Thoughts on Economic Consulting?

What is the general consensus around economic consulting firms like Charles River Associates, Nera, Cornerstone Research.

What kind of projects do people in this type of work perform when compared to the traditional strategy consulting roles found in the traditional consulting firms? 

What are the laterals and exit ops like?

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Comments (16)

Nov 15, 2020 - 12:26pm

Even though econ consulting has the word "consulting" in it, my understanding is that the job itself is quite different-- they tend to focus on regression, and more econometric methods and heavier emphasis on data analysis than you'd probably experience in management consulting. A lot of work with law firms and legal matters. I think business school placement is pretty good, but to give you a sense of what they do, people also go to law schools and PhD programs (can't really speak to laterals)

Nov 15, 2020 - 12:38pm

I know some econ consulting firms have a lot of working financial modelling for specific sector practices (Charles River for instance). Have you heard of laterals into IB or PE a few years out? To me, it sounds like the skill sets are transferrable given the depth of the financial analysis and sector research. Or perhaps it's more common for the business school exit and re-recruit into MC/IB/PE? 

Nov 15, 2020 - 12:51pm

my understanding is heavily influenced from old threads here, but I've seen the consensus being that econ consulting will get you into a good business school and then you re-recruit (though take what i have to say with a grain of salt, hopefully others will comment, or better yet, search linkedin)

  • Intern in Consulting
Nov 15, 2020 - 8:41pm

I was recruiting for some Econ consulting, and while doing so did many linkedin searches to try to understand career paths. I also did an externship at an econ consulting firm.  Here is my understanding:

- They do a lot of legal work: antitrust cases (is A & B merger anticompetitive), damages calculations in securities fraud (The company hid information, how did this affect stock prices), intellectual property damages, etc.  I would look at some of the firm's websites for information.  Typically the firm's analysis supports an expert witness in court.  

- Exit opps are mainly to data analysis in tech companies (FAANG pretty common), business analytics, and any role that involves data.  More common though are MBA, PhD, and JD programs- the big Econ consulting firms have amazing placement into M7, T15 law, top phd, etc.  

- If you are interested in economic consulting, Cornerstone, Analysis Group, NERA are all elite groups that are highly regarded.  Brattle CRA Compass Lexecon and others are strong as well.

- I would be hesitant to compare Econ consulting to strategy consulting.  Cornerstone vs McKinsey isn't a question of "what is better?" but "Would you rather do Econ consulting or strategy consulting?"  The work requires very different skillsets (Econ is more data analysis focused and you will use R, STATA, SAS, etc).  It is a lot more for the student who is passionate about economics and are interesting in doing data analysis all day.

- Recruiting for these firms is very competitive, maybe slightly less than strategy consulting.  I know people who got rejected after the first round at the firms above and went on to get MBB offers.    Obviously the more selective firms like Cornerstone are very competitive to get into, but others are definitely less competitive. 

Edit: Although I think my understanding is accurate, one of the other posters on this thread actually works for one of the econ consulting firms, so definitely hold his advice with more weight than mine.  Although interacting with people/former employees at the firms is the best way to get advice. 

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  • Works at Charles River Associates
Nov 16, 2020 - 12:27pm

As someone who works in the industry, I can provide some insights. You will mainly work on things like anti-trust, cartel and competition cases. Most of your work will be for law firms who represent their clients. Essentially, you are providing the economic expertise as part of a larger legal advisory package. You will always know who the end client is, but you will not necessarily solely interact with them. Although I only mentioned 3 types of project, these encompass most of what you will do but are also quite varied (e.g. you could work on a pro-merger economic model for a corporate M&A or investigate a price fixing cartel for a government). Exits are mainly to competitors since the work done by the main players in the industry is virtually identical. You may end up going to business school, but that is rare and frankly not that relevant. Other less common exits can be for economic advisory positions at large corporates or potentially banks. A PE/HF exit is essentially unheard of.

Background for entry level people typically tends to be UG + Masters in economics (obviously) with focus on microeconomics or industrial economics. PhDs are usually for those hired in more senior roles, although experience is what makes you valuable in this field. Unlike IB where any quantitative profile flies, having a background in engineering, physics or maths won't cut it simply because this is such as specialised field that you need to know how the numbers relate specifically to microeconomics.

I may be bias but, generally speaking, the top firms in this space are CRA, NERA, The Analysis Group and Compass Lexicon (which is part of FTI Consulting). Other notable smaller firms are Frontier Economics, Cornerstone Research, Oxera and RBB Economics. Edgeworth Economics is also a solid name, but CRA poached a significant number of their top people recently; not saying this as a brag, just something you should be aware of when applying and how it may impact project flow.

This field is a really cool and interesting one that can teach you plenty of valuable skills. You will also face consulting projects you will never face anywhere else due to the niche nature of the work. The only thing to watch out for is that it can pigeonhole you, so think long and hard if you really want to be in this industry. If yes, I'm sure you'll end up enjoying it. Best advice would be to do an internship so you get a taste of things and decide based off that.

Nov 16, 2020 - 12:42pm

Thanks for the detailed breakdown. My main concern is the downside you mentioned regarding how I may be pigionhole'd especially if I specialize out of UG/Masters in a specific sector.

I actually have a interview at one of the firms you mentioned above, could you PM me so I could ask some more detailed/targetted questions on your experiences in particular?

  • Analyst 3+ in IB-M&A
Dec 14, 2020 - 10:33am

One of the smaller econ firms worked alongside our MBB team. They focused on a very detailed cost assessment in a heavily regulated industry trying to reconstruct accounts. Didn't see them myself but heard they were nice guys. Solid work as well but, again, extremely detailed. Probably an artefact of the more legal work they do. Seemed like a good training ground for moving to a larger 'strategy' player. 

Nov 23, 2021 - 7:30am

I used to work in the industry (nearly 10 years ago) and made a huge Q&A thread a while back which used to be one of the top search results for economic consulting, but I can't find it anymore. Suffice to say the advice here is mostly pretty good. Most common exit op is definitely MBA + econ PhD but there are still lots of internal data science/finance/strategy exists you can make. "Data science" didn't really exist when I was in the industry, I did a lot of SAS program but just considered myself an analytics/data guy (if I was forward thinking enough to brand myself as a "data scientists" and learn Python perhaps I could have done something really cool).

As others have pointed out all the work you're doing is in a legal context, usually to prepare expert reports submitted in legal proceedings. As an analyst it's drilled into your head that there can't be any errors ever (so the testifying expert isn't made to look like an idiot by the opposing expert) which is why these firms have extreme standards for auditing/quality control.

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  • Analyst 1 in Consulting
Nov 23, 2021 - 5:35pm

Worth noting that econ consulting is slowly moving towards using Python / R in work in addition to standard Excel - especially great if you want to move to tech.

At my company my group was almost exclusively using Python

Nov 23, 2021 - 11:05am

Seems super interesting and intellectually stimulating. I have no idea what exit opps are like, or even comp or hours, for that matter, but I would imagine that you could potentially make a difficult exit into a thesis-driven PE role if you show well in interviews and can sell the story.

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Nov 23, 2021 - 4:54pm

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