Categories
Economists Harvard Lecture Notes

Harvard. Tobin’s notes to lecture by Alvin Hansen on Keynes’ General Theory, May 1938

 

The following notes were taken by James Tobin at the end of his junior year at Harvard. The notes for this lecture by Alvin H. Hansen on Keynes’ General Theory were “filed” as loose-leaf pages inserted into a bound volume of Tobin’s handwritten course notes for Economics 41 (Money, Banking, and Commercial Crises, taught by John H. Williams and Seymour Harris). Hansen’s lecture might have been a guest lecture for that course since only a recitation section taught by Kenyon Edward Poole was included in the notes for that date.  

Also on that date in history at Harvard: Gunnar Myrdal held the second lecture in his four-lecture Godkin public lecture series “The Population Problem and Social Security”.

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Lecture
5/4/38
Prof. Alvin H. Hansen of Garver & Hansen
Littauer Professor of Political Economy

Keynes’ General Theory.

Not mainly concerned with trade cycle. Ch[apter] on trade cycle not very original. Cycle consists in fluctuation of rate of investment-purchase of capital-goods. Keynes holds that fluctuations in rate of invest[ment] due to fluctuations in the rate of prospective profits, in the marg[inal] efficiency of capital. Keynes emphasizes the rôle of expectations—psychology. Quick shift from prosperity to depression due to violent shifts in expectation from optimism to pessimism.

Mainly concerned with larger problem of full empl[oyment] of labor and the other factors of production. Could still have trade cycle but its booms would hit full employment. But also conceivable is a society in which ceiling of fluctuations is below full empl[oyment]—permanent under-employment. This long-run under-empl[oyment] Keynes mainly concerned with. Modern societies tend to be in a situation of chronic under-employment. He accuses classicals of working on assumption that society has long-run tendency to full empl[oyment]. Classical writers were concerned with pricing system and returns to different factors, and how much labor, etc., was used. R[ate] of int[erest] for example determined amount of saving cped [compared?] to consumption out of given income. This according to K[eynes] only goes with full empl[oyment] assumption. Rise in consumption in condition of under-empl[oyment] will lead to rise in investment as well. These are not alternatives until there is full empl[oyment]. This well realized by bus[isness] cycle theorists. Keynes applies it to long-run analysis.

What determines the volume of employment?

1) Rate of interest
2) Marg[inal] efficiency of capital. (Prospective rate of profit anticipated by bus[iness] man.)
3) Propensity to consume.

Nothing new about introducing rate of int[erest] as a determinant. Wicksell 1898 set forth determinants of expansion as prospective rate of profit on one side and r[ate] of int[erest] on the other side. Keynes adds the propensity to consume. dC/dY >0, <1, decreases. Rich societies have tendency to fail to maintain level of income once achieved. A society which consumes all of its income would have no difficulty in maintaining its level, because no deficiency in income-spending from incomes pd [paid] out to factors. If some part is not spent on consumers’ goods—just saved without a purchase of capital-goods – those who save are not actual investors-entrepreneurs—and there is not an equal amount of new investment, there is a tendency for incomes to fall. If propensity to consume is low, other determinants of employment must be very strong—high prospective rate of profit, low r[ate] of int[erest]—in order to balance saving.

“Classical” relation of r[ate] of int[erest] to saving. Later classical writers qualified argument: if r[ate] of int[erest] is very high, more saving; if low, less. But in between, there are the fixed-income savers. Keynes: determinant is level of incomes. Wouldn’t say no relation of saving to r[ate] of int[erest]. Given r[ate] of int[erest], determinant is level of incomes. There is for K[eynes] then no minimum r[ate] of int[erest], such as Cassel found: if int[erest] falls there because of shortness of human life people will say int[erest] is so low that not much income from it. Hence they will consume capital. At this p[oin]t tendency for saving to decrease, & consumption [to] increase. For K[eynes] there is another minimum point, below which there is not decrease of saving but an increase of hoarding. K[eynes] distinguishes mkt [market] & pure rates of int[erest]. Special risk in buying long-term commitment—risk is that r[ate] of int[erest] will rise a little bit in future, price of bond will drop so as to wipe out all int[erest] gain on it. Hence there is pt[point] where we won’t bother to buy securities but will hold cash. R[ate] of int[erest]not driven down below point of consump[tion] ncrease. What people will do is hold savings in liquid forms.

In rich community, marg[inal] efficiency of capital low; propensity to consume low; but rate of int[erest] can’t keep falling because of liquidity-preference. Hence there is not adequate volume of new invest[ment] to maintain full employment. R[ate] of int[erest] doesn’t drop to point where people stop saving & consume more, & rectify the difficulty; but is held up by liquidity preference.

Emphasizes largely r[ate] of int[erest]; Spiethoff thinks important thing in expansion is marg[ignal] efficiency of capital, which K[eynes] largely takes for granted. Spiethoff’s factors influencing prospective rate of profit on new invest[ment]: expanding market, increasing population, inventions & giant industries. All these associated with a young & growing capitalism, as in 19th.—unique century, conquering the world and revolutionizing the industrial technique and expanding population. Now decline in population, and no new mkts [markets]. K[eynes] assumes this exploitation of opportunities & emphasizes the monetary rate of int[erest], not as Spiethoff on non-monetary influences on marg[inal] efficiency. Risk & uncertainty of modern world decrease the will to invest—and perhaps also the tendency to save w[oul]d be greater. Failure of invest[ment] outlet.

K[eynes]’s solutions:

1) Artificially create a low rate of interest.
2) Stimulate consump[tion] by redistribution of income.
3) Enlarge volume of public investment.

[Qualifications]

1) How far will stimulate invest[ment] doubtful.
2) Effects of taxation for this purpose may hurt private invest[ment]
3) Public invest[ment] may be offset by private invest[ment] decline.

            Economic policies are choice among evils.

 

Source: Yale University Archives. Papers of James Tobin.  Box 6, Loose pages in bound lecture notes for Economics 41 taken by James Tobin during the 1937-38 academic year at Harvard University.

Image Source: James Tobin senior year portrait in Harvard Class Album, 1939.

Categories
Funny Business M.I.T.

M.I.T. Faculty skit. Robert Solow as the 2000 year old economist.

 

 

A skit in economics typically involves a humor transplant of some sort. The following script from the faculty contribution to an annual M.I.T. economics skit party (ca.  1979-80 which is when Luis Tiant pitched for the Yankees) took its inspiration from  two greats in American comedy, Carl Reiner & Mel Brooks, who sometimes performed as interviewer and 2,000 year-old man, respectively.

While it is fairly clear that Robert Solow performed and probably wrote the entire skit, the identity of the interviewer still needs to be established. Hint: there is a comment box at the bottom of this post. 

The script comes from a file of such Solovian skits that Roger Backhouse has copied during his archival research and has shared with Economics in the Rear-View Mirror.

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Q: You have probably all heard the interviews with the recently discovered 2000-year-old man. We are fortunate to have with us tonight another great find, the 2000-year-old economist, Robert M. Solow. By the way, Dr. Solow, just what does the M stand for?

A: Methuselah, dummy.

Q: Dr. Solow has seen so many skit parties in his life, that he was not very happy about appearing at this one. Do you remember the first skit party you ever went to?

A: No. Skit parties are like hangovers – best thing to do is forget ’em and swear never to do it again. I do have a hazy recollection of an early skit party, I think it was what the one where I first heard the joke about bordered determinants…

Q: What is the joke about border determinants?

A: I don’t know, but they sure laugh[ed] their fool heads off.

Q: Any other recollections about that skit party?

A: Well, you could hear them building pyramids in the background, I remember, and there was this Sphinx-like object, looked a lot like Dick Eckaus… You don’t suppose that, even then???? Nah, forget it.

Q: Turning to more serious issues, what is the biggest change in economics since the old days?

A: Mechanization, by cracky. First the electric typewriter, then the computer, then the Xerox machine [handwritten insert: but not fast enough for (3 or 4 illegible words)]. Nowadays people write papers at the rate they used to wipe their… glasses. I believe Feldstein has solved the problem of hooking the typewriter directly to the Xerox machine, and the whole paper is reproduced without being touched by human hands. There is even a rumor that he has a secret way of getting the paper written without human intervention…

Q: Come come, Dr. Solow, you don’t believe that.

A: Well, have you looked at any of Feldstein’s recent papers? Now in the good old days, stand-up roll-top desks, quill pens, the main-frame abacus, a man thought twice before he wrote a paper. At least he thought once. If only old Tom were here.

Q: Tom who?

A: Tom Gresham. You know: bad working papers drive out good. Not to mention Dave Hume, the inventor of the quantity theory of working papers. As Milton used to say: any way you slice it, it’s still baloney.

Q: Is that Milton Friedman?

A: No, Milton Horowitz, the inventor of the pastrami sandwich. I believe he appears in a footnote in Joskow’s classic mustard-stained work on the subject.

Q: Let’s come to your recent impressions. What do you see as the most important recent development in economics?

A: That’s easy – the increase in the mandatory retirement age to 70. Of course it’s got a long way to go before it does me any good, but I underestimate the DRI Mandatory Retirement Age Monitor estimates the retirement age to be rising at 1.73 years per year, so time is on my side.

Q: Apart from its effects on you personally, why do you think this is an important development?

A: It saves a lot of time at department meetings never to have to make a tenure appointment again. And you know what department meetings are like – even worse than skit parties.

Q: How do you think the change will affect students?

A: They’ll love it. Courses will be the same year after year. Reading lists will never change. Textbooks will go on and on and on. Can you imagine the 200th edition of Dornbusch and Fischer? I hope it’s printed on better paper than the low-grade papyrus of the first edition… I do wonder about Eckaus and that Sphinx…… Exams will be the same year after year. Students hate change. Look at what happened when you fellows tried to change 14.121 this year.

Q: Turning to economic theory, what has been the most important development you have witnessed in the last 2000 years?

A: The two-dimensional diagram.

Q: Be serious.

A: I am serious. Can you imagine Bhagwati, the Picasso of the Production Possibility Locus, trying to fit all those curves in a one-dimensional diagram, which was all we had in the old days? There wasn’t hardly room for anything besides the axis.

Q: Come, come. Bhagwati would find a solution for that little difficulty. Who needs an axis?

A: Maybe so, but can you imagine four-color one-dimensional diagrams? How could we have expensive textbooks without four-color diagrams? How could we have expensive professors without expensive textbooks? How could……

Q: OK, OK. What is the second most important development in economic theory in your lifetime?

A: The subscript.

Q: Don’t you know the difference between trivia and serious economic theory?

A: Sure. Trivia are worth remembering, but serious economics is OK to forget.

Q: Maybe we better stick to trivia…

A: I was just kidding. I really know the answer. There is no difference between trivia and serious economic theory.

Q: Tell us about the most interesting experience you ever heard of an economist having?

A: Easy. Happened to an agricultural economist I knew, feller named Samuelson, farm boy from Gary, Indiana. He was digging on the farm one day, checking out the law of diminishing returns, and he found a potato growing with a nickel in it. Marvelous thing. Folks came from miles away to see a potato with a nickel in it. Old Samuelson frittered away the rest of his life looking for another potato with the nickel in it. Never could find one. He did find a couple with three cents in them, but somehow it wasn’t the same. Never accomplished another thing, old Samuelson. Wonder whatever became of him? He’d be 2009, I reckon. By the way, whatever became of that other farmer, Weitzman?

Q: You mean Chaim Weitzman, the founding father of Israel? His last words were: you don’t have to convince me, Professor [Frank] Fisher, I’m Jewish too.

A: No, I mean Marty Weitzman, old quick and dirty, the lion of Levittown.

Q: Why do you ask?

A: Reminds me of the fellow I used to know, a Secretary of the Treasury named Hamilton……

Q: Reminds you of who? Oh, I get it, they both got killed in the dual.

A: Watch out, Buster – the agreement was that I tell the jokes and you prove the theorems.

Q: All right. Let’s get away from personalities. What do you think of recent macro theories?

A: Not much.

Q: What about rational expectations?

A: If there were any truth in that, it would have been thought up long ago.

Q: Not necessarily. The old-timers could have thought that someone would think of it, without thinking of it themselves.

A: That’s true, but the old-timers were too sensible to think that anyone would think a thought like that.

Q: How about the quantity theory?

A: Ingenious.

Q: Really?

A: Imagine saying that velocity is so stable that only money matters, and so unstable that no use can be made of the theory, and imagine getting away with both statements.

Q: But what is macroeconomics left with then?

A: Well, the old Ioto-Sigma Lamba-Mu [Greek for “IS-LM”] curves were good enough for Aristotle, it’s good enough for me.

Q: Would you care to comment on the theory of built-in stabilizers?

A: If you’re not going to be serious, we might as well go watch a ballgame. I understand Louis Tiant, the 2000-year-old pitcher is going for the Yankees.

Q: Use your 2000-year-old imagination. I’ll give you an example of built-in stabilization – Social Security.

A: How so?

Q: The less likely it is that anyone will ever be able to collect benefits, the likelier it becomes that they make even more money consulting on Social Security. Take [Peter] Diamond, for example.

A: You take Diamond.

Q: No thanks. Imagine a man leaving a perfectly good career in public finance to go into law and economics and make a hash out of both fields.

A: Stick to the straight-man lines, please.

[Handwritten insert begins here]

Q: What do you think of the proliferation of journals?

A: I think it is terrific. Of course it has been going on for a long time – ever since BJEA, the Babylonian Journal of Economic Analysis was challenged by the SEJ, the Sumerian Economic Journal.
What I particularly like is the increased specialization. Like JHR, the Journal of Human Regressions and JME, the Journal of Mathematical Existence.

Q: The Journal of Mathematical Existence – isn’t that the one that started with the famous 2-line proof: I count, therefore I am?

A: Yes and was followed by a 47 page proof that without continuity existence was still generic.
I also like this trend toward paired journals.

Q: Paired journals?

A: Yes, like the two Harvard journals – one publishes theory without measurement and the other measurement without theory.
And then there’s the 2 JPE’s – the Journal of Public Economics and the Journal of Private Enterprise.

[handwritten insert ends]

Q: What do you see as the greatest danger facing the economics profession?

A: The threatened extension of truth-in-lending legislation to truth-in-teaching. We could have the biggest rash of malpractice suits since Nicky Kaldor retired.

Q: I think you’re onto something there. How foresighted of this department to have hired an expert on malpractice like Marilyn Simon [joined faculty 1977-78 academic year], the world-famous author of Unnecessary Surgery – The View from the Inside.

A: Simon only writes about malpractice – [Jeffrey E.] Harris actually does it, I understand.

Q: You seem to have discovered a lot since you turned up around here. Anything else new on the malpractice front?

A: There’s a rumor that the University of Chicago has had to recall all the degrees issued during the last five model years.

Q: You mean…

A: Right. Defective transmission mechanisms.

Q: Gad. Are there any good defenses against malpractice suits in your long and varied experience?

A: You can hire a mathematician for the faculty.

Q: What good does that do?

A: How the hell would I know? All I can say is that every department seems to be hiring mathematicians these days. It’s got to be for something.

Q: I’m looking for some more tried and true defense.

A: There’s always the Long-and-Variable Lags defense. See the Supreme Court decision in Tobin versus Friedman, in which Friedman successfully argued that first it’s true, second he never said it, and third wait till next year.

Q-: How about the Roy Lopez Defense?

A: You mean P–K4, P-K4; N-KB3, N-QB3; B-QN5, P-QR3?

Q: No, I mean Roy Lopez, the middle line-backer for the Princeton Economics Department – anyone sues for malpractice, he breaks their legs.

A: Sounds good. There’s also the classic defense due to Stanley Fischer, that truth should be indexed. Today’s malpractice is tomorrow’s conventional wisdom.

Q: Speaking of conventional wisdom, have you spoken with Professor Galbraith since your return?

A: No, but I have been reading his latest book: Why Are People Poor?

Q: I’ll bite; why are people poor?

A: Not enough income, according to Galbraith.

Q: Does he have a remedy?

A: Move to Switzerland.

Q: I see.

A: I can’t wait until the news reaches Calcutta.

Q: One last question, to return to the subject with which we started. Do you see any trends in student skits?

A: Longer.

Q: Longer and funnier?

A: Longer.

Q: Any final comment?

A: Let me ask you a question. What do you consider the most remarkable thing in this interview?

Q: That’s easy. We never mentioned IBM.

 

Source:  Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archives. Papers of Robert M. Solow. Box 83.

Image Source:  Carl Reiner and Mel Brooks performing the 2000 year old man from NPR KNAU, Arizona public radio article “Could You Talk To a Caveman?” (May 9, 2013) .

Categories
Economics Programs Economists Yale

Yale. Ruggles, Tobin, Parker, Peck, Levin, and Brainard muse about their economics department, 1999.

 

 

This item is too nice to leave as a mere link so I have copied and pasted from two different captured webpages at the internet archive, Wayback Machine. About a half century of memories are found in the collective memories of six members of the Yale economics department. Tobin, Parker, and Peck were professors of mine and it is so nice to “hear” their voices again. From time to time, I return to this page to add links.
At the bottom of this post you will find a brief comment by Edmund Phelps who is a Yale economics Ph.D. alumnus (among other career highlights). Edmund Phelps’ autobiographical reflections at the Nobel Prize website include much Yale material, in his scholarly life that has spanned many institutions.
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The Yale Economics Department:
Memories and Musings of Past Leaders

M. Ann Judd, Business Manager/Research Associate
Economic Growth Center

As beauty is in the eye of the beholder, so one’s view of history is often influenced by one’s own role in that history as well as by the roles of one’s fellow actors. The history of the Yale Economics Department is more than a collection of dates and facts and is probably best told by those who lived it, were changed by it, and, in turn, shaped it. Among the important players in this history were James Tobin, Richard Ruggles, William Parker, Merton J. Peck, Richard Levin, and William Brainard. Their reminiscences give a flavor for the department over the past 50 years. Each man brought special talents and qualities to the department; each has taken away a unique set of memories of the people and events that defined the department for him. Within each unique set of memories, however, some common threads emerge: Lloyd Reynolds’ important contributions to building the department from being second-rate to one of the strongest in the country; the arrival of the Cowles Foundation and its impact on the department; the creation of the Economic Growth Center; the turmoil of the sixties; the downsizing in the seventies and eighties; and the many factors that give Yale’s Economics Department its distinctive character.

Introduction

The history of the department has been set forth by Lloyd Reynolds in “Economics at Yale, 1940-1990.” According to Reynolds, both the study of economics and the department itself have undergone major changes since the teaching of economics at Yale began with the appointment of Irving Fisher in 1891. Many of the changes in the department began around the time that Reynolds himself joined the department in 1945. The department of the 1920s and 1930s lacked a clear identity due in part to the fact that some of the “economics” faculty were members of the Department of Political and Social Science (which included several sub-disciplines – economics, government, anthropology and sociology), and some were members of a small Department of Applied Economics at the Sheffield Scientific School. These applied economists generally did not have formal training in economics and were more business and practically oriented. In 1937, a major restructuring of the university merged the faculties of Sheffield and Yale College into a single Faculty of Arts and Sciences under a single dean. This process resulted in the creation of a separate Department of Economics, which brought together economists from the Department of Political and Social Science and applied economists from Sheffield.

Although there was a group of younger economists in the department in the mid-1940s, which included, in addition to Reynolds, John Miller, Max Millikan, Harold Williamson, and Ralph Jones, the decision-making in the department was dominated by what Reynolds refers to as the “ice cap.” This group consisted of older, conservative professors, eulogized by William F. Buckley, Jr. in his God And Man At Yale, who were prone to regard younger economists as being dangerously liberal. However, they had control over appointments and promotions, which meant that the atmosphere for junior faculty at Yale was relatively discouraging. In the forties, the power of the “ice cap” began to melt, and Kent Healy, who was chair in the mid- to late-1940s, began the process of strengthening the department. In the early postwar period, he brought in a very strong group of younger faculty members, many of whom were later to make major contributions to the department: Neil Chamberlain; Challis Hall; Charles E. Lindblom; Warren Nutter; Richard Ruggles; and James Tobin.

Reynolds describes the period between 1950 and 1965 as one of great expansion. During this period, the number in professorial ranks tripled, the annual expenditures for teaching and research increased from $118,000 in 1951-52 to over $1 million in 1965-66, and the department achieved a ranking of either first or second in the country. Also during this period the Cowles Foundation moved to Yale, very strong faculty members were recruited, the Economic Growth Center was founded, and there was an abundance of foundation money.

In 1951, the department had five full professors; by 1954 there were eleven. This was made possible by three outside appointments (Henry Wallich, Robert Triffin, and William Fellner) and three internal promotions (Richard Ruggles, James Tobin, and Ralph Jones). Between 1952 and 1957, fifteen assistant professors were appointed, an average of three per year. All fifteen of these junior faculty members were from outside Yale because at that time the department’s Ph.D. program was not very strong.. By the end of the fifties, the department had a large and strong group of junior faculty, only two of whom ended up staying at Yale over the long run. The main reason faculty were lost was that they were lured away by competing institutions.

The year 1965 marked the peak of departmental strength: economics was one of the largest undergraduate majors; the graduate school admitted approximately 30 prospective economists of high quality each year; the M.A. program for government economists from developing countries was flourishing; Cowles and the Economic Growth Center were important and firmly established parts of the department; and invitations to join the faculty were rarely turned down. Only two issues clouded an otherwise positive picture: 1) the unbalance in the department that was the result of the faculty’s being heavily weighted toward theory and mathematical economics but being weak in some applied fields; and 2) the perceived and sometime actual inequality between department members who were affiliated with either Cowles or the Economic Growth Center and those who were not.

The period between 1965 and 1990 is described by Reynolds in three words: consolidation; decline; and recovery. By 1980, the department was ranked toward the bottom of the “top ten.” The quality of the graduate student body declined in part because top undergraduate students were choosing graduate programs in law, medicine, or business over Ph.D. programs. The department also lost many of the best applicants to Harvard and MIT. The university itself also went through a period of consolidation during this time, which had an effect on all departments. Government and grant money became more difficult to obtain, which in turn led the department to cut back on faculty. Finally, the department lost and had trouble recruiting faculty replacements during this time for three major reasons: 1) New Haven was not viewed as being a desirable location; 2) the area had limited opportunities for two-career families; and 3) internal disagreements often prevented appointments from being made. Actions taken in the late 1980s ameliorated the situation somewhat, and a few strong junior and senior appointments have brought the overall quality of the department back to its mid-1960’s level.

Memories and Musings

I had the opportunity and honor to spend time with several of the men who have contributed so much to the department. The thoughts they shared with me give insight into their contributions to the department and put their own particular spin on some of the major events in the department’s history. I have edited some of their comments (some were more loquacious than others), but have tried to preserve the personality and character of these men as reflected in their own words.

 

Richard Ruggles

In 1939 I graduated from Harvard with my classmates, William Parker and James Tobin, and like them undertook graduate study in economics. The previous cohort of Harvard graduate students in economics was very distinguished and included Paul Samuelson, Ken Galbraith, Abe Bergson, Lloyd Reynolds, John Miller, Lloyd Metzler, Robert Triffin, Henry Wallich, and many others, including my sister Catherine Ruggles. With the outbreak of World War II, Bill Parker went into the Army and Jim Tobin went into the Navy. I managed to finish my graduate work and I went into OSS. I served in London in 1943, in Europe in 1944, and went to Japan for the Bombing Survey at the end of the war.

In 1946, I returned to Harvard as an Instructor and married Nancy Dunlap, who enrolled as a graduate student in economics at Radcliffe. At the 1946 meetings of the American Economic Association, I met John Miller, who had moved to Yale, and he invited me to give a talk at Yale. I did so and was appointed Assistant Professor. At that time Ed Lindblom, Neil Chamberlain and Challis Hall were also appointed as Assistant Professors. Although, at Harvard, Yale was viewed as a boys’ finishing school, there was a group of younger faculty members who were highly regarded. In addition to John Miller, Lloyd Reynolds had come from Harvard, and there were Max Millikan, Richard Bissell (who was always on leave) and Wight Bakke. The so-called “ice cap” consisted of pre-Keynesian economists who, for the most part, specialized in specific areas such as transportation, corporate finance, accounting, and money and banking. Generally speaking, the “ice-cap” were reasonable men, but they were oriented toward training Yale undergraduates to go out into the business world.

The newly appointed Assistant Professors were quite congenial and held Saturday night dances in the Strathcona lounge. There was, however, no role for professional women in the Economics Department so Nancy and I became consultants for the government, the United Nations, and foundations. In 1948, we went to Europe for the Economic Cooperation Administration. In the 1950s, we worked for ECA in Washington, the Ford Foundation, and the United Nations in New York. When the Korean war broke out, we were asked to create an intelligence unit for the CIA for collecting and analyzing Soviet factory markings. We hired some Yale students and employees from ECA. At Yale we developed a “Rapid Selector” project in conjunction with the Yale Electrical Engineering Department to help analyze the factory markings data collected from Korea. The “Yale Rapid Selector” was quickly made obsolete by the development of computers.

During the 1950s, Lloyd Reynolds was building up the Economics Department at Yale. He recruited Robert Triffin, Henry Wallich, and William Fellner. The Yale Economics Department was becoming known for the quality of its faculty. At that time, the Cowles Commission at the University of Chicago was unhappy with their arrangements there and approached Lloyd about coming to Yale. The arrangements for bringing Cowles to Yale were made in 1955, with Tjalling Koopmans and Jacob Marschak being appointed as Professors in the Economics Department. As part of the agreement, the Econometric Society also moved to Yale, and I agreed to serve as Secretary, with Nancy as Treasurer.

By 1959, however, friction developed between some members of the Cowles Foundation and the Chairman, Lloyd Reynolds. As a consequence I was asked to serve as chair. As Chairman I managed to recruit Joe Peck, William Parker, and Hugh Patrick, who had been an undergraduate at Yale and had participated in the CIA Korean project. However, I did not like being Chairman, and I resigned in 1962.

The Yale Economic Growth Center was established in 1961. Lloyd Reynolds and I had served as consultants to the Ford Foundation, and they had expressed an interest in establishing a center for the study of economic development at Yale. In addition, Nancy and I were actively consulting for the Agency for International Development in Washington D.C., and they also wished to foster such research. As a consequence, Lloyd Reynolds established the Yale Economic Growth Center. It had as its mission the development of “country studies” of economic development. Graduate students in economics writing their doctoral dissertations were sent to developing countries to do “country studies.” To facilitate and manage the operations, Miriam Chamberlain was appointed Executive Secretary to manage the day-to-day operations of the Growth Center. Miriam had been working at the Ford Foundation in New York and had moved back to New Haven when her husband Neil was made a Professor of Labor Economics. Mary Reynolds, wife of Lloyd Reynolds, was placed in charge of building up a library of books, documents, and data relating to developing countries. Nancy Ruggles was hired with AID funds to design the framework of data for the country studies. In addition, Nancy agreed to become the Secretary of the International Association for Research in Income and Wealth, which was transferred to the Economic Growth Center from the University of Cambridge, England. All three women had Ph.D.s from Radcliffe and were highly qualified for their functions.

To some members of the Economics Department, however, the hiring of faculty wives seemed inappropriate, and in 1966 the Chairman, therefore, asked for their resignations. Simon Kuznets suggested that Nancy and I could carry out our research program at the National Bureau of Economic Research in New York. For the next decade I carried out my research activities at the NBER in New York and Washington D.C. I taught the undergraduate course of the “Economics of the Public Sector,” the Senior Honors Seminar, the graduate course in “National Accounting,” and carried out the administrative tasks of Director of Undergraduate Studies or Director of Graduate Studies in Economics.

In 1978, I transferred my research activities from the NBER to the Institution for Social and Policy Studies at Yale. Nancy had been employed as the Assistant Director of the United Nations Statistical Office, but she also became associated with ISPS in 1980. We jointly carried out our research at ISPS until the accidental death of Nancy in 1987.

 

James Tobin

I came to the Yale Economics Department in 1950. It was my first job after having gotten my degree at Harvard and then having spent three years on a postdoctoral fellowship, partly at Harvard and partly at Cambridge in England. When I came here in 1950 the department was very small. I think there were maybe 4 or 5 professors (maybe a few more); that was all. The faculty weren’t all really economists. Some of them had been in the Applied Economics Department at the Sheffield Scientific School: Ralph Jones was an accountant; Wight Bakke was in labor economics though he was more of a sociologist than an economist; and Kent Healy was a railroad economist. Healy was a very interesting man, but he was not squarely in the center of the field of economics. There were others in industrial engineering, business, and banking. Two other members of the department had gone into academic administration. Edgar Furniss was Provost and Norman Buck was Dean of Freshman. Furniss and Buck were part of the famous trio, Fairchild, Furniss and Buck, who had written what was the big textbook in the 1920s and early 30s. At the time I came to Yale, Furniss and Buck were not very active in the department because they were busy with administrative responsibilities.

However, there were some new people here, people I had known at Harvard. Lloyd Reynolds and John Perry Miller, who were maybe five or six years older than I was, had been instructors, i.e., advanced graduate students, when I was an undergraduate at Harvard. Richard Ruggles, who had been a classmate of mine at Harvard College and in graduate school, was also here and was very influential in my deciding to come to Yale. Another graduate school acquaintance of mine, Challis Hall, had also come to Yale. There were others, not from Harvard, new to me. Ed Lindblom was another of the younger and new people here back then; then as now a most interesting colleague.

At the time I came there were very few graduate students (7 or 8 at the most), so the department could not be described as having been a big thing at Yale. I came to Yale because Ruggles, Reynolds, and Miller convinced me that there would be a renaissance of the department; it would grow and improve. That was indeed what happened. I think when I was chairman in the 1970s that we had a department of almost 60 people, 30 of whom were full professors, and that was about 25 years after I had come. So over those years a lot did happen and much of that was due to the initiatives of John Miller and Lloyd Reynolds who scrambled around among Yale alumni to get help in financing graduate fellowships and started building the department. During the early 50s, they were active in recruiting. William Fellner, Henry Wallich, and Robert Triffin were three excellent professorial appointments who helped to put the department on the map.

In 1954, I was asked by the Cowles Commission for Research in Economics (then located at the University of Chicago) to come to Chicago and be its director. I had tremendous respect for the commission and for the people there, including two great economic theorists and econometricians. One was Jacob Marschak. Marschak came originally from Russia through Germany. He had left Germany in the 30s in fear of Hitler, joined the New School in New York on his way to Chicago and Cowles. I had first met Marschak at the American Economics Association meetings in 1948 where I had been asked to discuss a paper of his. I was barely out of graduate school at the time, actually a postdoc, and it took me all Christmas vacation to prepare for the session. But my discussion impressed Marschak, and that’s how I got to know him. The other Cowles leader was Tjalling Koopmans, who was then its Director. I was being asked to succeed Koopmans who had had as much as he wanted of that job. I went out to Chicago to discuss the offer, but I was not very anxious to move there, and my wife was certainly not anxious to do that. I phoned Koopmans a week or so after my visit, and I told him what I thought he would find to be bad news, that I was going to decline their invitation. Koopmans didn’t seem to think that it was bad news. He said at once that he was going to be on sabbatical leave for the 1954-55 academic year, and he wondered if it would be possible for him to spend the year at Yale. I was not yet a full professor and I certainly couldn’t speak for Yale, but I told him I couldn’t imagine that Yale wouldn’t be absolutely delighted. Surely the department would be enthusiastic if he were to come. Koopmans did come under the Irving Fisher Visiting Professorship. It turned out that Koopmans had anticipated that this would happen. The whole idea had been that the commission would try to get a new director. However, they didn’t expect that they would be able to get anybody that they wanted and that if this were the case they would then consider moving. So Koopmans’ idea in coming here for his sabbatical was to start the ball rolling for the move to Yale. Yale was the logical place to come because the Cowles Commission was founded and financed by a Yale alumnus of the class of 1913, Alfred (Bob) Cowles.

During the 1954-55 academic year Koopmans negotiated the deal that brought Cowles here. I then became the director of the Cowles Foundation for Research in Economics when it relocated here beginning in 1955. Both Koopmans and Marschak also made the move to Yale, as did a group of very bright younger people, many of whom have become very distinguished economists over the intervening years: Roy Radner for one and Gerard Debrue who later won a Nobel Prize (which, of course, Tjalling Koopmans did also). Our department was augmented not just by the two major professors who came but also by the younger assistant professors. The Cowles move kept the momentum going toward enlarging the department, improving its reputation, and attracting more graduate students. It also helped to get the funds to finance all these things, in part because the Cowles Foundation brought its own money. We soon became a major department in the country, one of the top four or five, whereas Yale in 1950 had not ranked at all among major departments of economics.

I was the director of Cowles for some years, interrupted by my going to work with the Council of Economic Advisors in Washington for two years, in 1961 and 1962. I came back and was director again for a while and then moved on. I was chairman for a year (1968-69) when Joe Peck went to the CEA, but my real term as chairman was 1974-78. This period was the peak of the department in size; it was probably the biggest in terms of number of faculty that it’s ever been. It was also a time of transition because some of the older professors were retiring. At the end of my term as chairman, I wrote a final report to the provost. In the report, I discussed a number of problems that I saw in the department. However, I must say that when I was chairman I got the most complete cooperation that anyone could ask for from the provost, who at that time was Hannah Gray. Gray was very sympathetic to the department and appreciative of the distinction that the economics department and its faculty were bringing to the university.

As I’ve said, in those days the department was doing well and was highly regarded. There were a few things that I worried about, but I should say that I didn’t worry very much. I did not find it hard to be chairman. I actually liked the job. I didn’t find it to be a great burden, and I didn’t find that it took all of my time. I had an excellent staff at 28 Hillhouse and fine cooperation from my colleagues.

However, we were having some problems in recruiting and holding some of the best quality economists in the country, for various reasons. Among people who had never lived here or knew very little about the city, New Haven didn’t have a great reputation then, or now I guess, as a place to live. (Actually when I first mentioned, in 1950, to my wife that we had an excellent offer from Yale, she was not very keen on the idea. But she learned to love New Haven, so it all worked out). But one of the problems of New Haven (even 20 years ago) was finding jobs for the spouses of people we wanted to attract to the faculty. There are not a lot of other attractive educational institutions around here, and the area is not a big place for a lot of the professional jobs that spouses of professors are looking for. The spouses often thought that they should have a connection with Yale, but it wasn’t easy to arrange joint appointments for two people at once. In fact, that’s one of the reasons we lost Joe Stiglitz. Stiglitz was a very eminent young economist in those days, a real rising star, and we felt good that we had attracted him here at the same time that we got Bill Nordhaus. Unfortunately, we couldn’t accommodate his new wife who was also an economist; in fact one of our graduates at Stanford could.

Our difficulties in getting outside people to come here applied also to assistant professors. Earlier in the 70s they had come gladly. They knew they wouldn’t get tenure, but they thought the experience would be interesting and valuable to them. However, our uniqueness in providing that opportunity was going away, and we didn’t have much chance to make internal promotions because we were already a very large department. It turned out, and has turned out over the years, that the people we had an advantage in trying to recruit were people who had been students here, who knew the place, who knew the department, and who knew New Haven. Many of our faculty are Yale Ph.D.s, and they came back here more readily than people who had Harvard degrees or Chicago degrees or whatever. For people of the same quality, we had a greater chance of getting them if they had some experience or previous knowledge of Yale.

The graduate program had already begun attracting students in the 1950s and was a very popular place for graduate study for people who came out of colleges such as Oberlin, Swarthmore, Williams, and such places all around the country. However, we were not able to do as well as Harvard or MIT in getting the graduate students we wanted. First, to them Boston was a more attractive place to live than New Haven. Second, there was a feeling among graduate students who had gotten National Science Foundation fellowships that one should go to MIT because a lot of other people who had gotten NSF fellowships would be there as well. So a superior student body was attracting a superior student body.

I would also say that, in both faculty and graduate student recruiting, Yale has had a tendency to think of itself as more obviously attractive to everybody than it is. We’ve often been a bit arrogant in deciding whether we wanted somebody or not and in finding reasons not to recruit them. In addition, we didn’t have higher salaries or higher fellowships to use to attract people, partly because of the attitude of “well, after all it’s Yale.” There were also times when we would have done well to take risks in getting younger people for full professorships or associate professorships ahead of their normal appointment rank. The department tended to be very choosey about these things and some of our faculty felt that we’d better wait and see how good someone was. However, by the time we had waited to see how good they were, they had accepted positions somewhere else, and we had no chance to get them. That happened quite often, and I think still does. However, in looking at the program I received for the departmental reunion this April, I see a list of very eminent scholars. They are all our own Ph.D. products, and they are great people. We should be proud of having produced a group like that over all these years.

In those days, back in the 60s and well into the 70s when I was still chairman, many excellent college students in good colleges and universities who majored in economics were interested in getting a Ph.D. in economics and going into college teaching. I think at Yale in those days ten percent of the senior class who were majors in economics went to graduate school in economics somewhere; now almost nobody does. The same is true for the other institutions that were the feeder schools for graduate students in economics. Students now go to business school or law schools or they go to Goldman-Sachs in New York to take a remunerative job. At any rate, they don’t find an academic career in conventional economics as attractive as did their forebears who had graduated from the same list of good colleges and universities in the past. That’s why we have had to rely on foreign students much more these days, which has changed the atmosphere of the department. The department always had good foreign students, but having so few American and Canadian students has changed the interests of the graduate students. There is less interest in policy, world affairs, American affairs, current events and more exclusive interest in formal theory and technique. Also it used to be that our graduate economics club itself organized symposia, debates on political economy – things that were in the press everyday. That doesn’t happen now.

Another concern of mine was the slowness of dissertations. The question is whether we rely too much on students being self-starters on their dissertations. My observation is that students often spend a lot of wasted motion and wasted time trying to find, on their own, a dissertation subject. In the physical sciences graduate students usually attach themselves to a lab in which there is one principal investigator, one faculty member, and the professor has a whole large research agenda in mind that is then parceled out to students as subjects for dissertations. We’ve always regarded the choice and the design of the subject as part of the test of the candidate; something that the students should do on their own. However, maybe we have overdone it. This is a perennial problem, and there is a perennial debate as to how it should be organized.

One problem that we had in my day as chairman and since is the fragmentation of the department. Partly the profession itself has become more specialized, so that few people are general economists. They’ve become specialized and tend to see more of people who have interests that are closely related to their own than they see of their colleagues in general. It was partly for that reason that I was advocating, back in the time when I wrote my chairman’s report, a physical connection between 28 and 30 Hillhouse. We finally got that, thanks to Bill Brainard sticking with it and getting it done. I think it’s great, a wonderful common room for the department and the graduate students.

The coming of Cowles in 1955, as I see it, without a doubt must be regarded as a big plus for this department. It certainly brought very eminent people here, and it did great things for us to have Marschak and Koopmans and the younger people they attracted. However one problem that it brought was the result of the fact that the Cowles Commission had originally started in the 1930s when mathematical and quantitative methods in economics were rather new and rare. Actually, Irving Fisher, beginning in the 1890s here at Yale, was one of the rare pioneers in bringing mathematics into economics. He was very unusual in that respect. There weren’t very many people like that. In fact, he was almost the only one in the U.S. in those days. The Cowles Commission was founded by Alfred Cowles precisely to see if quantitative methods, statistics, and mathematical formulations in economics couldn’t be promoted and couldn’t solve some of the problems that had been difficult in the 30s in the actual operation of the markets and the economy in general. The commission was the major focus in the world of people who had the interest, ability and training to do this, and it was a pioneering thing to do. It was also the same Mr. Cowles and his generosity that produced, in conjunction with the Commission, the Econometrics Society, the journal Econometrica, and really the whole subject of econometrics.

However, by the 1950s and 60s these techniques had begun to spread over the whole profession and, essentially, rather than being unusual skills, they became the normal skills that people had to learn if they wanted to be graduate students and become professional economists. So it was no longer the case that people who had the abilities and interests that had marked the Cowles Commission in its earlier stages were so unusual, and, therefore, almost everybody who might be recruited to Yale felt that he or she was capable and qualified to be in the Cowles Foundation. Essentially the Cowles Commission doctrine had won, it had swept the profession, and everybody was doing it. So the question became what was the difference between the people who came to Yale who were in Cowles and the people who were not. There were those who didn’t see any reason that they shouldn’t be in Cowles, and job candidates were often told by their professors at Harvard or Princeton or wherever that they should accept a position at Yale only if they could be in Cowles. It really became a status thing. When Cowles came to Yale in 1955 and I was the director, I invited some people who were already at Yale to be in the foundation; Arthur Okun, Charles Berry, Michael Lovell, and so on. So the foundation was composed partly of people who had come from Chicago and partly of people who were already at Yale. And we did in the future add to the Cowles roster people who were recruited because they were wanted by the department as a whole and not just by Cowles for its own program. However, there was a psychology of fragmentation which resulted from some of the difficulties some people saw in having this high-powered organization here.

Now in the old days of economic research in general there was a willingness on the part of foundations to give block grants to research institutions such as Cowles, the Economic Growth Center, and the National Bureau for Economic Research. The NSF, Ford Foundation, and Rockefeller Foundation were willing to give a bunch of money to the organization for whatever broad program had been described to them by the leadership of the organization. The foundations stopped doing that sometime in the late 60s and started insisting, the NSF particularly, that every grant be for a specific research project. When I was first director of Cowles I got block grants, but afterwards the policies of the foundations were such that you couldn’t do that anymore; you had to look for funding on a project-by-project basis. This lessened the administrative distinction between the Cowles and the rest of the department. Everybody at Cowles had to put together individual grants as did everybody else in the rest of the department.

This Cowles-not Cowles problem, which was severe in the 70s and early 80s, finally got solved. Now there isn’t any attempt to have any foundation-wide program here in this building as there was back in Chicago and in the first days at Yale. Cowles is now more of a service organization for anybody who wants to be in it.

The Economic Growth Center also became a center with its own program, its own leadership, and its own members. I thought as chairman that once these institutions existed that we had to treat them with fairness, they have legitimate reasons for being here and sometimes they need to have appointments that are departmental appointments. Cowles really was not doing a lot of specialized things in those days or now, but the Growth Center was and is still now concentrated on some particular problems, so they need to have the personnel to study them.

I felt that there were some problems related to the then new School of Management, and these may be continuing problems. One problem was, is, that SOM hires economists. The school should, of course, and there was a good prospect that SOM and the department could have useful joint appointments. We did have some, e.g., Paul McAvoy and Stephen Ross, but I have the feeling that in general joint appointments were not as successful as they could have been. Sidney Winter, who was primarily a department appointment, was also very suitable for an appointment at SOM and doing some teaching there. He wasn’t happy with his relationship with the school so we lost him a few years ago. I thought then and think now that there are some missed joint opportunities. The department would get a person who could add to the general intellectual climate of economics with only one-half a slot instead of a full slot. There are a number of areas that would make sense to be joint such as financial economics, industrial organization, regulation of business, any number of things like that that can be useful for collaboration in research and in teaching. But it doesn’t seem that we’ve been able to devise the ad hoc or systematic relationships to do that. It could also help to bring applied people into the department, which we need in several traditional areas of economics. We should have coverage in all the main areas. The school also has higher salaries for economists. The same economics Ph.D. would get more money being at the school than here. There’s just something about being a school of business instead of a department of economics. But I think we’ve gotten used to the fact that there’s a school up there, and they have bigger offices and plusher carpets and so on.

I’m also disappointed that the school has abandoned its original dedication to being not just a school of business but being a school of management including public management (employment in the public sector, government jobs as well as private business jobs, and so on). And now they have abandoned that ambition even in the title of the degree they offer. They used to offer MPPM, Master of Public and Private Management, now they offer just an ordinary MBA. So they have pretty much abandoned the notion that they were going to be different from other business schools in the sense of worrying about management in general and management in the public sector as well as the private sector. I think that’s regrettable, and I also think it makes more difficult the kind of association with this department that there could be.

One thing that the department needs, in my opinion, that the university needs, is some kind of center of policy research, some group of people or organization that could concern itself with public policy, public economic policy in particular, but it wouldn’t need to be confined to that. Most of our rival institutions do have such an institution. There’s the Woodrow Wilson School at Princeton, Kennedy School at Harvard, Center for Economic Policy at Stanford, and so on. But we don’t have anything like that, and, as I said earlier, we are missing that. We do have a great collection of theorists here; we have the most powerful collection of econometric methodologists and a lot of what our students do is the technical stuff, formal theory, etc. They do not have enough, at least to my taste, interest in what’s going on in the world. We’re unlike our rival institutions (Berkeley, Stanford, Harvard, Princeton) in this respect, and I think we should try to do something about that. We have joint majors between economics and political science, economics and ethics, and so on that are very popular with undergraduates. We don’t have anything parallel to that at the graduate level. It would be natural to do that. There are people here who are individually quite involved in this – YCIAS is the closest thing we have to that, and it’s very important. It has made a very big difference to have that. But there should be a center that is broader than that to include things besides development and international economics.

One thing I’ve observed over the years of being an academic and a faculty member of one institution for a long, long time is, to put it in the extreme, that there are two kinds of faculty members. There are those who are by nature, by instinct, by inclination, and by sense of responsibility, what you might call institutionalists who have adopted Yale as an institution that they identify themselves with and regard as a very important part of their lives and their obligations. They do the best they can for this institution – for Yale and for the economics department within Yale. And then there are professors who are very much more individually motivated and who are ready to leave at the drop of a better offer somewhere else. They have no particular identification with this place except as it is the best thing from their individual point of view, and they don’t feel the same sense of dedication and responsibility to the institutions within Yale as a whole. This department was built up by people who were of the former type like John Perry Miller and Lloyd Reynolds, and it’s been kept going by people like that: Bill Nordhaus, for example; and Gus Ranis, Bill Brainard, Joe Peck, and Bill Parker. These are people who really see themselves as wanting to be identified with the institution and to do what makes the institution better. That’s what keeps things going. And it’s not just faculty but assistants and secretaries and administrators who have kept the institution thriving and take pride in it. Yale and the department have been fortunate in having so many dedicated institutionalists.

One final thing – the whole academic enterprise didn’t do very well on minorities and women in academic jobs. We tried to do better, and I considered that to have been an important part of my job when I was chairman. On women, the university did very badly. There was this fear of nepotism, that one must avoid having both husband and wife appointed. The situation with Nancy Ruggles was a shame, because she was someone who had all of the necessary qualifications to be a professor, should have been, and would be under present circumstances. It was an unfortunate idea of people in that generation that there was something corrupt about having two members of the same family together. We’ve done better on minorities than we have on women. But both are still unfinished business – it was priority business twenty years ago and it’s priority business now.

William Parker

I came to Yale at the same time Joe Peck did, 1962. We had both been in Washington. I had been teaching at North Carolina but was on leave in Washington. Joe was there working for William McNamara, Secretary of Defense. I was at Brookings doing research. We both got jobs at Yale and both asked for another year off before coming, which John Miller accepted readily. It was annoying to realize that Yale would rather save the year’s salary than have our services. The department had just moved out of Strathcona Hall in the tower. Both Lloyd Reynolds and John Miller had had their offices there. The department moved to Hillhouse Ave. Joe and I, however, were given offices that were being vacated in Strathcona, so the whole rest of the department was on Hillhouse except for Joe and me. We had lunch together every day. One day Joe looked at me and said, “I thought it was going to be a big deal teaching at Yale. This is like teaching at Denison or some little college. I just see you and have lunch and that’s it.” We did finally get offices on Hillhouse too. When Joe became chair, he gave me that big office that Bill Nordhaus has in 28 Hillhouse; I was glad to be Joe’s friend.

I became DGS around 1970, and was DGS off and on for about 10 years. This was the time of Vietnam and there was a notable alteration in the attitude of the graduate students then – they were raising hell. I enjoyed that. It brought out a radical streak in me that I didn’t realize I had. There were radicals of all different flavors – Maoists, a few old time socialists, German-type Marxist/socialists, environmental people. (Two or three good dissertations on the environment were produced. I especially remember Jim Tober’s on wildlife in the 19th century and Hamilton Helmer’s on economic development in Vermont. But I shouldn’t mention any specific names because there were so many that were so wonderful and on all sorts of different subjects!) Then there were really just plain radicals who didn’t know what they were for, but whatever it was we (i.e., the department) were giving them, they didn’t want it. One of the most vigorous of the radicals was Ross Thompson (now chair at University of Vermont). I remember the first night of the term when Gus Ranis had a reception at his house for the new graduate students. Tobin was there (and everyone had enormous respect for him even before he won his Nobel Prize). I looked over and saw Thompson giving Tobin hell (no one ever does that), saying things like, “Old Keynesian stuff is for the birds.” Tobin assumed a shocked look, as your mother might do, but didn’t say anything. Tobin’s wife came up to me and said, “Do you hear what that young man is saying to Jim? He ought to be ashamed of himself!”

Heidi Cochran, who has become a leading feminist economist, also came to me, almost in tears, and demanded that the department fire Willy Fellner, a conservative European, who insisted on teaching the required micro course. I pointed out to her that this would be hard to do in as much as he was the President of the American Economic Association. But she said that didn’t make any difference. He was about to retire, but she looked at our keeping him as an example of male bonding. I couldn’t dispute that.

Then a dozen of the students wanted a specific course in Marx and Marxism, and they weren’t getting it. They came to me with their request and I said, “Why not? It’s a good field.” The problem was the students didn’t trust anyone to teach the course. The students had a good course worked out, and I agreed to come in and sign forms so the students could get credit. I went to their lectures as DGS, but I finally began to raise doubts and questions in class about things they were saying. (They attacked Malthus, who was a great idol of mine.) One day one of the students came to my office and told me that the students didn’t want me in there anymore; they just wanted to have someone who was sympathetic to them. I said, “You’ll have trouble getting a grade without an instructor, but it’s a waste of time for me to come if you don’t want to listen.” They kept on with the course and when the end of the term came, I gave everyone a B and they were all satisfied.

Finally, one of their number, David Levine, assumed leadership. David was a tough-minded Marxist and thought deeply, after the fashion of a German philosopher. Ray Powell, as chairman, hired three men: Joe Stiglitz, Bill Nordhaus from MIT, and Al Klevorick from (I believe) Princeton. Levine, despite a (magisterial) book called A Reformulation of Economic Theory, was appointed for several years, but never promoted. That was the department’s notion of filling the need in “radical economics.”

I almost got Rick Levin into economic history, but industrial organization was also strong with Peck and Nelson. Rick got interested in technology and ended up going in that direction. Organizations, indeed, have become his métier.

It was almost always a problem to keep economic history in the curriculum. The policy people didn’t think that history was worth anything, and the econometricians thought it wasn’t scientific. The people who supported it were Gus Ranis and the Growth Center faculty (bless their hearts), Fei, Schultz, Evenson, and Srinivasan. Also, surprisingly, the mathematicians as such, i.e., the mathematical theorists, Koopmans, Scarf and Bewley believed in its importance. Their stuff wasn’t useful either, and they had more sympathy for a purely academic pursuit. The “old Europeans,” Koopmans, Triffin, Fellner, and Wallich, and also Montias were friendly and supportive. I was able to keep the program a required field partly by being willing to be DGS. I kept accepting the job every couple of years when it came up because no one else wanted it, and if they put history out, I’d go with it. I was the only senior appointment, but I had a series of excellent assistant professors who never got promoted. Originally the idea was that there would be a joint economic history program in the history and economics departments. This was John Miller’s idea when he was dean. He was very favorable to economic history and wanted a person in economics and a person in history. When I came to Yale, they made an offer to David Landes, who went to Harvard finally. I preferred to be in economics because that’s what my degree was in, and I didn’t see the point of being in two departments. It was hard enough to keep up with the politics of one department. I was on the dissertation committee of a couple of very good history graduate students.

I could tell lots more stories about the students and faculty. I really felt very fond of the students, especially the fifty or so who wrote their theses under me. The better they were, the less they needed me; and they were all (nearly) so good!

 

Merton J. Peck

I was first appointed chair in the summer of 1968, but served for just a few months before going to Washington to work for President Johnson. Tobin was chair while I was in Washington. I returned from Washington in 1969, and served as chair for a total of about ten years (from 1969 to 1973 and again from 1978 to 1983).

In 1969-70, early in my chairmanship, the department was able to persuade John Meyer, who was a professor at Harvard, to join us. That was considered a great coup because few Harvard professors resigned to come to Yale. Meyer had been a friend of mine from graduate school, and we actually wrote our first book together. He filled a void here in the newly emerging field of urban economics. He was originally an econometrician. He was also president of the National Bureau of Economic Research, which was then located in New York. Meyer established a branch office of NBER in New Haven. Meyer, however, eventually returned to Harvard. The second big appointment that was made in the first year of my chairmanship was Richard Nelson, who was then at Rand, and, coincidentally, I’d also written a book with him.

Another thing that was distinctive about the department in the first years of my chairmanship was the high ranking in various surveys of the Yale Economics Department. Yale was tied with MIT, ahead of Harvard. This reflected, in part, the fact that the Harvard faculty were growing older and retiring. It also reflected the fact that during that period both Koopmans and Tobin were awarded Nobel Prizes. In addition, Ray Powell, my predecessor, had hired eight or nine very able assistant professors. In this group were people who later became important in the department and the profession – Bill Nordhaus and Al Klevorick (both still at Yale), Marty Weitzman (who left first for MIT and then for Harvard), and Joe Stiglitz (who left us for every place including Stanford, Oxford, Princeton, Chair of Council of Economic Advisors in the Clinton Administration, and now Chief Economist of the World Bank). So it was both the two impressive older people, Koopmans and Tobin, plus these younger people who made the department a lively and exciting place for both graduate and undergraduate students. That was all early in my chairmanship. After that we began to slip a little, partly because we got older and partly, of course, because Koopmans retired. Tobin retired later, but after that we didn’t have quite as visible a senior faculty.

The other problem here was that the department in the mid-seventies began to decline steadily in numbers. The high point was 1973/74 with about 63 faculty; by 1988/89 we were down to 40. The size reduction was the result of slow growth in the endowment and in giving in the seventies. The department had also been very much dependent on NSF, which financed almost one-half the salaries. We also had big Ford grants to both the Economic Growth Center and to Cowles. I remember showing the Provost that, given the overhead we could charge, the university actually made money by hiring more assistant professors. But that era collapsed because the Ford Foundation switched its attention to other areas: urban problems; public schools; arts, and the NSF sharply cut back its spending on economics. The contraction was not as traumatic as it was in some other parts of Yale because we decided not to change the terms of employment for any of the existing faculty, tenured or non-tenured. Instead, we stopped hiring. However, that meant we lost the kind of particular thrust you get from bringing in two or three young people every year. There were a couple of years when the department didn’t hire anyone. People left and weren’t replaced – that’s how the number was lowered.

Another issue that began to surface was the relationship among Cowles, the Growth Center, the department and the Institution for Social and Policy Studies, which had been established in the early seventies with an endowment from the Beinecke family. There were different issues for each of these organizations. ISPS was very dependent on short-term soft money, which became progressively more difficult to obtain. In the case of Cowles and the Growth Center, as the outside money disappeared, faculty there became, in terms of their employment, less distinguishable from the rest of the assistant professors who, in those days, were called departmental appointments. The distinction between Cowles and EGC began to blur in terms of employment conditions and financing, and the distinction between the kind of people Cowles would hire and the rest of the faculty began to disappear. When I first came here, people in Cowles were people who knew mathematics. However, by the early 1980s, every younger economist knew the mathematics that distinguished the Cowles group in an earlier era. So it became unclear who was to be in Cowles and who wasn’t. Cowles, because of Tobin, Koopmans, and others, had great prestige. Everyone wanted to be in Cowles, and Cowles members worried about what it would mean to be a Cowles member if Cowles lost its elite status. This issue was finally resolved during Rick Levin’s chairmanship by essentially saying that anyone in the department could be a member of Cowles if they applied. There had been various perks that were associated with being at Cowles, and these tended to disappear (in part because outside financing disappeared). Cowles had had a Wednesday lunch, which fairly rapidly became a departmental lunch, but financed by Cowles! I think that the change was probably the right thing to do, but it made Cowles members restive because they felt rightly that they were losing their distinctiveness.

During my chairmanship, we lost our star econometrician, Nerlove, to Chicago, and we had trouble replacing him. This hurt us because many younger faculty wanted to go to a place where they could get help with econometrics. The problem was solved in the Brainard era with the arrival of Peter Phillips.

Throughout the period we remained very strong in attracting graduate students, and we were rather consistently either the third or fourth biggest major in Yale College. There was always a substantial number of undergraduates who were very good. Yale encourages its undergraduates to get graduate training elsewhere. Also, by the time most undergraduates have spent four years in New Haven, they would much rather move to Boston, Palo Alto, or Berkeley. The number of undergraduate economics majors, however, who go on to graduate study in economics has been consistently low. About one-fourth of economics majors go to law school, one-fourth to business school, one-fourth to some other kind of graduate school (of whom 5% get a Ph.D. in economics), and one-fourth essentially have a career without any additional professional training. One thing that has changed is that many more students work for a couple of years before going on to law school or business school. That’s partly because they’re in debt and partly because they’re counseled not to go to law school or business school until they have some professional experience.

Among our Ph.D. students, we’ve had quite a diversity in what they pursue. There has always been something like 30-40% who have taken non-academic positions. Favorite employers are the federal government, the Federal Reserve System, and international organizations. The remainder pursue an academic career. However, people do bounce around a bit – they may work at the New York Federal Reserve Bank for a couple of years and then take a teaching position at NYU.

One thing that has happened, beginning more in Brainard’s chairmanship, is a shift in where our graduate students come from. Originally, John Miller, DGS in the post-war period, had the theory that the best way to attract good graduate students was to focus on small, liberal arts colleges such as Oberlin, Swarthmore, Williams, Wesleyan, and Amherst, and then go there and don’t take the best student (he or she will go to Harvard or MIT anyway), but take the second or third best. It’s likely that the second or third best will turn out to be as good as the first best. Miller was a very successful recruiter in that period – Gus Ranis was recruited from Brandeis and Dick Nelson and Bill Brainard from Oberlin. What happened then was that the slowdown in academic hiring caused students at these schools (particularly the best students) to shift their interest to going to law school or business school. At the same time, we got an increasing number of applications from abroad so that the typical entering class today is only 10-20% from the U.S. Many of the foreign students prefer to stay in the U.S. when they finish because the U.S. treats young people much better than they are treated in Europe in terms of allowing them to work and giving them research opportunities. Many students, therefore, like to stay until they have gotten some international recognition and can then go home in glory. Japan is unusual in that, by statute, you cannot be a full professor until you are 38; so you might as well stay here and get better pay. Many other countries are similar in that younger people are not promoted very rapidly.

Another problem we have in attracting graduate students is that Yale (and this is sometimes said as a compliment and sometimes said pejoratively) has a reputation as a high tech department. We use extensive mathematics; we emphasize econometrics and theory. Because in many places American undergraduate education in economics is much more like writing a senior essay on the debate about tariffs, some American students are more inclined to want to go to a department where applied fields are better represented.

Through much of my chairmanship we almost never had a person who stayed nine years before he or she was then considered for tenure. The reason was that people were hired away in their seventh or eighth year. They would get an offer and then we’d either have to say you’re lucky or we’ll have to match that offer. It was much easier to deal with individuals because we didn’t face the uncomfortableness of trying to decide whether someone should be promoted. It was an infinitely better way to have things happen. In some cases, for example Marty Weitzman, we couldn’t hold him. Then there was the period, toward the end of my chairmanship, when the market slowed down, and we actually had people here in the ninth year who had to be considered for tenure (and in many cases not given tenure). During this period Paul Schultz came, and Bill Nordhaus, Ray Fair, and Al Klevorick were promoted. But several people left too — Joe Stiglitz, John Meyer. This was normal turnover and wouldn’t have been a problem except for the fact that we weren’t hiring. That affected mostly the assistant professor ranks. We did not replace two full professors for budgetary reasons, but we generally tried to keep full professor vacancies even though by keeping them it cost us two assistant professorships.

In the latter part of my chairmanship, the creation of SOM had an impact on the department. SOM hired economists, and in the initial group of appointments were quite a few distinguished people who came in at the full professor level. These people wouldn’t come unless they were also given an appointment in the Economics Department. Different arrangements were made in different cases: for some we paid a little bit of the salary; for others we let SOM pay the entire salary, but the faculty member taught here. Several quite noted people left during what I call “the time of troubles” at SOM This had an impact on the department because we lost five full professors. These faculty members had varied in the degree to which they were active in the department. They generally did not do any undergraduate teaching. Shiller started out at SOM and then came to the department. MacAvoy came down to the department and then went off to Rochester to be Dean. He then came back to Yale to be Dean of SOM. Sharon Oster, who was an excellent teacher, became a professor at SOM. Susan Rose-Ackerman, who had started a career in economics, ended up in political science. Ed Lindblom also started a career in economics and ended up in political science.

Kingman Brewster, who had started SOM, wanted it to be integrated into the Faculty of Arts and Sciences. His model was that most of the faculty would hold joint appointments. This gradually tended to break down a bit because the department got a little nervous – we didn’t want to be outvoted in our own home. Also, SOM people generally wanted to do graduate teaching, and that’s what our own faculty liked to do best. The relationship between the department and SOM was never reestablished after “the time of troubles.”

I had come to Yale in 1963, which is when Bill Parker and Herb Scarf came. The Parker appointment was significant because he was able to develop a tradition of strong graduate students outside of Cowles or the Growth Center. He turned out a succession of economic historians who went to Stanford, Northwestern, Berkeley and so on. John Miller was always trying to give support to the idea that there must be a “third force” that would offset Cowles and EGC. That was probably one of the ideas behind the creation of ISPS.

The Yale Economics Department is probably more integrated socially than some of our rivals. I can point particularly to Columbia and Harvard, where many of the faculty live in the suburbs, work at home, and come in the three days a week that they teach. That gives a different air to the place than when people are constantly having coffee with one another. New Haven is a small town, and everyone has a short commute by New York standards. This social integration has declined somewhat over the years in part because there is hardly any faculty spouse who does not work.

The department has had a tradition of trying to pay attention to undergraduates. I’m not sure now that we’re much different from our rivals, but when I came here that was always a strong point. Economics is not an easy major because all students have to take theory and econometrics, which are very demanding courses. The number of economics majors over the last five years has doubled – from 100 to 200 – and we’ve gone from third or fourth to being the largest major. That irritates people in history and English, which were always the traditional big majors. There has been at Yale, in the last five years, a shift away from the humanities and to the social sciences and sciences. And within the social sciences, there has been a shift away from anthropology, sociology, and psychology to political science and economics.

All of our undergraduates are required to take two seminars. It used to be that these seminars were given by ladder faculty. However, we moved, under Rick Levin, from teaching four courses a year (two each semester) to teaching three courses, which was the standard introduced by Princeton. When we made that change, there weren’t enough ladder faculty for the seminars. Currently one-half of the seminars are given by outside faculty – two Trinity professors, someone from Epidemiology and Public Health, and a lecturer from radiology who started studying economics and says he loves it (he comes and teaches the seminar for free). The outsiders do a good job because they have one-year appointments, and if their teaching evaluations aren’t good, they’re not renewed. Even so, students say, rightfully, that Yale students are entitled to be taught by Yale professors. That is a tension that comes about, and we see the solution as expanding the Economics Department. This is an on-going controversy since while the number of undergraduate majors has doubled, the size of the department has not changed.

The number of graduate students in the department has actually declined. When the Clinton Administration was new, it reduced federal hiring, with the result that a lot of economists were dumped into the academic market. This made it hard for our students to get jobs. So, with a slack demand, we cut back from 30 new doctoral students per year to 25, and then to 22. Ironically, our graduate students are now in great demand because there is a shortage of economists.

When I first started at Yale, the department was in the process of moving from Strathcona to the buildings on Hillhouse. In the period of my first chairmanship, the move was completed and we took over 28 Hillhouse (which had been occupied by Far Eastern Languages). Before that time, the department had just had Cowles, EGC, and 37 Hillhouse. Taking over 28 was crucial to being able to have the entire department on Hillhouse. The buildings underwent some renovation at that time, but it was under Bill Brainard’s chairmanship that we began to get things in shape. Bill was very good in dealing with the physical facilities; he was probably the best chair for that. Under him, the basement at 37 was turned into a computer room and the Tobin Lounge was built. Bill had pushed hard for the lounge even though several people, myself included, argued that we didn’t need such a luxury and that we should use the money for fellowships in Tobin’s honor instead. But Bill was right; the lounge has proved to be an important addition to the physical space of the department.

When I was chair, particularly in my first term, it was a remarkably easy job. This was due, in part, to the fact that Fellner, Reynolds, and Tobin had a very balanced view about appointments and the department. I would go and see them, and then when there was a department meeting, once they spoke, everybody tended to fall into line – not out of terror but because they understood that when Jim spoke, he wasn’t speaking for Cowles but for the department as a whole. The same was true for Fellner and Reynolds. I also know that if all three of them said that something was a dumb idea, then it really was a dumb idea. As those three became less active and then retired, the department became more individualistic, which made things a little harder. There wasn’t really anyone who could step in to take over their roles. Both Brainard and Levin were regarded as being wise, but they didn’t have quite the academic stature or long service that was true of the others.

I did enjoy being chair, but I had what now seems to have been the easy years. It was a less demanding job then in part because the DGS took care of graduate students and the DUS took care of the undergraduates; the chair dealt mostly with the administration and faculty. I could teach two courses, consult and write. Beginning in Levin’s period, and particularly in Brainard’s period, the chair’s duties expanded, and it became a full-time job.

 

Richard Levin

I served as chair during the late 80s and early 90s, a time of resurgence as described by Lloyd Reynolds in his departmental history. Looking backward, some of the appointments made in the middle and later 1980s turned out to be extremely important for the long-term future of the department – the promotion of John Geanakopolos, bringing in Ariel Pakes, and moving up Don Andrews and David Pierce. A lot of the future leadership of the department was brought in in that era, both before my time and during my time as chair.

Of course, there were some disappointments as well. James Heckman, mentioned by Reynolds as one of the bright lights in this resurgence, ended up returning to the University of Chicago. I think Heckman left because he had the University of Chicago mode of operation in his soul and never completely adjusted to Yale. He is a superb economist. It’s not surprising that he went back to Chicago, but it was disappointing because he would have helped to build the empirical, applied side of the department. But that’s happening anyway under Ariel’s leadership. Ariel, along with Steve Berry and the current crop of junior people who do applied work, have brought empirical economics to as strong a position as it has had at Yale for a long time. The department still has a strong core of theory, and in theoretical econometrics it is clearly the best in the world. Recent senior appointments and the quality of the junior faculty both augur very well for the future. The department is better now than it was a decade ago.

The signal achievement of my first year as chair was a consequence of efforts initiated by Don Brown, who was chair before me, and Al Klevorick, director of Cowles. The achievement was solving the long-standing awkwardness of having within the department a research institution with independent appointment powers. The department had been hampered in some respects by the Cowles Foundation’s having independent power to make appointments to the research center. There were often junior faculty whom the department would seek to recruit, vote an offer to, and then recruitment would founder if the person could not get a Cowles appointment. There were positives and negatives to the situation. It gave Cowles, at least in the early years, a sharper identity as an institution with a distinctive research program; it did once have a mission to incorporate mathematics into the study of economics in a rigorous way. The mission succeeded so thoroughly that by the 1970s there were no more worlds to conquer. Indeed by the 1970s, Cowles ceased to have a coherent research program and was simply a collection of outstanding economists pursuing their own research agendas. A Cowles appointment from the early 1970s onward was more a certification of quality or excellence than it was a statement of whether the person fit into the research program of the foundation. This created a dual class of citizenship, and while it made it possible to recruit excellent people to Cowles, it also made it more difficult to recruit excellent people to the department as a whole. The issue was brought to a head by Don Brown’s courageous leadership; he took the issue head on in his own characteristic forthright way and got many people hopping mad. I have never hesitated to give Don credit because he put the issue out there and set it up so that I could solve it with a somewhat less confrontational approach. Immediately upon becoming chair, Al Klevorick and I worked out an essentially smooth and easy transition to a new regime that allowed any member of the department to elect to join Cowles in return for some commitment to participate in the activities of the foundation. It has been a net positive change in that it strengthened the ability of the department to recruit excellent junior faculty across the board. There have been several internal promotions to tenure over the past few years both inside and outside of Cowles. It does make it more difficult, this is on the downside, for Cowles to develop a distinctive identity as a group of researchers pursuing a common agenda. However, having said that for Cowles as a whole, it hasn’t prevented, for example, the emergence of a very strong econometrics research group that does have a pretty clear research program. Phillips, Andrews, and Linton are pursuing a common agenda with enormous success. There is less coherence in the theoretical work being pursued by the economic theorists at Cowles, but the current leadership is trying very hard to use Cowles more as a national center for conferences on important and current topics in research. I am hopeful that the next few years will restore Cowles’ prominence and visibility in the profession.

The fact that the department is housed in four separate buildings has caused some problems, though not of a serious nature. Historically, communication has waxed and waned across the different areas in the department. The faculty do come together regularly for meetings. There is a high level of civility and mutual respect – not like many departments that are riven with deep antagonisms. People like one another and that has been the case since I joined the department in 1970. Patterns of interactions, however, tend to be focused more within the buildings than between them. So it has always been something of a limitation that the department is in separate facilities. This got better, especially the interaction between 28 and 30, when the Cowles situation was changed. Even before the Tobin Lounge was built, things had improved. Don Brown and Bill Brainard led the way by making it clear that people from Cowles could and should locate in 28.

During my tenure as chair and, before that, as DGS, I saw eight graduate student cohorts. It was not an especially strong time for Yale in attracting graduate students compared to the 60s and early 70s when we were regarded as being one of the top two or three graduate programs in the country. We did get excellent graduate students in several of the fields where we had traditional strength. For example, we attracted outstanding prospective econometricians, but in other fields we had slipped in appeal to graduate students relative to four or five other schools. It’s hard to say what caused this. The department was perceived as not having as much strength in the younger tenured ranks as some of the competitors, and that was a problem. That’s been much altered in the last decade. In the last few years, Yale students have done quite well on the job market, which is either an indication that the students are getting better training or that the department is getting better inputs. I suspect both are true to some extent. The department’s reputation will continue to improve in the coming years because of the combination of strong junior faculty and a much more visible representation of younger tenured faculty.

The job market for graduate students in the late 80s and early 90s was not the best it had ever been, but it was also not the worst. Yale students have always gotten pretty good jobs. What was a little light during those years was the number of people going to the absolute top departments in the country, somewhat fewer than it had been in the 70s. However, we didn’t have the problem that a lot of the humanities departments had, i.e., failure to place students. Throughout the whole period the department has had some wonderful graduate students, many of whom have gone on to great, successful careers. There is really no period from which one could not draw an outstanding all-star team. I have personally gotten great pleasure out of seeing so many of my own students move on to outstanding careers, and I served on something like 62 dissertation committees in my 19 years on the faculty.

One thing often not noticed when one thinks about the department and its position relative to other departments is the extraordinary quality of our undergraduate alumni. I have had at least as many, if not more, senior essay students who have ended up as outstanding economists in positions in major departments as I have had graduate students. Typically these students do their undergraduate work at Yale and then go on to MIT or Harvard, occasionally to other places. The department has had a fairly rigorous approach to undergraduate education in economics. I hope that’s still true, but I have noticed numbers increasing, which is worrisome. It was true in the 70s and 80s that enrollments in some competing institutions for undergraduate economics majors were much larger than at Yale, but that was at the expense of rigor in the programs. Economics was often an “easy” major even at some of the more illustrious competing institutions. At Yale, the department has always insisted on using mathematics liberally in undergraduate courses. We have assumed that students had mastery of calculus and could handle multivariate calculus in their courses and linear algebra in econometrics courses. That makes a big difference because it puts meat into the undergraduate program. Don Brown and I were both absolutely rigorous in our insistence that faculty teach undergraduates. There were one or two historically grand fathered exceptions to that rule, but essentially faculty were not allowed to escape their obligation to teach undergraduates. In truth it’s a pleasure to teach Yale College students so most faculty accept the responsibility quite willingly. Occasionally it is an issue in faculty recruiting since other departments are often more permissive in giving less onerous teaching loads to faculty and sometimes specifically offer exemption from undergraduate teaching as though that were a burden and not one of the pleasures of the job. Yale approached that very differently (at least under Brown and myself) and said that one of the best things about being at Yale was the opportunity to teach Yale College students. The burden is shared fairly, and everyone participates. The department occasionally loses people because of the teaching load, but very rarely.

Another development that has had an impact on faculty recruiting is the issue of academic superstars and the wage competition that has resulted. Yale has been slow to adapt to the change in regime. This makes some colleagues impatient but Yale, like Harvard, has always had a somewhat more egalitarian pay structure among senior faculty – not strictly egalitarian, but less skewed than a lot of other places. At the higher end, we do now have something of a competitive problem in economics that does need to be addressed. Yale won’t go to extraordinary levels of compensation, i.e., 75% higher than an average full professor. The university’s standards for tenure are so high that everyone here is a star and would be almost anywhere else. The fact that most faculty could command very high salaries at other institutions can’t guide us excessively. We just have to be sure we don’t get in a position in which institutions of comparable quality are outbidding us. We are holding our own in most other disciplines. Economics is more skewed than even engineering or computer science, and that’s surprising.

Finally, I’d like to add that any department history ought to give appropriate recognition to the remarkable longevity and devotion of some staff. In my years, Mary Doody, Eleanor van Buren, and Cornelia Awdziewicz retired after long tenure and tremendous service to the department. Eleanor assisted the DGS from before the time I was admitted as a graduate student to the beginning of my chairmanship. She was a great friend of so many students – more than an administrative helper but a personal counselor and source of real humanity for so many people. Cornelia was the undergraduate registrar for many, many years. Mary kept the place running extremely efficiently for at least 15 years. All three were terrific people. Having to replace both Eleanor and Mary was an important event in my tenure as chair. We did it in a somewhat unconventional way with a mother-daughter team, Lorraine and Pam O’Donnell.

 

William Brainard

I came to Yale as a student in 1957 (the same year as T.N. Srinivasan). I finished my degree in the fall of 1962 and was appointed assistant professor for the 1962-63 academic year. I had finished my degree just in time to get a retroactive appointment to July 1 and just about the same day my middle son was born. I’ve been on the faculty since then; my perception of what goes on in the department has gradually changed, partly I suppose simply from the passage of time, and partly as a result of passing through the ranks.

In my early days, there was a much stronger identification of faculty with the research centers. Most junior faculty were affiliated either with Cowles or the Growth Center. Cowles had formal control over some senior slots and at that time took a strong interest in junior appointments if they had to do with micro or macro theory, mathematical economics or econometrics. The Growth Center brought in a large number of junior faculty in connection with the country studies program. Although there was a departmental seminar where faculty presented their research or discussed current economic issues (Ruggles and Wallich, for example, had a friendly debate on the costs of inflation), much of the intellectual life of the department was concentrated in the research centers. My closest colleagues were other junior faculty members at Cowles; Cowles coffee did lead to quite a bit of informal contact with senior faculty.

In the late 60s, things were quite wild in the university at large. The Vietnam War and its political and social consequences dominated discussion within the university, with heated faculty meetings (too large for Connecticut Hall), boycotts of classes, teach-ins. The national skepticism about authority and the establishment was amplified on the campuses. We had a “town meeting” on the appropriateness of ROTC in the university (with an incredible tied vote of the more than 2,000 participants. Robert Dahl, chairman of the meeting, and Martin Shubik, one of the many tellers, assert to this day that it really was a tie and not simply a graceful way of ending a contentious meeting with roughly evenly divided participants). Faculty and students were focused not only on Vietnam, but also on civil rights, poverty and the environment.

In the department the same mood led to changes in the department’s appointments process. Before then, for junior faculty, and I suspect many senior faculty, the process was mysterious. I don’t know exactly how my appointment was made, but I’m sure there were no junior faculty members involved. I had been told that Yale never hired its own and that I should accept one of the other offers I had. I had deadlines for these offers and was ready to accept one of them when I got the offer from Yale at the last minute. The rumor was that Arthur Okun had called Richard Ruggles the Saturday before I had to decide and asked what this rule was anyway. On Monday I got an offer. My recollection is that Bill Nordhaus and Ted Truman, who were then junior faculty, led the drive for reform. Finding that the corporate bylaws allowed faculty to vote on appointments to their own rank or lower, they got agreement from the senior faculty to open meetings on junior appointments to all members of the faculty. While complicating the process, this was undoubtably a healthy change. It led to the much more formal and orderly process that we have today, and maybe even to better appointments! It also meant that junior faculty became much more aware of what was going on in the department than they had been when I first arrived. In the early days following the reform, there were some rather heated and raucous meetings, not only because there were more people making decisions, but also because issues of ideology and a bit of counterculture were sometimes involved. Many students, and some faculty, questioned the usefulness of economic theory and econometrics, the emphasis on efficiency rather than equity, on competition, rather than on power. During that period, we devoted a class in micro theory to a discussion of the relevance of theory. We did lose some students because of disillusionment with the value of an economics education and because of a personal questioning of the appropriateness of being in graduate school with so many pressing social needs outside.

The Bobby Seale trial was held in New Haven and the city was the site for a national rally protesting the trial. There was enormous turmoil. Brewster handled the situation gracefully, establishing a positive, welcoming stance and avoiding confrontation. He got the National Guard to agree to stay outside of town unless there was severe disorder. There was a lot of anxiety about violence, and, in fact, there had been some – the front of Ingalls Rink was blown out. It’s hard to believe in retrospect, but the younger faculty at Cowles thought we should have someone “standing guard” in 30 Hillhouse the night prior to the big march. We chose shifts, and Dave Cass and I had the graveyard shift. We sat in the seminar room, now the library, chatting, doing puzzles, etc. What we would have done if anyone had ever tried to do anything beats me.

The department has a tradition of civility, which stood it in good stead during this period. There was a great deal of collegiality and mutual respect even though there were very wide divergences of views about the issues. Ray Powell, whose office I now occupy, will always be a model; he was person of high principle who practiced what he believed. He had strong personal views, but great respect for the views and rights of others. He was one of the faculty who taught classes on schedule during a boycott, but also gave a complete second series for students who had boycotted. William Fellner was the epitome of the civility and graciousness of the faculty. For individuals like Fellner and Wallich, who had lived through the European experience, or had fled Europe, it was reminiscent of the breakdown of order and the license of extremes, and was enormously distressing. For younger faculty like myself, things were easier. We didn’t feel threatened and didn’t feel that our world was coming apart. It is remarkable how well Yale and the Economics Department came through that period; at other places there was great tension and bitterness.

There was tension with respect to some appointments and promotions involving “radicals.” Tobin and Powell were always determined to be fair, and there were painful reviews of individuals who most thought did not merit promotion, but where there was a question of whether the person was not highly regarded simply because of his beliefs. It made for quite interesting faculty meetings. There was also more discussion of the curriculum. Most faculty had a pretty clear idea of what was important to teach in graduate courses, but they had to do more defending and explaining why to students than either before or since. I don’t think there were any permanent changes, but there were some new courses responding to the felt needs of students. Bill Parker has described his involvement in one such course. There was also great interest in the environment, the role of government, education, poverty, etc. Dick Cooper, Peter Mieskowski and I taught a course on public goods and externalities, which attracted over thirty graduate students. Such a course would be lucky to get 4 or 5 students today. We had an informal seminar on Yale’s role in New Haven and on poverty and the environment. And there were a number of interdisciplinary courses involving faculty and students from a wide variety of departments. Much of this was good, but one did not need to be much of a cynic to predict that these were transitory interests, and that the excitement would not last very long.

The role of the department in the curriculum has changed over time, but probably not primarily in response to the politics of the 60s. Even before then there was more departmental involvement in the design of the basic courses than there is today. For example, at a departmental meeting where various undergraduate matters were discussed, the faculty teaching introductory courses (now Econ. 110, 111, 115, 116) would present and discuss their proposed course outline, reading list and text. It was always interesting to see whether the faculty member in charge of sections recommended Samuelson or Reynolds. Although most of the comments and suggestions from other faculty were minor, there was no question that the department regarded the basic courses as its responsibility, not individual faculty’s property.

There was some tension over this issue during the 60s. A junior faculty member teaching the intro course decided to make it essentially an anti-classical economics course. Art Okun’s oldest son was here as an undergraduate, and Okun was appalled at what he heard about the course. So Tobin talked to the instructor. I believe he said the instructor had a responsibility to teach the core economics material – if only so the students would have a clear understanding of what was being beat up. If he wanted to teach a course on radical economics, he could, but it would be advertised as such. Today we may discuss whether there’s too much or too little mathematics in the basic courses, but there isn’t the same fundamental questioning of the value of the discipline. In the late 50s and early 60s, there was an informal dress code – a lot of undergraduates and faculty (and even some graduate students) wore coats and ties. I was pretty much at the low end – as a student I wore gym shoes and sweat shirts to class. When I joined the faculty I didn’t change much and I guess I was fairly notorious for my informal attire. We had a Christmas skit in which I was to dress in a tux and everyone else was to wear t-shirts, blue jeans and sneakers. I borrowed Richard Ruggles’ tux, which didn’t fit too well but had a beautiful ruffled shirt (the pants were a bit too short). In the late 60s, the dress code dramatically changed; I suddenly found myself in median attire. Gary Smith set the new standard, teaching barefoot, with holes in his dungarees and t-shirt. When I became Provost, I had to have a tux so I asked Ruggles if I could buy the one I had used in the skit. He gave it to me (no ruffled shirt though). I took the pants to Rosie the Tailor to be altered and Rosie told me he had a better pair that had belonged to John Perry Miller. So the tux I have now is indeed quite special – Ruggles’ jacket and Miller’s pants.

One of the challenges of the department is finding talented people, and holding on to them. It has gotten harder. Yale is at a disadvantage in attracting dual-career households (but Amtrak is about to solve that!). As the profession has grown, there are more universities that have first-class departments. Demand for economists in private firms and government organizations (e.g., the IMF, World Bank, Fed) has grown. Business schools have become major competitors for talent. Economics departments have both benefitted and been hurt by the discipline’s success. Salaries and job placement of graduate students have done well during a period when other academic fields have not prospered. I don’t have the numbers, but I would bet that job turnover in the profession has gone up. I think these forces have subtly changed the degree to which faculty feel bonded to the department, and in general there is less institutional bonding and loyalty than there was twenty-five years ago. The fraction of faculty who go to Yale College meetings, or are heavily involved in university affairs, is smaller than in earlier days. At the same time, I am struck by how many of our faculty, junior and senior, are wonderfully concerned about undergraduates and teaching.

There has been a big change in the graduate student population, with globalization of the program. When I was getting my degree, most students were American. Yale got very strong applicants from U.S. colleges and universities. The experience of the depression, the macro economic problems of that period and the quantitative nature of economics attracted people into the profession. Small liberal arts colleges were a major source of such students. There was a blossoming of economics as a discipline with the development of modern tools of analysis and the availability of data and computers. It was exciting to be in a discipline that was in such a state of ferment, with challenges that seemed surmountable. There was optimism about the extent to which modern tools would enhance our ability to understand the economy. The strength of the applicant pool from U.S. colleges and universities gradually faded – I’m not entirely sure why. Yale undergraduates still went on to Harvard, MIT, and Stanford, but rather than going on to do graduate work in economics, they went to law school, medical school, business school, etc. At the same time, there was growth in the pool of qualified applicants from around the world eager to come to the U.S. The U.S. undoubtably has the best graduate education going, and we dominate economics education worldwide. The growth in talented applicants from abroad has had a variety of effects on the program. Foreign applicants have different interests from the typical American undergraduate. They are less likely to be interested in social security or U.S. monetary policy and more likely to be interested in theory and econometrics. They are less likely to go into applied areas which are interesting, in part, because they concern U.S. economic issues. Among the applied fields, they are more likely to be interested in international economics or development. This has obvious implications for both the demand and supply of different kinds of courses in the department.

The profession in general has become much more specialized, and there are fewer generalists. This is a major change since the 1960s. You used to be able to attend essentially every seminar. It couldn’t possibly be done today; indeed some even take place at the same time. Although there were fewer seminars then than now, everyone tended to go. Tobin, Koopmans, Okun, Fellner, and Wallich all came to the Cowles seminar on a regular basis. Seminars on theory, econometrics, or mathematical economics were expected to be more or less understandable to the whole population. Today, seminars are more specialized and tailored more to the folks in the field. While that has its advantages, the profession is more fragmented and there is less cross-fertilization of the sub-disciplines.

The department still has the notion of a “liberal” economics education but there’s some tension about it. Students take micro, macro, econometrics, and economic history and have to write an applied econometrics paper, but there’s a lot of chafing. Students who are interested in doing theory want to know why they have to do the applied topics, and students interested in applied topics want to know why they need all that theory.

The intellectual heroes of my day were people who were driven by concerns about applied problems even if they were very good on the technical stuff. Tobin, Samuelson, Arrow all had the technical tools but never lost their interest in policy. In retrospect, it seems remarkable that Arrow and Solow both served as staff on the CEA. Koopmans, a theorist and econometrician, was always motivated by a desire to understand real world phenomena. They were not interested in abstraction or the internal logic of theory for their own sake, but as a way of advancing our understanding of economic problems. They were broad in their outlook. That generation has either died or retired, and the next generation is more specialized. I worry that specialization in the profession breeds specialization and will create greater and greater distance between abstract theorists and the economist who’s worried, for example, about poverty.

The uniqueness of the department at Yale comes in part from the presence of Cowles and the Growth Center. Our great strength in econometrics and econometric theory reflects the Cowles tradition. We are strong in development even though that’s an area that has suffered in the profession at large. We are a pretty eclectic department, with a tradition that goes back at least to my earliest days when it was evident that individuals in the department, far apart in politics, respected and listened to each other. Fellner was conservative, but Art Okun always said it was worth arguing with him; Art always took him seriously. It’s a diverse faculty, and there is pleasure in that diversity. And we still have a reputation for seminars where papers are critically examined and where a lot of constructive criticism is handed out.

 

Appendix I
YALE DEPARTMENT OF ECONOMICS
Past Chairmen
Past Directors of Undergraduate and Graduate Studies
1951-52 through 2012-13

 

 

Note: In addition, the following article was distributed at the reunion:

“Conversations with James Tobin and Robert Shiller on the ‘Yale Tradition’ in Macroeconomics.” Conducted by David Colander (Middlebury College), Macroeconomic Dynamics 3, 1999, 116-143.

Source:  From Yale University, Department of Economics Reunion (April 16-18, 1999). Internet Archive, Wayback Machine (August 16, 2000).  Updated table for Appendix I from copy of the Yale economics department website at Internet Archive,Wayback Machine (May 8, 2013).

Image Source: Handsome Dan the Yale bulldog. Yale Alumni Magazine Website (March/April 2017).

Categories
Chicago Columbia Economists Yale

Yale. James Tobin on Freedom to Friedman in 1964

 

The last paragraph of this letter from James Tobin to Milton Friedman could have been written yesterday (by someone with a good memory for history). While it is fair to say that Friedman’s team has managed to control the ball longer on the clock over the past half-century, Tobin’s team is better at keeping points on the scoreboard. 

___________________

Yale University
New Haven, Connecticut

DEPARTMENT OF ECONOMICS
Cowles Foundation for Research in Economics
Box 2125, Yale Station

December 7, 1964

Professor Milton Friedman
Department of Economics
Columbia University
Fayerweather Hall
New York 27, New York

 

Dear Milton:

As you urged in your letter of November 11, I shall read Federal Bulldozer [Sample review of Martin Anderson’s book]. The only redevelopment I am at all familiar with is the one here in New Haven. I think it has, in some net balance, enlarged freedom. Eminent domain no doubt infringes on one dimension of freedom and is subject to abuse. But there are surely aspects of freedom other than freedom from government coercion.

The discussion would be advanced if you would recognize that some government actions might enlarge the scope for individual choice and action for some individuals by diminishing the environmental constraints upon them.

I think also it is useful to distinguish between expansion of the public sector as a purchaser and user of resources and increases in specific and direct governmental controls and regulations. I don’t think that “modern liberals” who favor the former favor the latter. Certainly I don’t. I would not have a minimum wage law, or a Davis-Bacon Act, or the agricultural mess. And, when I want more money for education, I don’t like to be accused of wanting an NRA [National Recovery Administration]. But this confusion is what happens by the indiscriminate use of the term “Big Government.”

It is on the question of freedom of expression that I find the most difficulty understanding you. My reading of history and of the contemporary scene would be that the main threats to freedom of dissent have almost nothing to do with the economic size of government in our kind of society. The main threats have come from the know-nothings, Mitchell Palmers, McCarthys  [cf. a review of the Anderson book on Joseph McCarthy by Alonzo L. Hamby], Klu Kluxers, and the like. It is not the big Federal government that intimidates librarians, textbook writers, broadcasters, civil rights advocates in the South, etc. I do not know of cases where a democracy has crept into totalitarianism by gradually increasing the size and scope of government activity. But I do know of cases, like the Weimar republic, where the failure of conservative governments to use their powers for social and economic ends has delivered the whole country to a totalitarian dictator.

Sincerely,

[signed: “Jim”]

James Tobin

JT:lah

 

Source: Hoover Institution Archives. Milton Friedman Papers. Box 34, Folder 13 “Tobin, James”.

Images Sources:   1962 photo of James Tobin1968 file photo of Milton Friedman.

Categories
Exam Questions Harvard Syllabus

Harvard. Principles of Economics. James Tobin’s Student Reading Assignments, 1936-37

 

A few posts ago I provided a transcription of a bibliography of supplementary readings for Harvard’s principles of economics course in 1938-39.  While not uninteresting and indeed suggestive of the breakdown of topics and associated canonical texts, the bibliography provided little insight to the actual course coverage.

To remedy this I took a deep dive into James Tobin’s sophomore year notes for the course that run  260 consecutively numbered, clean hand-written notes for his readings along with brief summaries of the content of the section meetings. I have written down the exact sequence of readings he took notes on and have included the dates of the sections that give us approximate windows for when he did the readings. For the record, Tobin got an A in the course which hardly surprises. Other students could have fallen far short on the reading, but not Tobin!

The two main texts by Taussig and Slichter come as no surprise. Ten chapters were also assigned from a draft book manuscript by McIsaac and Smith that was published the following year. Tobin was fairly exact and consistent in identifying the chapter numbers and titles in his reading notes for Taussig and Slichter. His chapter titles for McIsaac and Smith differ quite substantially from those of the printed textbook, so I have included both.

To complete the set, I have included two semester final exams with this post.

______________________

Course Announcement

Economics A. Principles of Economics

Tu., Th., Sat., at 11. Professor Burbank and Dr. J. R. Walsh, and other members of the Department.

Economics A may be taken by properly qualified Freshmen with the consent of the instructor.

Source:  Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences during 1936-37.   Official Register of Harvard University,  Vol. XXXIII, No. 42 (September 23, 1936) p. 141.

______________________

Primary Course Texts

Taussig, Frank W. Principles of Economics 3rd ed. Volume I; Volume II.

Slichter, Sumner H. Modern Economic Society. New York: Henry Holt and Company, 1931.

McIsaac, Archibald MacDonald and James Gerald Smith. Introduction to Economic Analysis. Boston: Little, Brown and Company, 1937.

“The authors gratefully acknowledge the many constructive criticisms and the friendly co-operation offered by the instructors in Economics A at Harvard University, where a preliminary edition of the text was used in during 1936-37.”

______________________

 Reading Notes Sequence
James Tobin, 1936-37

Official beginning of classes Thursday October 1, 1936.

Taussig.

Chapter 1 [Wealth and Labor]

Slichter.

Chapter I [The Control of Economic Activity]
Chapter 3 [Free Private Enterprise],

Section
Tuesday 10/6/36

Taussig.

Chapter 2 [Of Labor in Production];

Slichter.

Chapter 2 [Some Fundamental Economic Concepts]

Section
Thursday 10/8/36, Saturday 10/10/36

Slichter.

Chapter 3 [Free Private Enterprise],

Taussig.

Chapter 3 [The Division of Labor and the Development of Modern Industry]
Chapter 4 [Large-Scale Production]

Slichter.

Chapter 7 [Large Business Units]
Chapter 5 [Machine Industry]
Chapter 6 [Specialization]

Section
Saturday 10/17/36

Taussig.

Chapter 5 [Capital]
Chapter 8 [Introductory: Exchange, Value, Price]

Slichter.

Chapter 4 [Modern Industry—A Capitalistic Organization]
Chapter 11 [Modern Industry—A Credit Economy]

Section
[no date]

McIsaac & Smith.

Chapter I [Notes: The Approach to Economic Analysis. Book: Nature and Purpose of Economic Analysis]
Chapter II [Notes: Contemporary Economic Background. Book: Production and Income in the Modern Economy]
Chapter III [Notes: Economic Valuations. Book: The Mechanism of Exchange]
Chapter IV [Notes: Factors Affecting Demand. Book: Consumer Demand]
Chapter V [Notes: Methods of Determinaing Prices. Book: Analysis of Supply: Cost of Production]

Section
Tuesday 11/10/36, Thursday 11/12/36, Saturday 11/14/36

McIsaac & Smith

Chapter VI [Notes: Current Supply Price. Book: Current Price Adjustment: Competitive Conditions]
Chapter VII [Notes: Current Supply Price and Costs of Production. Book: Current Price Adjustment: Monopolistic Conditions]

Section
Tuesday 11/17/36, Thursday 11/19/36

McIsaac & Smith

Chapter VIII [Notes: Dynamic Supply Price & Costs of Production. Book: Normal Tendencies in Price Adjustment]
Chapter IX [Notes: Price Spreads. Book: Supply and Price under Dynamic Conditions]

Section
Tuesday 12/1/36

Slichter.

Chapter 8 [Modern Business Organizations]

Section
Thursday 12/3/36

Slichter.

Chapter 17 [Public Authority as a Determinant of Price—The Problem in General]
Chapter 18 [Public Authority as a Determinant of Price—Public Utility Rates]
Chapter 19 [Public Authority as a Determinant of Price—The Stabilization Operations of the Federal Farm Board]
Chapter 22 [The Position of the Consumer]

Section
Tuesday 12/15/36, Thursday 12/17/36

Slichter.

Chapter 21 [The Determination of the Price Level]

Taussig.

Chapter 17 [The Precious Metals. Coinage]
Chapter 18 [The Quantity of Money and Prices]
Chapter 19 [The Cost of Specie in Relation to its Value]
Chapter 20 [Bimetallism]
Chapter 21 [Bimetallism, continued. The Displacement of Silver]
Chapter 23 [Government Paper Money]
Chapter 22 [Changes in Prices]

Section
Thursday 1/14/37

Taussig.

Chapter 24 [Banking and the Medium of Exchange]
Chapter 25 [Banking Operations]

Slichter.

Chapter 11 [Modern Industry—A Credit Economy]

Section
Tuesday 2/9/37, Thursday 2/11/37

Slichter.

Chapter 11 [Modern Industry—A Credit Economy]

Taussig.

Chapter 30 [The Theory of Prices Once More]

Section
Saturday 2/13/37, Tuesday 2/16/37, Thursday 2/18/37, Saturday 2/20/37

Taussig.

Chapter 32 [The Foreign Exchanges]
Chapter 33 [The Balance of International Payments]
Chapter 34 [The Theory of International Trade. Why Particular Goods are Exported or Imported]
Chapter 36 [Protection and Free Trade. The Case for Free Trade]
Chapter 37 [Protection and Free Trade, continued. Some Arguments for Protection]

Section
Tuesday 2/23/37, Thursday 2/25/37, Saturday 2/27/37

Slichter.

Chapter 29 [International Economic Policies—Restrictions on Imports and Exports]

Section
Tuesday 3/2/37, Thursday 3/4/37

McIsaac & Smith.

Chapter 10 [Notes: Demand for Indirect Uses. Book: Producer’s Demand]

Section
Saturday 3/6/37, Tuesday 3/9/37

Taussig.

Chapter 38 [Interest on Capital used in Production. The Conditions of Demand]
Chapter 39 [Interest, continued. The Equilibrium of Supply and Demand]
Chapter 40 [Interest, Further Considered]
Chapter 42 [Rent, Agriculture, Land Tenure]
Chapter 43 [Urban Site Rent]
Chapter 44 [Rent, concluded.]

Section
Saturday 3/13/37, Tuesday 3/16/37, Thursday 3/18/37, Saturday 3/20/37

Taussig.

Chapter 47 [Differences of Wages. Social Stratification]
Chapter 52 [The General Level of Wages]
Chapter 53 [Population and the Supply of Labor]
Chapter 54 [Population, continued.]

Slichter.

Chapter 9 [The Organization of Labor]

Section
Saturday 3/27/37, Tuesday 3/30/37, Thursday 4/1/37, Saturday 4/3/37

Taussig.

Chapter 49 [Business Profits]
Chapter 50 [Business Profits, continued.]
Chapter 51 [Great Fortunes]
Chapter 55 [Inequality and its Causes. Inheritance]

Encyclopedia of Social Sciences–Article on Population

Meade, James. on Population [in An Introduction to Economic Analysis and Policy, 1936] Part IV, chapter II [The Optimum Supply of Labour].

Hansen, Alvin. Theory of Population, Growth and Decline [Chapter XII in Economic Stabilization in an Unbalanced World, 1932.]

Section
Thursday 4/15/37, Saturday 4/17/37,
Tuesday 4/20/37, Thursday 4/22/37, Saturday 4/24/37,
Tuesday 4/27/37, Thursday 4/29/37, Saturday 5/1/37, 
Tuesday 5/4/37, Saturday 5/8/37,
Tuesday 5/11/37, Thursday 5/13/37,
Tuesday 5/18/37,
Thursday 5/27/37

Taussig.

Chapter 62 [Railways]
Chapter 63 [Railway Problems, continued]
Chapter 64 [Public Ownership and Control]
Chapter 65 [Combinations and Trusts]
Chapter 45 [Monopoly Gains]

Slichter.

Chapter 16 [Monopoly and Custom as Determinants of Price]
Chapter 28 [The Support of the State]

Silverman, Herbert Albert. Taxation; Its Incidence and Effects. London: Macmillan, 1931.

Chapter 5. General Principles of Incidence.

Slichter.

Chapter 20 [The Business Cycle]

Wooton, Barbara. Plan or No Plan. New York: Farrar & Rinehart, 1935.

Chapter 1. The Nature of an Unplanned Economy.
Chapter 2. Nature of Russian Planned Economy.
Chapter 3. Achievements and Possibilities of an Unplanned Economy.

 

Source: Sequence of readings assemble from Yale University Archives. James Tobin Papers. Box 7, Volume Economics A.

______________________

1936-37
HARVARD UNIVERSITY
ECONOMICS A
Mid-Year Final Examination
 

Part I
Answer TWO of the following three questions

  1. “In the long run the factors which are of importance in explaining prices are different from those which are of importance in the short run.” Discuss critically.
  2. Explain and distinguish between the determination of prices under conditions of:
    1. Indirect or monopolistic competition.
    2. Pure competition.
  3. “Both monopolies and monopolistic competition (indirect competition) may lead to an uneconomical use of the factors of production.” Discuss.

 

Part II
Answer all questions

  1. In view of the tremendous advantages accruing to the large unit of production, how can one explain the continued existence, and in some lines of industry and trade, the prevalence of the small scale enterprise?
  2. Discuss (a) the process of formation and (b) the function of the country’s capital equipment.
  3. “It is highly doubtful whether from a social point of view the advantages of the corporate form of enterprise outweigh its disadvantages.” Discuss.
  4. “Everybody knows that the trouble with this country is a shortage of money. You know it to be true in your case; I know it to be true in mine. My plan is simple. On Christmas morning — at the very time when extra cash will be appreciated — I propose to give every man, woman, and child a brand new dollar bill for every dollar he or she now has.” Discuss.

 

1936-37
HARVARD UNIVERSITY
ECONOMICS A
Year-End Final Examination
 

Part I

  1. Hour essay on quotation (a) or (b).
    1. “In a price economy the factors of production are so distributed that the goods most desired by consumers are produced by the most efficient methods. A control planning board could at best only duplicate the results which in an unplanned economy are achieved without conscious effort.”
    2. “Most of our economic troubles are ascribable to the fact that we are half way between laissez-faire and free competition on the one hand and a planned economy on the other. Thus we get many of the evils of both without the benefits of either.” Discuss with special reference to the “evils” and “benefits,” and give your opinion as to where the balance lies.

 

Part II
Write on each question of this part.

  1. It is said that wages are determined by:
    1. the law of supply and demand,
    2. the process of bargaining—individual and collective—between workers and employers,
    3. Social stratification—i.e. non-competing groups.Can these explanations be reconciled with the marginal productivity theory?
  2. Some economists have denied that interest corresponds to a real cost of production as wages correspond to labor. They say that interest is rather a surplus above actual cost, and a measure of capitalistic exploitation of wage-earners. According to them interest would not arise in a communist economy.
    Do you agree? Why or why not?

 

Part III
Write on any TWO of the following.

  1. “Lately our imports of goods have been increasing faster than our exports. If this tendency continues it will eventually bankrupt the country. We can no more continue to pay out more than we take in than can a business man afford to have outgo continually in excess of income.”
  2. Explain the mechanism by which an increase in aggregate bank reserves will affect the level of prices.
  3. Discuss the causes of industrial fluctuations and the public action that might ameliorate them.
  4. A tax on unimproved land will not be shifted but a tax on factory buildings probably will be shifted. Do you agree? Why or why not?

Source: Harvard University Archives. Department of Economics. Course reading lists, syllabi, and exams 1913-1992 (UA V 349.295.6), Box 1, Folder “Economics I, Final Exams 1913-1939”.

 Image Source: James Tobin’s senior year portrait in Harvard Class Album, 1939.

 

Categories
Harvard Suggested Reading Syllabus

Harvard. Industrial organization. Reading List, Kaysen and Peck, 1955

 

I have had the enormous good fortune of having excellent mentors during the course of my own economics education. The first was Professor Merton J. Peck who taught the double credit course “Early Concentration Economics” during the fall semester of my freshman year at Yale (1969-70). He liked a paper I wrote enough to show it to his colleague James Tobin who thought it was good enough to be written by a graduate student, or at least so I was told. With such a boost to my self-esteem, how could I not have continued in economics?

Mr. Peck (at Yale professors are addressed without the honorific “Professor”) offered me a job to be his bursary boy, a 10 hour a week student assistantship, with a variety of tasks spanning photocopying articles and chapters to editing his rough drafts (what humility, allowing a sophomore/junior at Yale to improve his writing!) When I complained to Mr. Peck once that there was no course in the History of Economics at Yale at that time, he told me to give “Willy Fellner” a call. That led to my second Yale mentor and the beginning of my education in the history of economics (a two semester tutorial reading economic classics). There were two major projects that Mr. Peck was working on during my years working for him: on industrial/technological policy in Japan for a Brookings book Asia’s New Giant and Economic Aspects of Television Regulation (with Roger Noll and John McGowan). 

Incidentally, in Robert Litan’s book (Trillion Dollar Economists, p. 103) I discovered to my delight that my mentor had spotted the talent in the young Frank Fisher and forwarded Fisher’s undergraduate paper to his colleague Carl Kaysen. 

As I was looking at my collection of syllabi from Harvard this evening, I spotted the course below co-taught by Carl Kaysen and Merton J. Peck. This syllabus is my first tribute to the memory of my mentor Joe Peck. I have appended his official Yale obituary. He is also of interest for my project on graduate education, having received a Harvard Ph.D. (1954).

_______________________________

HARVARD UNIVERSITY
Department of Economics
Spring Term 1955

Economics 161
Professor Kaysen and Dr. Peck

 

  1. Markets of Large Numbers (2 Feb. – 28 Feb.)

General introduction
Agriculture
Crude oil
Women’s clothing

R. Schickele, Agricultural Policy, Ch. 9-11, 13-17.
J.K. Galbraith, Basic Factors in Farm Price Policy (mimeo.)
K. Brandt, Farm Price Supports, Rigid or Flexible?
N. Ely, “The Conservation of Oil,” Ch. 11 in Readings in the Social Control of Industry.
E.V. Rostow, A National Policy for the Oil Industry, Part II.
“Adam Smith on 7th Avenue,” Fortune, Jan. 1949.

 

  1. The Regulated Industries (2 March – 30 March)

Electric Power
Transportation

Twentieth Century Fund: Electric Power and Government Policy, Ch. I-IV, X
M.L. Fair and E.W. Williams, Jr., Economics of Transportation, Ch. 18-23, 25, 30, 32.

  1. Economic Mobilization (11 April – 18 April)

D.H. Wallace and L.V. Chandler, Economic Mobilization and Stabilization, Ch. 1-5, 23-26.

 

  1. Nationalization and Planning (20 April – 27 April)

J.E. Meade, Planning and the Price Mechanism.
R.W. Lewis, British Planning and Nationalization, Ch. 1-3.
H.A. Clegg and F.E. Chester, The Future of Nationalization, Ch. 1, 3.

 

Reading Period

A.A. Berle, 20th Century Capitalist Revolution.

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. Box 6, Folder “Economics, 1955-1956 (2 of 2)”.

_______________________________

In memoriam: Merton Joseph Peck

YaleNews, March 6, 2013

Merton Joseph Peck, the Thomas DeWitt Cuyler Professor Emeritus of Economics, died March 1, at age 87. He resided in Florida and had been ailing for quite some time, according to his family.

Peck was a specialist in industrial organization, and wrote on a variety of topics including the aluminum industry, transportation, the defense industries, and cable and television. He also wrote about the transition to a market economy in the Soviet Union, as well as technological change.

He served in the U.S. Defense Department under Robert McNamara 1961–1963 as director of systems analysis, and he was designated by Time Magazine as one of the “Pentagon Whiz Kids” in 1962. Peck returned to Washington in 1968 to serve on Lyndon Johnson’s Council of Economic Advisors.

At Yale he served as department chair in various years throughout the 1960s, 1970s and 1980s, setting a record for number of years in that post. He also served as director of graduate studies, director of undergraduate studies, and acting dean of the Yale School of Management. He was a fellow of Pierson College at Yale.

Peck was born in Cleveland, Ohio, in 1925. Much of his very early youth was spent in Germany and Strasbourg in Alsace France. His father, Kenneth Peck, was head of European production for American Rake and Hoe. Both his parents died before he was 12, and he was subsequently raised by his aunts and grandmother in various small towns in Ohio. During World War II, Peck served in the Army Signal Corp and participated in the occupation of Japan. After leaving the army, he attended Oberlin College and graduated in 1949. He received his Ph.D. in economics from Harvard University in 1954 under the tutelage of Edward Mason.

Peck taught at Michigan (1955-1956) and Harvard (1956-1962) before coming to Yale, where he served on the faculty 1963–2002. He was also associated with the Rand Corporation and Brookings Institution.

He is survived by his children Richard, Katherine, Sarah, and David; and four grandchildren. His wife of 55 years, Mary Bosworth Peck, predeceased him in 2004.

Source:  YaleNews, March 6, 2013.

Image Source:  ditto.

Categories
Curriculum Economics Programs Yale

Graduate Training in Economics. Report of Panel Discussions at Yale. 1956

 

 

 

During the fall and early winter of 1954-55, Richard Ruggles and colleagues in the Yale economics department organized a series of interviews with representatives of business, government, international organizations, and universities to review the ultimate goals of a graduate education in economics and to identify future desirable directions the evolution of economics training might take. The interviews were followed by panel discussions in the Spring of 1955 attended by, among others, seven future economics Nobel prize winners. Today’s posting is a transcription of the final report printed in 1956. 

I came across a preliminary draft of the report in the Milton Friedman papers at the Hoover Institution Archives filed among his correspondence with Richard Ruggles and wondered whatever happened to the project. The report was never really published and survives as part of the “pamphlet literature”.  Only recently did I find a printed copy of the final report in John Kenneth Galbraith’s papers in the John F. Kennedy Presidential Library. The relative obscurity of this report can perhaps be attributed to its “Smoothie” style that has managed to blend panel member ideas and opinions into mere minutes of discussions sans quote or illustration. The report’s temporal proximity to the 1953 Bowen report (Graduate Education in Economics, AER, September 1953) could have left journal editors cold as well.

Since the primary goal of Economics in the Rear-view Mirror is to assemble artifacts to help us follow the historical development of the education of economists in the United States, the Ruggles Report of 1956 is worth rescuing from its undeserved obscurity in archival vaults.

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[1]

GRADUATE TRAINING IN ECONOMICS
A Report on Panel Discussions at Yale
YALE UNIVERSITY
1956

 

[2]

A restudy of graduate education in economics has recently been undertaken at Yale, with the aid of a grant from the Ford Foundation. This study involved two steps. First, economists in universities, government, and business were interviewed to determine what they thought the major problems in training economists were at present. These views were summarized in the form of an agenda, which was then discussed by five panels of economists. This report presents the views of the panel members, as developed in these discussion groups.

The following people participated in the panel discussion and in the revisions of the report.

Panel members:

Robert Adams, Standard Oil Company of New Jersey
Sydney Alexander, Massachusetts Institute of Technology
Kenneth Arrow, Stanford University
G.L. Bach, Carnegie Institute of Technology
William Baumol, Princeton University
E. G. Bennion, Standard Oil Company of New Jersey
Henry Bloch, United Nations
Howard Bowen, Grinnell College
Sune Carlson, United Nations
Gerhard Colm, National Planning Association
Ross Eckler, Bureau of the Census
Solomon Fabricant, national Bureau of Economic Research
Milton Friedman, University of Chicago
Albert Hart, Columbia University
Leonid Hurwicz, University of Minnesota
Dexter Keezer, McGraw-Hill Publishing Co.
Simon Kuznets, Johns Hopkins University
Stanley Lebergott, Bureau of the Budget
Wassily Leontief, Harvard University
Ben W. Lewis, Oberlin College
John Lintner, Harvard Business School
Edward S. Mason, Harvard University
James Nelson, Amherst College
Donald Riley, Bureau of the Budget
Paul Samuelson, Massachusetts Institute of Technology
Robert Strotz, Northwestern University
Clair Wilcox, Swarthmore College

 

Yale committee:

Richard Ruggles, Chairman
Wight Bakke
William Fellner
Kent Healy
John Miller
John Sawyer
James Tobin
Robert Triffin

 

[3]

The Role of Graduate Education in Economics

THE OBJECTIVES OF GRADUATE EDUCATION IN ECONOMICS which were most frequently mentioned by the panel members were (1) to develop economists who can push back the frontiers of economics; (2) to prepare economists for teaching, not only at the undergraduate level but also in graduate economics departments and business schools; (3) to train individuals who are capable of carrying out research for business, government, labor, and other research organizations; (4) to develop economists who can serve in policy guidance positions in business, government, and labor unions. The panel members agreed that the curriculum of graduate education in economics can no longer be organized exclusively about scholars; it has become essential to produce economists who can do, not just know. Primary emphasis in the past has been placed upon the production of teachers, and although this is an important function, focusing on it may develop a more restricted concept of education than is appropriate today.

The frontier of economic knowledge.

The continual emergence of economists who are capable of contributing to the substance of economics is essential for the vitality of the field. Of course, every student who goes through a graduate school should not be expected to make such a contribution; many are needed to practice the art and science of economics for more immediate objectives in teaching, in applied economics in business and government, and in less basic research in the academic world, business, and government. Nevertheless, the graduate school program should be such as to encourage research of a basic nature and to acquaint students with it. Only by such investment can economics be expected to develop. Such an orientation is useful also for those who do not go on to make substantial new contributions. It provides a [4] necessary perspective as to the current status of economic knowledge and the bases on which it resets, and points up gaps in economic knowledge and the process by which the evolution of economic thought comes about. Accent on the encouragement of basic research should not be construed, however, as implying that large amounts of learning and scholarship should be the aim. Rather it implies that the creative talents of the individual should be stimulated, and that the individual be trained in the necessary tools to do such research. These aims are complementary to the other objectives of graduate training, not competitive with them.

Research training for business and government.

In recent years, there has been an increasing use of economists for research purposes in business and government. Projections of future demand, analyses of the impact of various market forces, problems of taxation and government expenditure, analyses of productivity changes, studies of business fluctuations, and various international problems related to trade and foreign economic policy all have required that a considerable amount of economic research be carried out. Graduate schools have not generally taken specific cognizance of the needs of these groups so that new Ph.D.’s going into these areas often require a considerable training period before they become useful to their organizations. When the organization does not have available senior staff capable of carrying out such training on the job, the result is that lower grade work is turned out. It is recognized, of course, that schooling cannot entirely substitute for experience, and that some training on the job will always be necessary, but the question still remains whether the present graduate school training is as appropriate as it might be for meeting the research needs of business and government.

Policy and administrative guidance in business, government, and labor.

Besides the technical research uses of economists in business, government, and labor, economists are needed in a more operating [5] capacity, where day-to-day decisions and advice are required without any formalized research work. Advisors are required at the policy level in large corporations. Banks, insurance companies, large manufacturing firms, and labor unions are employing more and more people in this capacity. Government and international organizations need trained economists to serve as administrators of various programs. These needs are growing in importance as the complexities of economic life increase. Again, most graduate schools have not been particularly attuned to meeting this sort of need.

Teaching.

To a very large degree, teaching is a derivative of the other purposes of economic training. Teachers should be expected to be able to teach those things which are useful in the training of economists. Thus, at the graduate level the objectives outlined above would be pertinent; teachers should be trained to meet these objectives. The problem of undergraduate teaching of economics may at first appear to pose somewhat different requirements, but closer examination indicates that its objectives should be closely allied with the objectives cited above, lest it become too academic and unrelated to the current practice of economics. Undergraduate teachers need to be trained broadly and to have a good general perspective about economics. The development of teachers who are interested in the furthering of economics as a science is necessary in order to prevent the teaching of economics from becoming a sterile academic exercise. The crucial question here is the ability to teach effectively, and to keep on doing it through time—to keep alive, stimulated and stimulating.

 

[6]

Requirements Posed by the Objectives of Graduate Training in Economics

THE OBJECTIVES OF GRADUATE TRAINING IN ECONOMICS are largely complementary in the requirements they pose; there seems little ground for suggesting that individuals expecting to go into different areas of economics should have greatly different and unrelated programs. It was thought that the basic requirements common to all the objectives could be classified into four major categories: (1) a common core of economic knowledge; (2) the ability to present ideas coherently; (3) the ability to do research; and (4) the specialized training in the area of the student’s greatest interest.

No strong line of distinction can in fact be drawn between knowledge, on the one hand, and the ability to present ideas coherently and the ability to do research, on the other hand. A person who does not have the ability to express ideas coherently or the ability to do research cannot be said to possess knowledge of his subject. True knowledge is more than the capacity for parrot-like repetition of what this, that, or the other economist said, and what this, that, or the other formula is, and unless research is narrowly defined as the analysis of empirical data of a limited kind, really operative knowledge is included under either the ability to present ideas coherently or the ability to do research or both. Thus, the teaching involved in imparting the common core of knowledge (as well as that involved in specialized training) should be such as to produce in the student clarity of thinking which should make clear writing a necessary consequence; and, also, the teaching involved in imparting the common core of knowledge (and specialized training) should be such as to leave the student with a clear idea of what research means, and how the interplay of hypotheses with tests based on empirical data results in acceptable knowledge.

In spite of the obvious interrelationship of the four major [7] categories listed above, however, it will be useful to consider them one at a time.

 

COMMON CORE OF ECONOMIC KNOWLEDGE

All economists should have a general acquaintance with the basic ideas in economics, and all should be equipped with the tools and the general empirical knowledge about modern economic systems that will provide a basis for economic research, policy guidance, and teaching. The common core consists of (1) a set of analytical tools, (2) a way of handling the tools in research and problem solving, and (3) certain institutional knowledge about the economic world. This common core is necessary not only to meet the above objectives, but also so that economists will be able to communicate with each other, and so that mobility among different uses of economists will be preserved. The substance of economics itself will be enriched if individuals can move freely from one area to another. For example, it is beneficial for the development of the profession if economists can move between business and government, on the one hand, and teaching, on the other. Similarly, research individuals should have the same sort of general background as those who are faced with administrative problems. The existence of a common core helps to ensure this, and is some protection against excessive compartmentalization and overspecialization in the profession. The problem of core training is one of balancing the desirability of having a number of essential requirements included in each student’s program with that of having the minimum amount of formal requirements.

With respect to the nature of the common core, there was fairly general agreement among those participating in the panels, and the conclusions reached are not strikingly different from the current practice in many graduate schools or the objectives expressed in the Bowen Report. There was a general feeling that some reorientation and redesign within the accepted framework might be in order, but that the general framework itself [8] need not be significantly altered. The content envisaged would include economic theory, economic history, mathematics, and statistics.

Economic theory.

The theory requirement in the common core should probably be the most intensive of all the requirements. At least one and probably two full years of formal classwork in economic theory were considered necessary, supplemented by outside reading to fill in gaps not taken up in the formal courses. The courses themselves would not be entirely devoted to a formal presentation of certain specialized areas of theory, but should give students the ability to use theory effectively in handling problems. The work should cover modern theory in most areas of economics, and it should also be tied in with both the history of economic thought in these areas and some of the historical and institutional background that provides the context for the theory.

Economic history.

Economic history as a core component should be distinguished from economic history as a special field. The purpose of the economic history requirement should be one of literacy, to insure that the student has some perspective with respect to how economics is related to various aspects of human development. This requirement can provide the thread of continuity and integration which is normal lacking from work at graduate level. The growth and development of economic institutions in the various specialized areas should be treated in relation to each other, together with the relation of social and political history to economic development and the role of geographic location as a determinant of economic development.

Mathematics.

The purpose of the mathematics requirement as a part of the core is partly to serve as a necessary tool for the mathematical economics and statistics, and partly for general literacy. It would [9] be desirable, of course, for students to have a proper mathematical background when they enter graduate school. Unfortunately, such a requirement is not easily enforced at this time, and it will generally be necessary for this deficiency to be made up either while a student is taking other work in graduate school or during the summers. In view of the specialized nature of the mathematics required for economists, it may well be that a specialized course drawn up specifically for economists or for social scientists would be the most efficient way to meet the need. Such a course would not be intended as a shortcut, but rather would attempt to give the student those areas of mathematics which are relevant to social science and to relate them to problems in economic theory, game theory, statistics, and econometrics. Literacy in the area of mathematics is important so that students will not be frightened by economics which is cast in symbolic terms. If there is to be communication among members of the profession, it is essential that all economists should have enough mathematics so that they can tell in a general way what articles in a mathematical form are about. This does not mean that those students who are not mathematically inclined should be forced to achieve mathematical fluency. However, all students should at least be required to have some minimum competence in mathematics.

Statistics.

As in the case of mathematics, statistics is partly a tool requirement and partly a literacy requirement. As a tool, students should be able to employ statistics for economic research. The traditional topics such as probability theory, statistical tests, and index numbers would all be covered. In addition, however, the student should learn how to handle basic empirical material in a systematic and orderly manner. The uses of accounting data, together with the meaning of various accounting classifications and accounting methods, should be studied. The student should also have a general knowledge of the sources of economic data, such as the kind of material contained in the various censuses of [10] the U.S., the national income statistics, and the types of economic information provided by the other agencies in the government. They should be familiar with the empirical work provided by non-governmental research institutions such as the National Bureau, and by international organizations. All of these are useful research tools, and they are also required for literacy in this area, so that the student will be able to appraise and evaluate empirical research.

Interdisciplinary training as related to the core of economics.

Considerable attention has been focused recently upon the desirability of having students know about fields other than economics, so that useful cross-fertilization can take place among the disciplines, and so that economics can be used more effectively in helping to handle public and private policy problems. It is argued that training in other disciplines will give the student greater breadth and make his economics training more meaningful. There was a general consensus among the members of the panels, however, that elementary survey courses in other disciplines would be of limited usefulness, and would expand the common core to a point where it would seriously infringe upon the freedom of students to follow lines of their own interest. Undergraduate training supposedly gives a student breadth; if it has failed in doing this the lack should be recognized as a gap in the student’s training. It is questionable, however, whether a graduate school should take formal cognizance of such gaps, as it does in the case of mathematics, and make provision in the graduate school curriculum for filling them. Where the gaps are extremely serious, the student should probably be encouraged to attend summer school, an/or do special reading, to make up the deficiencies. But it does not seem that the subject matter of interdisciplinary training and the deficiencies of preparation in the students are sufficiently clearly defined to make courses in them practical. Experiments might usefully be tried in this area, but they should be regarded strictly as experiments, [11] which might eventually yield elements that should be incorporated into the common core.

The extent and timing of the common core.

In terms of formal requirements, the common core should probably not exceed four or five year courses, depending upon whether or not the student can anticipate the mathematics requirement. In addition to this formal work, however, it might be desirable to provide for some sort of tutorial instruction to fill in gaps not covered in the courses and to follow up lines of special interest to the individual student. Such tutorial instruction would provide an element of flexibility not obtainable in formal classwork. With respect to timing, it seems logical that the major portion of the core would be covered in the first year, inasmuch as it provides tools used at later stages in graduate work. On the other hand, some time should be left in the first year for students to take courses of their own selection. Students should have an opportunity to sample several specialized areas before finally determining the area in which they are most interested.

The Ability to Express Ideas Coherently

The economist should have the ability to express his ideas coherently, and to move easily between the abstractions posed by economic analysis and the empirical elements of the problems with which he deals. This requirement is more than that of being able to write grammatical English; it involves training in the organization of ideas and the development of perspective. Rigor and clarity is essential if the profession is to serve its many potential functions. One of the major complaints of people who hire economists in business and government is that the products of graduate schools whom they hire do not have this ability to present their ideas coherently. They often express the opinion that economists who are intending to go into business and government should receive special training in this respect. However, [12] it is not any less important that individuals going into pure research or teaching should be trained to express their ideas coherently. Perhaps the reason teaching and academic research have not appeared to suffer as much in this respect lies in the lack of direct supervision of such individuals by supervisors who bear the responsibility for their written and oral presentations.

As already indicated, the ability to express ideas coherently is not merely a problem of correct grammar, but rather involves the organization of ideas in a meaningful manner. Unless a student can express an idea clearly, he does not really understand it. Thus, the ability to express ideas coherently is highly related to the problem of substance, and is properly the responsibility of a graduate school. Some students have difficulty in writing because they have little or nothing to say. They have not developed habits of creative thinking, and do not know how to approach a subject.

Because the economist usually crystallizes the results of his work in written form the writing itself is a tool, and is part of the basic methodology of the profession. In other disciplines such methodological tools are given explicit consideration. For example, in the sciences, students are thoroughly trained in laboratory work. In mathematics, students are drilled in working through problems. In law, briefs and case studies are written. In medicine, the internship trains the student in the handling of actual medical cases. Few graduate schools of economics, however, have considered writing explicitly as a tool of the profession, and therefore relatively little accent has been placed upon training the student adequately in this function.

The Ph.D. thesis, traditionally the masterpiece of a student being trained for the doctorate, does not fulfill this need. All too often it is instead a traumatic experience which leaves the student scarred but untrained. In a great many instances, furthermore, the thesis is done by the student out of residence, and the supervision of the writing of it leaves much to be desired. The student often attempts to write the thesis while he is pursuing another job on a full-time basis, and the writing may take [13] a period of five or six years. The hurdle is so great, as a matter of fact, that a large proportion of students who have completed everything but the thesis never finish it. Also, the moral pressure on professors to approve theses of students who have spent a large number of years on them is very great, with the result that the thesis itself need only show effort and length to be acceptable. In other words, the Ph.D. thesis is quite unsatisfactory for teaching students how to write, and because of the institutional considerations involved this failure cannot be corrected merely by exhorting students and teachers to greater effort and higher standards.

The members of the panels believed that the solution to the problem of training students to write coherently lies in the direction of more writing practice early in the graduate training program, and reliance on a larger number of shorter papers (5 to 10 pages) rather than a small number of major papers. This process should intimidate the student less, offer him more practice in organizing material, and make the task of criticizing and evaluating any given paper simpler.

One important aspect of training students to write, now largely neglected, is provision for revising and reworking papers. So much effort goes into the original writing of a lengthy paper, and the task of reworking it is so great, that most of the student’s writing tends to be a single-shot experience. In many cases the student never even seriously re-reads what he has written after he finishes it. In order to promote the reading and criticism of papers, it was suggested that some of the papers be duplicated and discussed in essay seminars attended by both students and faculty. Students should learn from such a procedure not only when their own work is presented but also from the problems encountered by other students. In this connection also, all papers need not be written in the confines of formal courses. The tutorial function spoken of in the previous section might well bear some of the brunt of criticizing short papers.

Courses involving group research would provide an opportunity for students to prepare papers in conjunction with each [14] other. Such joint papers would force the students to discuss the organization and presentation of the material, so that an agreed-upon version may be arrived at. This practice will prepare students for the sort of writing experience they are likely to encounter in business, government, or other group research.

If the writing of papers is to be stressed as a part of the graduate training program, it is only proper that it should assume a more significant role in the grading system. The student who can produce a first-class report at this own leisure, using the materials freely available to him, may well be a better economist than one who is more facile in showing his learning well in an examination but who may also be less proficient in turning out an independent piece of research. Present grading systems rely heavily upon examinations, which may test the student’s leaning ability but do not ordinarily test his ability to produce a well-conceived and well-executed report. The comprehensive examinations weigh very heavily in determining whether students are permitted to proceed and what kind of financial aid they are given. At both the course level and at the comprehensive examination level, it would be possible to give greater weight to written reports in the grading scheme. For the comprehensive examination, the student might be required to present what he considered the best two or three papers he had written. An evaluation of these papers would add a significant new dimension to the judgment of the abilities of students at this stage. By giving reports and papers a significant weight in the grading structure of the graduate school, students would be encouraged to revise and rework their manuscripts to a greater extent than they now do. Originality would be rewarded just as learning ability is now rewarded.

Research Competence

Because so many economists are required to do research of some sort in their work, and because all economists must be able to analyze and evaluate the results of such research, research [15] training is essential. The tools of economic research are, of course, necessary at least in some degree, but fully as important as the teaching of tools is the actual training of students to do research by doing it. The student emerging from graduate school should be able to carry through a piece of research in a systematic and meaningful manner. Students must be trained to set out a problem, design their work program with reference to this problem, carry out the basic work utilizing pertinent sources and appropriate methods, and finally, evaluate the results of this research, relating them to the original problem and appraising their validity.

A number of members of the panels felt that economic research generally suffered from a lack of respect for discipline and rigor. Casual empiricism, rather than scientific testing of hypotheses, is all too frequent. In many major pieces of research the sources and methods behind the results are not indicated adequately. These faults, they believed, are the result of inadequate teaching of research methods.

The misapplication of research tools, or the failure to apply suitable tools, is also widespread in much current economic research. The research worker may carry extremely unreliable estimates out to a number of decimal places, causing an inordinate amount of computational effort and lending a spurious appearance of accuracy. At the same time, this same research worker may gloss over important characteristics of his material which should have been tested for bias or general inconsistency by the use of fairly ordinary and straightforward statistical testing procedures.

The lack of research competence is also evident in the formulation of research problems. Often the reader of a research paper is at a loss to discover just what is being undertaken, and whether it was in fact achieved. This confusion often stems from a lack of clarity on the part of the original research worker in the conception of his problem, even more than from his presentation of it. It is very important that those embarking upon research recognize the importance in the research process of the original [16] conception of the problem and the design of the research to fit the problem.

These faults in economic research, combined with indecisiveness on the part of the individual research worker, lead to a considerable amount of floundering and waste motion. It is frequently necessary to re-do a piece of research because the formulation of the problem was inadequate. The failure to apply the proper tools at the proper time in the research process also may require that much of the work be redone, to make adjustments the need for which becomes obvious at a later stage in the research process. The prevalent lack of discipline and rigor makes all these revisions of portions of the research process extremely difficult, so that in fact the work usually must be completely redone, very often with quite different results.

In the light of these difficulties, research training should start early in the student’s graduate career and continue throughout its duration. Although in his first year the student will not have the necessary background and tools to do very much economic research, even at this early date practice with simple research problems would be useful in acclimating students to the various problems that research poses earlier in their careers rather than later. More of the student’s time can then be focused at a later stage on problems of a more substantive nature. It is well known that the greater part of time now spent on the Ph.D. thesis is spent in floundering around trying to select a problem and decide just how to carry it out. More and earlier practice in research might avoid much of this floundering.

The assignment of a larger number of short research subjects seems generally preferable, at least in the earlier part of the graduate training, to concentration on a few more substantial topics. If a number of different subjects are assigned, the student is faced again and again with the problem of how to formulate the research objectives and how to design the research. A larger number of projects also will serve to introduce the student to a number of different areas of economics, rather than to concentrate his attention solely in one direction. The question of [17] whether specific research topics should be assigned or whether the student should be allowed to choose his own is not an easy one to answer. Probably some of each approach should be used. Assignment of topics has the advantage of training the students to write for a customer. Freedom of choice in topics, on the other hand, has the advantage of allowing students to follow areas of special interest—and also gives them practice in arriving at a decision.

One of the major objectives of research training should be practice in the handling of empirical material of all sorts. The student should become used to dealing with historical material, economic statistics from all kinds of sources, and also material from other disciplines. He should gain experience in the critical evaluation of definitions and concepts, and in the manipulation and recasting of material.

The form of research training should probably differ at different stages of the graduate training process. In the early stages it may well take the form of special workshop courses, together with some for the work done for tutorial purposes. At a later stage, internship in various research projects within the university might be advisable. If possible, summer internship programs with business, government, or economic research foundations would also be desirable. Finally, individual research relationships with the faculty members on the basis of research assistantships or apprenticeships would serve a valuable role.

The Ph.D. thesis should serve a major function in research training, and should provide a test of whether the student has achieved research competence. But the primary research training should be begun much earlier in the student’s career; it should not fall upon the thesis alone. The thesis may well emerge as an outgrowth of some earlier research project.

Specialization

Specialized training in specific fields is necessary so that economists can usefully bring to bear both the more detailed knowledge [18] of the institutions pertinent to the special area and the latest developments of economic analysis in this area. Without special field training, a student will not approach the frontier of any field, and will not have any training in depth. Specialized training, therefore, not only serves to equip a student to handle problems in a special area, but it also gives him training in depth as a background for understanding the process of research and appreciating the development of economics in general. In many special fields, economics alone will not be sufficient. Other disciplines are often required to enable the economist to deal with the specialized problems. In the area of corporate finance, law and accounting may be necessary. Law may also be necessary for public finance, labor, and international trade. Psychology or sociology may be pertinent to studies of consumer demand and labor. Each special field will necessarily entail the study of those portions of other disciplines which are germane to the set of problems encountered.

Under present circumstances specialization often tends to be somewhat superficial. The first year of graduate work is usually spent on the basic tool courses or general survey courses, and specialization is possible only during the second year of course work. A cumulative build-up of work within a special area is often impossible since the student finishes his term of residence at the end of the second year. Specialization may thus consist of one or two courses taken concurrently in the second year of graduate study.

The charge is often made that the areas of specialization offered tend to be too academic. Theory is extolled, and the actual work done by the student is largely confined to the library. Knowledge of the institutional setting of the special field tends to be slighted. There is little or no opportunity for internship in the special field during the period of graduate work.

Specialization may be conceived of as a highly detailed study of some small segment of economics or it may be conceived of as embracing a general area of problems for which other disciplines besides economics may also be relevant. Unfortunately, [19] present graduate training seems to emphasize only the first conception of specialization, but if the products of graduate schools are expected to serve as professionals in these areas the narrow concept of specialization must give way to the broader concept.

Finally, it is argued by representatives of both business and government that graduate training does not prepare students for the kind of work required in business and government. Unlike the conclusion in the previous sections with respect to the common core of economics, the ability to express ideas coherently, and the ability to do research, where it was concluded that the requirements are the same irrespective of whether the student wants to go into academic work, business, or government, additional training will depend upon the field the student decides to enter. The criticism that graduate schools at the present time do not offer appropriate specializations for students interested in business and government in the role of professional economists appears to be justified. The kinds of courses that would be required for such a specialization would cover such topics as projections, studies in demand and cost, and general economic accounting.

In order to correct the tendency toward superficiality, the student should customarily take two or three courses in a given special area, over a period of at least two years. This would provide the student with an opportunity to work in the area over a longer period, and so would permit a cumulative build-up.

Research work involving the handling of empirical material and/or field work should be undertaken simultaneously with the course work. Such research work might be part of an internship program, a workshop course, or an apprenticeship as a research assistant. In some cases, suitable summer employment might serve as part of the program.

As already indicated, training in related disciplines should accompany the work in the special field. Generally speaking, survey courses in related disciplines will not meet the need. Either courses especially designed to suit the area being studied or relatively advanced work within the other disciplines would be [20] appropriate in giving greater breadth to the program of specialization.

In order to meet the needs of business and government, a number of courses in fields not now generally offered could usefully be added. Such things as the problems of making projections, studies in cost and demand analysis, operations research, and economic accounting are all appropriate subjects, which could serve either as specialties in their own right or as valuable tool adjuncts in such fields as industrial organization, labor, and international trade.

The Role of the Ph.D. Thesis

In viewing the Ph.D. thesis as both a test of and a means of acquiring core knowledge, clarity of expression, and research competence, the panel members felt that the form of the thesis required some reconsideration.

The desirability of having the thesis written in residence is well recognized. Furthermore, the panel members generally agreed that it would seem sufficient as a requirement if students could turn out an article-length paper which would be of publishable quality. Such a short thesis could be examined and criticized in greater detail by the faculty, and, if needed, revised more often and more basically by the student. This does not mean that long Ph.D. theses should be prohibited; a student should have the right to undertake any task he wants to. Still, it does not seem unreasonable to require that even in the case of a long thesis the student shall, in order to meet the thesis requirement, present some piece of material not longer than 30 to 50 pages which can stand as an independent piece of writing, aside from possible appendices on sources and methods. Whatever he wants to do over and above this, of course, he can. It may well be argued that the short thesis should not be compulsory, but that it may be enough to announce to students that short theses are not only acceptable but encouraged. Several panel members felt that the short thesis might be inappropriate [21] for specific topics, and that the way should be left open so that the student could write a longer thesis if he chose to do so. There is danger in this approach, however, in that students may take the safe way out and write a long thesis much on the same basis that they write long answers to exam questions covering every possible facet of the question. In such a case the tendency to judge theses by the pound might continue.

If the requirement that the thesis be of publishable quality is seriously intended, it might be desirable to consider having the university undertake the actual publication, in the form of an annual series. If the theses are in fact held to a length of 30 to 50 pages, the cost of publishing them would not be excessive. Such an arrangement would have several advantages. First, it would tend to make the students more careful of what they offer, since in most instances it would represent their first published work. Second, it would provide the student with copies of his thesis at nominal cost in the form of reprints. This would be very useful for job applications. Even when prospective employers were not sent a reprint by the student they would be able to obtain the thesis series from most libraries, and so could have access to a sample of the student’s work. Furthermore, the faculty would feel more conscientious with respect to the supervision of theses, since it would be evident to other institutions and members of the profession generally what caliber of work was being done. Finally, the work involved could be arranged to accord the students themselves with experiences in publishing in much the same way a law review does in law school. The argument against such a series is that the better theses or redrafts of them will be worth publication in the regular professional journals, and that this would be much preferable. There is also no guarantee that the university series would offer any substantial incentive to high quality, but may well have the opposite effect.*

[22]

The General Form of Graduate Instruction in Economics

These requirements partially dictate the general form of graduate education in economics. For one thing, a certain degree of formality will be required in education at the graduate level. This formality comes about because the entering graduate student usually does not possess the background necessary for graduate work in economics. Unlike the sciences and medicine, it is not practical to require that all entering students possess training in specific areas. The decision by students to become economists almost invariably is made very late in their undergraduate careers, so that it is usually impractical for them to acquire more advanced training in this area while they are undergraduates. Students should, of course, be encouraged to acquire the background at the undergraduate level insofar as possible, and the graduate curriculum may be modified to accelerate students who are adequately prepared. Nevertheless, there will still be a considerable area of the common core to which almost all students should be subjected.

Students who are capable of good work in one direction but find some other area extremely difficult may perhaps be permitted to waive certain of the requirements. The exceptional students, furthermore, need not necessarily be only those brilliant students who excel in economic theory. Students of more specialized interests, such as those primarily interested in the filed of labor, economic history, or corporation finance, should be given consideration fully as much as the theorists.

To a considerable extent, flexibility of graduate training can be secured by more individual attention in the form of some sort of tutorial and/or internship training in graduate school. Such a tutorial and/or internship would make the individual needs of the students known to the faculty, and it would give the student more opportunity to go his individual direction, either filling in gaps in his knowledge or pursuing lines of special interest. It would not always be necessary that senior faculty members be used as tutors. Younger staff members who [23] were themselves more recently graduate students may make more suitable tutors, in that they are closer to recent graduate training and are generally freer with their time.

Finally, it seems necessary to maintain some form of certification as a function of graduate education, as long as the number of students trained is substantial. People hiring students will want to know the kind and caliber of work done by the student in question. It has been suggested that the certification problem can be lessened by relying for purposes of recommendation and scholarship evaluation on more lengthy comments written by the student’s supervisors.

The Period of Graduate Training

It is the present practice of many graduate schools to concentrate the tool courses in the first year of graduate studies. Such an arrangement tends to make a somewhat regimented, formal, and uninspired first year of graduate work. The beginning student is left little room to follow lines in which he is interested or to explore areas to see whether he would find them interesting.

The specialization that takes place in the second year, as noted in the preceding section, often means only a single course in the special field. As a result, a survey course within an area is considered advanced work in that area. This specialization, furthermore, occurs at the same time the student is preparing for his comprehensives, and usually more attention is given to the comprehensives than to the specialization.

The thesis is often not started until after the student has finished his second year of graduate work and passed his comprehensive examinations. As a result, not only the writing of the thesis but the conception of it as well may be done after the student has served his time in residence and left. The consequent lack of supervision, the relegation of the thesis to a part-time task, and the prolongation of the thesis period to a number of years all tend to reduce the quality and usefulness of the thesis.

[24] The panel was generally agreed that the distinction in timing between tool courses, specialization, and the thesis should be less sharp than is current practice. In the first year, the student should be allowed to do some browsing. Some of the tool courses should be postponed until the second year, so that more of a cumulative development in the tools themselves would be possible.

The preliminary work on the thesis should not be put off until the third year of graduate work, and the thesis itself should be completed while the student is in residence. Initial work might start in a thesis seminar in the second year of graduate study. Rather than spending full time on the thesis at any point in his graduate work, the student would be expected to work on his thesis along with other course or seminar work.

Internships, research assistantships, and other such programs may mean that the student will interrupt or prolong the period of graduate work, or he may spend some of his summers in such activities. Programs such as these, however, should be planned in terms of the student’s total graduate training, and should be carried out as part of it. They should not be devised solely in terms of the faculty’s manpower needs—as at present is sometimes the case.

These requirements indicate that a minimum of three years in residence will be required by graduate students to complete the work. Generally speaking, four years will be more usual, so that the student can get practical experience as well as formal training into his graduate training. For the student’s own good, a period of more than five years in residence between entrance and the obtaining of the doctorate is probably undesirable. Should the student contemplate a more ambitious program than this, it should be of a post-doctoral nature. It would be useful for this purpose if universities could set up programs whereby post-doctoral students could obtain internships in business and government for a year, and then return to the university in a teaching position for a year following the internship. Such an arrangement would encourage business and government to take [25] students on an internship basis, and would at the same time give the individual student an opportunity to get established after having served his internship.

Summary and Conclusions

  1. The familiar concept of giving all graduate students in economics basic training in a common core appears to be a useful device, and should be kept as an integral part of graduate training in economics. This common core, if properly conceived, has the advantage of providing some breadth to the student’s training, not only making him more literate, but also giving him a better perspective within which to place his more specialized training. The common core also makes it easier for economists to communicate with each other insofar as they have had the same type of general training. Finally, mobility within the profession is promoted, so that it is possible for economists to move between business, government, and academic work to a much greater extent than might otherwise be so.
  2. The inadequacy of the current training of economists in writing and research was considered to be one of the greatest gaps in graduate training. The ability to express ideas coherently and the ability to carry through research work in a skillful manner should both be considered major tools of the economist. The graduate program, therefore, should take account of both these needs early in the period of graduate training, and attention should continue to be directed to them throughout the graduate program. Both writing and research should be weighted more than is done at present in the grading structure of the graduate program. One of the primary objectives of graduate schools should be to produce people who do not just know, but who can do as well, and the grading structure should be changed to assist in bringing this about. Special programs to promote research training, such as internships in the university or outside of it, should be developed to give the student more research experience under supervised conditions.
  3. Specialization in graduate school should equip the student [26] with more advanced training in various areas. It is important that this training not be too narrowly conceived nor too superficial. Instances where a single advanced course and little outside work is supposed to make a student a specialist are all too frequent. Specialization requires a longer build-up of cumulative work, and may involve going into related areas outside of what is generally considered to be economics. Graduate schools should give more careful attention to the specialized training students receive and whether this training does in fact meet the requirements for genuine specialization.
  4. Graduate training normally takes place over a very extended period. Students often work part time while trying to get their doctorate. It is thought that much would be gained if, as in the case of the professional schools, graduate training in economics could take place in an unbroken period of concentrated effort. If the common core is to be retained as is suggested in item 1 above, and more emphasis is to be placed upon writing, research, and specialization, as suggested in items 2 and 3 above, it seems very probable that the total effort going into graduate training in economics by the student will have to be increased. The concentration of studies into a period of three or four consecutive years on a full-time basis will do much to increase the efficiency of the students’ training and permit these objectives to be met. Summer programs of research or internship training may also be of considerable aid in fulfilling these objectives without extending graduate training further.
  5. The present form of the Ph.D. thesis is not an optimal device for achieving these objectives. It was thought that short theses, which could be reworked more easily and which could generally be made available in published form, would be more manageable and would provide a more effective training device. Such a thesis could be integrated into the graduate training program, and could generally be expected to be written while a student was still in residence; the doctorate would be granted directly upon completion of the period of residence and the thesis.

 

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*One panel member has suggested that in cases where a mediocre short thesis is written only an M.A. be granted, and the Ph.D. reserved for theses of exceptional quality.

 

 

Source: John F. Kennedy Presidential Library. Personal Papers of John Kenneth Galbraith, Series 5. Harvard University File, 1949-1990. Box 517, Folder “General Correspondence 8/7/56—12/10/57”.

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Exam Questions Harvard

Harvard. Final Exams 2nd semester of graduate money and banking course, John Henry Williams. 1939-41

 

 

John Henry Williams was professor of economics at Harvard (1921-57) and served from 1936-48 as the first dean of its Graduate School of Public Administration. Together with Alvin H. Hansen he taught a graduate course with the nominal title “Principles of Money and Banking” that from judging from detailed notes taken in 1938-39 by R. W. Bean (Harvard Class of 1939) and in 1939-40 by James Tobin (likewise Harvard Class of 1939), also included generous doses of Keynesian macroeconomics and fiscal policy as well as of international monetary economics. From these notes we learn that Hansen and Williams taught the first and second semesters, respectively. To date I have only been able to find the semester final examination questions for the second semesters. A future posting will provide the reading list for the course.

This posting gives the course announcements, enrollments and the final examination questions for the 1938-39 through 1940-41 years.

Research Tip:  a typed copy of the Bean notes [missing pp. 98-99] can be found in the Wolfgang Stolper papers at Rubenstein Archive at Duke University (Box 29 ). A neatly handwritten bound copy of Tobin’s notes can be found in Box 6 of his papers at the Yale Archives.

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1938-39 Academic Year

Course Announcement

Economics 141. Principles of Money and Banking. Tu., Th., Sat., at 11. Professors WILLIAMS and HANSEN, and Associate Professor HARRIS.

Source: Harvard University. Courses of Instruction Offered by the Faculty of Arts and Sciences during 1938-39, 2nd edition. Official Register of Harvard University, Vol. XXXV, No. 42 (September 23, 1938), p. 151.

 

Course Enrollment

[Economics] 141. Professors WILLIAMS and HANSEN, and Associate Professor HARRIS—Principles of Money and Banking.

Total 40: 18 Graduates, 10 Seniors, 6 School of Public Administration, 5 Radcliffe, 1 Others

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1938-39, p. 99.

 

Second Semester Final Exam, 1938-39

1938-39
HARVARD UNIVERSITY

ECONOMICS 141
PRINCIPLES OF MONEY AND BANKING

(Three hours)

Answer THREE questions

  1. Discuss the elements of instability in our monetary and banking mechanism, and the suggestions in recent years for making it more stable.
  2. Discuss the “pump-priming” theory versus the “compensatory” theory of deficit spending.
  3. Discuss the relation of fiscal policy to long-run economic progress.
  4. Discuss the merits and defects of monetary policy as an instrument of business cycle control.

Final. 1939

Source: Harvard University Examinations. Final examinations, 1853-2001, Box 4 (HUC 7000.28). Faculty of Arts and Sciences. Papers Printed for Final Examinations in History, History of Religions, … , Economics, …, Military Science, Naval Science (June, 1939).

 

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1939-40 Academic Year

Course Announcement

Economics 141. Principles of Money and Banking. Tu., Th., Sat., at 11. Professors WILLIAMS and HANSEN.

Source: Harvard University. Courses of Instruction Offered by the Faculty of Arts and Sciences During 1939-40, 2nd edition. Official Register of Harvard University, Vol. XXXVI, No. 42 (September 22, 1939), p. 158.

 

 

Course Enrollment 

[Economics] 141. Professors WILLIAMS and HANSEN.—Principles of Money and Banking.

Total 65: 38 Graduates, 13 Seniors, 2 School of Public Administration, 6 Radcliffe, 6 Others.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1939-40, p. 100.

 

 

Second Semester Final Exam, 1939-40

1939-40
HARVARD UNIVERSITY

ECONOMICS 141
PRINCIPLES OF MONEY AND BANKING

(Three hours)

Discuss question ONE and TWO others.

  1. Keynes’ “General Theory” as a basis for long-run economic stability.
  2. The views of Foster and Catchings and Hayek on the “dilemma of thrift.”
  3. Hawtrey’s analysis of the business cycle and its control.
  4. The American gold problem.

 

Final. 1940

Source: Harvard University Examinations. Final examinations, 1853-2001, Box 5 (HUC 7000.28). Faculty of Arts and Sciences. Papers Printed for Final Examinations in History, History of Religions, … , Economics, …, Military Science, Naval Science (June, 1940).

 

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1940-41 Academic Year

Course Announcement

Economics 141. Principles of Money and Banking. Tu., Th., Sat., at 11. Professors WILLIAMS and HANSEN.

The subject as a whole will be systematically reviewed. Selections from important writings dealing with monetary principles will be read and critically discussed. Particular attention will be given to the theory of the value of money and to the policy and operations of central banks.

Source: Harvard University. Division of History, Government, and Economics, Containing an Announcement for 1940-41. Official Register of Harvard University, Vol. XXXVII, No. 51 (August 15, 1940), p. 61.

 

Course Enrollment 

[Economics] 141. Professors WILLIAMS and HANSEN.—Principles of Money and Banking.

Total 45: 28 Graduates, 4 Seniors, 7 School of Public Administration, 2 Radcliffe, 4 Others.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1940-41, p. 60.

 

Second Semester Final Exam, 1940-41

 

HARVARD UNIVERSITY

ECONOMICS 141
PRINCIPLES OF MONEY AND BANKING

(Three hours)

Discuss THREE topics.

  1. The uses and limitations of the multiplier concept.
  2. Compare the “over-saving” and “under-investment” theories as guides to fiscal policy.
  3. Monetary and fiscal policies under conditions of war or defense.
  4. “Full employment” as a criterion of fiscal policy.
  5. Discuss: “Deficit spending is the logical sequel to central bank policy, and it was entirely logical that its first phase should be pump-priming.”

Final. 1941

Source: Harvard University Examinations. Final examinations, 1853-2001, Box 5 (HUC 7000.28). Faculty of Arts and Sciences. Papers Printed for Final Examinations in History, History of Religions, … , Economics, …, Military Science, Naval Science (June, 1941).

 

Image Source:  John Henry Williams from the Harvard Class Album 1950.

 

 

 

 

 

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Uncategorized

Swarthmore. Economic Theory Honors Exam Questions by Samuelson. 1943

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Harvard economics alumnus Wolfgang Stolper (Ph.D. 1938)  was able to leverage his friendships and connections from graduate school to obtain a flow of external examiners for Swarthmore College’s honors examinations in economics. For today’s post I have transcribed the examination questions in economic theory provided by Paul Samuelson.

I find particularly interesting the early use by Samuelson of the term “neoclassical synthesis” under which he grouped “Marshall, Walras, Wicksell, Cassel or the Austrians” and that he considered distinct from the later synthesis of “orthodox economic thought” by Hicks.

I have also attached to this post a most delightful artifact, Paul Samuelson’s remembrance sent to the seventieth birthday celebration for James Tobin’s wife, Elizabeth (a.k.a. Bess, Betty) Ringo, who had been a graduate student of Samuelson’s at M.I.T. after having been one of his (probably January) examinees that year at Swarthmore.

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Samuelson’s Remembrance of Being a Swarthmore External Examiner

“Success has a thousand fathers. Failure is an orphan.” John F. Kennedy said that, and so before him did Mussolinis son-in-law. I claim some credit for bringing Bess Ringo to Cambridge and into Jim Tobin’s orbit.

It was Wolfi Stolper who persuaded me to be an external Swarthmore examiner. I never worked a harder weekend. Janet Goodrich and John Chapman, Peter and Freddie Kuh, Bess, and many more were part of that intense honors group. Even the faculty lobbied our Olympian outside group.

No good deed goes unrewarded. My booty from the countryside was Ringo’s promise to come to MIT’s new graduate program in economics, which was starved for draft-proof students. Nuns cannot be trusted except in pairs and to Betty’s indignation we admitted a female from Hunter College to be her buddy.

The rest is history.

Blessed history—for Betty and Jim and theirs have enriched the lives of us happy many.

[signed] Paul Samuelson

Paul Samuelson (and, by proxy, Marion Crawford Samuelson)

1 August 1992

 

Source: Duke University, Rubenstein Library. Papers of Paul A. Samuelson, Box 73, Folder “Tobin, James”

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SWARTHMORE COLLEGE
1943
Department of Economics

 

Honors Examination                       Division of the
Thursday, January 28                     Social Sciences

ECONOMIC THEORY

Examiner: Professor Paul A. Samuelson
Massachusetts Institute of Technology

Answer one question from each of four sections.

Section I

Write an hour essay on one of the following subjects.

  1. The use of a pricing system in a completely planned and socialized society.
  2. The difficulties faced in the classification of monopoly and competition, with a provisional, constructive solution of them.
  3. The significant meanings of the term “exploitation of a factor of production.”
  4. The marginal productivity theory and its difficulties.
  5. The relationship between firms and industry, between cost and supply, in the long and in the short run.
  6. Conflicting views as to the true nature of profit.

Section II

  1. Discuss price determination and allocation of supply between more than one market, under simple and discriminating
  2. “Edgeworth is wrong when he says that Giffen’s Paradox, positively inclined demand curve, is highly unrealistic and not to be found in practice. I have often observed that poor people eat more bread and potatoes than the wealthy, precisely because their income is less.” (Marshall) Comment upon this quotation bringing out the analytical point at issue.
  3. Why is it said that price is indeterminate under oligopoly and duopoly?
  4. Why has the Marshallian concept of consumer’s surplus been under attack? What did it attempt to do and under what conditions was it valid?

Section III

  1. “It is illogical that the Keynesians should speak of a future possibility of inadequate investment relative to saving since they insist on the necessary equality of these magnitudes.” Examine the issue raised here, making reference to other schools of thought. If you dare, attempt a synthesis of divergent theories and definitions.
  2. “Labor is like any other commodity. If its supply is excessive relative to its demand, lower its price and you will clear the market.” Comment.
  3. “I deny the very existence of a business cycle, and challenge anyone to produce evidence of its reality.” Meet this challenge.
  4. “The business cycle is monetary in origin, being nothing more than the ‘dance of the dollar’.” Comment.
  5. “The interest rate is a purely monetary phenomenon.” Comment.

Section IV

  1. Discuss the revolution in population outlook after World War I, and the economic problems raised.
  2. Will our major post-war problem be that of controlling a boom or combating a depression? Defend your stand.
  3. Disillusioned with monetary controls, governments have turned to fiscal policy to combat the business cycle. Give reasons and implications.
  4. When we have solved the problem of unemployed resources, there will arise the necessity to allocate resources in their optimal What are the criteria by which correct decisions are made in this sphere, and how is the perfection of competition involved?

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Professor Paul A. Samuelson
Massachusetts Institute of Technology

SWARTHMORE COLLEGE

            Honors Examination                        May 19, 1943                       Division of the
Department of Economics               Social Sciences

 

ECONOMIC THEORY

Answer one question from each of four sections.

Section I

Write an hour essay on one of the following subjects.

  1. The relationship between firms and industry, between cost and supply, in the long and in the short run, under perfect and imperfect competition.
  2. The scope and method of economics.
  3. We have had at last four syntheses of orthodox economic thought: (a) that of Smith; (b) that of John Stuart Mill; (c) the neo-classical synthesis (Marshall, Walras, Wicksell, Cassel or the Austrians); (d) Hicks. Write a critical contrast of at least two of these.

Section II

  1. Discuss discriminatingly the multitude of meanings of the term “excess capacity.”
  2. What bearing does the use of indifference curves have upon
    1. the problem of the measurability of utility
    2. the definition of complementarity, independence, competitiveness; joint demand and substitutability
    3. Giffen’s paradox and “inferior” goods?
  3. “Since each worker is paid the productivity of the last worker, (marginal productivity), a really smart and unscrupulous employer would hire so many workers as to cause the wage to be zero, or at least only enough above zero to support a physiological minimum of existence.” Comment.

Section III

  1. “Everybody talks about the disparity between saving and investment, but nobody attempts to measure it.” Discuss the theoretical and statistical problems involved here.
  2. “There is an inherent instability in the banking system, and this gives rise to the business cycle which is essentially ‘the dance of the dollar.’” Analyze.
  3. Describe the “multiplier doctrine,” its fields of application, its validity and shortcomings.

Section IV

  1. Weigh the arguments for and against secular stagnation.
  2. Defend or attack the thesis that there will be a post-war boom. Give your characterization of the post-war economy.
  3. The business cycle is a misnomer; it is a question of many cycles not of one.” Discuss the historical, statistical, and theoretical issues raised by this statement.
  4. Describe the cyclical behavior and importance of
    1. the building industry or
    2. consumers credit and installment institutions.

 

Source: Duke University, Rubenstein Library. Papers of Wolfgang Stolper, Box 22, Folder1.

Image Source: Elizabeth Fay Ringo from Swarthmore’s Halcyon 1943. Paul Samuelson (1940) from M.I.T. Memorial.

Categories
Chicago Economists

Chicago. Milton Friedman from Cambridge to T.W. Schultz. 29 Mar 1954

About a week ago I posted Milton Friedman’s letter from Cambridge, England to T. W. Schultz dated 28 October 1953. Today we have the next carbon copy of a letter to Schultz from Cambridge in the Milton Friedman papers at the Hoover Institution in which Friedman discusses a range of issues from a one-year appointment in mathematical economics at Chicago, the Cowles’ Directorship appointment, and postdoctoral fellowships. The letter ends with a laundry-list of miscellaneous comments from Arthur Burns’ Economic Report to the President through the reception of McCarthy news in England. Friedman’s candid assessments of many of his fellow-economists make this letter particularly interesting.  More to come!

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If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled. You can subscribe to Economics in the Rear-View Mirror below. There is also an opportunity for comment following each posting….

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Milton Friedman to T.W. Schultz
29 March 1954

15 Latham Road
Cambridge, England
March 29, 1954

 

Dear Ted:

Of the people you list as possible visiting professors while Koopmans is away, Solow of M.I.T. is the one who offhand appeals to me the most. I have almost no doubt about his absolute competence: I read his doctoral dissertation at an early stage and saw something of him last summer and the preceding summer when he was spending some time at Hanover in connection with one or another of Bill Madow’s projects. He has a seminal mind and analytical ability of a very high order. My only questions would be the other that you raise, whether he is broadly enough interested in economics. And here I am inclined to answer with an uncertain yes, relying partly on the fact that he is flexible and capable of being induced. I do not know Dorfman of California either personally or through his writings. My question about him is that I believe that we would do best if we could use this opportunity in general to bring in someone with a rather different point of view and who will provide a broadening of the kind of thing done under the heading of mathematical economics, and my impression is that Dorfman is very much in the same line as Koopmans – but here too, I don’t have much confidence in my knowledge. As you know, I think very highly of both Modigliani and Christ, but as of the moment for this particular spot, would prefer Solow, partly on grounds of greater differentiation of product.

One rather harebrained possibility that has occurred to me outside your list is Maurice Allais, the French mathematical economist who is Professor at École des Mines. Allais is a crackpot genius in many respects. He came out of engineering and is largely self taught, which means he holds the erroneous views he has discovered for himself as strongly as the correct ones. I have always said that if he had, at a formative age, had one year of really good graduate education in economics he might have become one of the really great names. At the same time, Allais is an exceedingly active and stimulating person who works in mathematical economics of a rather different kind than we have been accustomed to. I think it would be a good thing to have him around for a year – both for us and him – though I am most uncertain that it would be for a longer period. I don’t have any basis for knowing whether Allais would be interested.

I have tried to think over the other European mathematical economists to see if they offer other possibilities. There are others in France: Guilbaud [Georges-Théodule Guilbaud (1912-2008)], Boiteux [Marcel Boiteux (1922-)] (I don’t have that spelled right), but none seem to me as good as Allais for our purposes. There are Frisch and Haavelmo in Norway, Wold in Sweden; of these, Haavelmo would be the best. I find it hard to think of anybody in England who meets this particular bill, and would be at all conceivable. Dick Stone? Has just been over and is not primarily mathematical but might be very good indeed in some ways. Is certainly econometric minded and fairly broadly so. R.G.D. Allen? Has done almost nothing in math. econ. for a long time.*

*[handwritten footnote, incomplete on left side presumably because carbon paper folded on the corner:   “…real possibility here is a young fellow at the London School, A. W. Phillips…invented the “machine” Lerner has been peddling. He came to econ. out of ….good indeed. He has an important paper in the mathematics of stabilization (over) policies, scheduled to appear(?) in Econ. Journal shortly.”]

Getting back home, the names that occur to me have, I am sure, also occurred to you. Is Kenneth Arrow unavailable for a year’s arrangement? What about Vickrey? I don’t believe that in any absolute sense I would rate Vickrey above Christ, say, but for us he has the advantage of bringing a different background and approach.

The above is all written in the context of a definite one-year arrangement in the field of mathematical economics. I realize, of course, that this may turn out to be an undesirable limitation. This is certainly an opportunity to try someone whom we might be interested in permanently; and it may be possible to make temporary arrangements for math. econ. for the coming year – via DuBrul, Marschak, etc. The difficulty is that once I leave this limited field, the remainder is so broad that I hardly know where to turn. For myself, I believe we might well use this to bring someone in in money, if that possibility existed. If it did, I should want strongly to press on you Harry Johnson, here at Cambridge, but originally a Canadian educated at the University of Toronto, who is the one new person I have come to know here who has really impressed me.

One other person from the US left out of the above list but perhaps eligible even within the narrower limitations is William Baumol. Oughtn’t he be considered?

Within the narrower limitations, my own listing would, at the moment, be: Allais, Solow, Baumol, Arrow, Vickrey, Phillips. I would hasten to add that my listing of Arrow fourth is entirely consistent with my believing him the best of the lot in absolute competence, and the one who would still go to the top of this list for a permanent post.

I turn to the other possibility you raise in your letter, a permanent post a la the Tobin one. I am somewhat puzzled how to interpret the change of view, you suggest, I assume that the person would be expected to take over the directorship of Cowles. If this is so, it seems to me highly unfortunate to link it with a permanent post in the department. Obviously, the best of all worlds would be if there were someone we definitely wanted as a permanent member of the department who also happened to be interested in the Cowles area and was willing to direct, or better interested in directing, Cowles. In lieu of this happy accident, I would myself like to see the two issues kept as distinct as possible; to have the Cowles people name a director, with the aid and advice but not necessarily the consent, of the department; have the department offer him cooperation, opportunity to teach, etc., but without having him a full-fledged permanent member. I hope you will pardon these obiter dicta. I realize that this is a topic you have doubtless discussed ad nauseam; what is even more important, if after such discussion, you feel differently, I would predict that you would succeed in persuading me to your view; which is why I leave it with these dicta and without indicating the arguments – you can provide them better than I.

The issue strikes me particularly forcefully because I do feel that in terms of the needs of the department, our main need is not for someone else mainly in the Cowles area; it is for someone to replace either Mints in money, or me in orthodox theory, if I slide over to take Mints’ role.

For Cowles’ sake as well as our own, there might be much to be said for having the directorship be the primary post for whoever comes. It seems to me bad for Cowles to have that post viewed as either a sideshow or a stepping stone. For directorship of Cowles, some names that occur are: Herbert Simon; Dorothy Brady; with more doubt Modigliani. One possibility much farther off the beaten track is Warren Nutter, who has, I gathered, been a phenomenal administrative success in Wash. at Central Intelligence Agency; yet is an economist. Would Charlie Hitch, who has been running Rand’s economic division be completely out?

[Handwritten note: “You know, Gregg Lewis might be better than any of these if he would do it!]

If the post is to be viewed as primarily a professorship in the department, with Cowles directorship as a sideline, I have great difficulty in making any suggestions: I would not, in particular, be enthusiastic about any of those mentioned in the preceding paragraph. Arrow, yes, but he is apparently out. Simon Kuznets, yes, but he would be likely to make Cowles into something altogether different that it is. I feel literally stuck in trying to think of acceptable candidates. Perhaps I can be more useful in reacting to other suggestions.

Let me combine with this some comments on your March 15 letter, which I should have answered long since.

On the post-doctoral fellowship, I feel less bearish than you, primarily, I suppose because I am inclined to lay a good deal of emphasis on the intangible benefits from having a widespread group of people who have had a year at Chicago. It seems to me that a post-doctoral fellowship is more likely to do this than a staff appointment, both because it is likely to bring in a wider range of people to apply and because it is rather more likely to have a one or two year limit and so a more rapid turnover. What has disappointed me most is the limited number of people among whom we have been forced to choose. Why is it that we don’t get more applications? Is it because we do treat it now like a staff appointment? Do we advertise it as widely as we might and stimulate a considerable number of applicants? Or is it simply because the great increase in number of post-doctoral fellowships available (and decrease in quality of people going in for economics?) has lowered the demand for any one fellowship? I find it hard to believe that making it into a staff appointment would help much in providing more adequate review and appraisal – this is I believe a result of the limitations of time on all of us – but it might give it greater prestige and make it more valuable to the recipient in this way, though, it would cost him tax and limit freedom.

I believe that part of the problem you raise about the postdoctoral fellowship has little to do with it per se but is a general problem about the department. Is our own work subject to as much discussion and advice from our colleagues as each of us would like? The answer seems to me clearly no. The trouble is – and I am afraid it is to some extent unavoidable and common at other places – that we have so many other duties and tasks to perform that being an intellectual community engaged in cross-stimulation perforce takes a back seat. This disease is I think one that grows as the square of the professional age. From this point of view, I think that the more junior people around the better in many ways and I think this one of the real virtues of the development of research projects that will enable us to keep more beginners around.

On the whole, I continue to think that the fellowship idea is sound, in the sense that we ought to have a number of people around who have no assigned duties. I would defend the Mishan result in these terms. I think he was a most useful intellectual stimulant and irritant to have around even if his own output was not too striking. The virtue of the fellowship arrangement is that it enables you to shape the hole to the peg. I cannot of course judge about Prais. But I am surprised by your adverse comments on Dewey’s use of it; I would have thought his one of the clearly most successful post-doctoral fellowships so far.

As you have doubtless heard, Muth has decided to go to Cowles. I am sorry that he has. I think he is good. I am somewhat troubled about the general problem of recruiting for the Workshop at a distance. In addition to Muth, I had heard from Pesek, whom I encouraged but left the matter open because he would rather have a fellowship that he applied for that would pay his travelling expenses to Washington. My general feeling is that it would be a mistake to take anyone just because I am not on the spot, that it would be far better to start fairly slowly, and let the thing build up, adding people as they turn up next year. Any comments or suggestions would be greatly appreciated.

I am delighted to hear about Fred’s ford project. I had a wire from Willits recently re Harberger and I assume it was in connection with his proposed project. Al Rees will be a splendid editor, I feel, and it is excellent to have him entirely in the department. I hardly know what to think of Morton Grodzins as Dean. I assume that his appointment measn that he was regarded as a successful administrator at the Press. Grodzins has great drive and energy, is clearly bright and intelligent, but whether he has the judgment either of men or of directions of development that is required, and the ability to raise money that Tyler displayed, is something I have less confidence in. Who is taking over the Press?

I enjoyed your comments on both Arthur Burns and McCarthy. With respect to the first, I thought the economic report extraordinarily good, both in its analysis of the immediate situation and in its discussion of the general considerations that should guide policy. It showed courage, too, I think in its willingness to say nasty things about farm supports and minimum wages to mention two. My views about the recession are indicated by the title of a lecture I am scheduled to give in Stockholm towards the end of April: “Why the American Economy is Depression-proof”. After all, there is no reason why Colin Clark should be the only economist sticking his neck out. It continues to seem to me that the danger to be worried about is over-reacting to this recession and in the process producing a subsequent inflationary spurt. Arthur seems to me to be showing real courage in holding out against action. To do something would surely be the easy and in the short run politically popular course.

McCarthyism has of course been attracting enormous attention here. Indeed, for long it has crowded almost all other American news into the background with the result that it has given a thoroughly distorted view of America to newspaper readers. I enclose a clipping in this connection which you may find amusing. it is not a bad summary, though I trust I put in more qualifications.

We have gotten an opportunity to go to Spain via an invitation to lecture at Madrid (Earl’s doing, I suspect), so Rose and I are leaving next week for a week there. Shortly after our return we go to Sweden and Denmark for a couple of weeks. We are very much excited by the prospects. Best regards to all.

Yours

[signed]
Milton

 

Source: Hoover Institution Archives. Milton Friedman Papers. Box 194, Folder “194.6 Economics Department S-Z, 1946-1976”.

 

Image: Left, Milton Friedman (between 1946 and 1953 according to note on back of photo in the Hoover Archive in the Milton Friedman papers). Right, Theodore W. Schultz from University of Chicago Photographic Archive, apf1-07484, Special Collections Research Center, University of Chicago Library.