March/April 2008

Economics at MIT

Continued from page 1

By Eileen McCluskey

Other prominent MIT graduates echo that sentiment. Athanasios Orphanides '85, PhD '90, who became governor of the Central Bank of Cyprus in 2007, recalls that MIT professors such as Solow, Fischer, and the late Rudi Dornbusch "had a keen interest in policy and passionately infused their lectures with real-world examples from history and current policy debates."

Orphanides stepped into his post at a critical time for his country. In January 2008, Cyprus, which has been a member of the European Union since 2004, converted from its own currency to the euro. Orphanides's transition efforts included launching a national help line to answer questions.

Impact on Public Policy
While alumni steer nations through turbulent economic times, MIT continues to foster "a growing recognition that most public-policy questions have an economic dimension," Poterba says. "Economists are finding a place at the table in analyzing and finding solutions to a diverse set of social problems."

For example, the department's Jameel Poverty Action Lab (J-PAL) uses scientifically engineered randomized trials to improve the effectiveness of antipoverty programs around the world. The lab was started in 2003 by Professors Abhijit ­Banerjee, Esther Duflo, PhD '99, and Sendhil ­Mullainathan. J-PAL's field-based research explores issues such as the impact of vouchers on private schooling in Colombia and the role of ­public-health programs in promoting health and productivity in India.

Other MIT scholars use macroeconomic theory to shed light on social issues. Professor Daron Acemoglu, for example, studies how governance structures and legal sys-tems, which sometimes date from colonial regimes, influence a country's growth trajectory. Professor Michael Greenstone, who uses statistical techniques to measure the economic impact of climate change, has adapted the same techniques to the first independent quantitative analysis of the impacts of the U.S. troop surge in Iraq.

"It is often an awakening to discover
fields besides science and technology where you can apply rigorous quantitative skills," says Poterba. "Many students who first encountered economics concepts in our two introductory courses have gone on either to careers in economics or to apply economic analysis in a range of other career pursuits."