Advancing Economics

Advancing Economics THE BECKER FRIEDMAN INSTITUTE FOR RESEARCH IN ECONOMICS 2014–15 Annual Report 2 HIGHLIGHTS 4 CONFERENCES 6 RESEARCH INITIATIVES 8 VISITING SCHOLARS 12 SAIEH HALL 14 STUDENT EVENTS 16 OUTREACH 21 FINANCIALS 22 HONOR ROLL 24 LEADERSHIP From the Leadership The Becker Friedman Institute began 2014–15 in new facilities and has enjoyed and prospered in our home in Saieh Hall. Before, given limited space, there was a virtual aspect to our institute; now with dedicated offices for visiting scholars and room to host workshops, lectures, and academic conferences, we have changed in truly important ways. This past year we had 47 visitors to the Institute, hosted 12 academic conferences, and sponsored 26 events for student and public outreach. We welcomed scholars from all over the world, achieving our ambition to be a true intellectual destination for new research advances. Motivating these activities and our research initiatives is the belief that informed discussions of prudent public policy are uplifted by formal economic analysis and empirical evidence. As Milton Friedman made clear, the conclusions of economics “are immediately relevant to important . questions of what ought to be done and how any given goal can be attained.” While we miss the inspiring intellectual leadership of Gary Becker, we continue to explore his vast scholarly interests while pursuing a growing range of interconnected research initiatives. We now have the opportunity to bring in elite scholars for longer term visits to the institute to complement strengths on campus and explore exciting new endeavors. We continue to welcome returning distinguished institute scholars and our new young scholars, including Mohammad Akbarpour and Manasi Deshpande. Our ambition is to host four to six postdoctoral research fellows in residence to add energy and ambition to our institute activities and the broader economics community. Finally, we are pleased to announce our Chicago economics history project, which will showcase the intellectual contributions associated with the University in ways that go beyond the simplistic characterizations often projected in public forums. An exhibit, oral histories of Chicago economists, and other features will offer a rich exploration of our past. We are excited by our opportunities in the upcoming year. We are supported by a team of dedicated staff and guided by an Institute Research Council of distinguished scholars as well as an advisory council that works to strengthen the institute. We are grateful for the generosity of those who have made our work possible, and we look forward to continuing support. Lars Peter Hansen Kevin M. Murphy Director and Cochair Cochair 2014–15 Highlights 47 236 18 38 Visiting Presenters Student Total scholars events events In 2014–15, the Becker Friedman Institute capitalized on beautiful and spacious new quarters in Saieh Hall for Economics to be come a true intellectual destination for economic inquiry. Our flourishing visitors program hosted a record policymakers spent time at the institute as visiting 47 economists and other scholars who shared their scholars. work in seminars, talks, and informal discussions. Notably, this year we increased our direct support Twelve research conferences, eighteen events for for research, providing funding to thirteen students, and eight public talks on topical issues faculty members through the Rosenfield Program conveyed economic insights and analysis to widen- in Economics, Public Policy and Law; to our ing network of researchers, students, policymakers, postdoctoral research fellows; and to twenty-seven alumni, and the public. graduate students through our Macro Financial We’re especially proud that many of these events Modeling Initiative funded by the Alfred P. Sloan involved and engaged policymakers, generating Foundation. valuable exchanges about how research, evidence, Read on for more details of our active and and new models can inform public policy. Several productive year. 2 | The University of Chicago 3,450 Total audience Stanford’s Susan Athey at a student- Research Scholar organized panel on big data Benjamin Brooks The Bank of England’s Charles Evans, president of the Federal Reserve Bank of Chicago, Andrew Haldane with former Bank of England governor Sir Becker Mervyn Friedman King Institute | 3 RESEARCH CONFERENCES Becker Memorial Highlights Year of Diverse Conferences As Gary S. Becker once said, “economics is judged ultimately by how well it helps us understand the world, and how well we can improve it.” By that standard, his long career was a brilliant success, as his incisive economic analysis illuminated a wide swath of life: education, discrimination, marriage and family life, crime, addiction, and more. The institute celebrated Summing up Becker’s influence, panel modera- the scope and influence tor Steven Levitt said that he and Pierre-André of Becker’s work at a Chiappori once analyzed the impact of leading conference in his memory economists by totaling how many times their work October 30–31, 2014. was cited as a motivation for other papers. Becker Leading scholars and clearly led the pack, with more than three times longtime colleagues the number of papers of any other economist—and gathered to present work in the areas aligned these influential papers appeared in each of six with or inspired by his research. decades, Levitt said. Panels of fellow faculty members explored two Other campus colleagues and some from across key areas of inquiry that Becker pioneered: human the country and abroad presented recent research capital theory and its role in development and in the fields that Becker pioneered. They included: growth, and the economics of crime and the law. • Richard Blundell of University College London, A pioneer of human capital theory, Becker was on inequality, insurance, and family labor supply interested in the power of education to influence • Pierre-André Chiappori of Columbia University almost everything. In that vein, fellow Nobel laureate on human capital, matching, and labor supply Robert E. Lucas Jr. and Harvard economists Claudia • Scott Kominers of the Harvard Society of Fellows Goldin and Edward Glaeser shared evidence on on strategy-proofness, investment efficiency, and the link between education and lower fertility rates, marginal returns higher female participation in the economy, and • Edward Lazear of Stanford University, applying improved political governance. Becker’s work on human capital and fertility to analyze the demographics of entrepreneurship In the second panel, William Landes of the • Assar Lindbeck of Stockholm University, on UChicago Law School discussed how Becker’s norms, incentives, and information in income work, rooted in the assumption that offenders are insurance responsive to costs, benefits, and sanctions, gave • Kevin Murphy, presenting work coauthored rise to a very large empirical literature on the eco- with Becker on the economics of persuasion in nomics of crime. Professor of Economics Casey advertising Mulligan discussed how Becker’s work extended the notion of imperfect competition to politics, James J. Heckman spoke on the market and non- while Sam Peltzman of Chicago Booth highlighted market benefits of human capital, and later con- Becker’s lesser-known role as a major figure in the cluded the conference with a keynote address on economic analysis of regulation. the impact of Becker’s research. 4 | The University of Chicago Academic Conferences 2014–15 Midway Market Design Conference The Society for Economic Measurement Creditors and Corporate Governance Interactions: Bringing Together Econometrics and Applied Richard Blundell, Microeconomics Guity Nashat Becker University College London Normative Ethics and Welfare Economics A Celebration of the Life and Work of Gary S. Becker Science of Philanthropy Macro Financial Modeling and Macroeconomic Fragility (New York) Flows of Goods and Technologies in the Global Economy Exploring the Price of Policy Uncertainty (Washington DC) Conference on the Handbook of Macroeconomics, Volume 2 Federal Agency Decision Making Under Deep Uncertainty Always empirical, Heckman considered a number Heckman explained that when Becker began his of different ways to quantify Becker’s impact. One work, the general view of was that things like family measure was his awards—the Nobel Prize, the life and individual choices about labor supply National Medal of Science, and the Presidential were not for economic study. But Becker and Medal of Freedom among them. Another was the the Chicago School changed all of that. “What is opinions of his teachers; in 2001 Milton Friedman notable about Gary Becker is that as he evolved said “Gary Becker was the most influential social in his thinking, he took the field of economics with scientist of the past half century,” Heckman noted. him—and later, many other social sciences too,” Heckman said. Becker Friedman Institute | 5 RESEARCH INITIATIVES Initiatives Deepen Economic Inquiry Economic research can provide evidence to shape effective policy, and that motivates much of the work the institute supports. This year, however, we also invested in research that looks at how policy and economic models should account for what we don’t know. With funding from the MacArthur Foundation, the and legislators should make regulatory choices institute launched the Price of Policy Uncertainty when required cost-benefit analysis is ambiguous. Initiative, which pursues key questions about accu- In May, initiative co-investigator

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