Columbia | Economics Magazine, Spring 2018 by ColumbiaEconomics

Spring 2018 | Issue 1, Vol. 2

Research at the Frontier of Economics OUR PH.D. CANDIDATES ARE MOVING ECONOMIC ANALYSIS FORWARD

Bernard SalaniĂŠ was appointed chair of the Department of Economics in October 2016. On the cover: Ryan Kim and Golvine de Rochambeau in the Alfred Lerner Hall (Photos by Jeffrey Schifman)

FROM THE CHAIR

Fulbright Visiting Scholar Chrysovalantou Milliou (Athens t is a pleasure for me to introduce the spring issue of our University) in the spring, and Markku Kaustia (Aalto University) Columbia Economics magazine. We know that many of you for the whole year. Several of them will contribute to our graduate enjoyed the first issue; I thank everyone who sent us feedback, teaching, in the Ph.D. or in the master’s program. This is a great and I hope that you will find this one as interesting or even more so. way for our students to be exposed to different approaches and In this edition we focus on research topics at the frontier of teaching styles. In particular, Josh Angrist will teach to both our economics. Our Ph.D. candidates are moving economic analysis master’s and Ph.D. students a class that draws on his bestselling forward and reframing policy debates with their research on Mostly Harmless econometrics textbook. topics as diverse as banking crises, infrastructure in developing We had 24 Ph.D. students on the junior job market this year. countries, and strategic communication. Other contributions This unusually high number is a statistical outlier, and we heard interview experts in the fields of finance and computer science— concerns that it might be difficult for so many Columbia students highlighting our commitment to train the next generation to obtain good positions. These concerns proved misplaced, workforce and leaders. however, as all 24 found jobs quickly. Once again, our students At the time of this writing, our junior recruitment season is placed extremely well: at Chicago, Boston University, Carnegie nearing its end. I am very pleased to welcome two new junior Mellon, and Johns Hopkins, to mention only a few outcomes. faculty—Xiaosheng Mu and Evan Sadler. Evan will join us The continuing trend of strong placement attests to the solid this summer, and Xiaosheng will come one year later after a reputation our Ph.D. program Cowles Fellowship at Yale. has established. The covers of Evan and Xiaosheng are both recent issues of the best journals microeconomic theorists and “Once again, our students placed also show that our recent will add to our strength in this former students are publishing area. We are also in the process extremely well: at Chicago, Boston at a high level. of hiring a new lecturer who University, Carnegie Mellon, and Our third cohort of master’s will reinforce our instructional students is completing its team, especially in financial Johns Hopkins, to mention only a second semester. They will be economics. The Financial few outcomes. The continuing the first to go through the new, Economics major we launched three-semester version of our in 2012 has been extremely trend of strong placement attests program. This should make it popular; it graduates about easier for them to work on their 150 students a year. We to the solid reputation our Ph.D. final thesis and, for many of are looking forward to this program has established.” them, to apply for admission in opportunity to re-energize it top Ph.D. programs. and build on its success. When this second issue of Manhattan has many great our magazine goes public, we will have a new website. As internet amenities, and their value is reflected in the price of space. As the technologies evolve, institutions like ours need to rethink their department has expanded, we have found ourselves more and online presence every few years. Thanks to the leadership of more cramped. Finding offices for new faculty and for visitors Sophia N. Johnson at the Program for Economics Research, we was hard, and we were unable to allocate carrels to as many Ph.D. now have a more attractive, capable, and responsive website. students as we would have liked. I am very pleased to announce I encourage you to see for yourself, at econ.columbia.edu. As that thanks to the support of David Madigan, Executive Vice always, we very much welcome your input. We would also love to President of Arts and Sciences, we have gained six additional see you at our events, seminars, and conferences and to hear from faculty offices and a number of workspaces. We are working to you at econ-info@columbia.edu. have the space renovated and ready by the end of the term. In the meantime, I can safely say that this excellent news has made the Ph.D. students very happy. We already have a great lineup for next year. We will have two Wesley Clair Mitchell Visiting Professors: Joshua Angrist (MIT) Bernard Salanié for the fall, and Kfir Eliaz (Tel Aviv University) for the year. We Chair will also welcome Mehmet Caner (Ohio State University) and Department of Economics Jonathan Libgober (on his way to the University of Southern California) in the fall, Georg Nöldeke (University of Basel),

CONTENTS

15 RESEARCH

STUDENTS

4 Department Increases Research Funds and Reaffirms Strong Financial Support

12 Do Overoptimism and Overconfidence Have an Effect on the Savings Behavior of Rural Households?

6 Climate Finance: What Are the Biggest Challenges for Investors and Companies? 8 What Can Neuroscience Contribute to Economics? 10 Can Data Science Help Us Solve Economic Problems?

14 Andrew Olenski: Firearm Safety Concerns and Risks of Injury Are Relevant Even among Experienced Gun Owners 15 Research at the Frontier of Economics From Military Service to Macroeconomics: Why Ryan Kim Wants to Improve the Welfare State

22 Golvine de Rochambeau Thinks Productivity Gains from Technology in Transport Sector Could Expand Reach of Globalization in Developing Countries Jean-Jacques Forneron: Economics Without Neat and Tidy Models Daniel Rappoport: I Know What You Are Not Telling Me

NEW BOOKS MONEY & FINANCE 24 Q&A with Lynn and Charles Zhang

Spring 2018 | Issue 1, Vol. 2

HEALTH AND WELL-BEING

ALUMNI

28 Work-Life Balance Is Associated with Physical and Mental Well-Being

30 Real Graduates, Real Leaders: Real Graduates, Real Leaders: Anna Zhou, Jake McRobie, Lillian Rusk, and Shubhdeep Deb Share Their Story

AWARDS 29 Eric Verhoogen Named among Russell Sage Visiting Scholars for 2018–2019 29 François Gerard, Awarded National Science Foundation Research Grant 29 NSF Research Fellowship: Andrew Robert Olenski

32 Congratulations Ph.D. Alums!

NEWS 33 Richard Clarida nominated to Serve as Vice-Chair of the Federal Reserve Board

29 36 Building Bridges: The Economics Department’s Response to Underrepresentation in the Field 37 Columbia Economics Competition Winners Announced 38 Congratulations to Parker Prize Winners (2017) 39 Redesigned Website Offers Visitors Richer Insight into the Department’s Research and Resources

34 Women and Economics

Department Increases Research Funds and Reaffirms Strong Financial Support PER EARMARKS $100K FOR GRADUATE STUDENT RESEARCH IN 2018–2019

ince its founding in 2003, the Program for Economic Research (PER) has been dedicated to its mission of supporting the research of faculty and students of the Columbia Economics Department and enriching the intellectual lives of the broader community. Naturally, fulfilling this mission places PER at a hub for pioneering research by economics scholars from the Columbia community and abroad. This year was no exception. PER’s visitor program hosted 10 scholars in the fall of 2017; it is welcoming another 9 scholars this spring from around the globe to visit the department and share their research through our weekly workshops and to interact with our faculty and students. The PER Distinguished Lecture Series, launched three years ago to promote understanding of pioneering research agenda by prominent scholars, is going strong. In the fall of 2017, Jordi Galí from the Center for Research in International Economics (CREI) discussed the role of monetary policies in containing asset bubbles, and Jonathan Gruber from MIT discussed his empirical research on the cost of “defensive medicine.” In the current spring term, Sandra Black (Texas), Lars Hansen (Chicago), and Vincent Crawford (Oxford) delivered lectures on a variety of stimulating subjects such as the effect of birth order on a child’s success, the role of uncertainty in the measurement of climate cost, and behavioral game theory. PER continues to have another busy season sponsoring numerous academic conferences. These conferences demonstrate the breadth and depth of intellectual pursuits supported by PER. They include large high-profile gatherings such as the 21st meeting of Society for Institutional & Organizational Economics held in June 2017 and a Special Symposium in Memory of Kenneth J. Arrow, both of which featured several Nobel Laureates. Last year marked the 10th anniversary of the lecture series, which was made especially poignant with the passing of Kenneth Arrow. The

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featured lecturer was Glenn Loury, who discussed “Persistent Racial Inequality in the U.S.” There were also smaller in-depth gatherings on frontier research topics. Cases in point are the Microeconomic Theory Conference held in September 2017 and the Market Design Conference held in April 2018. Organized and cosponsored by two newly-minted PER initiatives, Microeconomic Theory and Market Design, there are high hopes that they will become must-attend annual events for academics in the subject areas. Other similar frontier conferences include the Climate Finance conference, Political Economy, and the sixth Annual Bounded Rationality in Choice (BRIC) conference coming up in June 2018. PER supports not just the production of research but also its consumption by the Columbia economics community, its alumni, and beyond. In the fall of 2017, PER organized a panel discussion on “Protectionism Today.” Moderated by Columbia University Professor Jagdish Bhagwati, a panel of former policy advisers and academic experts addressed the alarming rise of protectionism under the Trump administration and debated a variety of policy concerns regarding bilateral balances, China, trade disputes, and the abandonment of the multilateral trading system. Nurturing the budding economists among our students is one of our most important goals. Over the last three years, we have significantly broadened our commitment to exposing our graduate students to frontier research areas and methodologies, with the introduction of distinguished lectures and minicourses. In November 2017, Benjamin Moll (Princeton) gave a minicourse on “Heterogeneous agents model in continuous time,” which introduced a cutting-edge methodology in macroeconomics research. This term, John Starchurski (Australian National) taught computer programming languages for economics research, and Rajiv Vohra (Brown) is teaching cooperative game theory.

“Over the last three years, we have significantly broadened our commitment to exposing our graduate students to frontier research areas and methodologies, with the introduction of distinguished lectures and minicourses.”

This year, we are very pleased to serve as the main vehicle for implementing the department’s pledge of $100,000 in supporting graduate student research. As part of this commitment, we have rolled out several programs. Last year, PER funded 11 summer research assistants, and we plan to provide similar support this year. Funding is also available for students to purchase data and process them for their dissertations. Several students have already made use of this initiative to obtain new data sets. Graduate student support for research travel and editing services is also available through PER. Our engagement with the Columbia undergraduate students remains strong and robust. The Columbia Economic

Review, published by our undergraduate students, put out another exciting issue this spring. I deeply appreciate your participation and support for our program.

Yeon-Koo Che Kelvin J. Lancaster Professor of Economics and Executive Director, Program for Economic Research (PER)

Left: Yeon-Koo Che (Photo by Jeffrey Schifman)

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Climate Finance: What Are the Biggest Challenges for Investors and Companies?

hirty-six scholars and leading researchers (including Lars Peter Hansen, 2013 Nobel Laureate in Economics, Christopher Sims, 2011 Nobel Laureate in Economics and Robert Engle, 2003 Nobel Laureate in Economics) assessed the risks of climate change for financial markets at a Climate Finance Workshop at Columbia University. Climate finance addresses how the financial system ought to manage climate risks when providing credit, making investments, and delivering other financial services, such as insurance. “Climate finance, by studying the expectations of investors and corporations regarding climate change, is more critical than ever to helping us assess these risks for our economy,” said Professor Harrison Hong, John R. Eckel Jr. Professor of Financial Economics at Columbia, who convened the workshop in collaboration with José Scheinkman, the Charles and Lynn Zhang Professor of Economics at Columbia, and Andrew Karolyi, Alumni Professor of Asset Management at Cornell

“Climate finance is equally important for adaptation. Significant financial resources will be required to allow industries and even countries to adapt to the adverse effects.”

University and executive editor of the Review of Financial Studies (RFS). “Climate finance is equally important for adaptation. Significant financial resources will be required to allow industries and even countries to adapt to the adverse effects and reduce the impact of climate change,” added Scheinkman.

Innovative Policy Action The Climate Finance Workshop focused on the biggest challenges for investors and companies—pricing uncertainty induced by climate change, real estate prices, divergent interests, corporate governance, pollution externalities of public and private firms, and, perhaps most importantly, reliable data. According to Andrew Karolyi, the mobilization of all players in finance is crucial for the fight against climate change, and climate finance will accelerate the transition toward a sustainable economy and improve the financial system. “What’s been driving me is to create the first body of knowledge on the topic of climate finance, and with the goal that this will influence and inspire scholars in years to come,” says Karolyi, who is overseeing the committee that will publish the first body of scientific data in the United States in the RFS this year. The Climate Finance Workshop was made possible by the Norwegian Finance Initiative (NFI), which awarded research grants for two separate research projects at Columbia University and New York University. Professor Hong received a three-year grant to carry out research and convene research conferences on climate change and capital market efficiency at Columbia University.

José Scheinkman and Harrison Hong (Photo by Jeffrey Schifman)

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What Can Neuroscience Contribute to Economics?

hat are the best uses of neuroscience in economics research, and how can these be further refined and improved upon? Does an increased emphasis on the neural correlates of behavior expand or limit the types of questions that are now being investigated? What does the future hold for our understanding of the human mind, and what are the implications for economics and the decision sciences? Professor Michael Woodford’s Cognitive and Behavioral Economics Initiative (CBEI) is one of several faculty-led research initiatives in the country exploring the contributions of the cognitive sciences to the study of decision-making. According to Woodford, new technologies to measure brain function in both humans and animals while making decisions—and the increased spatial and temporal resolution of those technologies in recent years—have contributed greatly to interest in this area. “Combining psychological and economic models with behavioral and neural correlates, neuroeconomics is a new area of research that has grown exponentially in the past 15 years,” says Woodford, the John Bates Clark Professor of Political Economy in the Department of Economics. “Experts from a variety of fields have turned to neuroimaging, electrophysiology, EEG, and other measures of the physiological correlates of cognitive processes, to investigate and attempt to tease apart highly complex decision-making behaviors.” Woodford moderated a recent panel considering what the future holds for our understanding of the human mind, and the implications for economics and the decision sciences.

“The research is exciting,” says Woodford. “It has already led to breakthroughs in understanding how humans and other organisms ascribe value to, and calculate the risks associated with, the choices presented by their environments.” The event was part of the Seminars in Society and Neuroscience series sponsored by the Zuckerman Institute. Among the many activities supported by CBEI is the Cognition and Decisions Lab, a joint venture of three principal investigators—Michael Woodford, Mark Dean, and Hassan Afrouzi. The lab’s aim is to use tools and techniques from economics, neuroscience, and psychology to better understand the cognitive processes underlying economic decision making. Current projects include studying the way in which the noise in internal representations of the options available to decision makers affects the decisions that they make, and the way in which limited attention is allocated by decision makers.

“Combining psychological and economic models with behavioral and neural correlates, neuroeconomics is a new area of research that has grown exponentially in the past 15 years.”

Michael Woodford, John Bates Clark Professor of Political Economy (Photo by Jeffrey Schifman)

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Can Data Science Help Us Solve Economic Problems?

he economic issues generated by data in the global economy will likely have a profound effect on economic research. According to Suresh Naidu, associate professor in the Department of Economics, data is a strategic asset in today’s economy. “Data science and widespread availability of data are changing the economy as well as what we can measure, and economists are excited about that. However, there are widespread concerns about issues like who should own the data and also datadriven price discrimination,” explains Professor Naidu. “The concentration of data in the five big tech companies—Amazon, Google, Apple, Microsoft, and Facebook—raises a lot of questions for economists,” says Naidu. These companies both make up half of the top 10 most valuable companies in the American stock market and influence just about everything else that happens in tech, as well as the rest of the global economy. “We are generally concerned about concentration in this sector,” he continues.

Data for Good Jeannette M. Wing is on a mission to push the frontiers of research in this field in the right direction. “The Data Science Institute at Columbia University is training the next generation of data scientists and developing innovative technology to serve society,” says Wing, computer science professor and Avanessians director of the Data Science Institute. “This idea of responsibility is very timely right now. We want to make sure the computational techniques and methods we are inventing are really doing the right thing. Do no

harm. We want to make sure it’s fair and ethical,” she continues. The Data Science Institute at Columbia has a three-part mission that encapsulates the great promise this new field has to improve the quality of life for all. “Our mission is to advance the state-of-the-art in data science; to transform all fields, professions, and sectors through the application of data science; and, to ensure the responsible use of data to benefit society,” explains Wing, whose seminal essay, titled “Computational Thinking,” was published more than a decade ago and is credited with helping to establish the centrality of computer science to problem-solving in fields where previously it had not been embraced. “Responsible use of data is really the opportunity for the social scientists on campus to work side by side and closely with the science and engineering community. The professional schools like journalism, law, business, and medicine all teach ethics to their students. It’s part of the training so you learn ethical concerns about treating patients, or your customers, or business clients. This is just part of your training, and I think we need to do that for data science because people are going to be collecting and analyzing data about people, and all of a sudden you have to start asking ethical questions.” With more than 250 affiliated faculty working in a wide range of disciplines, the Institute seeks to foster collaboration in advancing techniques to gather and interpret data and to address the urgent problems facing society. The Institute works closely with industry to bring promising ideas to market. “I think universities and academia’s responsibility

is training the next generation of students who are business leaders and tech entrepreneurs who are going to be building the technology. We need to make sure that as they are armed with the advances in technology, that they are asking the right questions from an ethical and social point of view,” explains Wing. “Data for good means two things: One is in terms of using data to benefit society, but tackling societal wide challenges; but I also mean making sure we use data in a good manner or responsible, fair, and ethical manner,” she adds. “Big data, data analytics, machine learning, and so on are the new techniques and tools that can be added to this repertoire that economist can use,” says Wing. “I would love to say in ten years, looking back, that Columbia University was a place that helped define the field of data science,” notes Wing. Naidu agrees. “Data science can help economists solve societal issues, both big and small. New kinds of data and analytic tools help us know more about how the economy works and how it is changing.

Jeannette Wing is computer science professor and Avanessians director of the Data Science Institute. She previously served as corporate vice president of Microsoft Research, overseeing a global network of research labs. (Photo by Jeffrey Schifman)

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(above) Shambhavi Tiwari with Professor Michael Best, who teaches the Honors Thesis Seminar (spring 2018). (Photo by Jeffrey Schifman)

Do Overoptimism and Overconfidence Have an Effect on the Savings Behavior of Rural Households? UNDERGRADUATE TRAVELS TO INDIA FOR HONORS THESIS FIELDWORK

hen Shambhavi Tiwari traveled to her native India last summer to obtain data from rural households in her home district of Deoria, which is located in the state of Uttar Pradesh (UP), she had one question on her mind: Do households in developing countries save less than they should? Tiwari, who is a student in Professor Michael Best’s Honors Thesis Seminar, says her interest in the topic began after she enrolled in courses taught by Professors Mark Dean and Michael

Woodford. “In Professor Woodford’s class, I explored neuroeconomic foundations behind these biases. There I learned that biases are often due to the fact that decision-makers are trying to use innate cognitive ability and their exposure to the world,” she recalls. “What I learned was that the predictions that we make in rational economic theory are extremely divergent from what actually happens in the field.” UP is one of the poorest states in India. The economy of the northern

Indian state depends almost entirely on the agricultural sector. Sixty-six percent of the population are farm workers. “The assumption going into this study is that poor people in rural areas will save because they are especially prone to shocks. Farmers are leaving the agricultural sector due to shocks. There are strong reasons why these farmers should want to save (to insulate themselves from shocks), yet similar populations have been observed to have very low savings rates. This may be

“What I learned was that the predictions that we make in rational economic theory are extremely divergent from what actually happens in the field.” rational in a sense that farmers just don’t have enough money to save, but maybe not,” she adds. Using this background and ignoring constraints of the experimental setting, Tiwari set out to survey 326 research subjects in the field. “It was difficult to elicit subjects’ responses on more personal questions about income and consumption, and subjects often grew uncomfortable when asked those questions in a group setting,” she notes. “The fieldwork revealed several issues. First, I realized that subjects often did not understand the instructions during the first iteration. Second, I did not realize that by conducting the experiments in group settings, I was putting subjects’ confidentiality at risk. Third, after speaking with my adviser and discovering my error, I realized that there is a possible correlation between subjects within group responses.” Ultimately, Tiwari found that “variations in decisions in which all individuals are faced with the same amount of risk can be reflective of a difference in perception of the issue or of a bias.” The paper outlines and implements a method to measure overconfidence and savings in the context of developing economies. “Although my results are not significant, I find limited evidence in support of my original hypothesis,

that overconfidence is associated with lower levels of savings in both periods,” says Tiwari. “I also show that price expectations play a role in savings decisions for the rural agricultural community of Deoria, Uttar Pradesh.”

More Questions Than Answers This study has had its own challenges. Tiwari says the fieldwork helped explain the literature and vice versa. “This study further sheds light on this notion of the poverty trap. What keeps poor individuals from saving less than expected, and this phenomenon of undersaving and overconfidence, is intriguing because of its implications,” she notes. “My theory is that people who undersave are more optimistic about their economic outcome.” Poverty is a tragedy Tiwari says she cannot simply ignore. “Poverty is solvable. This study has just raised more questions than answers. Tiwari says she plans to tackle some of these challenges in graduate school.

Shambhavi Tiwari speaks four languages. She is completing a bachelor of arts in economics and mathematics. She was one of five recipients of the Parker Prize for Summer Research in 2017. Her advisers are Professors Mark Dean and Alessandra Casella. She graduates in May 2018. (Photos, taken in Deoria, Uttar Predesh, courtesy of Shambhavi Tiwari)

Andrew Olenski (Photo by Jeffrey Schifman)

Andrew Olenski: Firearm Safety Concerns and Risks of Injury Are Relevant Even among Experienced Gun Owners

new study challenges the notion that experienced firearm users are less likely to injure themselves. In a letter to the editor in the New England Journal of Medicine, first-year doctoral student Andrew Olenski and Dr. Anupan Jena of the Harvard Medical School explain firearm injuries and the risks. “Despite high rates of unintentional firearm injuries, and recognition by the National Rifle Association (NRA) that firearm education is important, it is often said that firearm injuries occur primarily among inexperienced users and that firearm safety comes with experience and training, but that’s simply not true,” said Olenski, who worked as a researcher at Harvard Medical School before joining the Department of Economics.

The researchers hypothesized that firearm use would decline during the dates of NRA meetings—which attract tens of thousands of members from across the United States, including firearm owners and owners of venues where firearms are used—and that firearm injuries would also decline, even among experienced users. They estimated the rates of firearm injuries during convention dates versus control dates in a beneficiary-level multivariable linear regression of firearm injury. In addition, they used the National IncidentBased Reporting System to analyze the proportion of crimes involving firearms that occurred during convention versus control dates. “Among 75,567,650 beneficiary-period observations in the

claims analysis, 14.3% occurred on NRA convention dates,” said Olenski. Olenski and Jena also compared firearm injuries during the conventions each year from 2007 through 2015 with injury rates three weeks before and three weeks after each event. A decline of 63 percent was seen in the states where the conventions were being held, possibly due to large numbers of gun owners being at the events, as well as, in some cases, gun venues such as firing ranges or hunting grounds having closed while their staff attended the convention. “Nationally, there was a 20 percent reduction in firearm injuries during the convention,” Olenski said. Olenski noted that these findings are consistent with reductions in firearm injuries occurring as a result of lower rates of firearm use during the brief period when many firearm owners and owners of places where firearms are used may be attending an NRA convention. “It is hard to find good natural experiments when it comes to firearms,” says the Pennsylvania native. “I am interested in doing more research on these types of natural experiments and gun injuries.”

Research at the Frontier of Economics From banking crises to infrastructure in developing countries and strategic communication, our Ph.D. candidates are moving economic analysis forward and informing policy debates.

Ryan Kim and Golvine de Rochambeau (Photo by Jeffrey Schifman)

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From Military Service to Macroeconomics: Why Ryan Kim Wants to Improve the Welfare State

Ryan Kim (Photo by Jeffrey Schifman)

hen Ryan Kim was serving in the military in South Korea, he witnessed for the first time the residual impact of income and economic inequality. “Economics in principle aims at maximizing social welfare,” says Kim, who received a B.A. (with distinction) in economics and mathematics at the University of Wisconsin-Madison in 2012. “After I completed my undergraduate studies, I served in the military. I saw a lot of economic inequality, in the sense that people’s lives diverged in unequal ways. It’s not ideal, but there it was.” Conscription in South Korea has existed since 1957 and requires male citizens between the ages of 18 and 35 to perform about two years of compulsory military service. Women are not required to serve. “Service inspired me a lot. It got me involved and motivated to help people in society, improve the welfare state.” Kim says faculty also helped create a lot of opportunities and influenced his research interest. “I took a course with Professor Joseph Stiglitz, winner of the Nobel Prize in Economic Sciences,” Kim recalls. “It was after the markets crashed. We talked about the housing market, banking panic, and Lehman Brothers. The course both raised questions about methods of macroeconomics and the applicability of macro tools,” he continues. According to Kim, these real-world issues highlight challenges with the use of macro tools in the field, and pushed his research towards a more expansive study.

“My research provides novel explanation of the missing disinflation puzzle. “Using novel microlevel data and a change in bank health at the time of the Lehman failure as an exogenous variation of company’s credit condition, I find that firms that face a negative credit supply decrease their output prices,” Kim wrote in his job market paper. “My research highlights that corporate inventory and liquidity management, which has been neglected in the previous studies on banking crises, is a crucial determinant of output price dynamics. Models that feature inventories will better account for the fluctuation of inflation, inventory, and other aggregate variables.” Kim concedes that he will not solve the problems of economic inequality by himself. “Research is a process,” he notes. “To students thinking about joining the academy: please come! Graduate school requires self-discipline, and it’s very attractive for independent thinkers,” he adds. As a job market candidate, Kim had six attractive offers from the public sector and academia and decided to stay in academia. “Ph.D. life is ending. I am looking forward to life in Washington, D.C.” Ryan Kim will receive a Ph.D. in economics in May. His dissertation is titled, “The Effect of the Credit Crunch on Output Price Dynamics: The Corporate Inventory and Liquidity Management Channel.” He joins the School of Advanced International Studies (SAIS) at Johns Hopkins University in September.

Photo taken by Golvine de Rochambeau in Monrovia, Liberia

Golvine de Rochambeau Thinks Productivity Gains from Technology in the Transport Sector Could Expand Reach of Globalization in Developing Countries

“I have had several projects in Liberia. I started looking at transport there because it was very expensive.

iberia’s public road network falls short of the country’s needs both in transport coverage and quality. It is especially difficult during the rainy season. “It is true that there is a lot of rain in Liberia. According to the Food and Agriculture Organization, Liberia is the fourteenth rainiest place in the world,” says Golvine de Rochambeau, who traveled from New York to Monrovia, Liberia’s capital city, to conduct fieldwork. “It is also true, however, that in developing countries like Liberia, having high transport costs hinders growth and the trade in these countries,” she explains. De Rochambeau has lived in Argentina, Morocco, and Gabon. She is no stranger to working and living in developing countries. “I have had several projects in Liberia. I started looking at transport there

because it was very expensive. Poor road conditions and inadequate infrastructure slow productivity and limit the extent to which the country can engage in the global economy,” says de Rochambeau. “Liberia’s transport sector is an ideal setting in which to study this because of the economic dilemma. Transport is expensive when goods are shipped around the country. Roads deteriorate quickly and have high maintenance costs, sometimes estimated at more than one-third their initial investment. Taken together, short-term affordability versus longer-term sustainability of investments present a difficult trade-off for a credit-constrained government, even though these needs would be economically justifiable,” she adds. According to the Ministry of Agriculture, there are few trucks to transport goods

Poor road conditions and inadequate infrastructure slow productivity and limit the extent to which the country can engage in the global economy”

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Golvine de Rochambeau (Photo by Jeffrey Schifman)

in the country and, given the inclination toward subsistence farming rather than production of marketable surplus, there is a thin market for trucking services. Today there are an estimated 20 to 30 trucking companies in Monrovia. However, truckcarrying capacities are generally low, and most of the fleet has been imported as used vehicles into Liberia. These factors together with the poor state of roads contribute to Liberia’s high transport costs and work to undermine Liberia’s comparative advantage and reduce the competitiveness of its agriculture sector vis-à-vis other countries. “The obvious answer to this problem is to build roads. However, this is not so simple in Liberia or elsewhere. Roads are very expensive,” says de Rochambeau. The government lacks immediate credit capacity to build new roads. Understanding the inefficiency of transport within countries is key to making sure that

isolated regions are integrated in the global economy. As smaller cities struggle to find goods on the international market and get international products door-to-door, de Rochambeau believes that Liberia’s trucking firms may be able to use technology to improve productivity. “Severe information asymmetries are thought to make contracting particularly difficult within (and across) firms in developing countries,” she explains. “There is a substantial cost due to information asymmetry between managers and drivers on shabby roads, for example. It’s unpredictable when goods will arrive. Resolving this information asymmetry (via GPS monitoring) can significantly lower the marginal costs of these firms, reducing overall transport costs.” She is very enthusiastic about her work. “In my research, I show that the introduction of GPS trackers can significantly improve the efficiency of transport companies. However, the introduction of such technology can impair the relationship between managers and drivers. In fact, my research shows that managers prefer to install trackers with drivers they don’t trust,” she explains. “I am very excited to continue the research I started here at Columbia.” Golvine de Rochambeau will receive a Ph.D. in economics in May. Her dissertation is titled, “Monitoring and Intrinsic Motivation: Evidence from Liberia’s Trucking Firms.” USAID-Liberia financed the Global Positioning System (GPS) trackers used in the experiment. She joins Sciences Po as assistant professor of economics in September.

Jean-Jacques Forneron: Economics Without Neat and Tidy Models

ean-Jacques Forneron grew up in the Burgundy countryside. In 2008, he moved to Paris to study at the École Nationale de la Statistique et de l’Administration Économique (ENSAE), one of the leading French graduate schools in the fields of statistics, economics, finance, and actuarial science (he also attended HEC Paris, School of Management, at the same time). Forneron is an economist with a passion for statistics. “My dissertation proposes a Sieve Simulated Method of Moments (Sieve-SMM) estimator for the parameters and the distribution of the shocks in nonlinear dynamic models where the likelihood and the moments are not tractable,” says Forneron. “Simulationbased estimation is a powerful approach to estimate intractable models. These are models where you want to be more accurate about your representation of the world at the cost of making them hard to write down with pen and paper. The idea here is that, even though these models are complicated, you can still simulate these complicated economies and match features of this simulated data with real-world data.” In practice, these methods require strong assumptions about the environment and the risks that economic agents face. For instance, in finance and economics, “people often assume risk looks like the Gaussian distribution. However, in practice, people know that it’s wrong.” The problem here is that “if we underestimate the amount of risk that the agents face, then we will attribute the discrepancy to something else.” For instance, “the more risk there is, the more you are going to put your

money in a safe investment strategy—like a savings account,” notes Forneron. “If risks are misrepresented, this demand will appear to be due to your own preference for safer investments.” As a result, Forneron’s interest in econometrics reaches into the policy space: “If your policy affects these misrepresented risks, then you could greatly over/underestimate their effect because the agents will not have the preferences that you predicted. The Sieve-SMM estimator addresses this issue by flexibly approximating the distribution of the shocks with a Gaussian and tails mixture sieve,” he continued; “it better captures the risks in the data and then matches people’s behavior accordingly.” Forneron describes his early life in Burgundy as simple. Similarly, his research is not all that complicated when you get to the heart of it. “The paper is about relaxing assumptions people don’t want to make, but they have to make. This method simply allows you to be more flexible in describing the world that you want to match with the data.” In the end, “we all need to confront assumptions with the data,” he says with a smile. Jean-Jacques Forneron will receive a Ph.D. in economics in May. His dissertation is titled, “Essays on Simulation-Based Estimation.” He will join Boston University’s Department of Economics in September.

Jean-Jacques Forneron (Photo by Jeffrey Schifman)

STUDENTS

Daniel Rappoport: I Know What You Are Not Telling Me

aniel Rappoport understands communication games. He studies how communication relies on the provision of hard evidence. “Communication is not all cheap talk. It requires evidence and some form of verifiability,” explains Rappoport. These interactions are often complicated says Rappoport, “In criminal trials for example, there are potentially multiple pieces of evidence potentially available to the prosecutor.” Understanding how evidence is strategically presented or withheld has a wide array of applications and helps explain conviction rates, audit standards, and corporate disclosures. The main goal of Rappoport’s research is to understand how changes in the evidence environment affect outcomes, and to tease out which predictions are not too sensitive to the context at hand. Rappoport’s main theoretical finding is that when evidence is expected to be more readily available, outcomes are worse for the party that is providing it (whom the communication literature calls “the sender”). “This tracks with intuition,” Rappoport says. “A circumstantial case was more likely to get a conviction thirty years ago than it is today, given the wide array of tests and evidence that are now available.” The criminal justice literature terms this the CSI effect: jurors who are more informed about forensics expect more hard evidence to be available to the prosecutor, and as a consequence are less likely to convict for every evidence profile. Rappoport’s contribution is to establish this connection in an environment that is as general as intuition. “The existing literature covers some application, but not others. There is not a unified sense of how to solve these problems,” says Rappoport. “In a large class of verifiable

disclosure games, I characterize beliefs about evidence that induce worst outcomes for the sender.” Rappoport is hopeful about future applications of his theory. “An immediate application is juror selection; the theory reconciles why prosecutors would select jurors who are more naive about today’s evidence standards, and therefore expect less evidence.” Another area of application, according to Rappoport, is dynamic disclosure. The result can help us understand questions like, how often communication should occur between an investor and an entrepreneur? Should the entrepreneur disclose early or late? And, should he/she disclose the bad news first or the good news? Rappoport is a Montclair, New Jersey, native. He credits his interest in the field of economics to his parents, who exposed him to mathematics early on. “My dad is a macro economist, and he tried to teach me about math in a way that engaged my curiosity,” says Rappoport. “He discussed mathematics in terms of abstract questions instead of formulae. I am very lucky to have been exposed so early to this unique perspective.” On future research and work on this subject, Rappoport is optimistic. “I will stay in academia as long as they let me.” Daniel Rappoport will receive a Ph.D. in economics in May. His dissertation is titled, “Evidence and Skepticism in Verifiable Disclosure Games.” He joins the Booth School of Business at the University of Chicago in September.

“A circumstantial case was more likely to get a conviction thirty years ago than it is today, given the wide array of tests and evidence that are now available.”

Doctoral Students | Class of 2018 CANDIDATE FIELDS

PLACEMENT

So Yoon Ahn

Applied Microeconomics, Family Economics, Labor Economics

University of Illinois at Chicago, Economics

Sakai Ando

Macroeconomics, Finance

International Monetary Fund, Economist

Ashna Arora Labor Economics, Development

University of Chicago Crime Lab, Research Director

Cynthia Mei Balloch Macroeconomics, Finance, International

Columbia Business School (Postdoc), and London School of Economics, Department of Finance (Postdoc)

Tuo Chen Macroeconomics, Inequality

Tsinghua University School of Economics and Management (China)

Bikramaditya Datta

Microeconomic Theory, Corporate Finance Economics

Indian Institute of Technology Kanpur (India)

Golvine de Rochambeau

Development, Organizational Economics, Trade

Sciences Po (France), Economics

Sandesh Dhungana

Macroeconomics, Household Finance

International Monetary Fund, Economist

Jean-Jacques Forneron

Econometrics

Boston University, Economics

Tong Geng

Labor Economics, Economics of Education

KPMG Transfer Pricing, Senior Associate

Chengcheng Jia

Macroeconomics, Monetary Economics

Federal Reserve Bank of Cleveland, Economist

Yang Jiao

International Finance, Macroeconomics, International Trade

Fudan University (China), Fanhai International School of Finance

Meeroo Kim

Applied Microeconomics, Information Economics, Applied Contract Theory, Applied Econometrics

Korea Development Institute (South Korea), Economist

Ryan Kim

Macroeconomics, Corporate Finance, International Economics

Johns Hopkins University, School of Advanced International Studies

Andrew Kosenko

Microeconomic Theory

University of Pittsburgh, Economics (Visiting)

Nandita Krishnaswamy

Development, Labor

University of Southern California, Postdoc

Seunghoon Na

Macroeconomics, International Economics

Purdue University, Economics

Nathaniel Neligh

Microeconomic Theory, Behavioral, Experimental

Chapman University, Postdoc

Anh Nguyen

Industrial Organization, Health Economics

Carnegie Mellon, Tepper School of Business

Daniel Rappoport Microeconomic Theory

University of Chicago, Booth School of Business

Danna Kang Thomas

Public Economics, Industrial Organization

University of South Carolina, Economics

Lin Tian

International Trade, Economic Geography, Public Economics

Institut EuropĂŠen dâ&#x20AC;&#x2122;Administration des Affaires (INSEAD), France

Xingye Wu Microeconomic Theory

Tsinghua University School of Economics and Management (China)

Jing Zhou

International Monetary Fund, Economist

Macroeconomics, International Finance

NEW BOOKS

New Faculty Publications Why Growth Matters By Jagdish Bhagwati and Arvind Panagariya 290 pages; Public Affairs

The Economics of Race in the United States By Brendan O’Flaherty 478 pages; Harvard University Press

Speculation, Trading and Bubbles By José A. Scheinkman 119 pages; Columbia University Press

Matching with Transfers: The Economics of Love and Marriage By Pierre-André Chiappori 241 pages; Princeton University Press

Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change By Edmund Phelps 378 pages; Princeton University Press

Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump By Joseph E. Stiglitz 472 pages; W.W. Norton

Breaking Out: An Indian Women’s American Journey By Padma Desai 250 pages; The MIT Press

Building the New American Economy: Smart, Fair & Sustainable By Jeffrey D. Sachs 130 pages; Columbia University Press

Open Economy Macroeconomics By Martín Uribe and Stephanie Schmitt-Grohé 626 pages; Princeton University Press

Columbia Economics Metrics

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MONEY & FINANCE

Q&A with Lynn and Charles Zhang

Q. How are the concerns (financial and otherwise) different between high net worth individuals and middle class or uppermiddle class individuals? Charles: High net worth individuals are more focused on preserving and transferring wealth. They want to grow wealth, but I think they want more preservation of wealth, they want to pay less income taxes and transfer the wealth to the next generation. There is a more comprehensive approach to managing wealth. For the middle class, they are more concerned about saving money for retirement, saving money for the education of their children, and saving enough cash for a nice vacation, or growing wealth. That’s the key difference. Lynn: Yes, also philanthropic work and giving to charity are really very important. Q. How do you go about cultivating and maintaining relationships with your clients? And as wealth managers not working for a big bank, what strategies do you employ in attracting new clients? Charles: The relationship must be earned. We meet with our clients twice a year to review their investment portfolios, and financial planning. This is an ongoing process. We also do tax planning. So, the relationship is basically what we call, high touch. We are always available to answer questions and maintain our relationship through ongoing communication tools like newsletters. We work in a team that includes a financial adviser or planner,

a tax planner, and a wealth and asset manager (that’s me in terms of overall planning). Another important thing is trying to respond to all client inquiries within 24 hours. Right now, a lot of people don’t know that is key. For young people, when they send or receive an email, they expect an immediate response. We always get back to our clients right away. They know when we receive their emails. This is especially important for our younger son and his generation. Lynn: In the way that we work, even if the client does not need an answer, I always provide a quick email. This is just a little thing, but it goes a long way. It makes a big difference. I can give you an example of this: I say to clients, as long as we are in charge of this company, when you call our office during business hours, you will always hear a ‘live’ person answer the phone right away. The younger generation is all about efficiency. In our business, it’s a very detailed balance you have to maintain between efficiency and a personal touch. It’s a big difference. Charles: When you call our line, within 10 seconds you will have someone answer the phone. Another thing about cultivating and maintaining personal relationships is education and engagement. Everyone receives a personally signed birthday card. In terms of attracting new clients, we have a lot of experience. I worked with American Express. At age 29, I became the number one financial adviser in the United States. This is a big Fortune 500 corporation. I left in 2007 and became an independent financial adviser. We are independent fee-only financial advisers. We manage $3 billion assets. Genuine clients realize they want to work with us because independent fee-only financial advisers avoid conflicts of interest. Now one concern sometimes relates to the Bernie Madoff scandal. We don’t and

never will have a Madoff situation,

because Madoff was a custodian of his own assets and printed his own statements. If you want to work with any independent adviser, the number one rule of thumb is, where are the custodian assets? Are you a custodian by yourself or you have an independent custodian? We never print or issue our own statements. We have third-party custodian assets. These checks and balances ensure your assets are safe. This is a much safer financial adviser. We are not pushing special interests. We save our clients a lot of money. Lynn: Also, I want to point out that I think our clients are all about education. With the media and everything people realize this. The perception that your money is safe with a big bank is also a wrong perception. A lot of the whistle blower cases are custodian issues. You need to separate your own assets from that of the firm. You cannot use a client’s money in a way that it should not be used. We don’t put our clients at risk. Charles: Yes, the industry rules have changed. I think more and more people realize the top advisers are independent, and by choice. If you look at the top 100, the majority are independent. Lynn: I think the key is that there is a difference—on how we attract clients. Charles: We have a competitive advantage. We are definitely the better choice.

Q. Obviously, this varies case by case, but what general advice would you give to middle-class families in the United States as to how to manage their own wealth (how to build wealth)? Charles: We do have a minimum requirement for assets of $1 million. We also limit how many clients we take, with some exceptions. Lynn: I know some undergraduates may think we only want to work with wealthy clients; well, I only hire very experienced people to work with our clients. We charge clients very reasonably. We need to have a certain asset space for our platform. Charles: By the way, a lot of middleclass families do have $1 million upon retirement. The rule of thumb I would give undergraduate students is that when you graduate, remember these things: First, the ten-ten rule. Always save 10 percent toward retirement in the 401K, and another 10 percent to your bank account savings. Save the money for cash reserve and future equity investment. You are saving 20 percent. Second, if you begin saving at 22 or 23 years old, by the time you are 55–60, you will have more than $1 million. Third, be aggressive. People make this mistake with long-term investment. Invest in equity. Be aggressive. Especially in U.S. equity stocks. This country is the best for equity investments, especially for long-term ones. Fourth, when we started we had no money but we worked hard.

“The industry rules have changed. I think more and more people realize the top advisers are independent, and by choice. If you look at the top 100, the majority are independent.” (Charles)

Charles and Lynn Zhang photographed inside the Charles & Lynn Zhang Recruitment Lounge at the Kellogg School of Management, Northwestern University, Evanston, Illinois.

Lynn: In our culture we emphasize too much on being smart rather than going back to the basic principle of hard work. Hard work is important to individual success. Charles: My parents were middle class, low-middle class, in fact. They gave me this principle of hard work. At least when you are young, you should work hard. Lynn: Often you hear from 25 year olds— I want a work-life balance. I told my boys you should not have any work-life balance. I do not have it. When you are young, you work hard. Charles: You must be loyal and grateful for a job and opportunities. That will take you a long way.

Q. What are the occupations of customers who need the service from Zhang’s advisory firm or the personal financial advice service in general? Did you witness some dynamic changes in certain features of these customers during the previous two decades? Charles: We have all types of occupations. We have clients working in the corporate space—lawyers, economists, finance, accounting. Some of our clients have a Ph.D. in economics, and there are individuals from top business schools. Our clients are generally looking for comprehensive financial planning. They care about their finances and have the money to seek our services, and they recognize they do not have the knowledge to do this by themselves. Knowledge is one

free from conflicts of interest. Fee-only advisers offer unbiased advice. We are loyal to the clients. Charles: We are a member of the National Association of Personal Financial Advisors (NAPFA). NAPFA’s position is that the fee-only method of compensation is the most transparent and objective method available. This model minimizes conflicts and ensures that your financial planner acts as a fiduciary. Fee-only planners are compensated directly by their clients for advice, plan implementation, and for the ongoing management of assets. We accept no commission for our work. Lynn: In our industry, we, Zhang Financial, are fiduciary by nature.

“In our culture we emphasize too much on being smart rather than going back to the basic principle of hard work. Hard work is important to individual success.” (Lynn)

reason. Discipline is another. We now have quite a few clients close to retirement. In terms of changes over the past two decades, technology is important. Clients are smarter. Clients are not looking for sales people. Our clients are very sophisticated. It’s all online. Clients want advisers who can educate. Knowledge and technology are extremely important. Clients also demand more today. This also means there are more opportunities for graduates with master’s and Ph.D.’s in the finance sector. Q. Compared with some personal financial service provided by large banks, what are the comparative advantages of advisory firms? Lynn: I think our competitive advantage, if you compare us with other firms, is that we are fee only. Fee only is truly the best. The adviser who is operating fee only is

Charles: This is a huge advantage. With our independence, we can provide objective, unbiased service. Q. What made you start your own business, especially a business in the financial industry that requires lots of soft skills and relationship resources? What were some difficulties you had when you began your business? Charles: I liked the title financial advisory. And, the income potential seemed unlimited. Of course, they did not tell me the majority of people fail. When I started, for every sixteen independent financial advisers, only one survives. Our business is no guarantee. To be honest with you, I am very lucky because my wife had a fixed income job that allowed us to do this. She had a salary of $32,000 in 1991.

MONEY & FINANCE

“Our commitment to Columbia is about retaining excellent professors. We give resources to enable the continuation of research, which in turn makes the University a much stronger one.” (Lynn)

Lynn: Actually, it was $32,500. Charles: I made nothing at the time. But with unlimited earning potential, that means you have to work 80–100 hours per week for years. If you can do all those things, plus with a little bit of luck, you can succeed. Now I would not trade this for any other occupation. I think I have the best occupation in the business. But, when you start, yes, it’s very hard. Q. Your elder son, Mitchell, a Columbia College alumnus, has a great job at Gordian Group LLC. Can you speak to how the Economics Department prepared him for the real world? How did his professors lay a strong foundation for him? Lynn: I think our son is an excellent example of how Columbia as a school itself, prepared him for a career. Gordian Group is a leading merging and acquisition group. So, he quickly stood out for his skills and being able to transfer knowledge. He could do the numbers. Columbia is an excellent foundation for learning. He told me the school teaches you the ability to learn and teach yourself. Columbia gave him the foundation. He can quickly grasp what he needs to know. Charles: Another thing is that a Columbia degree opens the door. Investment banking is a very competitive field. Very few people have an opportunity for an interview. There are not a lot of jobs and job offers. I think a Columbia degree in economics definitely opened the door for him. It’s much easier to get an interview or an internship.

Lynn: And, the Core Curriculum definitely helps. My son says several of the conversations he had with partners were important. Columbia University really prepared our kids for work in the field. Mitchell, our eldest, looks like he will stay in economics. Our younger son Alex has a double major—economics and English/ creative writing. Alex is an excellent writer, but he loves microeconomics. Q. At a recent celebration of the professorship you established in the English Department, you gave a very inspiring speech about philanthropy as a form of investment. Could you speak a little bit about that and why you chose to invest so deeply in the Economics Department as well? Lynn: I think this is a good view; it makes sense. Our commitment to Columbia is about retaining excellent professors. We give resources to enable the continuation of research, which in turn makes the University a much stronger one. I told my kids that I am investing in their diplomas. Once they graduate they will invest back to ensure the value of Columbia diplomas. Charles: Investments and return come in different ways. Sometimes in business it’s tangible. You see numbers on your statement. You can feel good about that. We do a lot of things in our community. Sometimes it’s not about success, but we feel good about it. Lynn: For example, Columbia has a great Career Center. But there are some state universities without this critical resource, this advantage. We started a

career center at a state university because those graduates need it. There are not only middle class students but those at low income levels as well. They take classes, they get a degree, but you and I know that in order to get job in the business world, there are certain soft skills that you need. You need to look polished, you need a good resume, you need to market yourself in an interview. The center we donated provides all these things, and that makes us very happy. The emotional returns, you cannot see the money. Charles: I want to add one more thing. Columbia has super top economists and professors in the field of economics. Several have won Nobel prizes. José Scheinkman is an incredible professor. Few schools can match this academic wise. Our kids received degrees in economics from Columbia. We are investing in their school. Lynn: We are investing in Columbia, and our returns will be the graduates in the future who will be very accomplished people in society. I hope that they would also give back to Columbia. That’s our return. The bottom line is, we love Columbia.

Charles Zhang is managing partner and CEO of Zhang Financial. Lynn Chen-Zhang is partner, COO, and chief compliance officer.

HEALTH & WELL-BEING

Work-Life Balance Is Associated with Physical and Mental Well-Being

everal studies suggest that graduate students are at greater risk for mental health issues than those in the general population. This is largely due to social isolation, the often abstract nature of the work, and feelings of inadequacy—not to mention the slim tenure-track job market. According to Dr. Richard J. Eichler, executive director of Counseling and Psychological Services at Columbia University, mental health and well-being are not just one thing. “People bring challenges from their own personal histories, that goes without saying,” says Eichler, who joined what was then the Columbia College Counseling Service in 1986 as staff psychologist. “Depending on the field you are pursuing there are different stressors. In the simplest of terms, the idea that you sacrifice everything—from exercise to sleep, nutrition, and relationships—in pursuit of your degree is not a good idea. Work-life balance is a term that encompasses the idea that there has to be room for both.” The perceived benefits of wellness education in university environments are substantiated by a number of studies. A paper published in Nature Biotechnology shows that graduate students are more than six times as likely to experience depression and anxiety than the general population. The study was led by co-senior authors Teresa M. Evans (Texas) and Nathan L. Vanderford (Kentucky). Columbia Economics magazine spoke with Nathan L. Vanderford, assistant professor of toxicology and cancer biology at the University of Kentucky and assistant dean for academic development at the university’s College of Medicine. From his campus office in Lexington, Kentucky, Vanderford says the findings support strong interventions and urge action on the part of institutions.

“We found that there are lots of different things that can go off course and cause anxiety and depression, and we need to pay attention with targeted interventions that promote work-life balance, positive relationships, and self-care.” The study was based on a survey including clinically validated scales for anxiety and depression, deployed to students via email and social media. The survey’s 2,279 respondents were mostly Ph.D. candidates (90 percent), representing 26 countries and 234 institutions. Some 56 percent studied humanities or social sciences, while 38 percent studied the biological and physical sciences. Two percent were engineering students and 4 percent were enrolled in other fields. Some 39 percent of respondents scored in the moderate-to-severe depression range, as compared to 6 percent of the general population measured previously with the same scale. According to Vanderford, work-life balance is key, though it’s hard to attain in an ever-competitive environment. “Faculty and administrators must set a tone of self-care as well as an efficient and mindful work ethic to improve mental health and well-being,” he adds. Eichler agrees. “Students should not put aside the basics of self-care. The simple advice is that an hour spent exercising or sleeping—you will more than get back in terms of increased productivity. You will experience fatigue and less cognitive acuity, if you are sleep deprived. You are also more susceptible to illness, which then costs you. Spending a few hours from time to time with a friend is very important.” Columbia Health offers a broad range of on-campus services. “There are a lot of specific groups tailored to graduate students, and a number

Richard J. Eichler, Executive Director, Counseling and Psychological Services

of programs for international students. We offer individual counseling to a host of support and psychotherapy groups. We can conduct services in 15 different languages,” adds Eichler, who currently serves on the Clinical Advisory Board of the Jed Foundation and on the Editorial Board of the Journal of College Student Psychotherapy.

To learn more about Columbia Health services, visit: health.columbia.edu/

AWARDS

Awards Celebrating the significant accomplishments of our faculty and students during the past academic year

Eric Verhoogen Named among Russell Sage Visiting Scholar for 2018–2019 Eric Verhoogen will study the relationship between unionization and technology adoption in U.S. manufacturing. Using data from the National Labor Relations Board, Census surveys, and a new database of collective bargaining contracts, he will compare firms where unions narrowly won representation to firms where they narrowly lost to analyze the extent to which union contracts either encourage or discourage the adoption of new technologies. Eric Verhoogen is professor in the Department of Economics and School of International and Public Affairs. He is also Vice Dean for Academic Affairs in the School of International and Public Affairs.

François Gerard, Awarded National Science Foundation Research Grant François Gerard of Columbia’s Department of Economics was awarded the National Science Foundation’s (NSF) division of social and economic sciences grant for a project titled, “Unemployment Insurance Schemes in Developing Countries.”

The award seeks to enhance the understanding of individual, social, and organizational behavior by creating and sustaining social science infrastructure, and by supporting disciplinary and interdisciplinary research that advances knowledge in the social and economic sciences. Professor Gerard’s research project will study the most efficient form of unemployment support using a large data set on the employment history of more than 400,000 workers.

NSF Research Fellowship Andrew Robert Olenski was awarded the 2018 National Science Foundation (NSF) Graduate Research Fellowship in the social sciences. The grant was awarded for a proposal titled, “Health Care Waste and the Downstream Spending Implications of Clinical Testing: Quasi-Randomized Evidence from Emergency Departments.” Olenski is a first-year Ph.D. student. The research will contribute to the literature by providing downstream welfare estimates (long-term health benefits net of costs) of a specific clinical behavior, while outlining a framework to study other potentially wasteful behaviors relevant to policymakers. “We know that physicians tend to overprescribe certain unnecessary tests and procedures, and that is considered health care waste. The issue here is that those unnecessary tests might lead to additional treatment that we don’t usually count as ‘waste.’ I propose a method to try to estimate the magnitude of this ‘downstream’ element of health care waste,” says Olenski. The NSF Graduate Research Fellowship Program recognizes and supports outstanding graduate students in NSF-supported science, technology, engineering, and mathematics disciplines who are pursuing research-based master’s and doctoral degrees at accredited United States institutions.

ALUMNI

Real Graduates, Real Leaders Anna Zhou (CLASS OF 2016)

nna Zhou is an alumna of the Economics M.A. program, having been a member of its inaugural cohort, which began in fall 2015. Coming into the program, her original plans were to use the M.A. degree to help strengthen her future applications to Ph.D. programs. Although she enjoyed the academic and intellectual challenges that came with graduate level work, she soon realized that she would rather pursue a job working in industries where finance and economics intersect. Zhou has been quite successful in her pursuits in this area. After graduating in the summer of 2016, she secured a position working for the Bank of China in New York City, doing work involved with helping firms obtain mid-term or long-term loans for business expansions and operations. After spending about a year in this position, Zhou moved on to her current role working as an economist at Bank of America Merrill Lynch (BAML). Talking about her current position, she notes that “I really love my job at BAML. We do various things from forecasting economic indicators to writing reports on economic outlook and insights on labor market, the housing market, or the Fed. The projects are constantly changing, and we get to analyze real-time data, which could have a huge impact on the markets. BAML’s position provided exactly what I wanted: working in a finance firm but doing more academic oriented work. It is also a great platform—I am lucky to have met many smart people and am constantly learning from them every day.” Reflecting on her time in the M.A. program, the things that stuck with her

the most were some really enjoyable classes and professors and, most importantly, the lifelong friendships she developed with other students in her cohort.

Anna Zhou

Jake McRobie (CLASS OF 2017)

ake McRobie had always thought of going to graduate school, but it wasn’t until after he finished his undergraduate studies and had worked in equity research for two years that the timing was right. When asked recently what prompted him to join the Economics M.A. program at Columbia in the fall of 2016, McRobie responded that “I thought the time was best to pursue my academicallyoriented interest in economics. I had been reading a great deal of economics books and wanted to formalize my learning in a way that complemented my math undergraduate background.” He went on to say that he was drawn to Columbia’s M.A. program for several reasons: “the location was great with many potential employers only a quick subway ride away, it is a small program with great access to renowned professors and dedicated people getting the program up and running, and Columbia is a reputable school trying to give a valuable, best-in-class M.A. experience.” After finishing the program in the summer of 2017, McRobie secured a position at Oxford Economics on the U.S. macro forecasting team. His work encompasses a range of different areas from providing insights into key economic data indicators to running various scenarios to look at the macroeconomic impact of such things as tax cuts, tariffs, wage growth, and more. One of his favorite parts of

Jake McRobie

Lillian Rusk

Shubhdeep Deb

the job is producing in-depth research briefings focusing on key trends in the U.S. economy. McRobie has written about areas such as financial markets, banking reform, immigration, and inequality. When asked to reflect on his time in the MA program Jake said he felt challenged, which was important to him. He went on to say that, “having decided to leave work and pay to return to school, I did not want to feel I was wasting my time. Given the volume and complexity of the assignments, I certainly did not feel that was the case. I picked up valuable skills that help me in my current position. It’s also been a great platform to gain friends and connections in both economics and New York. That has been very helpful.”

Lillian Rusk (CLASS OF 2016)

illian Rusk, an alumna from the Economics M.A. program, is currently in her first year at the Chicago Booth School of Business pursing a Ph.D. degree in economics. When looking back on the steps that led her where she is today, it is apparent that Rusk executed a well-thought-out plan for getting into a top Ph.D. program. After her undergraduate studies, Rusk spent two years doing economic consulting work at the Brattle Group. She remembers that her decision to leave consulting work and apply to the Economics M.A. program was partly because she had done very little math as an undergraduate and she knew that she needed to strengthen this area to have a chance at entering a Ph.D. program. She recalls that, “the program at Columbia gave me the time and resources to improve my technical talents, and it also gave me the chance to show my potential for developing original research through the final paper requirement. I suspect that helped my Ph.D. application a lot, both through being able to submit an original piece of work and because it made my recommendation letters more informative. It also meant I entered the Ph.D. program with a much better

sense of where I see myself in the research landscape.” Rusk delayed applying for Ph.D. programs after graduating with her M.A., again reflecting her patience in following a carefully planned path. She successfully secured a full-time research assistant (RA) position with Columbia Economics Ph.D. alumna Jessie Handbury at the Wharton School in the University of Pennsylvania. The position gave her the opportunity to do work on a big data project that looked at how food stamp benefits affect retail behavior. “Since the program at Columbia was one year, I knew it would be too early to apply to Ph.D.’s for the following year,” she explained. “So I anticipated having a gap year between, and being an RA was the most sensible way to spend that time. I started applying for RA positions pretty early on, which was key for getting an offer, as a lot of the hiring is done well before the end of the school year.” Thoroughly enjoying her first year of Ph.D. studies, Rusk plans on pursuing a career in academia, noting that, “It’s so thrilling to conduct one’s own research, and I suspect I’d also enjoy teaching and advising students in their own research.”

Shubhdeep Deb (CLASS OF 2016)

hen choosing which M.A. program to attend beginning in the fall of 2015, Shubhdeep Deb remembers that he was looking for a program that would best help him prepare for Ph.D. studies in the future. “Since I was already planning to apply for a Ph.D., the course structure of the Columbia Economics M.A. program was particularly appealing for me, as it closely mirrored the course structure and material of the first year of a Ph.D. Economics program,” he recently recalled. He found that the course work was also helpful in preparing him for future Ph.D. studies as well, noting that, “The course content was not only technical and challenging but was taught in a way that gave ample time for students to master

each topic in depth. This was particularly helped by the very high quality of teaching assistance provided by the senior Ph.D. students who helped clarify the material.” After completing the program in the summer of 2016, Deb began a full-time two-year research assistant (RA) position with Jan Eeckhout at Pompeu Fabra University (Spain). When asked why he didn’t apply for Ph.D. programs right away and what sort of work he did in the position, he said, “I decided to apply for the RA positions while at Columbia as I wanted to explore the academic world a little more prior to starting my Ph.D. During the last year I have worked on three of Professor Eeckhout’s papers in addition to initiating a joint project with him. The papers primarily analyze the functioning of the labor market, and some also analyze the relation between labor market and market structure. The nature of the work involves all aspects of research, which include building theoretical models and coding them, and then using numerical methods to map the model to the empirical estimates in the data.” Due in part to the fantastic work he is doing there, Deb has already been offered a position in the Ph.D. program at Pompeu Fabra University. He’s waiting to hear back from applications to other Ph.D. programs before deciding where to attend but is confident that he can “certainly see myself working in an academic setting doing postPh.D. studies. I have an intrinsic interest in the functioning of the world around me, especially the functioning of the labor market. I feel, given my background, skills, and research interests, academia is not only the best place to direct my contributions to but it is also where I would be happy working in the long run.” This article was written by Shane Bordeau, assistant director of the Master’s Program.

ALUMNI

Congratulations Ph.D. Alums!

our recent graduates published research in the most recent issue of American Economics Journal: Applied Economics (April 2018). The paper by former students Benjamin M. Marx (Class of 2014) and Lesley J. Turner (Class of 2012), “Borrowing Trouble? Human Capital Investment with Opt-In Costs and Implications for the Effectiveness of Grant Aid.” The paper by former student Anukriti Sharma (Class of 2013), “Financial Incentives and the Fertility-Sex Ratio TradeOff.” The paper by Costas Meghir, Mårten Palme, and Emilia Simeonova (Class of 2008), “Education and Mortality: Evidence from a Social Experiment.”

Right: Department of Economics 11th Floor (Photo by Jeffrey Schifman)

NEWS

Richard Clarida Nominated to Serve as Vice-Chair of the Federal Reserve Board

n April 16, 2018, President Donald J. Trump announced his intent to nominate Richard H. Clarida to become the next vice chairman of the U.S. Federal Reserve, a position held most recently by Stanley Fischer. The U.S. Senate must confirm the appointment before it becomes official. From February 2002 until May 2003, Clarida served as the Assistant Secretary of the United States Treasury for Economic Policy, a position that required confirmation by the US Senate. In that position, he served as chief economic adviser to the Treasury Secretary, and advising him on a wide range economic policy issues, including the U.S. and global economic prospects, international capital flows, corporate governance, and the maturity structure of U.S. debt. In May 2003 Treasury Secretary John Snow presented Clarida with The Treasury Medal in recognition for his record of outstanding service to the Treasury Department. From 1997 until 2001, Clarida served as chairman of the Department of Economics at Columbia University. Earlier in his career, Clarida taught at Yale University and served in the administration of President Ronald Reagan as senior staff economist with the Presidentâ&#x20AC;&#x2122;s Council of Economic Advisers. Clarida has published numerous and frequently cited articles in leading academic journals on monetary policy, exchange rates, interest rates, and international capital flows. He is often invited to present his views and research to the worldâ&#x20AC;&#x2122;s leading central banks, including the Federal Reserve, the European Central Bank (ECB), the Bank of England, and the Bank of Japan. He has also served as a consultant

to several prominent financial firms, including the Global Foreign Exchange Group at Credit Suisse, First Boston, and Grossman Asset Management. Since 2006, he has been global strategic adviser with PIMCO, an American investment management firm. He is a member of the Council on Foreign Relations and the National Bureau of Economic Research. Clarida was director of the National Bureau of Economic Research (NBER) Project on and editor of G7 Current Account Imbalances: Sustainability and Adjustment (University of Chicago Press, 2007). Since 2004, he has served as co-editor of the NBER International Macroeconomics Annual and is co-editor, along with Jeff Fuhrer, of the volume Essays in Honor of Benjamin Friedman: Special Issue of the International Journal of Central Banking (Jan. 2012). Clarida received his B.S. from the University of Illinois with Bronze Tablet honors in 1979 and his M.A. and Ph.D. from Harvard University in 1983.

Richard H. Clarida is the C. Lowell Harriss Professor of Economics and International Affairs at Columbia University, where he has taught since 1988. (Photo courtesy of Richard H. Clarida)

Women and Economics A

new report from a committee of the American Economic Association (AEA) shows that since the turn of the century, there has been no significant increase in the share of women entering the pipeline to become professional economists. Among first-year doctoral students studying economics, the share was 32 percent in 2017—barely changed from 33 percent in 2000, according to the report. The imbalance is so great that in six of the “top twenty” economics programs, fewer than one-fifth of the incoming doctoral students were women. This decline in the share of women at relatively early stages of the economics career path is already beginning to reshape the field at more senior levels. The report, which was published by the AEA’s Committee for the Status of Women in the Economics Profession (www.aeaweb.org ), shows that about six years after the share of women starting doctoral programs began to shrink, the

share of women completing Ph.D.’s also began to decline. And seven years after that, the share of women among tenured associate professors of economics stopped rising. “I was alarmed, like everyone else,” says Bernard Salanié, professor and chair of the Department of Economics. Data on Ph.D. candidates by gender show Columbia Economics conferring the degree on 10 female candidates, or 42 percent of graduates in 2018. “It turns out that our Ph.D. program at least is among the most female in the United States. One quarter of the Ph.D. candidates from the top 10 programs this year were from Columbia University.”

(Photo by Jeffrey Schifman)

NEWS

Building Bridges: The Economics Department’s Response to Underrepresentation in the Field

here are many deep structural barriers to break through in the field of economics. Take the issue of representation in the field. According to a report (www.aeaweb.org) published by the Committee on the Status of Minority Groups in the Economics Profession (CSMGEP), in the academic year 2015–2016, there were approximately 152 black and 208 Hispanic faculty members in economics in the United States from schools that participated in the survey. Minority women exist in the intersection of two underrepresented groups and are thus particularly underrepresented at all stages of the economic pipeline. “This is not only a problem with economics,” says Bernard Salanié, professor of economics and chair. “There is similar underrepresentation in mathematics, engineering, and physics. However, what is clear is that this lack of diversity constrains intellectual development in our field.” In response to this challenge, the Department of Economics will launch a Bridge to Ph.D. Program next year. The program aims to enhance the participation of students from underrepresented groups in the field of economics. To achieve this, the Bridge Program will provide an intensive research, course work, and mentoring experiences to postbaccalaureates seeking to strengthen their graduate school applications and to prepare for the transition into graduate school. “There is a big issue here,” says Mark Dean, chair of the Department’s Diversity Committee. “Because people

“There is similar underrepresentation in mathematics, engineering, and physics. However, what is clear is that this lack of diversity constrains intellectual development in our field.”

research things based on their experiences, greater representation in the field would change it in a number of ways. We are uniquely placed at the University to have a hand in the pipeline issue.” Bridge participants will be hired as full-time Columbia University research assistants (RAs) for up to two years and conduct research under the mentorship of faculty members, postdoctoral researchers, and graduate students. “We have great ideas in the Department, many of which will move the field forward,” notes Salanié.

NEWS

Columbia Economics Competition Winners Announced

he winners of the Columbia Economics Competition for 2018 were announced recently. Kirk Wu (CC’21), Derek Zhang (CC’21), and Makena Binker-Cosen (CC’21) were cited for presenting the best economic analyses of income distribution in the United States. The Columbia Economics Competition is one of the two annual competitions held at the Department of Economics at Columbia University. This year, teams were asked to evaluate the evolution of income distribution in the United States since the 1970s and provide viable policy solutions to current challenges.

Winners from left to right: Kirk Wu CC’21, Derek Zhang CC’21, Makena Binker-Cosen CC’21.

Congratulations to Parker Summer Research Prize Winners (2017)

he Department of Economics provides financial support for Columbia College students who take unpaid summer internships that focus on research. By introducing students to original research, a summer internship can provide the foundation for an honors thesis or develop an interest in pursuing a graduate degree. Five underclassmen were awarded a stipend of $2,500 last year to support research.

From right to left: Zoey Chopra, Sahil Rai, Guillermo Carranza Jordan, Shambhavi Tiwari, and Jessica Bai (absent) (Photo by Jeffrey Schifman)

NEWS

Redesigned Website

Offers Visitors Richer Insight into the Department’s Research and Resources

he Department of Economics is proud to launch our newly redesigned website, econ.columbia. edu. The primary objectives of our site development effort were functionality, style, and layout. “We are excited about our new website launch and the robust information it provides faculty and students,” said Bernard Salanié, professor and chair of the Department of Economics. “We believe that this new comprehensive website will allow our users to have a very informative

In addition to the changed design and layout of the pages, new functions have been implemented. “We focused on simplifying our content and increasing visibility of our programs and research,” said Eric Vlach, systems administrator in the Department of Economics. “The new design allows streamlined menus, clear navigation, and a responsive layout for all devices.”

experience as we continue to grow and increase our presence online.”

The new Columbia Economics website was launched March 30, 2018.

Department of Economics: Bernard SalaniĂŠ Professor of Economics and Chair Economic Advisory Council (EAC): John A. Allison Princeton, B.A. Columbia, M.A., M.Phil. CEO and Chief Investment Officer, Unio Capital Miles Freedman Owner, GFD Management Inc. Mark E. Kingdon Columbia, B.A., 1971 Harvard, M.B.A., 1973 President, Kingdon Capital Management John G. Quigley Georgetown, A.B., summa cum laude Stanford, J.D., M.B.A. Columbia, M.Phil. Cofounder, Special Limited Partner, YL Ventures GP Ltd. Senior Adviser, Carthage Capital Group Andrew M. Senchak Lafayette College, B.A. Columbia, Ph.D. Executive, Morgan Stanley Bart Turtelboom Columbia, Ph.D. Chief Executive Officer and Executive Director, APQ Global Limited

Program for Economic Research (PER):

With thanks to:

Yeon-Koo Che Kelvin J. Lancaster Professor of Economics and Executive Director

Angela Reid Director of Academic Administration and Finance

Sophia N. Johnson Assistant Director

Shane Bordeau Assistant Director, MA Program

Stephanie Cohen Program Manager

Amy Devine Program Coordinator Ph.D. Program

PER Steering Committee: Bernard SalaniĂŠ (Ex Officio) Yeon-Koo Che (Ex Officio) Patrick Bolton (Member) Richard Clarida (Member) Simon Lee (Member) Columbia Economics is published twice a year by: Program for Economic Research (PER) Department of Economics Columbia University 1022 International Affairs 420 West 118th Street New York, NY 10027 Phone: 212-854-1542

Julie Stevens Academic Affairs Coordinator Jen Pinargote Assistant to the Chair Alan Lin Editor in Chief, Columbia Economics Review (CER) Design & Art Direction: Columbia Creative: Junie Lee, Donna Snyder, Margaret Griffel, Geoffrey Allen, and Maxwell L. Beucler Photography: Jeffrey Schifman For the latest news and updates about Columbia Economics, visit: econ.columbia.edu Comments, suggestions, or address changes may be emailed to econ-info@columbia.edu or mailed to the address above.

C O N G R AT U L AT I O N S

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