Department of Economics
We are currently ranked as the best economics department in the world. Our goal is to make sure we stay there.
Highlights of the Year
Two department graduates received important honors. Steven Levitt (PhD 1994) received the John Bates Clark Medal of the American Economic Association. This award is presented every other year to an outstanding economist under the age of 40. It was the seventh such award to an alumnus of the department. Margaret Garritsen de Vries (PhD 1946) was the recipient of the Carolyn Shaw Bell Award of the American Economic Association. This award is presented annually to an individual who has furthered the status of women in the economics profession.
A number of faculty members have received important honors and awards. Institute Professor Peter Diamond was named the Killian Award Lecturer for 2003–2004. The James R. Killian Jr. Faculty Achievement Award is the highest honor bestowed by the MIT Faculty on one of its own members. It was established in 1971 to recognize "extraordinary professional accomplishments by MIT Faculty members."
Associate professor Sendhil Mullainathan was named a MacArthur Foundation Fellow for 2002. Also known as the MacArthur "genius awards," these fellowships are awarded based upon three criteria. These criteria are extraordinary originality, promise for important future advances based on a track record of significant accomplishment, and potential for the fellowship to facilitate future creative work.
Associate professor Esther Duflo received the Elaine Bennett Research Prize of the American Economic Association. The Bennett Prize recognizes outstanding research in any field of economics by a woman at the beginning of her career.
Assistant professor David Autor was named a Sloan Foundation Fellow for 2003–2004.
A number of faculty members serve in leadership positions in various economics associations. Professor Diamond is the president of the American Economic Association, Professor James Poterba is a member of the executive committee, and Professor Nancy Rose is a member of the nominating committee. Professor Paul Joskow is the president of the International Society for New Institutional Economics. Professor Olivier Blanchard is on the Council of the Econometric Society.
Turning to students, graduate and undergraduate, next year's entering class of 21 PhD students will include 11 international students and 5 women (24 percent). Two in our entering class have National Science Foundation Fellowships.
Undergraduate enrollment increased this year by almost 12 percent. There were 107 undergraduate majors in economics (27 of whom are double majors), 196 undergraduate minors, and 363 concentrations completed in economics. Forty-six students received their SB in economics in 2002–2003.
Our graduate students did well on the job market this year, with 48 percent receiving assistant professorships in the top 20 economics departments and business schools. A total of 74 percent accepted academic positions, 4 percent took positions in government, and 22 percent obtained positions in the private sector.
Future Plans
Our department is doing very well. The atmosphere is warm and friendly, the research atmosphere is exciting, and faculty members are productive. Our junior faculty are particularly outstanding, and we see this as our main strength for the future. Some fields where we were less stronglabor economics and development in particularare expanding and attracting an increasing number of students. The new field of behavioral economics is becoming increasingly popular.
We have felt for some time that we had two major senior needs: one in theory and one in macroeconomics. We had two search committees looking at potential candidates. We have made an offer in theory to Steve Morris; the offer is still outstanding. The death of Professor Rudi Dornbusch and the departure of associate professor Jaume Ventura created needs in international macroeconomics and trade. Professor Ventura resigned his position effective June 30, 2003. He will assume a position at Universitat Pompeu Fabra in Spain. We have started a search process in both fields.
Competition from other universities' economic departments is becoming more intense, and our few competitors are often bigger and richer. We strongly feel that to maintain its position in the long run, the department must increase in size, both by expanding its core and the number of faculty members in major fields. While MIT has allowed us to create two new positions (one funded and one unfunded, which we are currently trying to fund), and we are thankful for its response, we believe that more will be needed in the future. We also have to secure one of our main assetsthe quality of our student poolby increasing the number of fellowships we can offer. We have been able to fund one and a half new fellowships in the past year. This represents some progress, but it is not enough given the decline in many of the traditional external sources of such fellowships.
Personnel
This was Professor Blanchard's final year as head of the department. Professor Bengt Holmstr��m will become the new head beginning July 1, 2003.
Professor Mullainathan was awarded tenure effective February 1, 2003. Effective July 1, 2003, associate professor Dora Costa will be promoted to full professor; assistant professors Guido Kuersteiner and Autor will be promoted to associate professor; and assistant professor George-Marios Angeletos will be reappointed.
Michael Greenstone will join the faculty as the 3M associate professor of environmental economics as of July 1, 2003. He received his PhD from Princeton University in 1998. His major fields are environmental and labor economics.
Haluk Ergin will join the faculty as assistant professor as of July 1, 2003. Haluk received his PhD from Princeton University and is a theorist.
Ernst Fehr will join the faculty as an annual visiting professor as of July 1, 2003. Ernst is currently the director of the Institute for Empirical Research in Economics at the University of Z��rich. He is an expert in experimental economics, a field that we do not currently cover.
There were 13 visiting faculty for all or part of academic year 2003. Annual visiting professor Jean Tirole taught a topics course in industrial organization. Annual visiting professor Mathias Dewatripont taught microtheory. Visiting professor Richard Baldwin taught trade economics. Visiting professor Christophe Chamley taught macroeconomics. Visiting professor Mark Gertler taught macroeconomics. Visiting professor Charles Kolstad taught environmental economics. Visiting professor Amitabh Chandra taught labor economics. Visiting assistant professor Kaivan Munshi taught development economics. Visiting assistant professor Rohini Pande taught development economics. Visiting assistant professor Botond Koszegi taught behavioral economics. Visiting associate professor Huntley Schaller taught political economy. Visiting assistant professor Marco Battaglini taught political economy. Postdoctoral associate Andrea Vindigni taught macroeconomics.
The department has three women faculty members, all of whom are tenured, and no minorities. All search committees are instructed to identify outstanding women and minority candidates as part of their search process. As part of the regular recruitment process for junior faculty, the department solicited/received 238 CVs. Twenty-two candidates (including five women) were selected for interviews. We made two offers this year, both to men. One of the offers was to Roland Fryer, a minority candidate. He chose instead to join the Harvard Society of Fellows.
Honors and Awards
Professor Angeletos was named a research fellow of the National Bureau of Economic Research.
Professor Joshua Angrist gave the Sargan Lecture to the Royal Economic Society in April 2003. He was also a coeditor of the Journal of Labor Economics.
Professor Autor was awarded an Alfred P. Sloan Fellowship for 2003–2004 and was the recipient of the National Science Foundation CAREER Award for Empirical Studies of Labor Market Intermediation. He also received Honorable Mention in the Minnesota Award for best paper on institutions and the labor market for his paper, "Why Do Temporary Help Firms Provide Free General Skills Training?"
Professor Abhijit Banerjee was a distinguished visitor at Washington University in St. Louis.
Professor Blanchard is a member of the Econometrics Society Council.
Professor Ricardo Caballero was invited to give the Bill Phillips Lecture at the Australasian Meeting of the Econometric Society, 2003.
Professor Costa will be a fellow at the Center for Advanced Study in Behavioral and Social Sciences for 2003–2004. She also received the Investigator Award in Health Policy from the Robert Wood Johnson Foundation.
Professor Duflo received the Elaine Bennett Prize of the American Economic Association. She was also nominated for the Best Young French Economist Prize given by Le Monde, le Cercle des ��conomistes.
Professor Glenn Ellison was selected as a member of the Institute for Advanced Study for 2003–2004. He was also the recipient of the MIT Graduate Economic Association Teaching Award for 2002–2003.
Senior lecturer Sara Fisher Ellison is the recipient of a fellowship from the Institute for Advanced Study for 2003–2004. She was also the recipient of the MIT Undergraduate Economic Association Teaching Award.
Assistant Professor Xavier Gabaix was the keynote speaker at the International Econophysics Conference in Indonesia in August of 2002and at the Second NIKKEI Symposium on Econophysics in November of 2002. He was also a member of the selection committee for the Econometric Society Conference held in Stockholm.
Profesor Jerry Hausman gave the 2003 Shann Memorial Lecture for the Australian Economics Society.
Professor Holmstr��m was the keynote speaker at the ESRC Conference on "Pay, Incentives and Performance in the Public Sector." He gave the Nancy L. Schwarzt Memorial Lecture at Northwestern University. He was also the keynote speaker at the 2003 CEPR Conference on "Organizational Behaviour, Structure and Change: The Economics of Personnel and Organizations" in Toulouse, France.
Professor Joskow is the president of the International Society for New Institutional Economics. He is also a member of the National Commission on Energy Policy.
Professor Whitney Newey was named program cochair of the 2005 World Congress of the Econometric Society.
Professor Poterba was invited to deliver the Munich Lectures in October of 2003. He gave the Marsh and McLennan Lecture at Furman University and the Hahn Lecture to the Royal Economic Society. He was a member of the Executive, Program, and Audit Committees of the American Economic Association through 2003. He will be a member of the nominating committee of the American Economic Association for 2003–2004. He was named the distinguished scholar of the American Council on Capital Formation for 2002.
Professor Rose was a member of the nominating committee of the American Economic Association for 2003.
Assistant professor Muhamet Yildiz received a Cowles Foundation Fellowship for 2003–2004. He was a session chair and discussant at the 2003 Allied Social Science Association (ASSA) Econometric Society Meeting and was a member of the organization committee and a session chair for the conference on Economic Design at New York University. He served as an associate editor for the Review of Economic Design.
Research Achievements
Faculty research resulted in the following published or forthcoming material:
- Professor Daron Acemoglu's paper, "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," written with Simon Johnson, was published in the Quarterly Journal of Economics.
- Professor Angrist's paper, "Protective or Counter-Productive?: Labor Market Institutions and the Effect of Immigration on EU Natives," written with Adriana Kugler, was published in the Economic Journal.
- Professor Autor's article, "The Rise in the Disability Rolls and the Decline in Unemployment," was published in the Quarterly Journal of Economics.
- Professor Banerjee's paper, "How Efficiently is Capital Allocated?: Evidence from the Knitted Garment Industry in Tirupur," written with Kaivan Munshi, is forthcoming in the Review of Economic Studies.
- Professor Blanchard's paper, "The Macroeconomic Effects of Labor and Product Market Deregulation," written with Francesco Giavazzi, is forthcoming in the Quarterly Journal of Economics.
- Professor Caballero's paper, "Smoothing Sudden Stops," written with Arvind Krishnamurthy, is forthcoming in the Journal of Economic Theory.
- Professor Costa's paper, "Understanding Mid-Life and Older Age Mortality Declines: Evidence from Union Army Veterans," was published in the Journal of Econometrics.
- Professor Duflo's paper, "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," written with Emmanuel Saez, is forthcoming in the Quarterly Journal of Economics.
- Professor Glenn Ellison's paper, "The Slowdown of the Economics Publishing Process," was published in the Journal of Political Economy.
- Professor Frank Fisher's paper, "Forecasting Wheat Production: The Case of the Irbid Region of Jordan," written with E. Al-Karablieh, A. Jordan, and A. Salman, was published in the Quarterly Journal of Economics.
- Professor Gabaix's paper, "A Theory of Power Law Distributions in Financial Market Fluctuations," written with P. Gopikrishnan, H. Eugene Stanley, and V. Plerou, appeared in Nature.
- Professor Jonathan Gruber's article, "Evaluating Alternative Approaches to Incremental Health Insurance Expansion: What is the Right Criterion?" is forthcoming in the American Economic Review.
- Professor Jeffrey Harris' textbook, Health Economics, is expected to be published in 2004.
- Professor Hausman's paper, "Weak Instruments: Diagnosis and Cures in Empirical Econometrics," written with J. Hahn, is forthcoming in the American Economic Review.
- Professor Holmstr��m's paper, "The State of U.S. Corporate Governance: What's Right and What's Wrong?" written with S. Kaplan, was published in the Journal of Applied Corporate Finance.
- Professor Joskow's paper, "A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market during Summer 2000," written with Edward Kahn, was published in the Energy Journal.
- Professor Newey's paper, "Higher-Order Properties of GMM and Generalized Empirical Likelihood Estimators," written with R. J. Smith, is forthcoming in Econometrica.
- Professor Poterba published his paper, "Recent Developments in and Future Prospects for Public Economics," in the American Economist.
- Professor Rose's article, "The Impact of Bankruptcy on Airline Service Levels," written with S. Borenstein, is forthcoming in the American Economic Review: Papers and Proceedings.
- Professor William C. Wheaton published his article, "An Analysis of variation in Local Land Use Regulations," written with Bengte Evenson, in the Brookings Papers on Urban Affairs: 2003.
- Professor Yildiz's article, "Bargaining without a Common Prior: An Immediate Agreement Theorem," was published in Econometrica.
More information about the Department of Economics can be found on the web at http://econ-www.mit.edu/.