Professional Documents
Culture Documents
M INNESOTA
Fall 2006
Looking Back,
Moving Forward
Remembering the golden history of the Economics Department
Recognizing the life and work of Regents Professor Leonid Hurwicz
Students and alumni who’ve made their mark
Fall 2006 19
Minnesota Economics is published Fall 2006
once a year by the Department of
Economics in the College of Liberal www.econ.umn.edu
Arts at the University of Minnesota
for alumni/ae, faculty, staff, and
friends of the department.
Chair
Narayana Kocherlakota
Director of
Undergraduate Studies
Simran Sahi
2 6 10
Editors
Elizabeth Hilberg
Eugenia Smith
Lisa Thiegs
Colleen Ware
Table of Contents
Writing 1 Letter From the Chair
Douglas Clement
Elizabeth Hilberg
Lisa Thiegs 2 A Golden History
Since its inception, the University’s economics department has been
Photography home to experts and ideas that have garnered international recognition.
Everett Ayoubzadeh
University Archives
Department of Economics 6 Intelligent Designer
Leonid Hurwicz knows how to achieve desired objectives in economics
contributors and in life.
Susan Banovetz
Tessa Eagan 10 Treasure Hunt
Sara Shuford Tom Holmes unearths the hidden gems in his economic research.
Wendy Williamson
16 Making a Difference
Cover photo by Everett Ayoubzadeh Rebecca Blank’s undergraduate degree in economics from the
U of M launched a career dedicated to social change.
20 Minnesota Economics
Letter from the Chair
On July 1, I took over as chair of the and Neil Wallace. Moreover, I knew from
Department of Economics, following Ed my many Minnesota Ph.D. friends that
Foster. These are big shoes to fill. Ed has Minnesota somehow magically inculcated in
done a great job over the past six years, and its Ph.D. students exactly the right attitude
the department and the University owe toward research: It’s important, frustrating,
him a large debt of gratitude. but most of all fun. It was without a doubt
I thought I’d use this opportunity to tell the highlight of my career when I joined the
you a little about myself, and in so doing, faculty here in 1998.
a little about the University of Minnesota. Enough about the past, though. Where
I got my Ph.D. in economics in 1987. My does the department need to go in the
degree was from the University of Chicago, future? Many of the positive attributes
but Minnesota had a huge indirect impact I stressed above are still firmly in place.
on my Ph.D. education. My adviser was We have a great Ph.D. program and a
Lars Hansen, who received his Ph.D. very strong undergraduate program. Our Narayana Kocherlakota
from Minnesota in 1978. Two of the most view of economics is still grounded in a professor and chair
exciting courses I took were taught by Robert synthetic view of theory and data. We’ve 612-625-3810
Townsend, who received his Ph.D. from had some departures and some retirements, nkocher@econ.umn.edu
Minnesota in 1975. My experience with Lars however; so our number-one task in the
and Rob has had an enormous impact on my next couple of years is to hire more faculty
research throughout my career.
The approach to economics that Lars
and Rob taught us relied on the synthesis of By the time I was ten years removed
economic theory and economic data. This
synthesis is a hard one because the precision from my Ph.D., there was no place
of economic theory doesn’t dovetail nicely
with the messiness of economic data. Most I respected or admired more than
economists end up cutting corners either in
their use of theory or in how they use data
Minnesota. In some form or another,
because they can’t make them jibe together almost every part of economics that
in a satisfactory way.
But Lars and Rob made the connection I used in my research came from there.
seem natural to us. I still remember
learning principal-agent theory in one of members to continue to enhance the think of anyone working today who more
Rob’s advanced courses and then using student experience and to compete with completely epitomizes the Minnesota
that advanced (remember, it’s the early other highly ranked departments. synthesis of theory and data than Pat.
eighties!) theory to understand feudal On that front, we’re very excited about The department is enormously proud
institutions in the next. This synthetic the arrival of associate professor Fabrizio of the continuing successes of our alumni.
approach was (almost) unique to them Perri and professor Patrick Bajari. Fabrizio To cite but one of many, Luis Carranza
among the Chicago faculty of the day. But specializes in international economics but (Ph.D. ’96) was recently named the finance
after graduate school, as I met more and has made contributions in a variety of other minister in Peru. As it turns out, financial
more economists trained at Minnesota, fields as well. Some of his most interesting markets know the benefit of a Minnesota
it became clear to me that this approach work teaches new lessons about the ability Ph.D: Peruvian bonds immediately rose to
to economics was really a Minnesota of people in the United States to share a nine-week high upon the announcement
approach to economics, not something income risk with one another. of Luis’ appointment.
special to Lars and Rob. Pat Bajari is a Minnesota student This department has a glorious tradition.
By the time I was ten years removed from through and through. He got his B.S. in It would be impossible to maintain that
my Ph.D., there was no place I respected economics and mathematics here in 1992; tradition without the gifts we’ve received
or admired more than Minnesota. In some then he received his Ph.D. in economics over the past years from our generous
form or another, almost every part of in 1997. His field of specialization is alumni and other friends. All we can say
economics that I used in my research came industrial organization. In his recent is: thanks!
from there: mechanism design from Leo work, he has made enormous headway in I look forward to serving as department
Hurwicz, rational expectations econometrics the crucial problem of estimating models chair over the next three years. Feel free to
from Lars Hansen and Tom Sargent, and of strategic firm interaction in dynamic call me or send me an e-mail if you have
monetary economics from Robert Townsend settings. More generally, it is hard to comments of any kind.
Fall 2006
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10 11 12
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15
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Minnesota Economics
Since its inception,
the University’s
Economics Department
has been home to experts
and ideas that have
garnered international
recognition.
By Douglas Clement
I
deas are the lifeblood of a university.
And because many people can use
the same idea simultaneously
without decreasing its value for
others, sharing ideas stimulates productiv-
ity. This concept of “endogenous growth”
has been formalized by economists only
to the course description, was “to present
clearly and fairly the history of the science
and to thoroughly inculcate established
principles.” From the start, Folwell seemed
to understand the importance of divergent
outlooks in the discipline. “Conflicting
views are brought out with all possible
a key member of the faculty during this
period before his departure for Harvard
in 1937. His (and Sir John Hicks’) IS-LM
charts, which summarize relationships
among investment, savings, liquidity prefer-
ence and money supply, still tax the learning
curves of economics undergrads today. Min-
recently—and some economists still debate impartiality,” he said. nesota’s close association with University of
its validity—but it is an apt description The University’s first economics Chicago economics also began early: In the
of the University of Minnesota’s Depart- Ph.D.—and one of the nation’s first women 1930s, George Stigler was a faculty member
ment of Economics throughout its history: to receive a doctorate in economics—was at the University, as was Milton Friedman
increasing returns through the generation Hannah Robie Sewall in 1899. Like eco- briefly at the close of World War II.
and diffusion of ideas. nomics dissertations today, her thesis, a
From its earliest years, when the Univer- nuanced analysis of evolution in concepts of Birth of a Department
sity’s president did double-duty as its only economic value prior to Adam Smith, was After the war, student enrollment climbed
economics instructor, to the most recent filled with Greek symbols. Unlike today’s at the University, and faculty numbers
class of graduate students, who wrote dis- students, however, Sewall wasn’t using expanded in step. In 1946 after four years
sertations on topics as complex as dynamic Greek to build mathematical models. She at the U.S. Treasury Department, Walter
optimal contracts, economics at the Uni- was quoting Aristotle in his native tongue. Heller arrived in Minneapolis, and Min-
versity has always been about ideas and the In these early days, economics was part of nesota economics would never be the same
people who share them. The list—of both the political science department, for at the again. “If you want the founding father of
people and ideas—is extraordinary, and the time, the discipline was essentially the quali- the Department of Economics,” observes
history of the department is a remarkable tative study of interactions between political Jim Simler, department chair from 1967
tale of growth in knowledge. and economic forces, rather than the rigor- to 1991, “there’s only one answer. It’s
ous mathematical treatment of production Walter Heller.”
The Early Years and exchange that economics later became. A skilled economist, Heller also had a
The first economics instructor at the In 1913 economics became an independent keen eye for academic talent and an envi-
University was indeed its first president, department within the College of Science, able gift of persuasion. By 1957 he had
William Watts Folwell. His goal, according Literature and the Arts, and all SLA majors drawn together a faculty remarkable in both
took economics as a required subject. But its quality and its breadth: John Turnbull,
in 1919 the economics faculty was merged Andreas Papandreou (future Prime Minis-
Pictured left: with business education, becoming a unit ter of Greece), Oswald Brownlee, Harlan
1) Andreas Papandreou 2) Anne Krueger
3) Oswald Brownlee 4) William Watts Folwell
within the newly formed School of Busi- Smith, John Buttrick, Edward Coen,
5) Neil Wallace 6) Ed Coen 7) Chris Sims ness. The resulting association endured for Franz Gehrels, John Chipman, John
8) Marcel (Ket) Richter 9) Tom Sargent more than four decades. Kareken, Scott Maynes, Richard Savage
10) Alvin Hansen 11) Leonid Hurwicz
12) Harlan Smith 13) Craig Swan
Often referred to as “the American and Frank Boddy.
14) John Buttrick 15) John Turnbull Keynes” and one of the nation’s leading But without one particular economist,
16) Walter Heller macroeconomists, Alvin H. Hansen was Minnesota economics might never have
Fall 2005
2006 3
FEATURE A Golden History
Ed Foster
John Kareken
Herb Mohring
Walter Heller
Cliff Hildreth
Heller and Hurwicz coalesced. Heller’s most significant recruit- great deal. It was just truly remarkable what
Minnesota Economics
Jim Simler
Jim Jordan
John Chipman
Fall 2006
Intelligent Designer
Leonid Hurwicz knows how to achieve desired objectives in economics and in life.
By Douglas Clement
Minnesota Economics
But in truth, Hurwicz launched a revolu- salt will tell you that most of the time the “ My joint work with
tion of his own by dramatically transform-
ing the way economists think about eco-
system is not in equilibrium; it’s moving up
or down or oscillating.”
Leo Hurwicz is one
nomic systems. Rather than passively accept For Arrow, the collaboration was espe- of the finest intel-
the given structure of an economy and opti-
mizing within its constraints—the standard
cially significant. “My joint work with Leo
Hurwicz is one of the finest intellectual
lectual experiences
method—Hurwicz’s theory of “mechanism experiences of my life,” he wrote. “His of my life.”
design” provided a rigorous method for cre- depth, his caution and demand for rigor,
—Kenneth Arrow
ating rules of interaction (mechanisms) so and most of all, his sense of the essence of
as to achieve desired objectives. “This new the problems, were powerfully educative.”
approach,” Hurwicz wrote in 1973, “refuses (Hurwicz smiles when he hears of Arrow’s
to accept the institutional status quo… as message: “I’m amazed that you have tracked
the only legitimate object of interest.” Revo- down such people who are willing to per-
lutionary indeed. jure themselves.”)
Hurwicz’s work has allowed economists A decade later, he published a set of
not only to analyze competitive markets but papers on consumer demand theory, which
also to devise alternatives. “A lot of classical analyzed the derivation of utility functions
welfare economics starts with a particular from demand functions. “In my opinion,”
mechanism, the competitive economic says Chipman, “both these contributions
system,” observes Hurwicz’s University of made him deserving of a Nobel Prize.”
Minnesota colleague and collaborator, John Hurwicz hasn’t yet received the Nobel, but
Chipman. “He goes further behind that to in 1990 he was awarded the National Medal
designing mechanisms from scratch.” of Science by President George H.W. Bush,
The competitive market system is remark- “for his pioneering work on the theory of
ably robust, but there are clear examples— modern decentralized allocation mecha-
coping with pollution, for instance, or nisms.” Only six economists in history—
providing public goods—where markets the others are Nobel laureates Arrow, Gary
fail. In such situations, mechanism design Becker, Milton Friedman, Paul Samuelson
excels in the creation of alternatives. Today and Robert Solow—have received the Medal
it’s used in applications as varied and vital of Science, and Hurwicz is the only scholar
as the design of airwave spectrum auctions, from the University to be so recognized.
analysis of monetary policy rules, internal “I thought it was a case of mistaken
organization of large corporations, and identity,” Hurwicz quipped when he first
shaping of computer networks. heard of the award. Now he admits that
while he was very surprised to get it, he was
Other Contributions “delighted that the concept of decentraliza-
While many consider mechanism design to tion is [recognized] as important for eco-
be Hurwicz’s most innovative work, his con- nomics.” Mechanism design doesn’t neces- Hurwicz receives the National Medal of Science in 1990.
tributions are far broader. In the early 1940s sitate a decentralized structure, but “I have a
he worked at the Cowles Commission, a value prejudice in favor of decentralization,”
think tank dedicated to econometrics. he admits. “When I think the market is
His research there on small sample not good at taking care of something, and The legal education was his father’s idea;
properties, says Chipman, “is still cited I look for alternatives, I first look for d Hurwicz was more interested in astrophys-
as fundamental.” ecentralized alternatives.” ics. So in addition to attending law school,
And in the late 1950s, soon after his he studied physics and entered the piano
arrival at the University, he published three A Winding Road conservatory, indulging another of his tal-
seminal papers, coauthored with Stan- From Bolsheviks to Bush is a long jour- ents. “I was running like mad,” he recalls.
ford University’s Kenneth Arrow, on the ney. Hurwicz began it in a horse-drawn But it was a second-year course in econom-
dynamic stability of competitive equilibria. wagon when his family, fearing political ics, taken while working toward his law
Economists had long studied equilibrium in persecution, left Moscow in 1919. “It was degree, that hooked him. After graduation,
competitive economic systems, but no one something you could make a Dr. Zhivago he was admitted to the London School of
had carefully evaluated their stability. movie about,” Hurwicz says. They returned Economics. His English was rudimentary,
“Much teaching, even now, is focused on to their native Poland, and he studied in and the classes he understood best were
the system being in equilibrium,” observes Warsaw schools, receiving a law degree from
Hurwicz. “But any economist worth his the University of Warsaw in 1938. (Continued on page 8)
Fall 2006
FEATURE Intelligent Designer
(L to R): John Chipman, Timothy Kehoe, Leonid Hurwicz, Marcel (Ket) Richter, Simran Sahi
national standing taught by a Hungarian economist. “He Maxim), celebrated their sixty-second wed-
owes much to had a worse accent than I did, but I could ding anniversary in July.
understand it, so I took all the courses he
Hurwicz. was teaching.” The professor: renowned Shaping the Department
I would say he’s theorist Nicholas Kaldor. Hurwicz arrived at the University of Min-
Hurwicz took night classes at LSE as nesota in 1951, recruited by Walter Heller.
responsible almost well, and “was able to more or less do two Heller was the worldly policymaker;
single-handedly years in one, at least in terms of inhaling Hurwicz, the quintessential mathematical
knowledge.” In 1939 he went to Geneva theorist. But the two worked in brilliant
for its high for further study, but when Hitler invaded concert, creating an independent spirit and
reputation.” Poland, Hurwicz became a Jewish refugee, identity for economists at the University,
and his parents and brother fled Warsaw recruiting talented young economists, and
—John Chipman only to be interned in Soviet labor camps. teaching students the technique and beauty
After several tense months in Switzerland of economics.
and Portugal, Hurwicz emigrated to the The department’s national standing owes
United States, completing his studies at the much to Hurwicz. “I would say he’s respon-
University of Chicago and Harvard. His sible almost single-handedly for its high
family eventually joined Hurwicz in the reputation,” says Chipman.
United States. He taught meteorology at the In his Nobel autobiography, laureate
University of Chicago from 1942 to 1944, Daniel McFadden points out that when he
and—sight unseen, he claims—hired eco- was a student, it was Hurwicz, along with
nomics undergraduate Evelyn Jensen, a farm Chipman, who drew him to economics
girl from western Wisconsin, as his teaching because of his insight into mathemati-
assistant. He and Evelyn, along with their cal models of learning and choice. Other
four children (Sarah, Michael, Ruth and students and colleagues emphasize that
Minnesota Economics
Friends and “Someone asked me recently if I could
think of a single individual who might
A Golden History
colleagues note that epitomize the University,” said Craig (Continued from page 5)
Fall 2006
Treasure Hunt
Photo courtesy of Stan Waldhauser
To m H o l m e s u n e a rt h s t h e h i d d e n g e m s
i n h i s eco n o m i c r e s e a rch .
U
By Douglas Clement
10 Minnesota Economics
What factors influence the diffusion of Wal-Mart stores? While scale and transportation costs are critical baseline factors,
they alone can’t explain why industries locate where they do. Gov-
Why is there such a high geographic correlation between ernment policies play a significant role, as does labor union activ-
nursing-home unionization and coal mines? ity. “I often look at how avoidance of labor unions or government
regulations might tilt company decisions,” Holmes says. He uses his
How important were railroads to the growth of the nation? benchmark models incorporating scale and transportation to then
measure the separate impacts of regulation and union activity.
T
Digging Deeper
A unifying theme in Holmes’ research is the importance of digging
hrough innovative synthesis of economic theory hard for data and comparing those data tightly with theory. Most
and data, Tom Holmes digs into such questions economists lean toward either theory or econometrics. Not Holmes.
U
and unearths truths about how economies arrange “A lot of people do well in this field by just doing the math, sitting
themselves: a tradition of economics known as in their office with pen and paper,” he observes. “And others are
industrial organization. really specialists with data. It’s just worked well for me to try to play
“I am fundamentally interested in how production both cards.”
is organized,” says Holmes, Curtis L. Carlson Professor So while his papers are filled with high theory and intricate
of Economics. “I’m interested in seeing how big the math, they also incorporate gigabytes of data that are meticulously
productive units are and where they are. Do they put everybody in assembled from government databases, industry sources, local
one big plant or lots of little plants scattered around the country?” phonebooks or online articles. And while he could outsource the
As he elaborates, the map of his research agenda slowly reveals data gathering to others, Holmes chooses to do much of it himself.
hidden treasures. “Yeah, I get dirty,” he jokes. “I’ll do a lot of the data work; at the
very early stages I always need to do it.”
Unhidden Agenda For Holmes, a direct relationship with the data is essential. “It’s
Early in their schooling, economists learn that firms grow to the size never enough for me to run some regression and just see what pops
at which they minimize average production costs. This often results up,” he says. “I look at my data and look at the outliers, and I say,
in large production facilities that allow companies to take advantage what’s their story? You learn a lot by digging. You often learn about
of economies of scale. But pushing strongly against that tendency something new that you didn’t even know existed. If I didn’t dig I’d
is the cost of bringing goods to market. A single huge factory could miss out on my best ideas.”
achieve low costs per unit, but the expense of shipping products to
stores across the nation could overwhelm the scale economy savings. Holmes’ Schooling
That balance is at the heart of Holmes’ research agenda. “If you Holmes’s zeal for economics started with his first college seminar.
pile up production in this one little spot, you can have great effi- “I went to my first econ class never even having heard the term
ciencies, but how are you going to get it to people?” he asks. “That’s ‘supply and demand.’ I had no idea what it was about,” he recalls.
really the trade off that drives much of my work: enjoying scale “And, well, I just fell in love with it. I couldn’t believe it. I basically
economies versus saving on transportation costs.” never did anything else.”
A recent Holmes paper published in the “Journal of Political He majored in math and economics at the University of Pennsylva-
Economy”, for example, examines why companies tend to put sales nia. Then he got his Ph.D. at Northwestern University in 1985. After
offices in large cities. One potential explanation is that salespeople teaching at the University of Wisconsin, he became a Federal Reserve
in large cities have greater access to market information that enables Bank of Minneapolis economist in 1993, joining the University fac-
them to match customer needs. But by carefully constructing a ulty two years later. In 2003 he was awarded the Carlson Chair.
model and comparing it to U.S. data, Holmes finds that scale econ- In addition to his research, Holmes teaches both graduate and
omies and transportation costs may be more persuasive reasons. undergraduate classes at the University. “I really enjoy undergradu-
ate teaching,” he says, recalling his own initial classes in the field.
Economics of Density But working with graduate students is especially gratifying. “I get
Similar factors play a role in his Wal-Mart research, which examines the most out of the one-on-one working with students on their
the time-path of the corporation’s store openings across the country. theses,” he says. “It’s really thrilling to see somebody put their
It might seem that Wal-Mart would have chosen the highest quality research together. One of the most rewarding aspects of this job is
locations around the country, one by one, as it expanded its empire. to see your grad students grow.”
But instead, Holmes concluded, the company pursued economies Holmes’ enthusiasm about economics begs an obvious question
of density: locating new stores close to older ones in order to save about his own children, the eldest of whom has just started college.
money on deliveries, infrastructure, management and advertising. Would he predict that any of the three will follow in their father’s
A short animated movie clip created by Holmes tracks the com- footsteps? Holmes smiles widely. “That’s still to be determined,”
pany’s diffusion across the United States from 1962 to 2004 and he responds, always the cautious scholar. “I’m hoping. I don’t want
shows it spreading like a virus—or pollinating like a flower, depend- to be too pushy. But I think it’s the greatest job—and the greatest
ing on your point of view. field—in the world.”
Fall 2006 11
Working in collaboration has paid
off for graduate students Ananth
Ramanarayanan and Costas
Arkolakis, whose ongoing research
has already received accolades.
By Elizabeth Hilberg
12 Minnesota Economics
Sense
Sensibility &
A m y B r at kov i c h marries her passio n
for jewe l ry desig n with her backgro u n d
i n eco n omics .
F
By Elizabeth Hilberg
Fall 2006 13
Photo courtesy of Kurt and Don Winkelmann
Kurt and Don Winkelmann at the 2006 Davis Cup in Mission Hills, California.
Cultural Crossings
From Minneapolis to While many father and son duos can say they share a passion for sports or antique
cars or the great outdoors, few would say that their common interest lies in applied problem
Mexico, father and son solving. And even fewer can tout two generations of Ph.D.s in economics. Don and Kurt
Winkelmann claim this distinction, and they share their alma mater as well. Don spent his
Don and Kurt Winkelmann graduate school years at the University of Minnesota’s Department of Economics in the
early 1960s, paving the way for his son, Kurt, to follow with his graduate degree in 1987.
have used their U of M Both were drawn to the department’s reputation for analytic rigor and the strength of the
faculty. “I remember being impressed by the idea that I was being exposed to cutting-edge
economics education to material practically every day,” Kurt says. “Looking back, I have an even deeper appreciation
now for the innovative quality of that work.”
gain global perspective. Though it was a shared interest in applied problem solving that led them both to the
University’s Department of Economics, their paths diverged when it came to careers. Don,
whose thesis focused on agricultural subsidies and labor migration, landed in the academic
By Lisa Thiegs arena as a professor at Iowa State University before moving to Mexico, where he eventually
became director general at CIMMYT (Centro Internacional de Mejoramiento de Maíz
y Trigo), an international not-for-profit organization that helps improve corn and wheat
technologies for developing-country farmers. Kurt focused on applied econometrics with
an emphasis on financial economics and real estate for his dissertation; now he’s a managing
director for the Investment Management Division at Goldman Sachs in New York.
14 Minnesota Economics
For both an international perspective
played an important role in their future.
Don moved his wife and three children to
Mexico in 1966 to help build the Iowa State
Both suggest that there are A Family
economics department’s nascent master’s essential skills that came from Partnership
degree program in agricultural economics their economics education that
at Mexico’s Colegio de Postgraduados. He Although Minnesota and Mexico
expected to return to Ames, Iowa, after 18 went deeper than theories and are many miles apart, Don and Kurt
months but ended up staying for nearly mathematics. Winkelmann have found a way to shrink
three decades as he settled into his role at the gap. By establishing a fellowship
CIMMYT. A significant part of his work through the University of Minnesota’s
involved combining the views of biological Department of Economics, they have
sciences with the views of social scientists, with institutional investors around the discovered that they can honor their
in particular economists, to develop world on broad investment policy issues. cultural connections while making
improved technology. The broader view “There has been a very steady diet of an economics education a reality for
made a difference, and the attitudes and interesting issues to work on at Goldman,” current students. Don and Kurt, along
tools that emerged took hold in developing- he notes. “The issues are, as often as not, with Kurt’s wife, Janine, hope that
country research programs. raised by clients, with the implication that students with Latin American ties will
His efforts didn’t go unnoticed. For his providing solutions can have important have the chance to build a foundation
work with the Colegio de Pos-Graduados practical consequences.” for the future with a solid education at
and with CIMMYT, he received Mexico’s Don and Kurt see eye to eye on most the University.
Order of the Aztec Eagle, an award the matters. Both suggest that there are essential “The University of Minnesota gave
Mexican government gives to foreigners skills that came from their economics all three of us tools that enriched our
who have made a significant contribution education that went deeper than theories lives and careers,” Kurt says. “For Dad
to the country. He eventually became and mathematics. “In any situation, I try and me, it was a career in economics.
chair of the technical advisory committee to figure out the core problem,” Kurt says. We also wanted to recognize that
for CGIAR, the Consultative Group on “One of the things that really stuck with Mexico had given us some experiences
International Agricultural Research. me in terms of a lesson was that there are that really broadened and enriched
Retired since 2000 and living in Santa probably discernible economic structures our lives outside of what we were
Fe, Don hasn’t left economics and his driving what we see empirically.” doing professionally.”
global perspective behind. He is active Don still focuses on basic maxims that When Kurt initially approached his
in Santa Fe’s Council on International went hand in hand with his education: father with the idea of the fellowship,
Relations, follows immigration issues “For me, the little phrases like ‘No free Don didn’t need to be convinced. “I
closely and volunteers with Santa Fe’s lunches,’ ‘Sooner preferred to later,’ found it easy to follow Kurt’s lead
International Folk Art Market. He most ‘Think about specialization,’ and ‘Look at because I found what he was talking
enjoys being a Woodrow Wilson Visiting division of labor’ had lasting importance. about and his motivations very
Fellow, which gives him a chance to talk to They emerged from theory supported by appealing,” Don says. “And I just
students at small colleges. “I’m not there analysis. I’ve long since forgotten theory’s liked the idea of the two of us doing
teaching economics; I’m talking about refinements, and I’m no longer competent it together.”
my experiences in combining views from with the analysis. But the maxims stayed,
various disciplines in solving production and they had a large influence on the last 20
and environmental problems.” years of my working life, and they still do.”
Kurt lived in Mexico for eight years The father and son team know, too, to
before leaving for college when he was 18. expect the unexpected. “People should be
“The experience in Mexico had a profound alert to the many opportunities, beyond
influence on me,” he says. “The exposure at those that motivated them initially, that
an early age to a different culture probably are going to open up along the way,” Don
made it easier for me to contemplate a says. Kurt agrees, referring to an analogy
career focusing on global clients and global that’s often used at his office: “A career is
issues.” Spending his youth in a foreign a marathon, not a sprint. People should
country sparked his interest in travel; keep in mind that they’re going to be
whether it’s for work or pleasure, he travels working for a long time. The Economics
to South America, Central America and Department gives its students a solid
Spain regularly. foundation of tools that should carry them
Now, after 13 years at Goldman Sachs, through a career. And you can never really
Kurt heads the Asset Management Group’s predict what kind of opportunities might
Global Investment Strategy group, working show up.”
Fall 2006 15
graduate school that she discovered just how much they cared about
their students. After she graduated from the University, Blank was
hospitalized for an illness that delayed her graduate school plans for
a year. She was quite surprised when department head Jim Simler
came to visit her in the hospital. “I still think about it, and I was so
touched by it,” she says. “He clearly felt connected to the people
from his department, even though I was two years out.”
Blank, now dean of the University of Michigan’s School of Public
Policy, has been heeding Heller’s call to make a difference in the
world. As a graduate student at MIT, Blank was active in commu-
nity service, volunteering at a local shelter and soup kitchen.
Over the next fifteen years, Blank found her niche in various eco-
nomics professorships at MIT, Princeton and Northwestern, where
she also served for a year as director of the Joint Center for Poverty
Research. Blank published and edited numerous books and articles
that covered topics such as work and welfare reform, labor market
dynamics and poverty trends. Her book, “It Takes A Nation: A New
Agenda for Fighting Poverty”, has been widely used in classes and
received the 1997 Richard A. Lester Prize for Outstanding Book in
Labor Economics.
Following major legislative changes in welfare programs in the
mid-1990s, her edited volume with Ron Haskins, “The New World
of Welfare”, provided information to policymakers and researchers
about the effects these changes were actually having. In a series of
Photo courtesy of Rebecca Blank
papers, Blank demonstrated that these policy changes led to large
Making a
increases in work among single mothers and reduced their welfare
use. “The U.S. has changed from a monthly cash support system
for low-income families to one based on work,” Blank says. “This
has had many good effects, but it also has created new challenges
Difference
for mothers who face problems finding adequate child care or who
find themselves in unstable jobs. In my work, I’ve tried to point out
the real successes of welfare reform while still recognizing that many
single mothers have limited earnings and remain poor.”
While most of her career has been spent in the academic arena,
she also served on the Council of Economic Advisers, once as a
Rebecca Blank’s undergraduate degree in economics from the senior staff economist during the first Bush administration in 1989,
U of M launched a career dedicated to social change. and later as a President-appointed member during Clinton’s second
term. While on the council, she advised the White House on such
By Lisa Thiegs issues as a minimum wage increase, Social Security reform and wel-
A
fare reform.
s an undergraduate at the University of Minnesota, Blank, also co-director at the University of Michigan’s National
Rebecca Blank (B.S. ’76) enjoyed the courses she was Poverty Center, helps initiate research that provides information
taking for her English major. But once she tried an to advocacy groups and policy analysts. She says that one of the
economics class, she realized economics could take her biggest issues right now is the effect of large incarceration rates on
life in an entirely different direction, one that could bring about low-income families. Many men with a prison record returning to
social change. low-income communities have difficulty finding a job. This limits
“Taking economics classes gave me a chance to use math skills their income and the ways in which they can support their children,
I had acquired over the years,” she says, “and it gave me a chance who are often raised by single mothers. “We need to focus on jail-
to think seriously about social problems and issues I cared about.” to-work efforts and find ways to reintegrate the incarcerated back
If she had any doubts about whether she had made the right into the community,” she says.
choice of major, they were dispelled in Walter Heller’s introductory Blank, the 2005 recipient of the University’s Outstanding Alumni
economics class. “He communicated that if you know economics, Achievement Award, tackles tough issues every day and doesn’t balk
you can make a difference in the world,” she says. when she’s faced head-on with economic and social quandaries. She
Blank knew she was working with outstanding faculty while lives by following her passion and tells others to do the same: “Go
she was in the program, but it wasn’t until she was on her way to out and do something you find deeply engaging.”
16 Minnesota Economics
KUDOS
Focus on Faculty
Zvi Eckstein was appointed by the
government of Israel to a four-year position as
the Deputy Governor of the Bank of Israel. He
Alumni Achievements participates in setting monetary policy, bank
regulation and advising the government.
Masahiko Aoki (Ph.D. ’67) was voted president-elect
Narayana Kocherlakota was named a
of the International Economic Association at the World Council
fellow of the Econometric Society in December
meeting in Morocco in August 2005. He will become president
2005.
in 2008 for a three-year term.
Beth Allen gave the Murat Sertel memorial
Rebecca Blank (B.A. ’76), co-director at the
lecture in October 2005 at the ASSET meeting
University of Michigan’s National Poverty Center, is the 2005
on Crete.
recipient of the Outstanding Alumni Achievement Award from
the University of Minnesota. The symposium proceedings in honor of
Marcel (Ket) Richter were published in
Geir Haarde (M.A. ‘77) became prime minister
“Economic Theory” in August 2005 and also as
of Iceland in June 2006. Haarde has served in many
a book, “Rationality and Equilibrium” (Springer,
governmental positions, including minister of finance and
2006).
minister of foreign affairs.
Fall 2005
2006 17
Leaving a Legacy
Colleen Donahue
donah071@umn.edu
We are all change agents. Some February 10, 1884. He earned a bachelor’s
612-626-7642
people have the capacity to effect change degree from Columbia University in 1908.
on a grand scale. If you’re a Warren Buffett He earned his Ph.D. in 1917 from the College of Liberal Arts
University of Minnesota
or a Bill Gates, you can give away billions, University of Pennsylvania. In 1919, he
225 Johnston Hall
and your philanthropy will have a global came to the University of Minnesota as a 101 Pleasant St. S.E.
impact. Most of us, of course, will have to professor in economics, with a specialty in Minneapolis, MN 55455
settle for something more modest. insurance, in the newly established School
The billionaire philanthropists of the of Business. His wife, Mildred Mudgett,
world may get the headlines—but there are was also employed by the University in the
countless others, including many friends of School of Social Work. our graduates are managing the finances
the Department of Economics, whose gifts Though not in contact with the of countries and corporations all around
are no less generous as a percentage of their department for decades, the Mudgetts the globe.
income or assets. And these gifts make a real must have watched how the department And most of all, they must have cared
and lasting difference in people’s lives. was faring. This gift was no fluke. This about students.
Take, for instance, the late professors couple made a considered decision to leave The generous support of people like
Bruce and Mildred a particular kind of legacy—one that would the Mudgetts can help this phenomenal
Mudgett. In May, provide opportunities for talented rising department sustain its international
the University economists to study at Minnesota. reputation for generations to come. Their
of Minnesota
Foundation received a
gift of $342,000 from Gifts can create systematic change in
Bruce Mudgett
M INNESOTA
Economics
Nonprofit Org.
US Postage
PAID
Mpls., MN
Department of Economics Permit No. 155
University of Minnesota
1035 Heller Hall
271 19th Avenue S
Minneapolis, MN 55455
Phone: 612-625-6353
E-mail: econdept@econ.umn.edu
Web: http://www.econ.umn.edu/
18 Minnesota Economics