Got my second raise.

Just got a small raise yesterday. together with a small promotion. I made a mistake by accepting a very low starting salary. Thanks to Yannick’s persistence, I started the battle for correcting it since last year. And I am lucky to have two bosses who are very nice to me. I won both battles, and adding up, it is about 30% raise in a year.

I am not really that pround of the raise or promotion. As my boss says, this is still very low compared with market value. But I made the mistake, and this is as much as he can help.

But I am really grateful to my boss. 30% raise for a new hire in the first year is very rare, I believe.

This actually encourages Yannick to go to Industry.I am one of those women who find “asking for a raise really difficult”. On the other hand, I feel that Yannick is obessed with “fighting for a raise”. Both times, it was him who pushed me to fight for the raise. And he keeps saying that one of the regrets he might have from going to academia is that he will lose the opportunities to fight for a raise.

And recently, moomin’s little raise discouraged him even more from going for academia.

What shall I say? He is in a field where a professor’s pay is much lower than a professor’s pay in my field. I wanted him to be a professor, based on my knowledge, which does not apply to his case.

And, if I still want to be a stay-home housewife, I think that I should help him to go to industry. After all, I would rather encouraging him to fight for a raise than struggling for the little pay check myself. He can enjoy the battle, I can enjoy the money, a real win-win situation.

How much premium are you willing to pay for top university education?

Since our last discussion about PhD’s career choice, I came across an interesting discussion about paying for education in a forum.

“Case study: please see quick summary for more details.
A 17 yr old got into one of the top 5 schools (the $48k a yr type) and her parents make about $250k so she cannot get fin aid. She can get a free ride to a state school that actually has a lot of national merit scholarship finalists going there, so it’s not a dump.
I turned the problem around countless times (mostly at around 3 am).
What would you wise fatwallers do? Right now I try to convince her that free undergrad is better than $200k top school, especially if she wants to go to grad school right after undergrad. Am I wrong to ask her that?
Personal experiences and/or any other advice are greatly appreciated.
Thanks a lot!

Edit: MIT vs. Ariz State honors college; her goal is med school.

Ok guys, thanks. More replies than I expected. I really appreciate this. Her parents are old friends of mine and they asked me for input.

I am glad to see that my main thinking gets somehow confirmed:
-want to go into engineering and work directly after undergrad: MIT no-brainer
-want to go to med school: ASU might not be a bad choice

Her parents are in their low 40s but they’d really like to semi-retire early (before 50). They have about $400k in assets. They came here I believe about 8 or 9 yrs ago and they started earning in the $200k range 2 yrs ago. They live frugally, no bmw, lexus, etc. Perhaps their only extravagance is some international travel. However, their thinking is that they can pay for med school, no questions asked. They also are afraid that her going to MIT might entice her to stop after undergrad and scrap the medical school plans. I also believe that the MD job security is better than life in a cube, even at GS or GOOG.
Right now she is depressed, she thinks that her dreams are being shattered by not going to a top school.”

Many people joined the discussion, including graudates from state colleges, graudates from MIT, Princeton, Stanford, Johns Hopkins, and recruiting faculty at graduate schools or medical school. Many people faced similar difficult choice.

The thread originator concluded

“I am glad to see that my main thinking gets somehow confirmed:
-want to go into engineering and work directly after undergrad: MIT no-brainer
-want to go to med school: ASU might not be a bad choice”

I disagree, not just on his/her main thinking, but also on his/her summarization of the discussion. As I read through all the replies, I feel that the majority of the people do not regret what they chose–Ivy League or state college. Those who chose to go to top universities do not regret being in a school with “unusual culture where hacking and tinkering with things and figuring out how much bend there is in the rules are all valued” even though they came out of school with $10K debt, Those who chose state college felt happy that they left college without any debt, and went to good graduate school afterwards. These people emphasize that only the rank of the graduate school counts.

Yannick and I discussed this during the dinner time. We came for PhD program, which normally offers full fellowship or assistantship, so going to a top university was a no-brainer for us. If our kids someday face this choice, what shall we do?

At first, I was inclined to recommend the 17 year old girl to attend a state university. I was a TA for a class with more than 900 students in an Ivy League University. We had to divide the class into small TA review sessions. I was TAing two honor sessions, each with about 22 students. While I did see some very smart and hard-working students, I do not think that they got much attention from the professor. Some later came to me for recommendation letters, because the professor is not very accessible. Those famous professors in top universities are famous because they do research, they publish papers. They get recognition only by the number of papers they publish, or the level of the journal their papers get published. To publish papers, they had to squeeze their teaching effort. Pretty much every professor I know consider teachinga a burden. What’s the point of paying $200K to a school where the professors never see you anyway, and do not pay much attention to teaching?

However, after the discussion with Yannick, I started to change my mind. I transferred from an Ivy League university to another top private university, so I do not really know much about public schools. I started TAing graduate course after my transfer, so I really do not know the undergraduate life well either. Yannick has been to both public and private universities, and his experience tells him that the course qualities at the private school are better than the public school he stayed even when they are ranked similarly ( I guess public school professors pay even less attention to teaching?) And more importantly, you see many more smart people in a top university, and you will learn and benefit from them.

Moreover, as I read through the discussion, I saw surviving bias in the replies from those state college graduates. It looks like that everyone is happy with their decision. However, most of the state college graduates who do not regret are people that survived well in the public schools. Most of them got admission to the medical school, or went to top universities for PhD programs later. I do not see many replies from people who chose public state universities and went to work afterwards. Where are they? Does that mean that anyone who face this choice will survive well out of the public school? I doubt it.

My hypothesis is: given a group of people who faced similar choice as described and who chose to go to public school, those survived well out of public schools tend to reply to the thread more than those who did not. 17 is a very young age, anything can happen. What if she decides not to go to graduate school? What if she gets to know people whom she should not know?

Only satisfied people responded. So we have to take some discount on these replies. There are people who dropped out from top universities, like Bill Gates, we can be sure that he does not regret. There must be a lot people who dropped out from public schools too, but we do not see them very often in the news.

Yannick and I do not belittle public schools. But I am very risk-averse. If our kids face the same decision, I think that we will let them choose MIT. After all, I know that they have a much higher probability of making good friends at MIT than at ASU, and with that, I will have some peace in mind. And if we have a daughter, I will sent her to MIT or Stanford, no question asked! She can bring back a very good husband, maybe better than Yannick (I have not found one yet, and will not :). $200K is a lot of money, but our peace of mind and our children’s happiness are worth more than $200K, right?

Better start saving for our children now, and prepared to rent for a long, long time. I believe that the investment in education will give higher return than investment in real estate or stock market.

A Fresh PhD’s Career Decision Tree

Given that Yannick and I stayed in graduate school for such a long time, we made many friends who got PhD’s in various fields–economics, business, engineering, science… Some went for academic career and are already titled professors; some are still struggling for their tenure; some went to industry and become millionaires from IPOs; some got laid off and came back to school. And those fresh ones, seeing footsteps from their senior fellows, feel confused. They seek help, from advisors and professors, from fellow PhD students, from friends, from families. And the truth is: the more people they ask, the more information they gather, the more difficult the decision becomes.

After our discussion with mOOm about the value of a graduate degree and seeing the struggle many of our friends are facing, I decided to draw a decision tree to help people go through the process. This is, by no means, a replacement for advice from an academic advisor, or your career development help center. This is just my little game to find out whether what I learned in textbook can really find some use in real life.

I am not an engineering and science major, but I find PhDs in engineering and science often face a more complicated choices. They can choose to do a post-doctoral fellowship, just like residency for MD. People from economics or business school normally do not have to go through this. So I decided to draw a decision tree for Sisi, a fresh PhD from science and engineering.

Sisi got her PhD in applied math from a top school. As a fresh PhD, Sisi does have some options, and that’s exactly what she and her family are struggling with.
(1) She can get an assistant professor position in a 2nd or 3rd tier university right now, which pays about $60-80k.
(2) She can work in the industry, which pays six figures right away.
(3) She can wait for another year or two as a post-doc fellow, and shoot for a faculty position in a1st tier university.

Here is a very Simplified version of a pseudo-decision-tree.

Two main reasons make this tree “pseudo”. First, Sisi is struggling with assigning probabilities to each branch. What’s the probability of getting unemployed in 2 years? Sisi had a friend who joined a very big and profitable company 2 years ago, and come back to school now due to company re-structure. What’s probability of building a successful business of her own? Go to any bar in Silicon valley any day, Sisi will find 1/2 of people there dreaming of building another google, or at least a youtube. But we had only one Google, one youtube. Sisi believes that she has a technical edge to build his own business, but how can she assign a probability on this?

Second, Sisi puts only monetary value in stead of utility on each node. What makes this decision even more complicated is that Sisi and her family assign different utility to each outcome. Sisi’s husband wants her to go to a 2nd -3rd tier schools, so she can has less pressure and get a baby soon. He also puts higher utility on going to industry, since he has the same dream as a valley girl and wants Sisi to join him.

However, as a female who window-shops designer clothing from time to time, Sisi puts higher utility on “brand names”. Practically speaking, option-3 is the least ‘economical one. Doing a post-doc costs another 2-3 years with minimum pay. After that, if she gets to a 1st tier university, the pay is generally lower than 2nd tier university. Top universities always have higher bargaining power, in accepting students, in recruiting faculty. However, how many 1st tier universities can you find? Supply and demand determine the price. If Sisi wants to get the brand equity of 1st tier universities, Sisi has to pay the premium. Sisi is ready to pay for it, her husband is still hesitating.

And as a female, Sisi puts higher utility on security (on this part, Sisi is not alone ). Getting tenure in whatever university will give Sisi’s family low but guaranteed income and legal status. As immigrants without a green card, Sisi’s first priority is: Security! Security!! Security!!!

Still, the problem of assigning probability remains. I know that many fresh PhDs are facing Sisi’s decision tree. In fact, many friends of ours are on the same boat right now. Assigning these probabilities requires experience, across time, across people. I hope that senior readers who have experienced all these can help Sisi fill in the probability in the tree. If we can get a large sample, the law of large number will work for us.

TIA!

Do we want to play Liar’s Poker? Notes 1

I found two books listed most frequently as favorite books among PF bloggers — Liar’s Poker: Rising Through the Wreckage on Wall Street and A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition. I felt a bit embarrassed that I did not know these two books, though I had thought about getting a job in Wall Street. I decided to make up my ignorance.

I finally got the two books one month after I placed holds on them. By then Yannick and I got very busy with our work. So we decided to optimize our times — each read one and exchange reviews.

Yannick likes numbers, so he got the “Random Walk”. I am more fiction or biographic type, so I picked “Liar’s Poker”.

The first thing that struck me was the author’s comments on “economics”. He noted that, although most arrivals on Wall Street studied economics, the knowledge was never used – actually, any academic knowledge was frowned on by traders. Economics is not really a science, but rather a means by which investment bankers find potential candidates to hire.

This sounds like Michael Spence’s model of job market signaling. I always considere it a drawback in signaling game — Education is useless other than being a signal to the potential employer. Now Liar’s Poker confirmed this assumption with a real life example. I guess that this was one of the very few cases where the assumptions of an economics model hold true in reality. Unfortunately, instead of increasing my confidence in my economics education, it makes me even more disillusioned with the economics knowledge I got from PhD classes.

On the other hand, the book gave us a relief. As the book says, most millionaire traders started their trading business in their early 20’s. We had some sort of regret that we missed the opportunity to be there. Given that I have so many friends working in investment banking, I can’t (or do not want to) believe that the life in Wall Street is like the “jungle” the book described. However, I doubt that the way the IB sales traders and people make money has changed much. They consider it a success by deceiving the less-informed public and ripping off their clients. I do not think that Yannick will ever be able to do this. So this may not be the road for us anyway.

The book also talked about Michael Milken’s junk bond empire. It is interesting to see a different view on Michael Milken from Den of Thieves

Our Financial Goal – I

We all have heard of the stories on how writing down your goals may help you achieve them. I don’t know if it’s true for others, but for someone forgetful like me, you bet it’s going to help. Our immediate goal is to have enough income to relieve Jacqui from her job. And you know who is going to earn that income right? Probably not our future kids.

I am now in the job market for my first real job. I am good at math and coding and can try my luck in the financial industry. However, I really feel that my life is too short to waste in the quant’s position. I believe in doing things I love. If I’m really good, money (not necessarily big money) will come, or I should be able to make a living.

That being said, I am now probably interested in too many career paths: entrepreneur, university professor, consulting, research scientist, and so on. I am interested in the quant job even, just not its life style. However, all the above are meaningless without a happy Jacqui. I want to have enough time at home to be with her, while at the same time, bring home enough income (good pay). Does such a job exist, with good pay and allowing a good life style?

If not, I probably will accept a lower pay, since both Jacqui and I are pretty frugal. More importantly, move to an inexpensive area and enjoy our life.