Two more prominent awards for Economics

Univ of Chicago has given 9 Nobel Prize Winners as per Nobel Prize Committee list (They basically see what Univ is one at at the time of award, so someone who gets an award when he is at MIT but has taught earlier at Univ of Chicago, The committee would cite MIT in its award). This press release from Univ of Chicago tells me till 2004, out of 55 Nobel laureates 23 were associated with Univ of Chicago either as students, associate professors etc. This is quite a number.

Thanks to Economic Principals, I just came to know about 2 more awards:

1. Bernácer Prize : awarded by Observatory of the European Central Bank given to European Economist under 40 (similar to Clark Medal). Given every year and is named in honour of Germán Bernácer (1883-1965), the first Spanish economist who made significant contributions to the development of macroeconomic research, the BERNÁCER PRIZE was established in 2001 to recognise the work of young economists from the European Union and to stimulate research on European macroeconomics and financial issues.

There have been 5 winners so far:

• 2001 Philip Lane (Trinity College Dublin),
• 2002 José Manuel Campa (Graduate School of Business New York University and University of Navarra)
• 2003 Luigi Zingales (GSB Chicago),
• 2004 Stephanie Schmitt-Grohe (Duke),
• 2005 Monika Piazzesi (GSB Chicago) and
• 2006 Hélène Rey (Princeton)

Again 3 out of 7 are from Univ of Chicago!! Another thing to note is that where as we have only one woman who has won the Clark Medal. here it pretty Even-Stevens.

2. The Elaine Bennett Research Prize : Awarded by American Economic Association (the one that also gives the Clark Medal) and is awarded every other year to recognize, support, and encourage outstanding contributions by young women in the economics profession. Elaine Bennett, made significant contributions in economic theory and experimental economics and encouraged the work of young women in all areas of economics.

The winners:

• 1998 Judith Chevalier (GSB Chicago....has now moved to Yale)
• 2000 Susan Athey (MIT.... has now moved to Harvard)
• 2002 Esther Duflo (MIT)
• 2004 Marianne Bertrand (GSB Chicago)
• 2006 Monika Piazzesi (GSB Chicago)

Out of the two lists I have only read Esther Duflo( just a bit though) and Luigi Zingales (a little more) . Duflo focuses on development research and Zingales on Financial Economics.

Zingales is a star and his research work on financial markets is quite extraordinary and always provides a lot of food for thought. He has written extensively with Raghuram Rajan and together have written some landmark papers on capital structure, impact of finance on growth, underdevelopment ( I mentioned about their work here and here). His/Their work is a must read for all looking at finance as their careers.

Assorted Links

1. A super speech by Fed Governor Mishkin on Globalisation and Financial Development. He also talks about the role of institutions in financial development, the topics I had blogged on previously (here and here) He is one of my favourite economists. His papers are one of the simplest to read.
2. On Hedge Funds (By Brad De Long) . On Hedge Fund salaries.
3. A good review of Susan Athey's work (mentioned in previous post). Here is David Warsh praising her work. Here is Economist Profiling her work
4. Lee Iacocca Interview .
5. Diary of an Investment Banker. How little money they make?
6. Contronyms?? Find out for yourself

Thanks to Marginal Revolution for 2 (1) & 6, Finance Professor for 2(2), 4 & 5 and New Economist for 3

Profiling Daron Acemoglu's work

I came across this wonderful line in something I was reading:

To paraphrase Robert Lucas (1988), once one starts to think about economic growth, it is hard to think of anything else.

I can't agree more with this sentence. It sums up my state of mind in recent months. Initially, I used to understand this field as run of the mill types with little to offer only to realise how wrong I was. I continue to be amazed by the work done so far in the subject and the approaches taken by economists to arrive at their own set of conclusions.

As I am still new to this subject (which is a case with most of the subjects) I would like to take up the papers one by one. I have covered a paper by Rajan/Zingales which attributes low underdevelopment to the initial factor endowments in a country. Their idea is very different in the sense that even if you create reforms, development may not happen if the initial factor endowments are not distributed equally.

Recently, I have begun to read growth and development work by Daron Acemoglu. Another Clark Medal Winner (Here is Levitt congratulating Acemoglu) and has done some remarkable work on the same. There is a very good overview of his work by Robert Shimer whose name I picked from Freakonomics Blog. Levitt says he could have been one of the leading contenders for the Clark Medal. That got me to searching Shimer's work and I discovered this gem of a paper summarizing all of Acemoglu's work so far. Here is the paper. Considering the fact that Shimer has coauthored some work with Acemoglu, it again emphasises the importance of having a thinking partner.

His other work looks equally good but it his work on institutions and development, Investment and Growth and on Political Economy which has impressed me the most. I have been aware of his work on first of the three but to read the other two has been simply an eye-opener.

The question which often comes to mind is even US was a colony and so was Africa. Why and How did the two have such different levels of development? For how, there have been many factors - human capital formation, initial factor endowments, geography, education, institutions etc. Out of so many, institutions have been attributed as the most important cause for growth. And this is Acemoglu's view as well.

However, it is the answer to why that he has made a more valuable contribution to our understanding of growth theory. To cut the story short, in his landmark paper he attributes underdevelopment due to mortality rates in erstwhile colonies. Whichever colonies had higher mortality rates (due to malaria etc) the colonizers set up extractive institutions and wherever it was low, they set up good/efficient institutions. As the mortality rates were high in Africa, hence poor institutions and hence low development.

In another paper he shows that colonizers set up extractive poor institutions where the colonies were already rich & prosperous and efficient institutions where colonies were poor. Hence, India which was a rich country continues to be poor.

Well, again the basic idea is same that institutions are important. It is the approach towards understanding why certain countries grew and others didn't. There have been criticisms on the paper and there would continue to be more, but it is the basic freshness of the research which I feel is important.

But again, like other papers what is the hope for Africa and other poor countries. How do they change the institutions which have been set so many years back. How does somebody change the history? This is one aspect most economists agree is the most difficult part and continues to be a challenge for research.

I would continue to post on this fascinating subject. Keep visiting this blog.

Assorted Links

1. First and foremost Dani Rodrik has begun blogging. Well, this is going to be a treat to read. I had heard a lot about him and discovered his work just browsing and have been hooked on since. (For the uninitiated he writes on the topic I am currently really reading about- Growth and Development; He has criticised World Bank development program popularly called Washington Consensus really well in his papers). I loved the way he mentions about Hirschman award in his blog. You deserve it Sir! Here is a superb writeup cum interview on Rodrik and his work.
2. Milton Friedman's House :He had a great taste in interiors as well !!
3. Joshua Angrist (His profile is here) defends Levitt style research
4. How much should one Save? A nice one from Free Exchange Economist.com. Read this as well on Cottage Industry
5. Update 1: Here is Levitt defending his research

Thanks to Marginal Revolution for 1, 2 and 3

Steven Levitt..time to defend your research

This morning I read two blogs (here and here) which mentioned about Steven Levitt (his wikipedia profile is here) and his impact on economic research. Both the blogs quote newspaper article which criticise Levitt's research ( R'ber he is somebody who has been awarded the Clark medal ; For the uninitiated Levitt's research is on crime, population etc; he has coauthored the popular book Freakonomics)

He has often been criticised for giving rise to something which has been called "cuteo- nomics" i.e. asking questions which may not be economics but could simply be a good reading ( most I am sure don't agree). As he is hugely admired (because of Clark Medal) , the traditional economists have criticised him for making this field popular and making people look at all kinds of questions and calling them economists. The article does talk about few students who trained under Levitt and have written papers which could be interesting to read but you really cannot call it economics.

My view on this is that Levitt kind of research is interesting in the sense it helps us look at answers to those questions which have not been attempted before and gives a new dimension to the research. We often come across problems related to research where we have no data, do not know how to interpret results in different ways, this is where Freakonomics kind of analysis helps. However, everything has to balanced. The problem is not with the research perse but the proliferation of the same and in times when we are still struggling to answer basic questions in economics (what drives growth, how to reduce poverty etc). This is an area of concern and as the article shows Levitt has not been doing enough to defend his style of research. He is in fact promoting his style to answer more cute questions than traditional economic questions.