Working alongside colleague Drew Fudenberg—the Paul A. Samuelson Professor of Economics at MIT—Northwestern University Kellogg School of Management Professor of Strategy Luis Rayo asks, does the trainee grunt work dilemma make complete economic sense?
Kellogg Insight author John Pavlus talks with both Rayo and Fudenberg about their new research on the topic, “to determine whether the relationship most resembled an economic quid pro quo, or something more akin to a prolonged test of skill, or merely a rite of passage.”
“Master-level knowledge is extremely valuable, but also very difficult to transfer efficiently,” writes Kellogg Insight author John Pavlus.
The “fundamental economic problem” Rayo faced when he was studying under a professor during his undergraduate tenure is that “master-level knowledge is extremely valuable, but also very difficult to transfer efficiently.”
“Consider an idealized transaction between a master sushi chef and an unskilled protégé: the protégé, ideally, would simply ‘buy’ the expertise he wants for a fair price up front, just as he would for any durable good. Unfortunately, the cash value of the chef’s accumulated knowledge is likely to exceed any amount a novice could possibly afford.”
Rayo and Fudenberg find that if the trainee cannot immediately “pay” (hypothetically) for the training, then the person training them is not in a position to “drop everything” and help them learn. In contrast, if the person training them offers to let the trainee pay them back down the line, then the trainee has unfair leverage in the economic exchange.
“Given this economic impasse—a novice wishes to ‘buy’ knowledge that she cannot currently afford from a master who cannot reliably extract payment for it in the future—how can the two parties make their exchange?”
The (Potential) Trainee Grunt Work Solution
Rayo and Fudenberg’s potential solution is a mathematical model where “the master and novice simultaneously choose how much time and effort to expend working with each other.”
“One way to profit from your novice is to keep him around working for a long time by training him slowly,” Rayo tells Pavlus. “Maybe his brain would be able to learn all of your knowledge in one or two years, but you might take ten years.”
The trainee grunt work dilemma arises often early in the training process. Considering those starting their careers are not often economically in a stronger position than the person training them, the trainee needs to work, but doesn’t yet have the requisite knowledge to complete higher-level work. However, Rayo argues, there is a benefit.
“In professions where there’s a considerable amount of knowledge to transfer, the model predicts that you’ll tend to observe large amounts of menial work early in the relationship,” he says.
To curb instances where the trainer overworks the trainee, or forces them to do tasks that are not related to the productivity of the job (such as hazing), Rayo and Fudenberg argue regulations need to be in order.
“For example, in 2003 the Accreditation Council for Graduate Medical Education introduced rules restricting the average number of hospital work-hours for medical residents to 80 per week. But Rayo’s model predicts that this kind of regulation will simply induce the hospital ‘masters’ to extend the length of medical residencies to compensate. And there are, indeed, places where this is happening.”
Rayo says, “If you’re serious about regulating these employment relationships, the model shows that it’s better to limit hours worked and limit the overall length of the apprenticeship at the same time.”
While the thought of regulation makes some shudder, Rayo argues its for the greater good. “What masters lose from the regulation is less than what apprentices gain from it.”
Check out Pavlus’ story “Why Do Trainees Get Stuck with So Much Grunt Work?” over at Kellogg Insight.