all of the above may come to bear, there are numerous structural changes and threats that will likely cause declining enrolments aka lower demand.

Second, about PhD enrolments: currently, demand for PhD enrolment is high – PhD economists still have a lot of options outside of academia. But Asian and also European schools are improving rapidly, and therefore it’s possible that PhD enrolment may decline. Still, the programs are small already, and it’s not clear that 2-3 fewer students here or there alter the supply of academic PhDs meaningfully. In summary, I doubt that supply of PhD grads will drop meaningfully over the next decade.

Third, about retirements. In most jurisdictions, professors do not have to retire. People get healthier, live longer, and need income for longer. Pensions are also getting less generous. Overall, we should expect that professors will work for longer. There are a lot of folks that are between 35 and 55, and almost all will stay in their position for another 20-40 years. FWIW, presently, this is a blessing for deans because older professors teach more and do the admin work that young professors aren’t keen on. If everyone at the UofT who’s over, say, 65 would suddenly retire, we’d face a decade of problems and would have to significantly crank up the admin and teaching requirements on junior faculty.

What are the best pre-experience graduate programs in finance in Canada?

UofT: Master in Financial Economics, Master in Financial Risk Management, Master in Management Analytics, Master in Data Science, Master Mathematical Finance, Master in Engineering with Finance Specialization. YorkU: Master in Finance. Western: Master in Financial Economics. McMaster: Master in Finance. The latter two are carbon copies of UofT's MFE. UBC has a research masters in finance which is great.

What’s the most common reason why people take a pre-experience graduate program?

They couldn’t get the job they wanted with just a BA/BCom or they started too late with post-graduation planning (e.g., didn’t do a meaningful internship in the summer between year three and four) and a masters gives them a little more time.

What’s the most important criterion that I should use to assess the quality of a pre-experience graduate program?

The main objective of doing a pre-experience masters is to get a job. Therefore, a program’s post-graduation employment record is the most important criterion: anything below 50% is not worth it. Good programs have 80% plus. However, 100% is not credible because programs don’t know what every student does, and there are always people who decide on a different path than employment after their masters. Why does employment matter? Because post-graduation employment is most strongly correlated with the strength of the student body. You want to have smart, capable people around you. If a program has an internship component, check the employment stats for that. UofT's MFE has had a 100% record for almost two decades.

Will programs “place” me?

Ideally not. A good program provides ample information about opportunities, arranges meet-and-greets/events, and provides targeted professional development support. But "career services" is not “placement.” The latter creates conflicts of interests for schools because they prefer you having a job than not. Good schools explicitly don’t do it. Also, be mindful of conflicts within a school: many schools prioritize their MBA over other masters, because for MBAs, post-graduation employment is a key ranking criterion. That may mean that as a non-MBA you may be excluded from events or may not see some job ads.

As a BA/BCom grad, you will have a very hard time in the MMA, MMF, MDS, and MEng because most students in these programs have a science background. Please be aware that some schools keep pushing out new, flashy programs that are mostly a profit centre. QueensU is a good example. They have several masters (I stopped counting), but you should avoid them because they take anyone with a heartbeat (=they just exist to make money). They are often not taught by regular faculty and provide no professional development or career services etc. I’m also not convinced by masters programs in the US – they often seem like an afterthought. 

Should I ask questions about student body composition?

Yes: a great masters program will put together people from different disciplines and backgrounds, albeit suitable to tackle the degree requirements (e.g., they need to be familiar with mathematical formalism). Students sometimes complain when instructors cover basic stuff because their classmates don't know some concepts that they feel are elementary, but, seriously, that just silly grandstanding and chestpounding. Mixing people from commerce/economics, statistics, engineering, or sciences in the room strengthens everyone because each brings insights and ideas that the other won't have.
Now this next part is controversial: you should also ask where people are from. Let me stress that I love international students from anywhere and appreciate each and every one. I see a problem though when a program has a large group of direct-entry students from one particular region. Direct-entry here means that these folks have not obtained their bachelors in Canada. Imagine, for instance, that 90% of a cohort comes straight from Germany. Students will talk German among one another, which may exclude you if you don't speak German, and they most likely make connections only or mostly with one another. If diversity matters to you, this may not be the experience that you are looking for. The program can still be great and work for you, but at least inform yourself. I am mentioning this because there are some programs where 90% or more of a cohort are direct entrants from a single, non-Canadian jurisdiction. 

Reference letters are extremely important for PhD admissions. All that follows, however, does NOT apply to letters for doctoral programs but to letters for masters.

First and foremost, in my opinion reference letters for masters programs should be abolished entirely. They ask faculty ridiculous questions that most of us cannot answer truthfully with a straight face. They ask for rankings along criteria for which we simply have too little info. Unless the referee picks the everything among the top 2 rubrics (outstanding (top 1%) and excellent (top 5%)) for all criteria, you’re out. It’s ridiculous, and I wish programs would stop asking these questions.

What would a good reference say?

There are three main questions that admissions committees (should) ask about a candidate: first, will the person make it through the program (are they academically sufficiently strong/qualified)? Second, is the person employable? Third, will the person be an asset to the program (i.e., to other students who are there)? A good letter will speak to these three questions. Realistically, however, professors can only answer the first question with a high degree of confidence. Coursework says little about question number two. 

How likely is it that a professor supports my application?

It is important that you understand that a professor is not writing you a letter to “get you into a program” – their allegiance is (or should be) not with you but with their colleagues who they provide information to. They stake their reputation by providing truthful information.

More specifically, the purpose of an academic reference is not to support your application but to provide pieces of information to the admissions committee that they otherwise doesn’t have. There are three general areas of information. First, your ranking in the class, the program, and across years. Second, information about the “quality of your transcript” (which courses are hard, easy, which courses are most important/indicative for success in the grad program). These two points help clarify the “is the person qualified” question.

The third area ("asset to class") is squishy and requires the referee to comment on personal observations: behavior towards classmates, interaction with instructors and TAs, impressions from personal conversations, or notable accomplishments in a class (e.g., great ideas in a project etc). This area is incredibly subjective, includes sometimes sensitive topics, and just screams “discrimination/implicit bias etc”, which is a key reason why I dislike reference letters for masters programs. In most cases, one simply does not have much or anything to say, and if you say nothing, it may count against the candidate. It’s nuts.

Who should I ask to write me a letter?

Responsible letter writers need to be able to say something positive about you, which may mean different things to different people (for me, see the next question). Your letter writer should also be a faculty member, not a sessional instructor (they do important work for the university, but they are not known to admissions committees, have no reputation concerns regarding these colleagues and, therefore, their word carries less or no weight).

Does a letter writer’s standing matter?

Generally yes because people with standing have a reputation, which they somewhat put at stake when writing a letter for a student. Therefore, their voice has weight. However, big shots also have better things to do than write a letter for a professional masters and so they commonly only support 4.0 students, for whom the letter is unnecessary. So we’re back to: what’s the point of a letter? FWIW, I am not a big shot.

Under what conditions will you write me a letter?

I need to be able to say something positive about you. I will comment on your ranking in my class and I will comment on other courses. This implies that you need to be in the top third of my class (=A/A+), and that you have performed well (A- or better) in most key courses, like MAT133 (but ideally MAT135), ECO220/228 (statistics), ECO375 (and ideally ECO475), coding, MGT235, MGT330. You also need to have at least an A- GPA.

What other reasons are there why a professor may not write me a letter?

As a letter writer, you stake your personal reputation in providing important information about a candidate. “Asset to others” and employability can be related to personality. Namely, as a professor, you meet a large number of students, and some people are simply “unpleasant” to instructors and fellow students. It harms my reputation when I recommended someone to a program who turns out to be a jerk, and so I won't write a letter to someone like that in the first place. There are other criteria: Some students are also often late with assignments, other perpetually request unwarranted regrades or haggle over grades and what credit for wrong answers. Suspected or proven cheaters are definitely out of luck, too. I’m not willing to waste my private and research time on supporting any such applications.

What is the most important criterion for program admission?

Remember: the questions are: can you make it through the program, will you find a job, and will you be an asset to others? So: the quality of your alma mater + your performance (GPA plus courses) = predictors of academic adequacy. Key items from your CV such as impressive internships = employability. Items from your CV such as roles student council, success in sports, charities, evidence of teamwork = asset to others.

What should my letter of purpose say?

This is the most ridiculous exercise of them all. Let me just say this: a letter very, very rarely sways a committee in your favor (I had one case in thousands of applications), but a poor letter will definitely harm you. A poor letter is one that genuinely annoys the reader - and a very large fraction of them do. 

Should I ask a professor for a reference letter that I can add to my industry applications?

Absolutely not. These letters are unlikely to make a difference, they are not confidential (therefore less credible), and therefore a waste of time for your professor.

Annoying question 1: I’m considering a career in teaching. How will I find the right PhD program for me?

Hold it right there: a PhD is a research degree. RESEARCH. Teaching is part of the job (an important one), but unless you have the ability to become a top-level researcher, this is not for you. Never ever ever think of the job of a professor as “teaching.” It simply isn’t (a professor's job probably the least-well understood high-profile job there is).

Annoying question 2: I think a job in industry is too competitive/demanding – being a professor is much more chill. How should I go about it?

Leave my office - you’re out of your mind. Doing a PhD is risky and requires an incredible amount of hard work with rewards that are far and few. And a PhD is only the beginning – it’s very hard to get a job as an assistant professor and then you want to get tenure! As an assistant professor you have to work even more, and it is physically and emotionally taxing and draining – even if you are in a supportive and kind environment. A PhD/professor's job is in no way easy or safe, 99% of the time you will get beat down. It’s how science works: most ideas are trivial, boring, or nonsense. The scientific process is tough and should only allow good ideas to survive. Criticism is important, but it's not always constructive (sometimes that's impossible) or delivered in a kind manner (academia is full of "characters"). Criticism of your research feels very personal because you've put real heartblood and love into your papers. But once a field stops beating down bad ideas, it enters "critical theory” la-la-land where only the right kind of thinking is allowed. 

Annoying question 3: I want to improve my chances in the financial industry and therefore want to do a PhD in finance. What do you think?

The supervision of a PhD student requires an enormous personal commitment by a faculty member – they have to sacrifice their own private time and part of their professional research time to train you. The relationship to your advisor is not transactional, it is personal. If you go into the program with the intention of working in the financial industry, then you are asking your advisor to spend their personal efforts to make a bank and you richer in the absence of ulterior motives. Some people are OK with that. I'm not.