May 19 • 41M

On the Very Serious Podcast: Tyler Cowen on Identifying Talent

We're measuring the wrong things, the Marginal Revolution blogger says in a new book.

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Very Serious is a weekly conversation with top political commentators, columnists and policymakers, focused on how events in the news relate to major, long-standing controversies in politics, economics and culture. Host Josh Barro is joined by a rotating set of regular guests to work out the ideas behind the arguments on topics serious and not-so-serious. It’s a great conversation across ideological lines that will leave you entertained, enlightened, and maybe even persuaded.
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Dear readers,

For this week’s episode of the Very Serious podcast, I spoke with Tyler Cowen, who is a professor of economics at George Mason University and co-author of the Marginal Revolution blog. Tyler is also co-author with Daniel Gross of a new book called Talent: How To Identify Energizers, Creatives, And Winners Around The World.

Tyler and I had a wide-ranging conversation because questions about identifying and matching talent underlie a lot of political and economic discussions in our society. Are we admitting the right people to universities? Giving them the right training? Preventing labor market discrimination? Setting policies around work and family that make it possible for people (especially mothers of young children) to do the jobs that align with their talents? And while these questions matter for individual flourishing and for successful firms, they also matter at an economy-wide level — one driver of productivity growth (and therefore economic growth) is better matching of talent to its applications.

Tyler has thoughts about how to do that better that might scramble your preconceptions, given his libertarian politics. One of his arguments is that we are over-weighting both IQ and grades in assessing talent: these matter (as do the underlying traits they measure, such as conscientiousness) but not as much as you might think. There are absolute superlative performers in jobs, but they’re not reliably the same as the superlative performers in school or on tests. Hiring the absolute top scorers on these measures doesn’t do that much for you compared to hiring people who merely do well.

Tyler is also critical of highly standardized job interviews, since interviewees are aware of how standardized interviews will be conducted and can prepare to defeat the questions they know they’ll be asked.

I find Tyler’s critiques here plausible, but I’m not entirely convinced on what he proposes to do instead. There are traits like drive and creativity that we would like to measure that aren’t being picked up well by these metrics. But is that because there aren’t good and reliable metrics for them? I’m a little skeptical that quirky and surprising interview questions are likely to produce accurate impressions of creativity or curiosity — and I don’t think Tyler has proposed a good metric for testing whether they do. (I also worry that unstructured interviews can lead interviewees to prefer applicants who are similar to them in personality, background, or demographics.)

And while I agree there are venture funders and startup founders who have demonstrated a superior ability to identify hidden talent, I am skeptical of the extent to which their talent-spotting abilities can be taught and scaled, especially into large firms. And we need large firms because they are so productive — while startups are nimble, large firms have economies of scale, and the fact that they got large demonstrates they are better than the competition at something important. Running and staffing a large firm necessarily entails a large degree of bureaucracy and standardization, including in the way you identify and develop talent.

All of which is to say, these are hard problems and Tyler (like everyone else) doesn’t have all the solutions to them. But he has identified some important gaps in the ways we analyze talent, and in our conversation he provides suggestions of relevance to some key stories today — including Elon Musk’s (probably still impending?) takeover of Twitter and the broader cultural fights within Silicon Valley.

I hope you find it thought provoking. If you have responses, I encourage you to share them in the comments.

Very seriously,

Josh

P.S. Next week’s podcast guest will be Matt Levine, author of Bloomberg’s popular Money Stuff newsletter. Do you have questions for Matt — about Elon Musk and Twitter, about SPACs, about whether everything is securities fraud, or anything else? Please send them to mayo@joshbarro.com before noon on Tuesday.

P.P.S. As we’ve mentioned, the Very Serious podcast is now hosted directly on Substack, coming to you through the same series of tubes as the newsletter. We think the migration has been pretty seamless — if you already subscribed to the podcast, it should still be coming into your player of choice just like before; and if you want to sign up now, we have a button here for you to press.

We are now offering episode transcripts. You can see this episode’s transcript here.

Questions about the process? Technical issues with your feed? Email podcasting@substackinc.com for support. For any other inquiries, please email mayo@joshbarro.com.