... The year I got my PhD (1977), there was a very clear ranking of desirable career paths. The best economics grad students went into academic jobs; the middle went to the Fed or the IMF; the bottom went, poor souls, to Wall Street.
Even then this meant an inverse relationship between academic ranking and income, since new assistant professors were paid only around $15,000, equivalent to a bit more than 50K today. But the prestige differences more than offset the pay differentials, at least as we saw it then. And one thing that’s hard to convey is how boring business seemed in the 1960s and 1970s. (”I’ve got just one word for you: plastics.”)
But that was in the 1970. He continues:
... [B]usiness stopped being so boring, and was even getting to be fun for some people. The old conviction that the academic life was the ideal definitely began to fray at the edges.
Did the influx of smart people bring on disaster? That’s a longer story. But the change in who went where is utterly real.
His post was commenting on this piece by Calvin Trillin on Wall Street Smarts:
“So what happened?”
“I told you what happened. Smart guys started going to Wall Street.”
“I thought you’d never ask,” he said, making a practiced gesture with his eyebrows that caused the bartender to get started mixing another martini.“Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”