Orszag urges grads entering tough economy to be resilient

White House Budget Director Peter Orszag urged new college graduates entering a tough labor market to be resilient.

"The labor market, though recovering, is still not strong," Orszag said Saturday in a commencement speech at Rensselaer Polytechnic Institute in upstate New York. "Too many of you despite the world-class educations you have and the skills you've acquired here at RPI are headed back home without a job, or back to school out of necessity without a choice."

Orszag urged the graduates to embrace risk and learn to adapt, telling them that the "adversity quotient" matters more than IQ, the intelligence quotient.

"Ultimately, it is that stubborn refusal not to be deterred that has built America," he added.

Orszag, who graduated from Princeton and has a doctorate in economics from the London School of Economics, also called on graduates to "be empirical," using actual evidence and not just theory as they made decisions in life.

He knocked a central tenet of classical economics holding that each person behaved like a "rational supercomputer" that would take the path that best furthers self-interest when all of the information is available.

"I think most of you would agree that this rational assessment of costs and benefits is not quite how you wound up with a cap and gown today," Orszag said. "Instead, there were a host of factors including the norms of those around you that excited you about computer engineering and science, who made it clear that doing well academically was not just a necessity but actually cool."

Orszag has boosted ideas favored by behavioral economists in the Obama administration, including in budget proposals a plan to require firms to automatically enroll employees in 401k accounts as a way to increase retirement savings.

"The bottom line is that as you pursue whatever field you will from this day forward, always try to square the theory with actual observation," Orszag said. "Ask the tough questions about conventional wisdom. Often the result will be to go down unexpected paths and even bigger rewards."