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M.I.T. Department of Economics Annual Report by E. Cary Brown, 1975-1976

The following annual report of the M.I.T. department of economics was most likely written for the care and feeding of administrators and the members of the department’s visiting committee. This report covers what was my second year of graduate school, so for folks from that time it reads like an annual Holiday newsletter to the family.

_______________________

Department of Economics
1975 – 76

Undergraduate Program

The long-run impact of the past year’s changes in the Institute Requirement in the Humanities, Arts, and Social Sciences is not yet clear. Unquestionably they have increased the Department’s enrollment, but the precise amount is uncertain because simultaneously a major revision was made in the two introductory economics subjects. In the past year enrollments were larger than previously, but smaller than in the transition of the previous year. Nearly 200 of the Class of 1976 concentrated in economics for their Humanities, Arts, and Social Sciences Requirement. Of all students presently enrolled, 327 (primarily juniors and seniors) have elected to concentrate in economics.

Undergraduate majors remain steady in numbers. As in 1974-75, 20 degrees were awarded. In the spring term the Undergraduate Economics Association was reactivated. Its weekly meetings with faculty led to several proposals for revision of the undergraduate program, and several student-faculty socials were organized.

Graduate Program

Enrollment has been remarkably steady in the graduate program. The number of applications for admission was virtually identical to the average of the previous six years. Next year’s entering class of 32 will be slightly larger than average, and will have fewer foreign students and more women, reflecting a shift in the percentage of applications from these groups. Four students from minority groups are expected to be in this class.

Financial support for the graduate student has changed very little over the last several years. We are still fortunate in having from one-third to one-half of the entering students on National Science Foundation Fellowships. For the whole student body, there has been an increase in the support by US foundations (other than NSF) and a decrease in support provided by M.I.T.

The number receiving the Doctor of Philosophy increased somewhat in the past year to 21. For the first time, two American blacks received degrees.* The class fared well in placement, their median salary offer totaling 24 percent above that of 1971. Like the past average, 86 percent went into teaching and 14 percent into non-teaching positions.

*Samuel Myers, Jr. Ph.D. thesis: “A Portfolio Model of Illegal Transfers”, supervised by Robert Solow.
Glenn Loury. Ph.D. thesis: “Essays in the Theory of the Distribution of Income”, supervised by Robert Solow.
See: William Darity Jr. and Arden Kreeger, “The Desegregation of an Elite Economics Department’s PhD Program: Black Americans at MIT“, History of Political Economy 46 (annual suppl.)

The Graduate Economics Association awarded the outstanding teacher in the Department prize to Professor Stanley Fischer.

PUBLIC SERVICE ACTIVITIES

The faculty has always been involved in public service activities tying research to the public interest. In connection with M.I.T.’s participation in the Bicentennial Celebration, Professor Jagdish N. Bhagwati set up a recent conference on the New International Economic Order: Professor Ann F. Friedlaender is planning one for this fall on Air Pollution and Administrative Control. Through the German Marshall Fund, Professor Richard S. Eckaus is organizing a fall conference on economic problems of Portugal. Professor Franco Modigliani arranged a conference through the Bank of Finland on International Monetary Mechanisms.

Various Congressional committees and government agencies have been advised. Professor Peter A. Diamond served on the Consultant Panel on Social Security for the Congressional Research Service. Professors Rudiger Dornbusch and Fischer and Institute Professor Paul A. Samuelson prepared a report for the US Department of Commerce on international financial arrangements. Professor Robert E. Hall was a member of the Advisory Committee on Population Statistics, Bureau of the Census. Professor Jerry A. Hausman served on the Econometrics Advisory Committee to the Federal Energy Administration. Institute Professor Modigliani was a consultant and member of the Committee on Monetary Statistics, Board of Governors of the Federal Reserve System. Institute Professor Samuelson consulted with the Board of Governors of the Federal Reserve System, the US Treasury, and the Congressional Budget Office. Professor Charles A. Myers was a member of the National Manpower Policy Task Force. Institute Professor Robert M. Solow served as Deputy Chairman, Federal Reserve Bank of Boston.

Several faculty members have been involved with the National Academy of Sciences and its related organizations. Professor Eckaus prepared a report, Appropriate Technology for Developing Countries, for the Board on Science and Technology for Developing Countries of the National Academies of Science and Engineering. Professor Franklin M. Fisher served on a National Academy panel on the Effects of Deterrence and Incapacitation; Professor Friedlaender was on the Executive Committee, Assembly of Behavioral and Social Sciences, National Research Council; Institute Professor Modigliani was on the Finance Committee; Institute Professor Samuelson served on the Editorial Board of the Proceedings; and Institute Professor Solow chaired the Steering Committee on Environmental Studies.

Professor Eckaus led an OECD Mission to Portugal that included Professors Lance Taylor and Dornbusch.* Professor Paul L. Joskow was a consultant to OECD in energy. Professor Evsey D. Domar was a member of a delegation of economists sent by the American Economic Association to the Soviet Union. Institute Professor Modigliani, who gave much time to the problems of stabilization in Italy, was a member of the Board of Directors of the Italian Council for Social Sciences.

*Along with several graduate students among whom were Paul Krugman, Andrew Abel and Jeffrey Frankel. Paul Krugman has written a short note about this experience with a picture!

The Brookings Institution Panel for Economic Activity included Professors Dornbusch and Hall, with Institute Professors Modigliani, Samuelson, and Solow as senior advisors to it. Professor Friedlaender served on the examining committee, Graduate Records Examination, Educational Testing Service. Institute Professor Modigliani served on the Committee on Economic Stabilization, Social Science Research Council. Professor Fisher is a member of the Board of Governors of Tel Aviv University. Institute Professor Solow continues as Trustee for the Institute of Advanced Study.

RESEARCH

International topics seem to dominate the research interests of the faculty. Professor Bhagwati, in addition to his work in developing countries and international trade theory, has given attention to a proposal for applying taxation to the brain drain. Professor Eckaus studied the role of financial markets and their regulation and the behavior of income distribution in economic development. Professor Taylor had three major areas of research: the development of nutrition planning models in Pakistan, international food aid and reserve policies, and growth and income distribution in Brazil.

Professor Morris A. Adelman’s continuing research on the world oil market, Professor Joskow’s analysis of the international nuclear energy industry, and Professor Martin L. Weitzman’s examination of OPEC and oil pricing involve applied microeconomics with international implications.

Research in various applied microeconomics areas was responsible for the second largest fraction of faculty effort. Institute Professor Solow continued to research the economics of exhaustible resources, and Professor Weitzman completed his analysis of the optimal development of resource pools. Professor Joskow has explored the future of the electric utility industry and its financing, the future of the US atomic energy industry, and the pattern of energy consumption in the US. He is developing a simulation model of the energy industry, and is reviewing the regulatory activities of government agencies in general and the health care sector in particular. Professor Hausman examined the Project Independence Report and is analyzing the choice of new technologies in energy research.

In the transporation field, Professor Friedlaender surveyed the issues in regulatory policy for railroads and alternative scenarios in federal transporation policy. Professor Jerome Rothenberg examined such problems in urban transportation as pricing policies, demand sensitivity to price, and modeling locational effects. Professor William C. Wheaton considered an optimal pricing and investment policy in highways under a gasoline tax.

Inextricably intertwined with urban transportation are questions of urban location and housing. Professor Rothenberg carried out research in such aspects of this problem as microeconomics of internal migration, supply-demand for housing in multizoned areas, the impact of energy costs on urban location, and the development of a model of housing markets and of metropolitan development and location that can be applied to general policy questions. Professor Wheaton developed an equilibrium model of housing and locational choice based on Boston experience.

Institute Professor Modigliani also conducted research on the housing market, but his interest comes primarily from the side of stabilization policies and similar macroeconomic problems. He also participated in a review after 20 years of his life cycle hypothesis of saving, made monetary policy prescriptions for both the US and Italy, reflected on the description of financial sectors in econometric models, and explored more deeply the application of optimal control to the design of optimal stabilization policies in economic models. Institute Professor Samuelson reviewed the art and science of macromodels over the 50 years of their development. Professor Friedlaender completed a quarterly macromodel of the Massachusetts economy. Professor Hall developed a model to deal with income tax changes and consumption.

Public economics has both macro and micro aspects, both of which are represented in the Department’s research. With Visiting Professor James A. Mirrlees, Professor Diamond theorized about public shadow prices with constant returns to scale, and about the assignment of liability. He also has generalized the Ramsey tax rule and continued his research into an optimal Social Security system. Professor Hausman is reexamining the cost of a negative income tax; Professor Rothenberg analyzed the distributional impact of public service provision; and Professor Wheaton explored intertemporal effects of land taxes, fiscal federalism in practice, and the financial plight of American cities.

Besides such theoretical research, there was significant research of an entirely pure nature. Professor Robert L. Bishop reexamined the measurement of consumer surplus. Professor Fisher extended his exploration of the stability of general equilibrium and of aggregate production functions. Professor Weitzman investigated the welfare significance of national product in a dynamic economy. Professor Hal R. Varian further explored the theory of fairness, non-Walrasian equilibria, and macromodels of unemployment and disequilibrium. Professor Hausman examined the econometric implications of truncated distributions and samples, of probit models, and of simultaneous equation models. In historical research, Professor Domar was concerned with serfdom, while Professor Charles Kindleberger investigated the role of the merchant in nineteenth-century technologic transfer.

Publications

Professor Bhagwati edited Taxing the Brain Drain: A Proposal and Brain Drain and Taxation: Theory and Empirical Analysis, and coauthored Foreign Trade Regimes and Economic Development: India. Professors Dornbusch and Kindleberger published numerous papers on implications of the new international monetary exchange structure for exchange rates, price stability, international trade, and international capital movements. Professor Weitzman continued his study of the Russian economy with a paper on the new Soviet incentive model.

With Visiting Professor of Management Ezio Tarantelli*, Institute Professor Modigliani published Labor Market, Income Distribution and Private Consumption (in Italian) and various papers on stabilization policy in Italy. He also wrote papers on inflation and the housing market and edited New Mortgage Designs for Stable Housing in an Inflationary Environment. Professor Hall’s labor market research resulted in papers on persistence of unemployment, occupational mobility, and taxation of earnings under public assistance. Professor Michael Piore wrote on labor market stratification and the effect on industrial growth of immigration from Puerto Rico to Boston. Professor Fisher had several publications on indexation and adjustment of mortgages to inflationary episodes. In the realm of economic history, Professor Temin published Reckoning with Slavery and Did Monetary Force Cause the Great Depression?

*Ezio Tarantelli was the victim of a Red Brigades’ assassination in 1985.

Institute Professor Samuelson published theoretical papers on factor price equalization and trade pattern reversal. In the realm of pure research, he put out papers on nonlinear and stochastic population analysis, optimal population growth, and the optimal Social Security system implied in a lifecycle growth model. He also brought out the tenth edition of his famous text, Economics: An Introduction Analysis.

FACULTY

Visiting Professor John R. Moroney was here from Tulane University; Visiting Professor Mirrlees came in the spring term from Nuffield College, Oxford University. Regular faculty on leave were Professors Fisher and Joskow in the fall and Professor Weitzman in the spring.

It is a pleasure to report the promotion to Associate Professor of Jerry A. Hausman. A new appointee, Professor Jeffrey E. Harris, with the unusual background of an M.D. and a Ph.D. in economics, will provide long-sought coverage in health economics.

Professor Kindleberger will retire as Ford Professor and become a Senior Lecturer on a half-time basis. Since 1948, when he came as an Associate Professor, Professor Kindleberger has been an effective teacher, scholar, participant in faculty governance, and counselor to governments and the public. He has trained the leading international economists of the next generation; he has produced a dozen books and more than a hundred articles in international trade and finance and in economic history. He epitomizes the highest kind of academician.

Several honors were bestowed on members of the Department. Institute Professor Modigliani will complete his year as President of the American Economic Association. Professor Myers received a Distinguished Alumni award from Pennsylvania State University. Professor Fisher was F.W. Paish Lecturer to the Association of (English) University Teachers of Economics. Institute Professor Solow received a D. Litt. from Warwick University, and Institute Professor Samuelson, a D.Sc. from the University of Rochester.

EDGAR CARY BROWN

Source: MIT Libraries, Institute Archives and Special Collections. MIT Department of Economics Records, Box 1, Folder “Annual Report 1975-6”.

Image Source: Building E52, Alfred P. Sloan Jr. Building, later Morris and Sophie Chang Building

 

https://mitmuseum.mit.edu/collections/subject/building-e52-alfred-p.-sloan-jr.-building-later-morris-and-sophie-chang-building-52

Categories
Economics Programs M.I.T. Undergraduate

M.I.T. Economics department committee (re-)organization. 1976-78

During my second year in graduate school at M.I.T. (1975-76), the economics department professors were engaged in a discussion about reforming the administration of their department. At the time I was completely unaware of this discussion that had been provoked by the following memorandum written by then Department Head, Professor E. Cary Brown, based on his experience with the growing overload of administrative chores and responsibilities in a department with the scale of that attained by M.I.T.’s economics department.

Brown’s memo to the faculty is followed by a transcription of a copy of the letter Brown wrote to Robert Solow, who as an administrative reorganization committee member, must have been asked for some further testimony. The entire committee’s (Peter A. Diamond, Stanley Fischer, Jerry Hausman, Paul Joskow, Robert M. Solow) report was completed two months after Brown’s memo. In the same departmental file from the M.I.T. archives, one finds a copy of the actual assignment of administrative responsibilities for the academic year 1977/78.

Many, if not most, of the administrative tasks had been allocated and faithfully executed before this “reorganization”. I know that Evsey Domar had long been covering the placement of new Ph.D.’s and also proudly serving as the departmental representative for library-related affairs. I sense reading these documents that the truly neglected child all along was the undergraduate program for which some arm-twisting was required to achieve equitable burden-sharing among the faculty. But perhaps there were other specific items that had been sore points too. Maybe Brown simply wanted an explicit organization chart to forestall “whataboutism” from the mouths of relatively uncooperative colleagues. But like I wrote above, this was a discussion that was invisible to me (appropriately so) at the time.

Cf. The committee assignments in the Harvard economics department during the 1972-73 academic year. 

__________________________

MASSACHUSETTS INSTITUTE OF TECHNOLOGY
DEPARTMENT OF ECONOMICS
CAMBRIDGE, MASSACHUSETTS 02139

March 12, 1976

Economics Department Faculty

Dear [blank]

For some time I have become increasingly dismayed at the increase in the administrative burden in the Department, and now find the present job as Head to be a nearly impossible one. If the job is to be made tolerable, it must have substantial additional faculty support in some form to cut it down to a scope manageable either by me or a successor.

There are two basic ways that this can be achieved: (1) by spreading the administrative activities and responsibilities more widely among the faculty; or (2) placing these tasks on essentially an associate departmental head, whose precise title could take various forms Executive Officer, Academic Officer (e.g., Tony French in Physics), or Associate Head. I personally would favor the Associate Head route, but regard it as an open question subject to further discussion and consideration, and to Administration approval. This new structure should be treated as an experiment, to last no longer than until the next Head is chosen, and to be reconsidered at that time.

My own thinking about the administrative tasks of the Department separates them into four major areas: undergraduate programs, graduate programs, research programs, and personnel and budgeting. While these can be headed by an administrator or by faculty, it seems to me that the first two programs should have formal faculty control regardless of the form the administrative reorganization takes. The graduate program nearly has that form now and largely runs itself, with the exception of a few odds and ends that now lie outside the responsibility of the graduate registration officers. The undergraduate program is a long way from this structure and will require a good deal of imagination, initiative and effort to resuscitate the Undergraduate Economics Association and provide more guidance and support for majors. The research programs (student and faculty) focus more or less clearly under the Committee on Economic Research. Personnel and budgeting are an administrative responsibility. They have involved increasing amounts of time as budgets have tightened, space has tightened, and the search for new faculty has expanded.

The administrative structure is an important matter to the Department. Because it involves departmental administration and the role of the Department Head, it concerns the Administration through Dean Hanham. He has asked me to appoint the following committee to consider these questions of reorganization and to make recommendations: Bob Solow, Peter Diamond, Stan Fischer, Paul Joskow, and Jerry Hausman. Please give your views to members of the committee as soon as you can.

Sincerely,
[signed “Cary”]
E. Cary Brown, Head

ECB/sc

__________________________

Brown to Solow

March 16, 1976

Professor Robert Solow
E52-383

Dear Bob:

I shrink from making organization charts, but the following diagram is intended to give some idea of the orders of magnitude of faculty involvement in departmental chores.

Chairman, Committee on Undergraduate Studies

  1. Faculty counselors (we have agreed with the UEA to keep members to 10 or less, and let faculty build up expertise by staying adviser for freshman, sophomore, junior, or senior year).

—10 faculty: 2 for each class. 4 for seniors

  1. Faculty adviser for humanities concentration in economics (advises and signs up students); also considers the eligibility of economics subjects, what we consider concentration, etc.
  2. Closely related to (2) is possible membership on the so-called Humanities Committee that approves and reviews the whole Humanities, Arts, and Social Science requirement and program. (We have no one on this year but as the largest concentration will surely need to have a presence.)
  3. Approval of transfer of credits from other schools to M.I.T.
  4. Advising with Undergraduate Economic Association in matters academic, professional, social.
  5. Undergraduate placement, while an Institute responsibility, could be supervised and assisted by a faculty member who would keep up to date on summer placement, interning possibilities, salaries. The experience our students have applying to graduate schools, actual jobs offered and taken.
  6. Design of curriculum, cooperative program, etc.
  7. Various activities, such as providing information to undergraduates in their choice of major (Midway in fall, seminar in spring), Open House activities, Alumni activities, etc.
  8. Relations with other Departments at undergraduate level, such as subject offerings, subject content, etc.
  9. Supervision and staffing of undergraduate subjects with multiple sections — 14.001, 14.002, 14.03, 14.04, 14.06, 14.30, 14.31.
  10. Catalog copy.

Chairman, Committee on Graduate Studies

  1. Graduate Registration Officers, so far one each for first two years, and one for thesis writers. Has been suggested that we have an additional adviser for foreign students and minority and women?
  2. Admissions Committee has, in the past, had three members.
  3. Placement, both summer and permanent.
  4. Supervision of core subjects.
  5. Ph.D. and M.S. requirements, program, size.
  6. Financial aid — coordinating various GRO; Admissions Committee, and Budget limitations.
  7. Graduate School Policy Committee meetings.
  8. Annual revision of brochure.
  9. Graduate Economics Association, Black Graduate Economics Association.
  10. Catalog copy.
  11. Various activities — professional and social that are not contained within a particular class.

Chairman, Committee on Economic Research (I faculty)

  1. Organized list of faculty projects requiring research assistants and the supply of them (both graduate and undergraduate). Assignment of R.A.’s.
  2. Assistance in research proposals.
  3. Inventory of internships and off-campus research.
  4. Supervision of unscheduled subjects, such as UROP, Undergraduate Seminar, and thesis.
  5. Supervision of M.I.T. Working Paper Series.
  6. Allocation of computer funds, developing rules, developing alternative sources.

Personnel and Budgeting (Administrative Officer and a large chunk of my time)

  1. Personnel
    1. Nonfaculty is supervised by the Administrative Officer.
    2. Faculty Personnel

(1) Employment — new Ph.D.’s and senior faculty
(2) Review and promotion
(3) Assignments, leaves, research

    1. Postdoctoral personnel
  2. Space allocations, revisions.
  3. Budget Proposals
  4. a. Proposals
    b. Implementation

Telephone
Xerox & Ditto
Supplies
Equipment

There may be other matters that I am leaving out – routine meetings average probably a day a week, and things like that. Consultations with faculty, students, and other Departments, would probably add a couple more days.

If there are questions, I’ll oblige, of course.

Sincerely,
E. Cary Brown, Head

ECB/sc

__________________________

MEMORANDUM

May 10, 1976

TO:       Department Faculty
FROM: Committee on Reorganization (PAD, SF, JH, PJ, RMS) [Peter A. Diamond, Stanley Fischer, Jerry Hausman, Paul Joskow, Robert M. Solow]

SUBJECT:         Reorganization

ECB’s [E. Cary Brown] letter of March 12, which created this committee, starts from the premise that the administrative burden on the Department Head has become essentially impossible. This seems clearly to be the case. It has happened because the department has increased in size and complexity without any corresponding adaptation of its administrative arrangements. Every new function has fallen into the Head’s lap. (Top that, anyone.) Apart from the sheer burden of work thus created, another problem is the difficulty of communications, because that is also time-consuming.

After some palaver and negotiation, we have a reorganizational package to suggest. It rests on two conditions; since it is something of an interconnected web, it will probably unravel if the two conditions can not be met. (1) Since the only way to correct an excessively centralized structure is to decentralize it, we propose to diffuse administrative responsibility more widely through the department; there will be at least one serious administrative post for everyone, or perhaps two minor posts instead, but everyone will have to participate. (2) The administrative load attached to the undergraduate program has increased with the size of the enrollment and the improvement of the curriculum; no one wants to manage an inadequately staffed program. We propose, therefore, that the normal teaching load for everyone in the department be agreed to be half graduate and half undergraduate teaching. This definition should be extended to everyone on the departmental budget: joint appointees, visiting professors, etc. As soon as there are a couple of exceptions to this understanding, there will be more. Then the management of the undergraduate program will break down, and it will revert or default to the Department Head, and that is what we are trying to stave off.

The particular organization we have in mind is as follows.

  1. The central functions (budgeting, space, leaves, relations with the MIT hierarchy, etc.) will be in the hands of the Department Head and an Associate Head namely PAD [Peter A. Diamond]). In addition, one of them (probably ECB [E. Cary Brown]) will be an ex officio member of the Committee on Undergraduate Studies to be proposed below, and the other will be an ex officio member of the Committee on Graduate Studies. The precise division of labor is obviously a matter of taste; for the moment, ECB [E. Cary Brown] will probably do most of the relations with the MIT structure and PAD [Peter A. Diamond] will concentrate on intra-departmental matters.
  2. There will be a Director of Undergraduate Studies (PT [Peter Temin]), who will be chairman of a Committee on Undergraduate Studies (with 2 or 3 additional members, possibly RD [Rudiger Dornbusch], PJ [Paul Joskow] and one other). This committee will be responsible for revisions of the undergraduate curriculum adding and subtracting subjects, staffing them, degree requirements, etc. In recent discussions with the Undergraduate Economics Association, the proposal has merged that there should be a larger number of Undergraduate Advisors (i.e., registration officers) than there is now, with each taking care of at most 10 students. That suggests we would need about 8 such advisors. The members of the Committee might serve as advisors, plus others. Merely serving as registration officer for 10 undergraduates is by itself not an onerous job.
  3. There seems to be no need for change in the organization of graduate studies in the department. We suggest that there be a Director of Graduate Studies (RSE [Richard S. Eckaus]) and a Committee on Graduate Studies which would, as now, consist of the other two Graduate Registration Officers. Things are going very well now with REH [Robert E. Hall] handling the first-year students. MJP [Michael J. Piore] the second-year students and RSE [Richard S. Eckaus] the thesis-writers. REH [Robert E. Hall] is prepared to take on the task or devising a scheme to keep track of post-generals students, and see that they find themselves a reasonable thesis topic in a reasonable amount of time. The scheme may need another person to look after it.
  4. We suggest the creation of Committee on Staffing whose functions would include looking after the hiring of assistant professors, the dovetailing of visiting professors with faculty leaves, and the rationing of visiting scholars. The picture we have is that the members of committee would do the interviewing and preliminary screening of new Ph.D.’s at the annual meetings, and decide which of them to invite to come and give seminars. At that stage and thereafter, the whole department faculty would be in on the act, and final decisions would be made, as they are now, in a department meeting. The main time-consumer for this committee would be the correspondence in connection with hiring. Since that would fall on the Chairman, that post would be a major one. For the other members of the committee, the burden would be relatively light. We suggest REH [Robert E. Hall] as chairman, plus perhaps 3 others.
  5. There seems to be no reason to change the way the Admissions Committee now functions.
  6. We see no need for major change in the Placement process. Our only suggestion are (a) perhaps to provide EDD [Evsey D. Domar] with another person to share the load, and (b) to have a pre-season department meeting, analogous to the post-generals meeting, at which each graduate student entering the market could be discussed by the full facuIty, and information and ideas collected.
  7. There are other details. RLB [Robert L. Bishop] is functioning as advisor to MIT undergraduates thinking about economics as part of their Humanities requirement, and we are happy to preserve that human capital. MAA [Morris A. Adelman] who has been our representative to CGSP is to begin a term on the CEP, which should count as a major administrative burden. We need his successor on CGSP.

One last point: we hope that each committee chairman will promptly send a written notice of each substantive decision to the Head and Associate Head for distribution to the department faculty, so that communications are well looked after. That plus rational expectations should do the trick.

Source: MIT Archives. MIT Department of Economics Records. Box 2, Folder “Department Organization”.

__________________________

DEPARTMENTAL ADMINISTRATIVE RESPONSIBILITIES:
ECONOMICS DEPARTMENT 1977-78
  1. UNDERGRADUATE COMMITTEE
Chairman: Peter Temin
Members: Cary Brown Senior Faculty Counsellor, Ex Officio
Jerry Rothenberg Senior Faculty Counsellor
Peter Temin Senior Faculty Counsellor
Rudiger Dornbusch Junior Faculty Counsellor
Jeffrey Harris Junior Faculty Counsellor
Jagdish Bhagwati Sophomore Faculty Counsellor (Fall)
Henry Farber Sophomore Faculty Counsellor (Spring)

Summer Jobs: Jeffrey Harris
Humanities Adviser: Robert Bishop
Transfer of Credits: Cary Brown

  1. GRADUATE COMMITTEE
Chairman: Richard Eckaus Thesis, Graduate Registration Officer
Members: Paul Joskow/Mike Piore Second Year Graduate Registration Officer
Marty Weitzman First Year Graduate Registration Officer
Jerome Rothenberg CGSP Representative
Stan Fischer, Ex Officio

Admissions Committee:

Chairman: Robert Bishop
Members: Frank Fisher and Lance Taylor

Placement: Evsey Domar
Harvard-MIT Theory Seminar: Eric Maskin
Theory Workshop: Kevin Roberts

  1. OTHER DEPARTMENTAL ACTIVITIES

Staffing Committee: Chairman: Rudiger Dornbusch

(For New Ass’t Profs.) Members:

Paul Joskow
Jerry Hausman
Stan Fischer, Ex Officio
(Added for Temporary Visitors: Robert Solow)

Independent Activity Period: Jeffrey Harris/Marilyn Simon
Unstructured Subjects Committee: Peter Temin, Undergraduate; Richard Eckaus, Graduate
Computer Allocation: Richard Eckaus

ADDENDUM: INSTITUTE COMMITTEES

CEP: Morris Adelman
Associate Chairman of the Faculty: Michael Piore
Visual Arts: Jerry Rothenberg
Library System, Chairman: Evsey Domar

Image Source:  For this portrait of members of the M.I.T. economics department in 1975 see the Economics in the Rear-view Mirror post that provides identifications.

Categories
Economics Programs M.I.T. Regulations

MIT. Revising Economics Ph.D. General Examinations. E.C.Brown, 1975

 

What makes this memo from E. Cary Brown particularly useful is that it provides us with a list of the graduate economics fields along with the participating faculty members as of 1975. Also the major revision proposed was to have a system of two major fields (satisfied with general examinations) and two minor fields (satisfied by course work). Interesting to note that graduate student input was clearly integrated into the revision procedure.

________________________

Memo from Chairman E. Cary Brown
on a Revision of General Exams, 1975

April 28, 1975

To: Economics Department Faculty and Graduate Students
From: E. C. Brown
Re: Revision of General Examinations

While it has been left that a Committee would be appointed to review the procedures of the general examination (see minutes of the Department Meeting of April 23, 1975), further informal discussion has moved toward a proposed concept of these examinations that I am submitting for consideration and agreement.

  1. There seems reasonable satisfaction about the structure of the present examinations, subject to clarification of the final 2 field examinations and their relationship to the 2 field write-offs.
  2. It is proposed that the 2 fields satisfied by passing the “general” examinations be designated major The examination will be offered in a field, will cover the field in a general way, and will be separated from course examinations. Minor fields will be satisfied by course work. A somewhat lower standard will be imposed in minor fields than in major fields. The “generals” examination, therefore, would apply to the fields of the candidate’s expected expertise, and emphasis would be on a broad coverage of the field.
  3. Each field should, therefore, describe its general requirements for the field as a major one, and list the subjects that may reasonably be offered as a write-off to satisfy the field as a minor one. There should also be some details on the requirements when fields are closely linked (e.g., the proposal for the transportation field and its relationship to urban economics).
  4. Assuming this proposal to be agreeable, the question of term papers still needs settling.

I propose, therefore, the following procedures:

  1. Would each of you give Sue Steenburg a list of your graduate subjects for this academic year, with an indication of whether or not a term paper was required and, if so, the percentage of final grade it represented.
  2. Would faculty in each field submit a list of subjects that may be used to satisfy major and minor requirements in their field as it would ultimately appear in the brochure. The fields to be covered are as follows, the faculty in the field are listed, and the responsible member underlined.
Advanced Economic Theory Bishop, Diamond, Solow, Fisher, Samuelson, Varian, Hausman, Weitzman
Comparative Economic Systems Domar, Weitzman
Economic Development Eckaus, Bhagwati, Taylor
Economic History Kindleberger, Temin, Domar
Finance Merton
Fiscal Economics Diamond, Friedlaender, Rothenberg, Brown
Human Resources and Income Distribution Thurow, Piore
Industrial Organization Adelman, Joskow
International Economics Kindleberger, Bhagwati
Labor Economics Piore, Myers, Siegel
Monetary Economics Fischer, Modigliani
Operations Research Little, Shapiro
Russian Economics Domar, Weitzman
Statistics and Econometrics Hall, Hausman, Fisher, Kuh
Transportation Friedlaender, Wheaton
Urban Economics Rothenberg, Wheaton

If there are any difficulties with these suggestions, let me know right away. If we can proceed along these lines, it appears to be simply a clarification of our recent past and a substantial timesaver. The reports can be looked at this summer by a student-faculty group, with responsibility for faculty on me and for students on Dick Anderson.

Source:  M.I.T. Archives. Department of Economics Records, Box 2, Folder “Grad Curriculum”.

Image with identifications: Economics Faculty group portrait, 1976.

Categories
Fields M.I.T. Syllabus

M.I.T. International Economics Syllabus for General Exam. Bhagwati and Dornbusch, 1977

 

 

In 1976 there was a graduate-student-faculty discussion concerning a reform of procedures for the general examinations at MIT’s department of economics. I have only been able to locate the field syllabus for international economics of the three fields mentioned in my classmate’s report:

“As a compromise intended to make everyone feel better without rocking the boat, a syllabus will be made up in each of three fields. The syllabus is intended to give some guidance as to what topics might show up on a general. The three fields chosen for the experiment are econometrics, industrial organization, and international trade.”

Source:  Massachusetts Institute of Technology. Institute Archives. MIT Department of Economics Records (AC 394). Box 2; Folder “Gen Exams”. Dick Startz, “Final Report on Generals’ Reform”, November 21, 1976.

__________________________

January 1977
Bhagwati & Dornbusch

INTERNATIONAL ECONOMICS
Syllabus

This syllabus is designed to provide some guidance in regard to the field requirements in international economics. It is not exhaustive but does indicate the broad areas in which the students will be required to be knowledgeable.

The syllabus is divided into the traditional areas of international monetary theory and policy, on the one hand, and the pure theory of trade, on the other. However, most public policy issues, with which the students will be expected to be familiar, require a skillful adaptation of both strands of analysis (as should be obvious from the writings of the best trade economists on policy matters such as the effect of the oil price increases). Thus, the students will be expected to integrate the two sets of insights as appropriate, in addressing themselves to policy questions. In this regard, the students will also be expected to have reasonable familiarity with the central issues of current concern, e.g. SDRs, GATT rules, the New International Economic Order problems, etc. Acquaintance with earlier historical writings, chiefly in the 1930s, should also prove to be rewarding since it emphasizes the integration of policy and theory. Here, the writings of economists such as Haberler, Ohlin, Iversen and Hawtrey are particularly recommended.

A. INTERNATIONAL MONETARY THEORY AND POLICY

International Macroeconomic Issues:

  1. National Income Accounting in the Open Economy. Balance of Payments Accounting. Reform of Balance of Payments Accounting in the US.
  2. Keynesian Macroeconomics in the Open Economy and the Current Account: The foreign trade multiplier, multipliers with repercussions. The transfer problem and income adjustment.
  3. Keynesian macroeconomics under capital mobility: Monetary and fiscal policy. The policy mix. Financing versus adjustment.
  4. Price and output adjustment in a Keynesian framework.
  5. Exchange rates and the current account: Elasticity, absorption and monetary approaches.
  6. Internal and external balance: The role of home goods.
  7. Flexible exchange rates: The income adjustment process. The terms of trade and saving.
  8. Flexible rates and capital mobility: Asset market theories of exchange rate determination. The role of expectations. The transmission of disturbances.
  9. Purchasing power parity.
  10. Portfolio balance theories of macroeconomics in the open economy: Capital flows and the structure of the balance of payments.
  11. The social cost of foreign exchange.
  12. Stabilization policy, the budget and trade policy.

International Financial Issues

  1. International monetary standards and international reserves.
  2. The Euro-dollar market.
  3. Interest arbitrage and forward markets.
  4. Intermediation, the pattern of world payments and lending, and the balance of payments.
  5. International Investment.

B. THE PURE THEORY OF TRADE

  1. General equilibrium analysis of the traditional value-theoretical model of trade theory, involving two primary, non-traded factors producing two traded commodities; theories of comparative advantage: Ricardo and Heckscher-Ohlin; empirical verification; new directions in explaining comparative advantage.
  2. Tariff analysis: effects of tariffs on internal and external terms of trade; equivalence of tariffs and quotas; transfer problem; growth and trade.
  3. Trade and welfare; trade vs. autarky; optimality of free trade; restricted trade vs. autarky; distortions and ranking of policy interventions; measurement of gains and losses from alternative policies; theory of non-economic objectives; preferential tariff reductions and customs union theory.
  4. Extension of the positive and welfare analysis of alternative models: (1) models involving use of imported factors of production; (2) models with non-traded goods; (3) models with putty-clay characteristics.
  5. Comparative advantage and uncertainty; analysis of illicit trade in general equilibrium; project analysis and trade theory.

 

Source: Massachusetts Institute of Technology. Institute Archives. MIT Department of Economics Records (AC 394). Box 2; Folder “Gen Exams”.

Image Source:  Jagdish Bhagwati (left), Rudiger Dornbusch (right). MIT Museum legacy website.

Categories
Funny Business M.I.T.

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

Would Mel Brooks' famous 2,000-Year-Old Man have understood modern language? Researchers say there's a possibility.

 

 

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.

_________________

 

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
Funny Business M.I.T.

M.I.T. Economics skit from about 1971

 

The following M.I.T. economics skit from ca. 1971 attains biblical proportions or at least displays biblical pretensions. The script comes from Robert Solow’s file of many such skits that Roger Backhouse has copied during his archival research. Alas this script displays some half-dozen gaps, but there is always some hope that the missing parts (mainly lyrics for songs noted below) will be found eventually in some other economist’s archived papers.

While there is no explicit date on the manuscript, the references to President Nixon, a mention of the eighth edition of Samuelson’s Economics (published in 1970) and the reference to Bishop and Domar who last taught the first graduate microeconomic and macroeconomic courses in 1970-71 are sufficient to give us a reasonably tight point estimate of early 1971 for this skit.

I have taken the liberty of correcting the many spelling errors and obvious typos. To improve readability I have also added boldface, alignment formatting etc. Comments are found within square brackets in italics.

Nerd humor, crude double entendre, puns coexist along side of flashes of wit and emotion. But it is mostly nerd humor.

_________________________

Opening Song [Lyrics missing]

Announcer [Text missing]

Narrator:

In the beginning God created the endowments and utility.
And God looked on the utility and saw that they were goods.
And there was darkness upon the face of the utility and the utility was without form.
And God said let there be light and there was light and the preferences were revealed.
And God said let there be a social welfare function and so it was that the preferences were ordered.
And God said let there be liberation of consciousness and there was consciousness of liberation.
And created economic man in his own image.
And on the seventh day God rested because the Robnett was closed.

[Robnett was name of the room in the Sloan Building that served as a graduate student lounge.]

[Enter Adam]

Adam: Like man, what am I gonna do with this endowment of two nuts I got stuck with. There ain’t no one to exchange ‘em with. I can’t get no satisfaction.

[Enter Eve tossing apple]

Eve: Hey man wanna bite of my apple

Adam: Now we’re getting down to the core of the problem.

Eve: Can I have one of your nuts if I give you a bite of my apple.

Adam: Well you see, I suffer from a certain lumpiness in my endowments. One nut ain’t no good to you on its own but I’ll exchange both of my nuts for 2 bites of your apple.

Eve: Hold it: I got a better idea. Why don’t we put your nuts and my apples together and reproduce them. Perhaps we can make a date.

[Gong and Lights]

God:   Stop! In creating this perfect static world for you, I forbade you to break the budget constraint. Now you have reproduced your endowments and broken the budget constraint. Henceforth I condemn all economic men to conduct their intercourse only through the medium of money, and each and every man shall maximize his profits.

[Exit God]

Narrator: ….and so it came to pass that a whole stream of prophets came into existence. And the first and greatest of these was Paul, son of Samuel, who led his tribe out of the gates of Harvard. And whilst resting at Tech. Square Paul saw a flash of burning light from behind the NASA building. And God spoke unto Paul and Paul wrote down these words on a tabernacle later to be called the Ten Foundations.

[Enter Paul]

Paul: Adam Smith who begat Malthus who had a surplus so he begat Ricardo who begat Marx, who By God was a bigoted begat. But Böhm-Bawerk begat Jevons who then begat Marshall who then get begat John Keynes. But Schumpeter came from the Austrian school and finally begat me.

While we’re waiting for Joan to print up the tabernacles for us why don’t we have a sing-song to make sure you know the begetting chain.

SONG – WHEN ECON.
[For the melody: Paul Robeson’s rendition of the original hymn]

LET MY PEOPLE KNOW

  1. When Econs were in Adams land (solo)
    Let my people know (chorus)
    Everything worked by the invisible hand (solo)
    Let my people know (chorus)
    Go down Paul way down in (Adams) land
    Tell old (Adam) let my people know
  2. When econs were in Ricardo’s land
    The topic was the rent on land
  3. When econs were in Marx’s land
    Come now brothers and join the band
  4. When econs were in Marshall’s land
    All was solved with a maximand
  5. When econs were in Keynesian Land
    Savings equaled investment planned

[Joan enters gives notes to Paul]

Paul: During the five minutes left to me I’ll read to you from the Ten Foundations.

TEN FOUNDATIONS
[Text missing]

[Gong, lights]

God: Paul! the promised land lies before the tribe of econs and thou must lead them unto this land of math and money. Thou shalt find it on a piece of old wasteland between the factories down on the river.

[Exit God]

Narrator: …and so the tribe of economists came to rest but Paul was not to become head of the tribe but instead the church grew and a Bishop was made head.

[Enter Bishop]

Bishop… Reads from manuscript in Pious voice

Everybody: Get off that’s last year’s skit.

[Exit Bishop]

Narrator: But the economists were not to live in peace for long for the mighty hosts of the Philistines fell upon them and besieged them.

[Enter 2 economists]

1st Econ: They say that these Philistines have a great warrior called Goliath who has issued a challenge to all economists to face him as champion of the Philistines.

2nd Econ: This character sounds Frankly Fishy to me

[Enter Frank]

Frank: No one calls Frank a Philistine. Take that and that.

[kills two economists.]

Narrator: And now a word from my sponsor: [Aitken Ad:]

 

Announcer: When you wake up in the morning, do your residuals seem to be going round and round?

If they do, you may be suffering from serial correlation. For severe bouts of serial correlation, especially if accompanied by lagged endogenous variables, see your local econometrician. But for the ordinary, everyday serial correlation, try Aitken’s, generalized least squares.
Don’t confuse Aitken’s with any ordinary least squares.

Scientific tests have proved that ordinary least squares is inefficient when it comes to serial correlation. Ordinary least squares merely covers up the problem, making you feel better by giving you optimistically high R2’s, low standard errors. Aitken’s heals while it conceals.

So for all of you who suffer from low Durbin-Watson statistics, the swing is to Aitkens’s. Aitken’s generalized least squares, brewed in Edinburgh, and other fine cities. But you know that.

[Others sing Amazing Frank]
[For the melody: Paul Robeson’s rendition of the original hymn]

Amazing Frank how sweet the sound
To save a wretch like me
I once was lost but now I’m found
Was blind but now I see.

That precious day that Frank appeared
The hour I first believed
Twas Frank that taught my heart to fear
And Frank my fears relieved.

Through many dangers toils & snares
I have already come
‘Tis Frank that’s brought me safe this far
And Frank will lead me home.

Narrator: ….and there was among the economists one called David.

David: All of my people are being killed—I must rescue them.

[hands cigarette to Frank who dies]

All Econs: How did you do it?

David: It’s easy—he got stoned!

All: Oh!

Narrator:…and so David became King of the tribe of Economists.

…and David begat a wise son called Solomon who inherited the ability to always know the question when given the answer

[QUESTION AND ANSWER: Text Missing]

Narrator:…But the economists lost their respect for the elders of the tribe and the world became more and more evil. This threw the economists into an economic and moral problem. The reproduction rate became higher, a labour saving device had to be introduced.

[LET’S CONTRACEPT: Lyrics or Text Missing]

[Bishop enters]

Bishop: I’m not surprised the world’s becoming more evil that Nixon just sits and fiddles while Arthur Burns. I must read the economic word to the econs

[23rd Psalm: Lyrics or Text Missing]

My lesson isn’t working, just listen to the people

[ain’t gonna deflate]

AIN’T GONNA DEFLATE

[Sung to the tune Blood on the Risers (Gory Gory What a Helluva Way to Die)]

VERSE

  1. They increased supply of money till the central bank was bust
    Commercial banks gave credit till restrictions were a must
    Investment broker ran amuck with their investment trusts
    AND we ain’t gonna deflate no more

CHORUS:
Glory Glory what a hell of a way to go (3 times)
And we ain’t gonna deflate no more

  1. They equaled up the tax receipts to gov’ment expenditure
    They raised the defense budget- so to help along the war
    And Dicky’s own account became more and more and more
    AND we ain’t gonna deflate no more

CHORUS:

  1. They lowered the rate of interest to keep Euro-dollars out
    The Germans out exchange rates messed everyone about
    The French exported gold to all as if there were a draught
    AND we ain’t gonna deflate no more

CHORUS

  1. They printed paper money and handed it around
    Sent money to Cape Kennedy got rockets off the ground
    But all the money printed went straight to Herr von Braun
    AND we ain’t gonna deflate no more

CHORUS

  1. Speculators bulled and beared till buffaloed they got
    Stability was never heard become a laughing spot
    The widows and the orphans cried keep down that old p dot
    NO     WE AIN’T GONNA DEFLATE NO MORE.

 

Narrator: ….one man alone was good in all this world.

[Franco Sawing]

[Gong, lights]

[The following Noah’s ark piece borrows heavily from the 1963 comedy album “Bill Cosby is a Very Funny Man….Right!” ]

God: Franco! (3 times) crescendo

Franco: No answer.

God: This is the Lord, Franco (Thunderously)

Franco: I’ll be with you in about 5 minutes.

God: Franco I want you to build me a model. I want it to be 60 equations long and 30 variables wide.

Franco: But I don’t know any econometrics.

God: So! Franco I want you to take two of every kind of variable into your model. Your model alone can save mankind for I shall flood the world with money.

Narrator: ….and so Franco worked feverishly not to say Frank-tically gathering variables from all his students until eventually he had two of every kind.

[Gong, lights]

God: Franco

Franco: What!

God: The time has come Franco

Franco: Do you know what I’ve been through. I’ve got all these variables and stuck them all in my model. They all look the same to me. How am I supposed to identify them?
Besides you didn’t tell me those variables were homoskedastic.
Now the investment’s got galloping consumptions, that infant industry’s riding his business cycle everywhere, income’s got a growth.
The whole model’s exploding.

[Gong, lights]

Franco: My God it’s shorting

Narrator:…and so money rained for forty days and forty nights.

[Franco looks out from model]

Franco: It’s stopped.

[Lights, gong]

God: Franco

Franco: Here we go again

God: You must tell all the variables to leave the model and multiply.

[Exit God]

Franco: Easier said than done. All right, come on out all you variables. Go away and multiply…go away and multiply.

[Enter 2 adders kissing]

1st Adder: We can’t multiply

Franco: Why not?

2nd Adder: We’re adders

Franco: There must be some way. God’s always right. Look, look, they’ve multiplied. How did you manage it.

1st adder: It’s marvelous what you can do with Logs isn’t it.

[Exeunt]

Narrator:…and so a population explosion occurred over night. And new preachers of the true economic world arose.

Announcer: And they begat three economists, Diamond, Modigliani, and Bhagwati.

 

[SONG: JAG, PETER, AND FRANCO]
[Still need to establish the original song used to parody]

THREE ECONOMISTS

(soft shoe routine)

Together: I’m Peter, I’m Franco, I’m Jagdish Bhagwati
We are the finest teachers in the world

Peter: I teach public finance though it’s sometimes hard to tell

Franco: I teach monetary and I give my students hell

Jagdish: I just sit and listen to the questions of Steve Zell

Together: Oh we are the finest teachers in the world.

[Peter does his thing, commentator describing. Text/Lyrics missing]

Together: I’m Peter, I’m Franco, I’m Jagdish Bhagwati
We all have our own teaching techniques.

Peter: I like mathematics—it’s a discipline sublime

Franco: I think talking slowly is a really awful crime

Jagdish: I draw Johnson diagrams—a dozen for a dime.

Together: Oh we all have our own teaching techniques

[Franco does his ad for the MITFRB model. Text/Lyrics missing]

[Jagdish does his offer curves spiel. Text/Lyrics missing]

Together: I’m Peter, I’m Franco, and I am Jagdish B.
We are the hardest workers in the world

Peter: I worked through Thanksgiving but I didn’t get much done

Franco: I run back and forwards from Cambridge to Washington

Jagdish: My output of articles is measured by the ton

Together: Oh we are the hardest workers
No we couldn’t be called shirkers
Yes we are the hardest workers in the world, oh yeah.

 

[STUDENTS LAMENT]

THE GRADUATE STUDENTS’ SONG

[To the tune of “My God how the money rolls in”]
[swaying from side to side, arms linked, on choruses]

ALL:

  1. Oh we are all graduate students
    We study with vigor and vim
    ‘Cos once we have got our Ph.D’s
    My God how the money rolls in.

Rolls in, rolls in, my God how the money rolls in, rolls in
Rolls in, rolls in, my God how the money rolls in.

  1. Our first year it was quite traumatic
    Just like being torn limb from limb
    We made it through Bishop and Domar
    Although at times it was quite grim
  2. But now as we’re facing the generals
    Our chances of passing seem slim
    We’re trying to alter the format
    The faculty will not give in

(pleading)

Give in, give in, oh faculty won’t you give in, give in
Give in, give in, oh faculty won’t you give in.

  1. And then we’ll start writing our theses
    We’ll make a great contribution
    We’ll go to the AEA meetings
    To get in the job market swim
  2. We’ll write up some erudite papers
    With lots of equations therein
    Then next comes a best-selling textbook
    To give Paul some competition

Competition, competition, to give Paul some competition, ‘tition
Competition, competition, to give Paul some competition.

  1. Paul Samuelson’s text is on top now
    It’s up to its eighth edition
    But we’ll supersede it entirely
    And start off a new tradition
  2. The they’ll give the Nobel Prize to us
    Our pride will be full to the brim
    And after we’ve published we’ll perish
    My God how the money rolls in

Rolls in, rolls in, my God how the money rolls in, rolls in
Rolls in, rolls in, my God how the money rolls in.

 

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

Image Source:   Sir John Betjeman—an English poet, writer, and broadcaster. From “Myrth Study” at the National Geographic Website (23 Dec 2013). He has nothing to do with the history of economics, but I love this picture of laughter!

Categories
Economists Funny Business M.I.T.

M.I.T. Analysis in Wonderland. Graduate Student Skit, 1975

 

The annual skit party was a huge social event in the economics department at MIT in the 1970s and presumably before and after.  Each of the cohorts was expected to write and perform its own skit in which economics and economics professors were the principal targets. Faculty written skits were often a part of the festivities. Here in this posting for the historical record, a parody of Alice in Wonderland set in the Wonderland Institute of Technology in 1975 written by the first-year class of 1974-75. But first I provide a list of my classmates with links to some biographical information where I was able to find something…whatever happened to Paul Krugman? Not everybody participated in the preparation and performance so there remains a presumption of comic innocence for the majority of the following.

In 1978 many of this cohort were involved in Casablank, a parody of the movie Casablanca. That script has been transcribed and posted at the highlighted link.

__________________

First Year Economics Graduate Students, 1974-75
M.I.T. (Spring 1975)

Abel, Andrew B.
Aspe, Pedro A.
Begg, David K. H.
Beleza, Luis Miguel C. P.
Bookstaber, Richard M.
Collier, Irwin L., Jr.
Datcher, Linda P.
Daula, Thomas V.
Desormeaux, Jorge J.
Donnelly, John F.
Duarte, Virgulino
Klorza, Santiago C.
Feiger, Margaret C.
Frankel, Jeffrey A.
Geehan, Randall R.
Giavazzi, Francesco
Halpern, Janice D.[sic, H.?]
Helms, L. Jay
Hill, Raymond D.
Krasker, William S.
Krugman, Paul R.
Malveaux, Julianne M.
Mincy, Ronald B.
Mooney, Patricia D.
Mork, Knut A.
Nagatani, Hiroaki
Neuer, Margaret R.
Smith, David A. [Alton]
Startz, Richard
Winicker, Mary K.

Source:  M.I.T. Archives. MIT Department of Economics Records, Box 1, Folder “Women & Minorities”.

__________________

While transcribing this skit from my own days as a graduate student, I discovered how much I had indeed forgotten. The mapping of many a character to the corresponding faculty member was no longer obvious to me. I have added a listing of  Dramatis Personae with annotations based on the combined incomplete memories of myself,  Jeff Frankel, Dick Startz, Andy Abel, Ray Hill and Jay Helms. Perhaps some long-lost member of the troupe will stumble across this page and help me fill in the blanks, especially with respect to casting (20 characters!). 

______________________

ANALYSIS IN WONDERLAND

Composed and performed by the first-year economics graduate students at M.I.T.
Second term, 1974-75

 

DRAMATIS PERSONAE

Narrator: played by Richard Bookstaber
Alice (Representative Graduate Student): played by Margaret (née Agnew) Feiger
Advisor (presumably the actual first-year advisor, Peter Diamond): actor unknown
Cheshire Cat (Jagdish Bhagwati): actor unknown
Micro: (Hal Varian?): actor unknown
Macro: (Stanley Fischer?): actor unknown
Quick & Dirty (Martin Weitzman): actor unknown
Palmer (Palmer, an actual Sloan School graduate student): actor unknown
Dormouse (Evsey Domar?): actor unknown
Mad Hatter (Charles Kindleberger): played by Jeffrey Frankel
March Hare (Robert Engle?): actor unknown
Tweedledee (Jerry Hausman):  possibly played by Jay Helms
Tweedledum (Robert Hall): possibly played by Bud Collier
Knave of Hearts (Franco Modigliani): actor unknown
Knave of Clubs (Arthur Burns): actor unknown
Knave of Spades (William McChesney Martin): actor unknown
Knave Alan (Allan Greenspan): actor unknown
King (President Gerald Ford): actor unknown
Joker (Paul Samuelson): possibly played by Ray Hill
White Rabbit (Robert Bishop?): actor unknown

ACT I

Narrator: The first year class presents…

Analysis in Wonderland, a tragicomedy in four unnatural acts. Any resemblance to faculty members living or otherwise should be inferred from the initials worn by the characters.

Act I, Alice enters Wonderland and meets the Cheshire cat.
(Alice is sitting at a table reading Samuelson’s Economics.)
Narrator: One day Alice was reading a book, but she was getting very bored, for the book had no conversations or jokes in it.
Alice: And what is the use of a book without conversations or jokes?
Narrator: And so she began to drift off. And eventually she noticed that there was someone on the other side of the desk…
Advisor: Hi! Welcome to the Wonderland Institute of Technology. You must be a first year graduate student. I’m your first year advisor, and it’s my job to talk to you and give you a feeling that someone cares about you personally.

Now, let me see your schedule (grabs book). Well, uh, (looks at book then says with emphasis) Paul, this schedule looks fine to me (signs it) and remember to turn in your roll cards on the first day of each class.

(Through all this Alice keeps going “uh” and “but”…but can’t manage to say anything)

Remember that if you have any questions or problems, just come in and talk to me, I have plenty of time. Excuse me!

(The advisor gets up and runs out. Alice runs after, then comes back)
Alice: What a strange place! But where should I go from here? Why there’s a Cheshire Cat. (Enter Cheshire cat) Excuse me, sir, but can you tell me where I ought to go from here?
Cheshire Cat: Why, I’m wery [sic] glad you asked me that. You should go to the optimal point, of course.
Alice: But how long will that take me?
Cheshire Cat: I can’t tell you that, listen to this. (Turns on radio, which produces static. Turns it off.) You see! Our economic theories are all static.
Alice: I would like to see some faculty.
Cheshire Cat: Well, you could go to Harward [sic], but it’s wery rare that anyone sees any faculty there. Or you could stay here, but everyone here has completely lost their faculties. They’re all mad, you know.
Alice: But I don’t want to go among mad people.
Cheshire Cat: Oh, you can’t help that; we’re all mad here. I’m mad. You’re mad.
Alice: How do you know I’m mad?
Cheshire Cat: Well, a physicist’s not mad, you grant that? Now, a physicist starts with facts and tries to find theories that fit them. I start with theories and don’t bother with facts. Therefore I’m mad. Yes?
Alice: But what are your theories about?
Cheshire Cat: Do they have to be about anything?
Alice: Well, I’ve often seen a subject without a theory, but a theory without a subject? It’s the most curious thing I ever saw in all my life!

(Alice suddenly starts)
Cheshire Cat: Don’t worry, it’s just the inwisible hand.
(Enter two characters with paper hats (?) on which are cross diagrams. One has a potato chip taped to his shoulder.)
Cheshire Cat: They’re Mike and Mac Ro
Micro: Someone must stop him! It’s shameful! Look at that silly diagram he’s wearing! It’s a disgrace to the profession.
Macro: It’s a perfectly good diagram. Not like that ridiculous diagram you’re wearing!
Alice: But the diagrams look just the same.
Cheshire Cat: Shhh! You’ll only get them more upset.
Alice: Why don’t you try to talk your differences over?
Micro: Well, we microeconomists believe in logic, so I’m willing to reason it out.
Macro: You can’t expect me to be reasonable. Can’t you see I’ve got a chip on my shoulder?
Alice: Why, yes—it’s a potato chip in fact.
Macro: I wear it in honor of our founder, Cain’s. So prepare to defend yourself.
Micro: I warn you, I’m a master of the Marshallian arts.
Macro: But I’m armed with the most deadly tool of macroeconomics: (pulls out several pairs of pliers)…Multi-pliers!
Micro: And I have the most dangerous concept of microeconomics. (pulls out a slingshot) Elasticity!
Alice: Oh no, they’re going to have a duel and micro is a semi-strict under dog!

(Mike and Mac turn back to back)
(enter panting, the Quick and Dirty banker, carrying a money bag and a calculator)
Q&D: Wait! You can’t have a duel without a primal.
Alice: Who are you?
Q&D: I’m duh quick and doity bankuh. And by my quick and doity bankuh’s calculation, I find dat what you need is more liquidity which I will now provide.

(out of the moneybag he pulls a waterpistol, shoots everyone, then runs)
Macro: Now we’re all wet. What are we going to do?
Alice: It’s all right, I know just what to do. Here’s the driest thing I know.

(begins reading from Bishop [notes])
Micro: This isn’t getting me dry at all.
Macro: Now there’s only one way to get dry, and this will prove to you that macroeconomics is good for something.
Alice: What are you going to do?
Macro: I’m going to do some hand-waving! Macroeconomists are always drying things out by waving their hands.
Alice: They are?
Macro: Of course! That’s why none of their theories will hold water. Now, watch this! (He begins to draw a diagram)
Alice: What do those lines mean?
Macro: Oh, I don’t know. But they’re pretty good lines, and Lord knows I have the right to a few good lines in this ridiculous skit.
Palmer: Haven’t you got the A line drawn wrong?
Macro: (Going very fast) Well, that line doesn’t really matter. (erases it)
Palmer: But then shouldn’t you erase the k line, too?
Macro: Well, all right (erases).
Palmer: What do X and Y stand for?
Macro: Oh, don’t worry about the axes (erases them). Actually, these are not quite like this anyway. (erases remaining lines) And, as you can see, equilibrium is at the intersection.
Alice: Well, I’ve often seen lines without an intersection, but an intersection without lines? It’s the most curious thing I ever saw in my whole life.
Narrator: You’re repeating yourself, Alice.
Alice: What do you expect, Mel Brooks?
Micro: You think that’s hand-waving! Why, I have seen hand-waving, compared with which that is no better than eternal bliss.
Alice: But what is better than eternal bliss?
Micro: Well, a ham sandwich, for instance.
Alice: But nothing’s better than eternal bliss.
Micro: And a ham sandwich is better than nothing. So, by transitivity, there you are!
Alice: (ignoring Micro as she turns to the Cheshire Cat) Isn’t there anyone here who isn’t mad?
Cheshire Cat: You might try an assistant professor.
Alice: Which one should I try?
Cheshire Cat: It doesn’t matter—pick one at random.
Alice: How do I do that?
Cheshire Cat: Just draw one from an assistant professor urn.
Alice: What’s an assistant professor urn?
Micro, Macro, Cheshire Cat, Narrator (in unison) About eleven thousand a year!
(pause)
Narrator: …and a copy of Bishop’s notes.
Alice: Curiouser and curiouser.
(exeunt all)

 

ACT II

Narrator: Act II. The Mad Boston Tea Party
(Dormouse sleeps throughout. Mad Hatter stuttering throughout; price keeps going up on hat.)
Mad Hatter: What’s your liquidity preference my dear?
Alice: It looks like you have nothing but tea.
Mad Hatter: That is all we have.
Alice: Then why did you ask?
Mad Hatter: Consumer sovereignty. (gives Alice tea) I would like to suggest to you that that will be eight pence (takes shilling from Alice.)
Alice: No cover charge?
Mad Hatter: A gentleman never takes cover, as we say in the old country.
Alice: Hey, I gave you a shilling and you only gave me two pence change back!
Mad Hatter: A gentleman never counts his change.
Hare: Gentleperson!
Alice: This sounds like a liquidity trap to me.
Mad Hatter: Alright, I’ll put it down on the T-account…(gets book)
Alice: There is something floating in my tea.
March Hare: (looking) Exchange rates.
Mad Hatter: … two pence… (fiddling with T-accounts)
Alice: No it’s ice.
Mad Hatter: …under frozen assets.
Hare: Gary Becker! (general laughter)
Mad Hatter: Why is the Poisson distribution like a temperature of 102?
Alice: Well, let’s see… I suppose you would have to integrate e to the…
Mad Hatter: Integration! They only do that in South Boston.
March Hare: No, that’s disintegration.
Alice: I suppose you have to differentiate between…
Mad Hatter: Differentiate? The first derivative is the last refuge of a scoundrel.
Alice: I give up, why is the Poisson distribution like a temperature of 102?
Mad Hatter: I haven’t the slightest idea.
Alice: That’s not very funny.
Mad Hatter: Funny?
March Hare: She wants to hear a joke.
Mad Hatter: A joke, a joke!
March Hare: …Fogel and Engerman! (general laughter)
Alice: I’m afraid I don’t get it.
Mad Hatter: Well, you see, certain names are standing jokes around here, like…Walt Whitman Rostow! (laughter)
Alice: Can I try one?
Mad Hatter: Go right ahead.
Alice: Milton Friedman! (silence among the actors who look sour a moment after the audience’s laughter dies down.)
Mad Hatter: Try another one.
Alice: Jay Forrester….(more silence).
Alice: I don’t understand. What’s wrong?
Mad Hatter: Well, some people just can’t tell a joke.
March Hare: Perhaps you’d like to see a proof?
Mad Hatter: A proof! A proof!
March Hare: This is a proof I recited before the Queen of Hearts. (goes to board)

Twiddle Twiddle lambda star
Alpha hat, beta hat times X bar.
Alpha hat, beta hat sigma Xi

One over n, equals mean of Y.
[writes on board:]:
\begin{array}{l}\mathop{{\tilde{\tilde{\lambda }}}}^{*}=\hat{\alpha }+\hat{\beta }\cdot \bar{X}\\=\hat{\alpha }+\hat{\beta }\cdot \sum{{{X}_{i}}}\left( \frac{1}{n} \right)=\bar{Y}\end{array}
Mad Hatter: Time to move on to the next place.
(everybody gets up to move)
Alice: What?! You mean you just move on to the next place without erasing?
March Hare: We don’t have to erase; we just relabel the axes.
Mad Hatter: I always erase twice, once before the period and once afterward. (erases)

(everyone moves down one, and relabels axes and curve)
     
Alice: And I suppose when you use up all the places you just start again at the beginning of the circle?
Mad Hatter: Yes. It’s called recycling.
March Hare: You better wake up the Dormouse.

(Mad Hatter and March Hare exit)
Alice: (To Dormouse) Wake up, wake up. (shakes him)
Dormouse: (waking) Whaaaaat?
Alice: Wake up. It’s over.
Dormouse: (Pause…) Can I Xerox your notes?
Alice: (starts to leave. turns and says) Why is a Poisson distribution like a temperature of 102? (Pause. Alice exits)
Dormouse: (alone) Because it’s not normal.

 

ACT III

Narrator: Act III. Alice meets Tweedledum and Tweedledee, who have a battle.
(Alice enters and sits down. Dum and Dee enter, arm-in-arm, prancing. Dee sits down; Dum goes to the board and begins. Throughout, Dee is frantic, pacing, and talking very fast. Dum is red-faced, slow-talking, constantly looking at the floor; arms folded, with noticeably short pants and a turtleneck.)
Dum: So, to conclude yesterday’s talk, we can see that it’s entirely possible that for the two sub-groups, say, men and women, you could have different parameters in the regression…
Dee: (jumping up to interrupt) I think I can draw a picture that will make that all clear. Wish I had my colored chalk… [draws pictures].
     
…so you see that while the slope in the pooled regression is zero, contrariwise; it’s actually negative for men and positive for women.
Dum: …Sort of, different slopes for different folks, which tells us…
Dee: [interrupting] …and contrariwise, I can clear this up by drawing a picture that would show…[draws picture]
 
Dum: [interrupting]…that there could be kinky behavior in some subgroups….
Dee: Right. (sits down)
Dum: But, as I was going to say, this illustrates the 287th “Iron Law” of econometrics, which states that….
Dee: (again jumping up to interrupt)…Contrariwise,…I think I can make that clear with a picture in four dimensions. Damn, I just wish I had my colored chalk…(draws pictures)
…which shows that…
Dum: (getting very irritated, interrupting) Nohow!

The time has come, the Walras said
to talk of many things,
of matrices and error terms
of cabbages and kings,
and keeping out your pictures
that keep complicating things.
Dee: Contrariwise!

In my way of showing things
I’m better far than you,
Your talk is like an old dead horse–
It’s slow, not unlike glue.
Dum: Now wait a second…
(Dum and Dee break into a general dispute, yelling at one another.)
Dum: ….you’re not consistent…
Dee: …you’re almost surely driving me to the p-limit…
Dum: …you’re a homoscedastic deviate…
(While Tweeledum and Tweedledee continue arguing, the Narrator breaks in…)
Narrator: So Tweedledum and Tweedledee
Agreed to have a fight
For Tweedledum said Tweedledee
Couldn’t prove Gauss-Markov right.
Dum: Of course we must have a fight. What time is it?
Dee: 10:40—We’re late getting started, so we better hurry up.
Dum: Let’s fight ‘till noon, then have lunch.
Narrator: So they agreed to fight and, as Alice watched, they began to see who could prove the theorem better.
(Dum and Dee give lectures simultaneously, beginning and ending at the same time with the same words.)
Dee:

[simultaneously with Dum]

I CLAIM THAT OLS IS BLUE.

Basically, we want to prove that

{{\sum{\left( \mathbf{{X}'Y} \right)}}^{-1}}\mathbf{{Z}'}\beta \le {{\sum{\left( \mathbf{{X}'\tilde{Y}} \right)}}^{-1}}\mathbf{{Z}'}\gamma

Now just take the inverse of the antilog of the Jacobian and delete the fourth row. Let little x be the square root of big X, and let medium-sized x be measured from its mean; substitute back in and we have

{{\sum{\left( \mathbf{{X}'}\left[ \begin{matrix} \mathbf{Y} \\ \mathbf{Z} \\ \end{matrix} \right] \right)}}^{-1}}{\left| J \right|\cdot \Pi \cdot {{R}^{2}}}/{\text{hat size}}\;

which you will recall from 14.381.

Then, as I promised, you can use this by transposing Z and x, deleting R and reversing the inequality…..OH SHIT…I’ve screwed up…Well, just change every medium-sized x in your notes to big X, delete all sigmas, and reverse the third and fourth steps of the proof I gave last week which was right here on the board. Or look in Tahl’s [Theil with an West Virginian accent] book. Everyone should understand this perfectly—and of course the notation is clear. Then, adding the obvious steps we learned in 14.381 to this proof completes the argument. SO OLS IS BLUE, as promised.
Dum:

[simultaneously with Dum]

I CLAIM THAT OLS IS BLUE.

Well….a lot of people go around proving the Gauss-Markov….Theorem….but the literature is full of cases….where what’s done is wrong….Take matrix addition for example….Some people just add element-by-element….while often the more interesting thing to do…..is to use the Choleski factorization of one of the matrices….And recalling that Tweedledum and I are the final arbiters of econometrics at W.I.T. (at least until Fisher gets back off leave) you’d better do it this way, or consider dropping the course. SO OLS IS BLUE, as promised.
Palmer: Shouldn’t you invert that Jacobian before proceeding to expansion in Lambert spaces….
Dee: [interrupting] If it was so, it might be; If it WERE so, it could be; But as it isn’t, it ain’t. That’s logic.
Narrator: Alice couldn’t figure out just who had won the fight, although Tweedledee HAD used a lot more words….
[exeunt]

 

ACT IV

Tweedledee: Act Four, “The trahl”.
Narrator: Within a few moments Alice will witness the trial of the Knave of Hearts who is in deep trouble now because the King of Hearts is flying all the way from the Capital of Wonderland to preside at the trial. You are undoubtedly familiar with the Knave of Hearts most important contribution to economic analysis, “A Life-Cycle Built for Two”. But now he has been accused of starting the latest Wonderland inflation and depression—or as they say in the seminar rooms down by the River Chuck—“inflession”. The economic experts of the King—Knave Arthur of Clubs, Knave William of Spades, and Knave Alan of Diamonds—have all convinced him that economic voodoo has been practiced on models on the Wonderland economy in the hallowed halls of W.I.T. Since the King of Hearts has never played with a full-deck in his life, he was easily deceived by these rascals. Fortunately for the Knave of Hearts the Queen was unable to come to the trial due to a prior speaking engagement before the Veterans of Foreign Business Cycles.
(Enter Knaves of C.S. &D. They play “Hail to the Chief” on kazoos for a few bars and end with “Pop goes the weasel.” Then the King enters wearing a helmet and carrying a football. A WIN button is conspicuous. King bends over, hikes the ball to Knave of Clubs. King sits down on throne in middle of stage.)
Knave of Clubs. Where’s the jury?
King of Hearts. (points at the Knaves) You. (Knaves turn around but no one is behind them. King continues…) Yes, you. You are his peers. And for a proper trial before we cut off his grant, we must have a jury of his peers.
Knight of Diamonds. (tossing a coin à la [George] Rath) We know what to do.
(Enter all the other characters from Wonderland, except Joker and reporters)
King: What are the charges?
Knave of Clubs: Eleven dollars a barrel.
White Rabbit: The King of Hearts, he has no smartz
But Unemployment yes.
The Knave of Hearts has played his part
To make inflation worse.
Knaves in the jury-box: Boo, Hiss, Boo!
King: It is a pretty despicable offense isn’t it?
Knave of Spades: Are you kidding? The charges don’t even rhyme.
King: Will the defendant rise?
Knave of Hearts: If I had known you were going to ask me that question I would have built it into my model.
King: I’ll hold you in contempt!
Knave of Hearts: I don’t suppose I’ll become overly fond of you either.
King: Let the jury note the defendant’s behavior.
Knave of Hearts: Which reminds me of my 1944 paper, but that is of course a secondary issue given the gravity of the problems which we now face. While I can’t formally defend the following equation to my own satisfaction, I think that it does make some economic sense. But first I should say that things will be getting much worse before they will get better, I can give you the latest predictions…..
King: (fuming through all of the above) Bind the bearer of bad tidings or he’ll talk us to death…
Knave of Clubs: But what shall we bind him with?
King: Bearer bonds, naturally!
(The Knaves come out of the jury box and use first-aid gauze to tie the knave of Hearts by body and legs & gag him—leaving only one arm free. Knave of Hearts has been talking with his hands throughout his testimony, and he continues gesturing with his free hand while occasional grunts can be heard under his gag.)
King: May it be noted that in the tradition of Wonderland jurisprudence we have left the defendant with one degree of freedom in spite of his lack of respect for this court. Are there any witnesses?
Mad Hatter: I am.
King: Take the stand.
Knave of Clubs (to Mad Hatter): Did the defendant do it?
Mad Hatter: Certainly not.
Knave of Spades: And you witnessed this with your own eyes?
Mad Hatter: And I didn’t hear or smell him do it either.
Knave of Diamonds: But how strong was your prior?
Mad Hatter: Well, I don’t like to boast but when I was a young man working for the OSS during the War, I once spent a week in bed with a….
Knave of Clubs: No, no, no. How much could new data affect your prior beliefs, and if considerably, what was your posterior judgment?
Mad Hatter: I don’t now, that’s a good one. But I’ve got one for you. What weighs 12,000 pounds and has a twice differentiable indifference map over hay and peanuts?
King: That’s irrelevant!
Mad Hatter: That’s right.
King: Give your evidence, or I’ll cut your grant off on the spot!
Mad Hatter: (stutters) I’m a poor man your majesty.
King: You’re a very poor speaker. (knaves laugh) I thought that was a pretty good one too. I’m in the mood for a few laughs (to White Rabbit) Call in the Joker.
White Rabbit: The Joker.
(Enter Joker, attended by secretary, fans seeking autographs, and reporters taking pictures)
Joker: It’s great to be back in Wonderland folks. A funny thing happened on my way…
King: (interrupting) You have been called here to testify. What is the Keynesian viewpoint?
Joker: As Uncle Miltie Friedman would say, only blindmen use Keynes. Hey, that’s a pretty good one. (To secretary) Write that down for my textbook—Better yet, put out a new edition. But, seriously folks just the other day I was leafing through a volume of Ricardo’s letters in the Sraffa collection when I came across a letter from Ricardo to James Mill describing the following encounter between Thomas Malthus and David Ricardo. Ricardo was walking down the street one day when he ran into the good Reverend who was, much to Ricardo’s surprise, sporting a banana in his left ear. Ricardo was surprised because Malthus was always the last of the political economists to adopt a new fashion. Finally Ricardo’s curiosity got the better of him and he asked, “I say Tom, why is that banana in your ear?” Malthus didn’t seem to understand—but that was hardly unusual as Malthus, more often than not, couldn’t understand what his friend was saying. In fact, old Malthus personally thought that Ricardo couldn’t optimize his way out of a paper sack, much less a Lambert space. Finally Malthus said, “I’m sorry Dave, but I can’t hear you, you see, I have this banana in my ear.” (everyone in the courtroom is sleeping) And now….ahem…ahem (everyone wakes up). A few of your favorite impressions: Francois Quesnay! (He covers his face with his hands; removes hands; expression unchanged) Böhm-Bawerk! (same routine)
King: Enough!
Joker: Nassau Senior! (same routine)
King: Take him away. (White rabbit and knaves carry Joker off, still doing impressions. e.g. Stanley Jevons, Joseph Schumpeter, Vilfredo Pareto….)
King: Who is the next witness?
Rabbit: Alice!
Alice: Here! (she goes to the witness stand)
King: What do you know about this business?
Alice: Nothing.
King: If you say anything, I’ll give you part credit. Otherwise….
Alice: But I don’t need part credit!
King: Young lady, I’m growing impatient. Either tell us something about this business or I’ll cut off your grant.
Alice: (crying) But I don’t have a grant.
King: Then why are you so upset, indeed.
Alice: What sort of….(alarm clock goes off in the jury box and the knaves wake up).
Knaves: (in unison) Verdict time!!
Knave of Spades: (To Knave of Diamonds) Do you have the coin?
Knave of Diamonds: Yes I do. (to Spades). You’re innocence, (to Clubs) you’re guilt. Call it innocence. (he tosses the coin high in air)
Alice: What kind of trial is this?
King: Don’t be a stupid child. It’s a Bernoulli trial.
Knave of Spades: Tails.
Knave of Diamonds: Sorry it’s heads. He’s guilty!
Alice: May I see the coin? (it’s tossed to her) This coin has two heads.
King: Did anyone say p equaled one half?
(Lights out. Everyone leaves but Alice. Lights on she has book and wakes up.)
Alice: I’m glad I woke up before I had to take generals. (She leaves)
Audience: (Deafening applause) Bravo. Cheers. Whoopee.

 

Source: Transcribed by Irwin Collier from personal copy.

Categories
Economists M.I.T.

MIT. Department of Economics Group Photo, 1976

Back Row:  Harold FREEMAN, Hal VARIAN, Jerome ROTHENBERG, Peter DIAMOND, Jerry HAUSMAN

4th Row: Paul JOSKOW, Anne FRIEDLAENDER, JOHN R. MORONEY (VISITOR TO DEPARTMENT)

3rd Row: Stanley FISCHER, Jagdish BHAGWATI, Rudiger DORNBUSCH, Robert SOLOW, Robert HALL

2nd Row: Edward KUH, Morris ADELMAN, Abraham J. SIEGEL, Richard ECKAUS, Martin WEITZMAN

1st Row: Evsey DOMAR, Paul SAMUELSON, Charles KINDLEBERGER, E. Cary BROWN, Franco MODIGLIANI, Sydney ALEXANDER, Robert BISHOP

1976_MITEcon_blogCopy

Apparently didn’t get the memo and/or not pictured: Michael PIORE, Frank FISHER, Peter TEMIN.

Thanks to Robert Solow, the photo-bomber standing to Solow’s left in the picture has been identified as a guest from Tulane University, John Moroney. It is possible that I forgot some other person not included in this faculty picture.

I note that the entire front row has gone to that great Department of Economics in the Cloud.

Source: A graduate student buddy of mine who entered the MIT Ph.D. program in 1975/76.

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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 of which this is the 250th. You can subscribe to Economics in the Rear-View Mirror below. There is also an opportunity for comment following each posting….