We were discussing Kevin D. Williamson’s article in the currentNational Review. He has a wonderful article about dynamic American businesses and the comparisons with other developed countries around the world. Of course you should read it and subscribe to National Review.
We previously discussed the exceptions of the business of American sports and public safety in America not being as risk loving compared to the rest of the developed world. Now we want to get on to professors and risk aversion. Remember that risk aversion means that an individual prefers a smaller variance of outcomes rather than a larger variance. In dismissing professors, Kevin says:
If you want to have a nice life as a college professor, you’d probably be happier in Denmark, where there is a very comfortable welfare state, or in Switzerland, where universities pay the highest academic salaries in the world.
Two things: First, tenured professors have a very low risk life in America. Second, there are substantial risks to becoming a tenured professor in America and elsewhere.
A tenured professor is not just risk averse but about as risk free as any position can be. A tenured professor can only be fired for cause. Poor, really poor, performance is not cause. We know this from our experience with System lawyers. You won’t get really rich as a professor but you have amazing freedom, benefits, and post-employment benefits so there is no need to go to Denmark. An example we have used before is that our health care is paid for until we are 115. A tenured position in America is like being in your own private nordic country but you don’t have to put up with all the tall people.
Reaching the goal of being a tenured professor, on the other hand, is a very risky proposition. There are other hurdles but the three major ones are getting a PhD, getting a tenure-track position, and, obviously, getting tenure. All of them are risky because the alternatives are not good. For example, many disciplines have a combined masters and PhD program. In effect, a masters degree is a parting gift for the folks that didn’t make it as PhD candidates. During our minor in economics we saw lots of folks get culled from that program. Getting a PhD is a judgment by the senior professors. If you rock the boat or are, gasp, a conservative you are less likely to get your degree.
Getting a tenure track position can be difficult. Part-time faculty positions are numerous but rarely advantageous. See this AAUP study. Part-time faculty members have high risk and low rewards. For some open full-time tenure-track faculty positions we would get well over 100 applicants. For an accounting position we might hit double digits in a recession. You need to love what you study to earn a PhD but you should consider the alternatives. Lots of PhDs never get a tenure track position.
Getting tenure is not easy. If you look at the story that Kevin probably used as a reference for Switzerland having the highest paid professors you will see that they expect great things for the money and it appears clear that promotion to full professor is far from a given. It looks like the Swiss universities are what we would call doctoral universities. If you check the Carnegie categories at the link you should know that there is a clear relation of risk and reward by classification. There are more classifications but three will do for our discussion: Doctoral, Masters, and Baccalaureate. Doctoral schools are paid like the Swiss and the probability of becoming a tenured full professor is low. We have tried to find data on the percentage of folks that leave but most leave before they are denied tenure. It is a bit like working a big accounting firm. Many are hired but very few become partners. The difference is that folks that leave a big accounting firms are in high demand. Folks that leave Doctoral campuses for other classifications have some baggage. At the other end of the spectrum, Baccalaureate tenure-track positions are easier to get and easier to keep but the financial rewards are usually much less.
Our point is that you have to be risk lover to become a tenured faculty member but once you reach that goal risk goes away.