For those of you who missed the talk this past Tuesday, here is University of Pittsburgh Professor Werner Troesken’s talk, “The Pox of Liberty: How the Constitution Left Americans Rich, Free, and Prone to Infection.”
Here’s a link to the book from University of Chicago Press, and here is a draft of the introductory materials.
The duel of honor – can you think of a more romantic topic for a St. Valentine’s Day lecture? The duel would seem to be a barbaric practice from an anachronistic age. Yet, Professor Allen provides a cogent theory of dueling, arguing that it provided a screen for otherwise unobservable investments in “social capital” – social investments that allowed aristocrats to demonstrate their allegiance to the crown. He argues that his “social capital” hypothesis is consistent with many of dueling’s peculiar institutional features, the rise and fall of the practice, and the salient differences between the European and American dueling practices. One suspects that he will also address Joseph Schumpeter’s duel with a recalcitrant campus librarian.
The talk is adopted from his recent book, The Institutional Revolution: Measurement and the Economic Emergence of the Modern World.
Professor Allen is on campus to discuss his classic work on North American agriculture, The Nature of the Farm (co-authored with Dean Lueck).
Thursday, February 14
Steitz Hall 102
4:30-5:30 p.m.
This weekend marks another big weekend for the Lawrence Scholars programs, including a visit from alums Hugh McLean, Jamie Reeve, and Mark Spertel for the Lawrence Scholars in Business program. Our guests will talk about commercial banking and private wealth management. I’ll try to get their bios up later today.
These events are excellent opportunities for you to get a glimpse at opportunities out in the real world, and to mix with professionals who actually want and have time to mix with you!
Doug Allen from Simon Fraser University will be on campus on February 14 as part of the Senior Experience in economics. In addition to The Experience, Professor Allen will also deliver a public lecture on his recent book, The Institutional Revolution: Measurement and the Economic Emergence of the Modern World. The book is a collection of work that principally examines the ‘peculiar’ institutions surrounding the British aristocracy and other pre-modern European curiosities , including the sale of public offices and military commands to the practice of dueling to “settle” disputes.
Professor Allen’s talk will focus on dueling!
Here are a couple of the papers that serve as the foundation for The Institutional Revolution, available via the genius of Google Scholar.
Douglas W. Allen and Clyde G. Reed (2006) “The Duel of Honor: Screening for Unobservable Social Capital,” American Law and Economics Review: 1–35.
Douglas W Allen (2002) “The British Navy Rules: Monitoring and Incompatible Incentives in the Age of Fighting Sail,” Explorations in Economic History, 39(2):113-232.
Douglas W. Allen (2009) “A Theory of the Pre-Modern British Aristocracy,” Explorations in Economic History, 46:299–313.
Douglas W. Allen and Yoram Barzel (2011) “The Evolution of Criminal Law and Police During the Pre-Modern Era” Journal of Law, Economics, and Organization, 27(3):540–567.
Want to learn more about (rare) peaceful transitions of power in communist countries? Come to Mark Frazier’s lecture. Want to understand how China sees its own future? Come to Mark Frazier’s lecture. Want to know the relationship between communism and capitalism in China? Come to Mark Frazier’s lecture.
Former Lawrence Professor, Mark Frazier, presently co-director of the India China Institute at the New School in New York City, will give the second Povolny lecture this fall tomorrow night at 7:30 PM in the Wriston Auditorium. The title for his talk is “Who is Xi? Knowns and Unknowns in China’s Political Future. For more information see Frazier talk_ Oct 2012
Lawrence alum Elijah Brewer will address the above question in the next Economics Colloquium. It will take place next Monday, October 8th, in Steitz Hall 102 at 4:30. We encourage all to attend.
Brewer characterizes what he will argue as follows:
The causes of the financial crisis of 2007-09 are many and varied. Indeed, the crisis may be viewed as the product of a perfect storm. This address will discuss many of the popular causes of the U.S. crisis and enumerate their more important sins. It then presents the traditional way we like to think about commercial banks, and how that had changed leading up to the financial crisis. Indicators of stress in the financial system, and commercial banks in particular, are presented. What you will see is that many of these indicators were flashing red well before regulators got their hands around the problem. I will argue that it was not the lack of regulation, but a lack of will by regulators to enforce the rules that were already on the books. Thus, the government’s and Congress’s desire to regulate Wall Street is mis-placed. The banking industry does not need more regulation for the regulators to ignore when it’s convenient for them to do so, but we need a greater will by regulators to enforce the regulations that they do have. I will conclude by offering an assessment of the Dodd-Frank Act.
Today is a summer visit day for prospective students, so hello to all of you good folks from Briggs 2nd.
Last year the Lawrence Scholars in Law program was fortunate to feature alumnus Tony Valukas in one of the better alumni talks you are likely to see. This year, Mr. Valukas is back as our commencement speaker. So, those of you commencing are in for a treat. Much of the rest of this post is from the LSL blog post from last year.
This is from his biography:
Mr. Valukas has been a partner with Jenner & Block from 1976 through the present, with the exception of his tenure as the United States Attorney for the Northern District of Illinois from 1985 through 1989. Prior to Jenner & Block, Mr. Valukas held several positions with the U.S. Department of Justice, including Assistant United States Attorney (1970-1974), Chief of the Special Prosecutions Division (1974), and First Assistant United States Attorney (1975-1976)… Mr. Valukas was appointed in 1991 as Special Counsel to the City of Chicago to investigate and report on the City’s health care system. He was selected Special Inspector General to the Chicago Transit Authority to investigate vendor fraud, and counsel to the Chicago Housing Authority to investigate vendor and pension fraud. He has also served as chairman of the Governor’s Task Force on Crime and Corrections for the State of Illinois, a 2-year effort which led to the passage of major prison reform legislation in 1993.
Mr. Valukas is also a former member of the Lawrence Board of Trustees.
That seems like quite a lot, but it certainly doesn’t end there. 
Indeed, Mr. Valukas was appointed by federal court to determine the causes of the collapse of Lehman Brothers, the largest bankruptcy filing in US history. According to the Wall Street Journal:
This was no small undertaking. At the New York offices, the Lehman team commandeered half of a floor previously used as storage space. The heat sporadically cut off as the work continued overnight. “A lot of the associates looked like longshoreman wearing caps and hooded sweatshirts,” said Patrick Trostle, a Jenner & Block partner who worked on the case.
By the time the investigation was over, more than 200 attorneys had worked on the case, reviewing 34 million pages of documents. Investigators also conducted roughly 250 interviews, ranging from Warren Buffett to Ben Bernanke.
The result is nine-volume, 2200-page report known as “The Valukas Report.”
That must be some dry reading, eh? Not from a Lawrence alum! In fact, it comes highly recommended (from the WSJ blog):
It is long, but Judge James M. Peck of the U.S. Bankruptcy Court in Manhattan said the recently released report on the causes for the Lehman Brothers Holdings bankruptcy reads like a “best seller.”
If he can turn a 2200-page bankruptcy report sound like a best seller, I am certainly looking forward to hearing what he has to say.
See you there.
On Monday night students in the Economics of the Firm class (Econ 450) will be showing off their work on the economic organization of Lawrence University. You can check this out in Briggs 223 on Monday at 6 p.m. I am impressed with the quality of the students in this course, and I am confident that they will put on a good show. If you aren’t careful you might even learn something about LU. Indeed, this should be of interest just for the descriptive statistics.
‘Selling’ Yourself Short? The Promise and Pitfalls of Income-Contingent Loans: With graduation just a few days away for the Lawrence University class of 2012, the time has come to embrace a looming reality: college loans. Most of us have them and they need to paid back. According to FinAid.org, more than 65 percent of four-year undergraduate students in America take on debt in the form of government and/or private loans to finance their education. Loans are generally issued by institutions or individuals with available money in return for a premium in the form of a fixed interest rate. An alternative option exists, however, whereby students instead offer investors a share of their future earnings, similar to the capital-raising efforts employed by firms. The idea is by no means new; in fact, Milton Friedman advocated the use of income contingent loans in 1955. Our project explores the benefits and concerns associated with issuing equity to finance education and analyzes whether this alternative option is viable for Lawrence University. We will discuss the adoption of an income contingent loan program at Yale University in the 1970s to provide an experiential understanding of this practice. (David Caprile, Oscar Koberling, Rana Marks, Stuart Smith).
Are Excess Endowments a Problem? Monitoring and Agency Problems among the Associated Colleges of the Midwest Economic discourse on the theory of the firm developed while trying to understand the for-profit firm; however, the last few decades have witnessed an increase in research on the not-for-profit firm. There is considerable variability among the two categories, for-profit and non-profit. One intriguing non-profit is the university. Unlike most non-profits and all for-profits, universities keep large cash surpluses. The reason for these large endowments has remained a puzzle (Hansmann 1990) One proposed explanation for large endowments is agency problems. We draw on data from a pool of small private liberal arts colleges to examine the relationship between “excess endowments” and high monitoring and agency costs. (Molly Ingram, Regina Hammond, James Maverick).
Why Does Lawrence University Have So Many International Students? Lawrence University has the highest percentage of international students of any college in the Associated Colleges of the Midwest. Indeed, the percentage of Chinese students on campus is higher than the percentage of all international students at several ACM schools. The “awkward” economics of higher education suggests that “colleges can buy important inputs to their production only from the customers who buy their products; colleges buy important inputs to their production only from the customers.” Lawrence procures these inputs by providing generous financial aid, lower initial deposits, and through other avenues. In turn, international students help provide language instruction, promote campus diversity, and contribute significantly to campus cultural activities. Our regression results are consistent with our contention that LU has an unusually high percentage of international students. (Linlin Liang, Yue Jia, and Zhan Guo).
Food catering services: Dine in or dine out? This project looks at data collected from 100 top liberal arts colleges ranked by U.S. News and World Report to determine factors that contribute to college’s food services make- or-buy decision. Consistent with the empirical work on make or buy decisions (e.g., Monteverde & Teece 1982; Joskow 1987, Anderson & Schmittlein 1984), we examine potential conventional microeconomic as well as transaction-cost theories for Lawrence’s recent outsourcing of food services. We provide logistic regression on outsourcing as a function of based on endowment size, campus acreage, size of the student body, location relative to urban areas. (Max Randolph, A.S. Darling, Andrew Kraemer, Brian Zindler).
The Department Picnic is an annual ritual at Lawrence, but one where we in the Economics Department haven’t quite mastered. This is partly because many of the faculty are relatively new, and partly because we just aren’t that into rituals.
That said, we will be communing as a Department this Wednesday, May 30, from 4:30 to 6:00 on and around the Hiett first floor patio (Location subject to change).
If you plan to attend, please indicate your intention here.
Your affirmation on the Doodle poll will allow us to procure appropriate levels of pizza and SuperChill® (the empirically validated cola choice of the Economics Department), and will also help us to ration in the event that supplies run short.
We look forward to seeing you there.
Using Statistics and Mathematics to Model the way in which Interest Rates Evolve over Time
Andrew F. Siegel
Department of Statistics and Foster School of Business
University of Washington at Seattle
Mathematical modeling is all about choosing the simplest equations that act like reality. Models of the evolution of interest rates over time are surprisingly deep because simpler models are full of inconsistencies (called “arbitrage opportunities”) that do not reflect market efficiency. Sophisticated traders would exploit these opportunities, systematically changing interest rates, instantly rendering the model invalid. At any given moment there are many interest rates: one for each investment term (which can range from days to years), and a consistent model must prevent arbitrage opportunities within the vast linear space of combinations (portfolios) of investments with different terms. Many aspects of mathematics and statistics are involved in the creation of consistent arbitrage-free models. My research involves a change in focus: Building a linear system for market prices instead of for interest rates, which reduces model complexity while increasing model flexibility. The technical parts of this talk will be described conceptually in an intuitive way, and anyone with an interest in mathematics and its applications is welcome to attend!
Thursday, May 24
Steitz Hall 102
11:10am
John Maynard Keynes is the father of modern macroeconomics, and Keynesian economics and the welfare state have been inextricably linked in the public mind since the postwar era. Indeed, he is widely believed to have provided the analytical, economic underpinnings for the welfare state. Bradley Bateman, a recognized scholar of Keynsian thought, examines Keynes’s contributions with the backdrop of the recent financial calamities and the widespread fiscal crises of state and national governments.
Please join us for Professor Bateman’s talk, which is part of the Lawrence Senior Experience in the Department of Economics.
Wriston Auditorium Thursday, May 17 4:30 p.m.Bradley W. Bateman is the Provost and a Professor of Economics at Denison University. He is the author of Keynes’s Uncertain Revolution and co-author of Capitalist Revolutionary: John Maynard Keynes.
On May 22nd at 4:30 in Steitz 102, Dan Quint will speak on the subject in the title, closing this year’s inaugural Economics Colloquium series with a bang. He is Assistant Professor of Economics at the University of Wisconsin – Madison. His work on auctions and bargaining has appeared in leading economic theory journals.His undergraduate degree is from Harvard University (Mathematics), and he received his PhD in Economics from Stanford University. Professor Quint will present his work on an interesting auction format used in eighteenth-century Amsterdam. He will focus both on the historical facts and the auction theoretic analysis. Abstract for his paper is below the fold. Continue reading Anglo-Dutch Auctions 300 years ago
Prospects for US Electricity Generation: Carbon Capture &/or Natural Gas
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David Gerard
Lawrence University
What will be the technology of the future for US electricity generation? Although carbon capture and sequestration (CCS) has the potential for steep reductions in CO2 emissions, CCS faces many potential regulatory hurdles and public acceptance issues. Moreover, the technology is expensive – both in terms of additional capital costs and the additional fuel needed to capture, compress and transport the CO2. I talk through some of my recently published work that assesses the decision to build new natural gas and coal-fired plants given future market and regulatory uncertainty, particularly uncertainty about future natural gas and carbon prices. I conclude that CCS will not be commercially viable without beaucoup public financial support or outright mandates. I finish with some speculation on how the current fracking boom will affect energy and electricity markets. It appears that it will be natural gas all the way down as the principal source of new added generation capacity.
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Tuesday, May 15
Steitz Hall 102
11:10 a.m.
The talk will draw heavily on:
Fischbeck, P. S., Gerard, D. and McCoy, S. T. (2012), Sensitivity analysis of the build decision for carbon capture and sequestration projects. Greenhouse Gas Sci Technol, 2: 36–45. Available at http://onlinelibrary.wiley.com/doi/10.1002/ghg.1270/full
Morgan et al., (2009) “Commercial Considerations,” Chapter 9 in Carbon Capture and Sequestration: Framing Issues for Regulation. An Interim Report of the CCSReg Project. Department of Engineering and Public Policy, Carnegie Mellon University. Available at: http://www.ccsreg.org/pdf/CCSReg_3_9.pdf
Gerard D., Wilson E.J. (2009) Environmental bonds and the challenge of long-term carbon sequestration, Journal of Environmental Management, 90(2):1097-1105. Available at https://www2.hhh.umn.edu/publications/2159/document.pdf
Dr. Kathleen Spees from The Brattle Group will be on campus Monday to deliver the third Economics Colloquium lecture this year, “Market Design from a Practitioner s Viewpoint:Wholesale Electric Market Design for Resource Adequacy.”
The lecture is at 4:30 in Steitz 102.
Dr. Spees has broad expertise in technical and policy aspects of electricity markets, including reliability and pricing. She earned an MS in electrical and computer science and a Ph.D. in Engineering & Public Policy from Carnegie Mellon. She completed a BS in mechanical engineering and physics from Iowa State University.
She will also give a talk to the ENST 151 class at 11:10, “Introduction to the Electric Power Industry.” Please see Professor Gerard if you are interested in attending.
The abstract for the Economic Colloquium is below the fold:
The Economics Department Open House is Thursday at 4:30 on Briggs 2nd, probably clustering near 217.
The Open House is a chance for economics majors to get together, and also for students potentially interested in the major to meet the professors (!), talk about the curriculum, chart a future course, learn more about the upcoming LSB trip, take an important step towards self-actualization, and meet some fellow economics students.
My understanding is that there will be some short talks by some of our Senior Experiencers. Oh, and delicious refreshments.
See you there.
Professor Richard Brualdi from University of Wisconsin is on campus this coming Tuesday, April 17, to give the inaugural McDougal Lecture in Mathematics. The talk is at 4:30 in Steitz Hall 102.
Professor Brualdi’s talk is “A Combinatorial Book of Colors,” and I’ve been assured that this is accessible to a more general audience. (Of course, I was assured by a mathematician). Here’s more on Professor Brualdi.
The McDougal Lecture promises to be an exciting addition to the intellectual climate here, and here’s some background information from our friends in the math department:
Professor Kevin F. McDougal earned a Bachelor of Arts degree in mathematics from Lawrence University in 1979. He wrote his Ph.D. dissertation, Some Combinatorial Properties of (0, 1) Matrices, under the direction of Prof. Richard Brualdi and received his Ph.D. from the University of Wisconsin, Madison in 1989. Kevin was a Professor of Mathematics at the University of Wisconsin, Oshkosh and had nine publications in combinatorics and a nearly completed book in combinatorics when he unexpectedly died in 2004 from a rare heart condition while training in Green Bay. The McDougal family sponsors this lecture series to celebrate Kevin’s intellectual curiosity and passion for mathematics.
See you there.
The LSB program sponsors an educational trip to Chicago every year. The purpose of the trip is to provide students an “immersion experience” in one of the country’s financial and entrepreneurial hubs. The trip will take place during reading period, on May 3rd and 4th. We will leave at 6:00 a.m. on Thursday, May 3, and return in the evening on Friday.
We will have a full schedule, visiting the following organizations: Chicago Mercantile Exchange, Madison Dearborn Partners, The Northern Trust Company, Deloitte, LBC Credit Partners, Industrial Council of Nearwest Chicago, Ennis Knupp + Associates, and the Chicagoland Entrepreneurial Center.
The costs of the trip are covered by the LSB program. The trip is open to all students. This trip is a great opportunity to learn about the business world up-close, in a way that you couldn’t do on your own. If you would like to join, register through LUworks. Deadline to register and pay $20 refundable deposit is April 25.
George Georgiou from the University of California at Santa Cruz will be on campus Friday to give a talk, “An Introduction to Law & Economics.” Mr. Georgiou is completing his Ph.D. in international economics, with a specialization in applied micro and law & economics. His work focuses on whether post-incarceration supervision levels affect recidivism.
Mr. Georgiou will give the talk in Briggs 223 at 1:50.
The usual delicious Econ Tea accouterments should be available.
It’s time for the Environmental Studies Fest, this Thursday, March 8th at 4:15 pm in the Atrium between Youngchild and Steitz Halls.
Come see what ENST students have been up to……and get Snacks!
Here’s what’s on tap:
*ENST 650 Capstone projects
