• Nobel-winning economist Michael Kremer to join department faculty as University Professor

     

    Photo by Jon Chase/Harvard University

    Photo by Jon Chase/Harvard University

    Nobel Prize-winning economist Michael Kremer has been appointed University Professor at the University of Chicago and will join our department faculty.

    A pioneer in development economics who has shaped the discipline through the use of field experiments to inform economic models, policy and program development, Kremer shared the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2019. He has been most recently at Harvard University, where he serves as the Gates Professor of Developing Societies in the Department of Economics.

    Kremer’s appointment at UChicago will be effective on Sept. 1. He also will hold a secondary appointment at the Harris School of Public Policy.

    “Michael is a scholar of extraordinary vision and accomplishment. His research has had an enormous influence on his field, and has been impactful in informing public policy in developing countries,” said Ka Yee C. Lee, provost and the David Lee Shillinglaw Distinguished Service Professor of Chemistry. “We are delighted to welcome Michael to the University of Chicago. The range of his research will undoubtedly lead to collaborations across divisions and schools.”

    University Professors are among those recruited at a senior level from outside the University, and are selected for internationally recognized eminence in their fields as well as for their potential for high impact across the University. Kremer will become the 23rd person to hold a University Professorship, and the 10th active faculty member holding that title.

    “The University of Chicago’s commitment to expanding research on development economics is an exceptional opportunity,” Kremer said. “The work ahead will develop new knowledge on ways to address global poverty and ultimately to do good for the world.

    Kremer was among the first economists to evaluate interventions in developing countries through randomized control trials. In 1998, he evaluated a project on deworming in Kenya. By comparing schools that had already been phased into treatment for intestinal worms with those that had not yet been phased into the program, he and his collaborators found that the program reduced student absenteeism by a quarter—and even reduced transmission of the disease to neighboring schools. Subsequent work also found that deworming had long-run impacts, leading to higher living standards 20 years later.

    “Michael’s research and its resulting policy impacts in economic development, health, education and technological innovation has been transformative at a global scale,” said Amanda Woodward, dean of the Division of the Social Sciences and the William S. Gray Distinguished Service Professor of Psychology. “We look forward to the next revolutionary phases of Michael’s work. He will be a foundational force for the future of Griffin Economics as well as for the broad community of economists at the University of Chicago.”

    Through the nonprofit organization Evidence Action and its private sector and government partners, Kremer’s work has now helped provide free deworming treatments to 280 million children. The World Health Organization recommends large-scale deworming as the most cost-effective way to improve children’s health and nutrition.

    “All of Michael’s work is grounded in theory and built around a coherent set of ideas interrogating what we can learn from economics,” said Rob Shimer, chair of the Kenneth C. Griffin Department of Economics and the Alvin H. Baum Professor in Economics. “His extraordinary contributions to the field of economics and to improving human welfare are testament to the power of his methodological innovations.”

    In addition to that research, Kremer helped develop the advance market commitment, proposing the idea of a contract that would guarantee that if firms developed vaccines for diseases affecting the developing world meeting certain technological specifications, donors would help cover the cost of purchasing the product. Such commitments have stimulated private investment in vaccine research and the distribution of vaccines for diseases in the developing world. A $1.5 billion commitment by a consortium of donors led to the development and distribution of vaccines covering the strains of pneumococcal diseases common in the developing world, saving an estimated 700,000 lives.

    “Michael’s landmark work has not only advanced the field but has had enormous real-world impact,” said Katherine Baicker, dean and the Emmett Dedmon Professor at the Harris School of Public Policy. “His work has resulted in billions of dollars being devoted towards malaria and pneumococcal vaccines focused on the strains prevalent in developing countries. Few economists have saved so many lives around the world.”

    While changes in broad-scale government programs have long provided economists with natural experiments to inform their models, Kremer and his colleagues developed an iterative strategy that engages—and in some instances, founds—NGOs to deliver social programs that implement and test economic ideas. This approach can reveal the causal forces at play in economic systems, shedding light where observational data cannot. It also offers a proving ground for developing and perfecting effective policies and programs.

    At UChicago, Kremer will lead a new Development Innovation Lab, an initiative that will sit within the Becker Friedman Institute for Economics.

    “I am excited to join the University of Chicago, with its storied tradition of pioneering economics research,” Kremer said. “The new lab will use the tools of economics to develop innovations of practical use for developing countries. By bringing together experts in different fields and working closely with nonprofit organizations, firms and governments in the developing world, we can simultaneously advance knowledge and generate solutions to development challenges which can reach hundreds of millions of people.”

    “Michael’s work simultaneously pushes out the frontier of understanding and has had enormous and lasting impacts on people’s well-being,” said Michael Greenstone, director of the Becker Friedman Institute and the Milton Friedman Distinguished Service Professor in Economics. “He is the perfect person to lead the Development Innovation Lab at BFI, and I know he will catalyze the terrific development economics here into even greater heights, with the ultimate beneficiaries being the field of economics and the world.”

    Kremer is the author of more than 120 academic articles and book chapters. He is a fellow of the American Academy of Arts and Sciences and a 1997 recipient of a MacArthur Fellowship. He has won awards for his work on health economics, agricultural economics and on Latin America.

    Kremer earned his Ph.D. in economics from Harvard University in 1992. He was a visiting assistant professor at the University of Chicago in Spring Quarter 1993. Prior to his appointment at Harvard, he was a member of the faculty at the Massachusetts Institute of Technology from 1993 to 1999.

    For more information, please see https://news.uchicago.edu/story/nobel-winning-economist-michael-kremer-join-uchicago-faculty-university-professor.

     

  • Study suggests the U.S. may undervalue timesaving transportation infrastructure

    For Lyft users, time is money—now, we know how much

    Study suggests the U.S. may undervalue timesaving transportation infrastructure

    How much money is time worth? University of Chicago economists and their collaborators think they have found the answer—$19.38 per hour. It’s a finding with policy implications, according to the economists, because it suggests the U.S. government may currently be underestimating the value of travel time.

    To quantify the value of time, the economists created a field experiment involving 3.7 million users of the Lyft app in 13 cities. By manipulating the price quotes and wait times displayed on the app, the researchers were able to study how much customers were willing to pay for a faster rideshare pickup.

    Released by the Becker Friedman Institute for Economics, the new working paper calculated the $19 figure by modeling the relationship between wait times and prices and extrapolating to find the value of an hour. The average wait time for a ride in the study was 3.08 minutes and the average price was $13.83.

    The broad nature of the experiment, said Prof. John List, allowed the economists to estimate the value of time across different people, choice circumstances and market conditions.

    A pioneer in the use of field experiments in economics, List co-authored the paper with UChicago alumni Ariel Goldschmidt, Ian Muir and Jenny Wang—who now work as data scientists at Lyft—and former UChicago postdoctoral researcher Robert Metcalfe, now at Boston University. V. Kerry Smith, an emeritus professor of economics at Arizona State University, also collaborated on the paper.

    “Our value of time estimate is larger than that which is currently used by the U.S. government, suggesting that society is undervaluing time improvements and subsequently underinvesting public resources in timesaving infrastructure projects and technologies,” said List, the Kenneth C. Griffin Distinguished Service Professor in Economics.

    On the basis of these findings, the study’s authors recommend that policymakers account for differences in the value of time based on location and time of day when estimating the costs and benefits of new public projects, and increase their rule-of-thumb value of time estimate to 75% of the mean wage rate.

    “Time is the ultimate scarce resource, and its value has deep implications for a range of economic phenomena and investment decisions,” the authors wrote. Among these, commute time is especially important because it impacts how people decide where to live.

    Read the full story at news.uchicago.edu

     

  • Remembering Yiran Fan

    The Kenneth C. Griffin Department of Economics and our campus community is deeply mourning the loss of Yiran Fan, who was an alumnus of the University’s Financial Math program and was enrolled in a joint program of the Booth School of Business and the Kenneth C. Griffin Department of Economics. He will be remembered as a generous classmate, a superb research and teaching assistant, a promising scholar, and a kind friend. 

    Many far-and-wide have expressed wishes and shared their plans to honor Yiran. Messages have been pouring into the department from Yiran’s friends, both within the University community and outside of it, as well as from faculty, students, and alumni. One such message is Lars Hansen’s testimony from his webpage

    Candlelight Vigil

    On Thursday, January 14, The University will hold a candlelight vigil for Yiran. The vigil will begin promptly at 4:00 p.m. in the center circle of the Main Quadrangle, and may be attended in person or remotely through a live broadcast. Those attending the vigil are expected to maintain COVID-19 safety requirements, including social distancing and masks. For additional details, including live-streaming information, please visit news.uchicago.edu

    Send a Note of Condolence

    Those who wish to may also offer a note of condolence for Yiran's family here. Notes will be translated, printed, and given to Yiran’s family.

    Memorial Fund

    In partnership with the Fan family, The University of Chicago is establishing a fund in memory of Yiran Fan to support students in the joint program of The Kenneth C. Griffin Department of Economics and Chicago Booth. To contribute, please visit give.uchicago.edu/ssdmemorial. The University will send a letter to the family to acknowledge your gift. 

    Make a Monetary Gift

    While the University is committed to assisting the family of Yiran Fan at this difficult time, we understand the desire of the community to support the bereaved family directly by gifts. Here are the community giving links:

    China residents (RMB donation)

    US residents (USD donation)

    More details and plans to honor Yiran's memory will be shared as they are made available. 

     

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