Episode 132 - Andreas Kraft: "Being a student athlete..."

Assistant Professor of Marketing and Asness Faculty Fellow Andreas Kraft is on The Course this week to talk about his experience as a student-athlete. Professor Kraft came to the US as an undergrad with a scholarship to play wheelchair basketball, with thoughts on going professional. However, with time, he finds himself asking more and more questions related to marketing in his economics classes, and got intrigued by the research world. Eventually, he continues his academic journey and graduates with three degrees, and is now teaching and researching in the Chicago Booth School of Business.

Transcript

Stephen00:00
Hello, and welcome to The Course. I'm your host, Stephen, and today I'm speaking with Professor Andreas Kraft of the University of Chicago's Booth School of Business. Professor Kraft is an Assistant Professor of Marketing at the Booth School. Originally from Vienna, he holds a PhD in Quantitative Marketing from the University of Texas at Austin, where he was awarded the Fred Moore Assistant Instructor Award for Teaching Excellence in 2022.

He's here today to talk with us about his career as a student athlete, what his quantitative marketing research entails, and spoiler alert, it might help you pay less for your next used car, and more. And of course, how he became a University of Chicago professor.

Professor Kraft, welcome to the course. It's really nice to see you. How are you doing? 

Andreas Kraft00:41
All right. Thank you. I'm doing very well. How are you today?

Stephen00:43
I'm doing well, thank you. Let's just start with the basics. Can you please tell our listeners, what your role is at UChicago and just a little bit in layman's terms about what you really do there. 

Andreas Kraft00:56
Yeah. So my name is Andreas Kraft. I'm assistant professor of marketing and Asness faculty fellow at the University of Chicago Booth School of Business. I'm in my second year and I'm mainly researching topics related to quantitative marketing here, and I'm teaching MBA students as well. 

Stephen01:11
Okay. Thank you. And we'll, we'll get into a lot of this, I think in more detail later, but just, could you quickly explain what quantitative marketing is for those who aren't familiar. 

Andreas Kraft01:21
Yeah. So quantitative marketing is the study of marketing, but from a quantitative perspective. So. I use methods that I borrow from economics to answer questions that are relevant to marketing. So think about firms interacting with consumers largely. 

Stephen01:34
Okay. So we tend to ask people what they wanted to be, or what they thought they would be doing as a kid. I've never heard anyone say that their childhood ambition was to study quantitative marketing. Was that the case for you or how did you, what were your sort of early interests as a young person?

Andreas Kraft01:51
Yeah, so you're definitely right. I don't think anybody has the goal of being a marketing professor at a young age and it was not different for me. So when I was young, I had much more normal goals. I think when I was five years old, I wanted to be a firefighter. When I was a little bit older, I realized that's probably not going to happen.

But I was really into sports as a young person. And so for a while I was very focused on sports and I figured that would be a big part of my life, at least until I'm maybe 30, 35 years old. So that's maybe not a long term job, but at least at this point in my life, I probably thought for a long time I would be still playing sports professionally. 

Stephen02:24
What sport or sports, out of curiosity. 

Andreas Kraft02:26
Yeah. So I was playing wheelchair basketball as a kid and I was quite successful in that. And eventually that's also what brought me to the United States, but I'm sure we'll talk about that a bit later. 

Stephen02:35
Yeah. Okay. Well, yeah, I certainly do wanna hear about that, but yeah, I mean, can you just describe you're kind of like, how your interest evolved and how you got from that stage to you know, being interested in business and now being an academic?

Andreas Kraft02:55
I grew up in Austria and Europe and over there you don't really take much economics courses. That's not really part of high school curriculum. But what I was doing in high school was playing wheelchair basketball and then eventually I got a scholarship from a school in the United States. That school was a pretty small school in Texas called UT Arlington and I took that scholarship and I moved over there to play wheelchair basketball. 

And then in the U. S. you're a student athlete, so you do both athleticism and student things. And I realized once I took my first class in econ, then that's really something I was quite into.

And as I was taking more and more economics courses, I realized I enjoy that way of thinking. I enjoy the problems that economics thinks about. And over time, basketball kind of slipped more towards the background. And I realized I'm much more inclined to academically achieve some goals. And so I was focused more on economics and then eventually I did my master's in economics as well, which helped me prepare for grad school.

And then eventually I ended up doing my PhD at the University of Texas, Austin in marketing. And then that was my formal education. 

Stephen04:01 
Just I just want to zoom in a little bit on the student athlete component that, that you mentioned. How did you find that, you know, having those two roles? Was that a challenge? Were there benefits that you still see, or yeah, how did that unfold?

Andreas Kraft04:17
Yeah. So I think it combines two things that at that age, you tend to think that sports is more important, but being forced to actually go to university and learn about things is very helpful because you actually find interests that you maybe didn't anticipate. And I think for me, it was quite similar.

At first I was very focused on sports and throughout my whole time I was on my scholarship, I was obviously very focused on sports, but I did realize that that might not be the best long term thing for me. And I realized that by being a student athlete, having the opportunity to, you know, take classes, learn about all kinds of things, because the U.S. system is also a lot more diverse in terms of undergraduate education. So I think it just exposed me to academics at an early age where that was very helpful for me to really find my interest in economics, which I probably wouldn't really have found if I would have been in Europe at that time.

Stephen05:12
I think you said, you know, there were certain questions in economics that really interested you. Do you remember what those questions were or just kind of what the genre of thing that spoke to you was as you were getting your feet wet in that field?

Andreas Kraft05:26
So I don't really remember any particular questions, but more broadly, I think, kind of think about firms interacting with consumers. was always interesting to me, but economics actually gave it a structure that made it very easy to think about. 

So if you think about consumers, they have some sort of utility that they're trying to maximize. Firms have some sort of profit to maximize. And then even if you only keep those two things in your mind, you can make sense of a lot of things you see in the world going on. And I think having that framework and having actually a structure to think through stuff as opposed to just every time you see something happening, trying to figure out what's going on.

I think that really helped me find appreciation for economics as a way of thinking about problems in economics.

Stephen06:09
Yeah, I mean, I don't know about your undergraduate school specifically, but generally, you know, economics is a very popular major here. But most people don't go on to study at a graduate level and, and then to end up actually teaching it. So I'm curious, was there a moment or was there one particular thing that you can point to that influenced your decision to actually pursue that at the graduate level?

Andreas Kraft06:35
I think a lot of people have like a long term goal of going to grad school. I think for me, it was more like a slow trickle. So I did my undergrad and then I had one more year left of my scholarship for basketball. So I started my master's. And during my masters, I kind of realized that all the stuff I'm learning is interesting but feels like it's barely even scratching the surface.

So I wanted to, you know, kind of learn more and then I realized that research is actually how you learn more than just in classes. And then it slowly evolved into me just wanting to learn more and trying to understand the world a little bit more. And I guess I didn't really have that one aha moment and I didn't dream about it when I was four years old, but eventually I realized that to fulfill my intellectual curiosity, that might be the best path forward. 

Stephen07:24
Yeah, just tell me a little bit about where your interest took you as a graduate. Like what projects, what questions were you working on?

Andreas Kraft07:32
Yeah. So when I was a graduate student, I, as mentioned, I was in a marketing group and I think marketing is a very broad field because there's a lot of different approaches. So I mentioned earlier that I was working on quantitative marketing, but some other people within the field work on consumer behavior, which is a lot more psychologically founded.

And even just being exposed to those different approaches, me being more economic focused, other people being more focused on psychology. I got interested in combining those two, and I'm not the first one, obviously, there's a whole field of behavioral economics that combines psychology and more economic approaches, but during my grad school time, I realized that there's a lot of interesting applications in marketing where we might know how consumers behave in a certain way, but we don't really always know how firms are going to react.

I think a lot of the questions I was exploring in grad school were related to that to some extent and my, my main paper I wrote during grad school is also related to that. How firms react to consumers that are biased in a certain way. 

Stephen08:39
  How do you measure that? Like what are the tools and methods that you were using?

Andreas Kraft08:43
Yes, I use, I tend to use secondary data. So I find big data sets and then within those data sets, I find patterns that seem consistent with what I'm trying to describe. And then there's a whole, there's a whole field in economics that tries to causally infer certain effects and there's just a lot of methods that people have developed that I'm able to use.

In my main paper in grad school, I looked at the car market. And a previous paper identified a fact that people, when they read the odometer of a vehicle, read left to right.

So for example, a vehicle that has 70,000 miles feels like it's a lot more than 69, 999 miles. And then if you look at the data, you see that there's really nice differences in the price of those vehicles. So if you just go up by that one extra mile, all of a sudden the car is two, three hundred dollars cheaper on average.

And then, so this was actually, in this paper, I was actually able to identify a lot of the effects that I wanted to show just by looking at pictures of plotting the price along the axis of mileage. So I think sometimes something very simple can actually show you a lot more than very sophisticated methods.

But obviously you still want to use some of those methods to make the case a little more rigorous. 

Stephen09:55
That a very interesting and surprisingly simple example, actually. I gotta keep that in mind, next time I'm shopping. But you know, I asked about your graduate experience, overlooking the fact that you have, I believe, three graduate degrees. Am I correct? 

Andreas Kraft10:12
Yeah, so I think one of them is my master's in economics. Then I got my PhD in marketing. And along the way, a lot of times PhD programs also award a master's after the three year mark. So I got that as well from UT Austin. 

Stephen10:25
By the time you started pursuing a PhD, were you pretty sure that you wanted to teach or did you see other potential applications for that?

Andreas Kraft10:32
So I think when I started my PhD, I was very focused on research. I was just interested in research. And I think I was pretty, pretty certain that I wanted to go down the academic route. I think there's always uncertainty because, there's just a lot of competition coming out of grad school, and so I didn't know if I was going to be able to achieve that, but it was at least a goal to find a good academic job where I'm able to do what I wanted to do, and that's research and teaching.

Stephen10:58
Who would you say are, have been some of the most important figures in your journey overall? And I mean, I'm either way back or, or people who are important now, but yeah, who would you just say are some really important figures or mentors in your academic journey?

Andreas Kraft11:12
I think there's a number of people, so the first person I want to highlight here is that when I was at the University of Texas at Arlington, which is schools in economics. But I had one really amazing professor, Professor Michael Ward, and I took some of his economics classes. And he talked to me about research and about some of the things that I might find interesting.

And he was actually the person that got me interested in marketing. And by getting me interested in marketing. I don't mean that he got me interested in questions related to marketing, but here's the person that told me that questions I'm interested in are actually marketing. So even within economics, I was asking questions that most people would consider marketing.

And so finding out that there's a field called quantitative marketing where I can actually find other people who are interested in the same problems and use similar methods. That was extremely helpful. Then I think during my grad school, I was just I had a very supportive department. I had a lot of fellow students that were all willing to talk about research, willing to talk about other things all the time. So I think just having a nice cohort during grad school was immensely helpful for me. 

And then just along the way, I think there's so many faculty members that I was able to talk to and learn from. So I think that's just. a huge amount of people that, you know, I learned something from each one of them.

And now I arrived at Booth and I think one of the great things about being here at Chicago Booth is also that there's, I think there's about 150 faculty here now. And every day I talk to some of them and every day I feel like I'm talking to somebody who's extremely smart and I get something out of those conversations.

And I think, again, like it's just very nice to have a mass of people around you that are all willing to talk to you and extremely smart and knowledgeable. 

Stephen13:00
Yeah, I'm glad to hear that. Yeah, so that brings us to where you are now. We're in the middle of the summer here. So I realized that right now things might be slightly different, but during a typical, like a typical quarter, what is the balance of your duties look like?

Like how much research were able to do? How much teaching are you doing? That kind of thing.

Andreas Kraft13:19
Yeah. So I think typical day is a little bit hard to define because. I'm teaching in one quarter of the year and during that quarter I'm very focused on teaching. So I have one day where I'm pretty much spending the whole day teaching and then I'm doing a lot of prep the other days and that quarter is very focused on teaching.

It's very, I'm very much focused on my students, trying to make the experience for my students as best as I can do and trying to just get the most out of it for them and for myself. 

The rest of the year it's very focused on research. So I think when I'm not teaching, pretty much 95 percent of my time I spend here at the university, except for the time I'm eating or having coffee with my colleagues, is spent on research.

And I think that's one thing that the university is really good about, that they're really trying to protect my time as a junior faculty and give me the time to work on research. And so I think to answer your question, there's not really an average day, but for most of the year, my average day is very heavily focused on research. 

Stephen14:21
Do you think that that's preferable? Kind of like having, you know, you're on for a quarter teaching and then you're spending one in research. Does it help to have it compartmentalized like that?

Andreas Kraft14:29
I think so. I mean, I think it helps me because I can really focus on teaching for those nine weeks and then I can, you know, the rest of the year, not worry about it too much. And I think it's good for the students as well, because if I'm a student in my classes, at least I hope that their experience is that I'm able to commit a lot of time and commit a lot of energy.

And I'm trying to be there for the students. And I think if I would be teaching more spread out through the whole year, it might be a little bit more difficult. And then the trade-offs would be a little bit different.

Stephen14:59 
Can you tell me a little bit about your research and like what, you know, what is exciting to you or what questions you are investigating right now?

Andreas Kraft15:08
Yeah. So I think what I mentioned earlier about this idea of what happens when consumers have certain biases or act in a way that maybe not standard, I'm still very interested in those questions. So I think some of my projects that I'm still working on is one, I'm trying to finalize my paper I talked about earlier where I look at the car market.

And then I have some other papers where I'm trying to think about some of those other behavioral biases and how they affect consumers and how they affect firms. So I'll just give you one example of a paper I'm working on right now. And that paper is considering the question of in group bias. So that's this idea that has been around for a long time of in group bias. So we tend to treat people that are in the in group different than people in the out group. And you may have seen that, like if you're a kid in a schoolyard or you may have seen it in many different settings, but we don't really know how that's going to affect firms. 

And I'm looking at it in the context of salespeople. So I'm trying to match two very large data sets and try to identify what happens if a salesperson meets a consumer that's similar to them or very different from them. And you can think about for firms that might actually be a really good thing. And for the firm, it might be good because, if my salesperson, say, went to the same college as the person they're trying to sell something to, they might actually really know what that person is looking for and it might be easier to sell and they might be, you know, have advantages in selling to those people just because they know their needs a lot better.

The other side could be that if we went to the same college and I'm trying to sell you something, I might really like you and I might just give you a really good deal because we went to the same college and that's obviously not good for the firm then. So I think that even here is some tension where we have a bias, in group bias, out group bias. We don't really know how it's going to affect a firm in a particular setting, and I think it would be nice to know if some of those biases that we've shown very rigorously in the lab, with undergraduate subjects or even with like online subjects, if that actually has some effect on larger markets.

So that's one of my projects, but I think Mmst of my projects are in that vein of trying to really understand if some of those behavioral biases, nonstandard behaviors, actually affect firms in a specific way. And then if we can, you know, think more about how they affect firms and what firms do about them. 

Stephen17:28
I will have to, I admit that my first thought as you were talking about that was like, oh yeah, well, I'm gonna get a deal then if we went to the same school. But obviously, yes, not ideal for the firm. What, this is a very broad question that we ask everyone, but what do you think is your favorite thing about your current role?

And is there anything about, you know, your responsibilities right now that you don't particularly enjoy. 

Andreas Kraft17:56
So I think favorite thing I would have to say to my colleagues, because I think working on research and having time to do research is obviously important. But I think the one thing that makes University of Chicago Booth actually the most unique and the most different from talking to other people what they experience at other universities is just having colleagues around all the time who are so generous with their time and willing to talk to you about anything pretty much. 

I think that's a really nice part and I think I've been here one year but it still feels very nice and still doesn't really feel like standard, like it still feels like people are extremely generous. 

In terms of things I don't like, I think it's pretty hard to come up with any. I might still be in my honeymoon period after only being here for one year, but I think if there were any particularly big issues, I probably would have realized by now, but yeah, ask me again in a couple years. 

Stephen18:51
We will have you back and see, see how things have shifted. Well, no, that's, that's good to hear. What advice do you think you would have for someone who, uh, was considering business school or considering, you know, similar types of research and pursuits to, to what you've pursued?

Andreas Kraft19:06
Just trying to see where interests take you seems to be the approach that's maybe the most successful, but at the very least it's the most enjoyable. I think sometimes we lose track of how long everything takes in academia. So for me, I started my undergraduate degree in 2011 and I started my faculty job in 2023.

So I spent a lot of time in school. And I think if I would have spent those years doing something I really don't like, I would have probably wasted 12 years of my life on something I didn't really like. And then maybe I would have a great job now, but I wouldn't even like that job as much, because I wouldn't be interested in this stuff.

So I think actually following your interests can be very much a hedge against bad outcomes, because at the very least, if you have a bad outcome, you enjoyed what you did up until then. And I think if you are someone who's in a position to actually, you know, get into a good grad school program or is in a position where they can apply to those top schools or top programs or anything grad school related. That means that you're pretty smart anyways. I think most people don't realize that. 

To be at this point, you're going to be a smart person anyways, and then failing is not really that bad. So, a lot of times I think about it as well and compare myself to my parents. So my parents, uh, they have reasonable jobs, but they're not academics, they're not particularly rich or anything along those lines.

So I think when I was in grad school, I realized that my stipend for grad school was already somewhat comparable to what they were making when they were my age. So I think just having that reference point relatively low in terms of income helped me a lot to kind of see everything as a gain and following my interests.

But I do understand that some people might have particular goals in life and then achieving those goals might be much more important to them. But I think what worked out for me and it's obviously a lot of hindsight bias and if things wouldn't have worked out as well, maybe I would be giving different advice. But I think following my passion really helped me enjoy the path to where I'm at now.

Stephen21:13
Yeah, that's a very healthy attitude. I'm also, I'm curious business school in particular, like does someone in your position often think. I could go, you know, I could move and actually work for a company, like I could go into industry or you feeling pretty much like you're going to stay in a role similar to what you're doing now?

Andreas Kraft21:35
Yes, I think I'm very happy where I'm at right now. And I think the role of business schools historically has kind of shifted. So if we think back 30, 40 years, There were a lot of small businesses that actually had a really hard time doing very basic stuff. And over time, I think business schools collaborated a lot with industry and industry got better at things and a lot of the knowledge really helped.

So I think there's a lot of examples you could cite where. Things that we're taught in business schools actually made business a lot more productive or whatever you want to call it. I think nowadays we have some of the biggest companies think about like Amazon, Facebook, and those companies hire a lot of PhDs that might alternatively be working at business schools.

And I think they know a lot of things, so I don't think that they necessarily have to rely on the research that we are doing here. So I think my interests are not necessarily in what people would have considered marketing 40 years ago, which is how can we maximize profit by selling more of a particular product?

But it's much more about understanding kind of like at a higher level what firms are actually doing. And I think my subfield of thinking about behavioral economics and marketing, there's a lot of ways that firms might be doing things that might not necessarily benefit consumers. And I think there are some things that might look like they're hurting consumers, but they're actually not hurting consumers.

I think understanding those problems is what I find very interesting, but I don't think firms have a particular interest in understanding that because it's not that important for them. They want to maximize their profits or they have their other goals. Whereas for me trying to understand marketplaces and incentives at a higher level, I think, it's not going to translate one to one to what I would do in a firm, and I'm sure I've really enjoyed the academic environment. 

Stephen23:24
Yeah, I guess, right, that kind of really like high level analysis is not the first place that a firm is going to dedicate its limited like marketing resources, right? Right. What would you say you are finding most fulfilling about what you do at UChicago? 

Andreas Kraft23:40
I think the most fulfilling part of my job would still be kind of like the intersection of research and teaching. So I think some of my research I was able to use in my teaching and actually seeing when students hear about your research and they kind of get interested in it and they start talking about how they can apply stuff like that. I think that's quite fulfilling because you actually see that what you're working on in terms of research has real world impact. And even though it's maybe small, like there's only, say, 50 students in the classroom, if they can learn about something that I find interesting and they also find it interesting, I found that quite fulfilling when I was teaching here for the first time. 

Stephen24:17
We're just about at time but on the subject of teaching I do see that you have won an award while you were at UT Arlington for excellence in teaching. And I'm curious not to make you brag on yourself, but what do you think you brought to that that resulted in you winning that? Like how would you describe your approach to teaching?

Andreas Kraft24:41
Yeah, so I think broadly my teaching approach is, I'm trying to see students as being the ones that can actually bring something very interesting to the table. So I think my teaching is very interactive. I'm trying to bring in students, I'm trying to draw on their experiences and trying to use what they know about, you know, their own experiences and trying to link it back to class concepts.

So I think obviously a lot of the class is gonna be about, you know, me communicating concepts or ideas or something about marketing to students. But I think what is actually the most interesting part for me as well, it's. Learning from students and having students learn from each other. And I think if you can actually design a class that allows for that, students seem to find that quite interesting and quite enjoyable.

Stephen25:28
Thank you, Professor Kraft, for your time today. And Course Takers, if you enjoyed today's interview, please check out the other ones. Leave us a comment, subscribe, follow, and share this episode with your friends and family. You can find out more about the University of Chicago through uchicago.edu or the university's campus in Hong Kong through uchicago.hk. Stay tuned for more, and thanks for listening.