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Given the leverage provided by an endowed chair, the department is open to a wide ranging discussion of research areas and questions that an endowed chair might support. Here, we provide some suggestions of research areas of current strategic interest to the department.
This is an exciting new branch of economics that examines how factors other than calculated self-interest affect everyone's economic behavior. Among other things, these factors include notions of fairness, reciprocity, revenge, and simple limits to humans' cognitive capacities to analyze complex decisions. Much of the research is done via experiments, both in labs and in the field; exciting recent work in this area uses MRI technology to examine the brain activity of subjects engaged in economic interactions. The effect of psychological factors in financial markets is an important area of behavioral research.
Large segments of the world's population continue to live in abject poverty. What factors, including shortages of investment of education, ineffective political systems, corruption, and/or environmental degradation, are most responsible for this, and how best can the economic fortunes of the world's poorest poor be improved? How helpful are microcredit and microinsurance, compared for example to public health programs or political reform? These are examples of key questions in development economics. The department currently has two young scholars working in this field; our senior scholar is expected to retire shortly. An endowed chair would provide needed department leadership in this area.
This is one of the basic three M's (micro-, macro-, and 'metrics) taught in the first year of every economics Ph.D. program; it is where students learn the statistical methods required to analyze data and test hypotheses. Using an endowed chair to Increase our department's strengths in econometrics would strengthen us in all other areas because this area is so foundational to our discipline.
Environmental Economics studies some of the most important questions facing modern societies. For example, what are the tradeoffs - if any - between economic growth and environmental quality? Given any goal for emissions reduction, what is the most cost-effective way to attain it? How can markets (including, for example, tradable emissions permits) best be used to achieve environmental goals most efficiently? In collaboration with the Bren school, UCSB's economics department is a world class center in environmental economic research.
Financial economics studies asset markets of all kinds. This field offers at least two unique opportunities for growth at UCSB. One is the presence of department members Rajnish Mehra and Steve Leroy, who have made internationally-recognized contributions to this field. The other is the presence on campus of the Center for Research in Financial Mathematics and Statistics (CRFMS). A chairholder in Financial Economics would both interact in mutually beneficial ways with this new Center.
Industrial Organization (IO)
Industrial organization studies the behavior of firms and their regulators, asking such questions as how regulation affects innovation, investment and profits, or how mergers affect consumers. UCSB's IO economists include a former Chief Economist and Director of the Bureau of Economics at the U.S. Federal Trade Commission. Understanding the strategic behavior of firms in an increasingly more complex economic and regulatory environment is clearly an essential component of any economics education. Industries of special interest to the department include information technology, health care, and pharmaceuticals; the role of intellectual property rights in knowledge-based industries is also a key emerging research area.
As all markets are becoming global, all of economics is becoming international. An endowed chair in international economics would thus be instrumental in keeping the department at the cutting edge of research and teaching.
Labor economists study the economics of work and pay, including the effects of regulation (such as minimum wage laws, overtime restrictions, and antidiscrimination laws) on labor markets. Sound public policy in labor markets is essential for a healthy economy, and labor economists' scientific study of labor markets is key to the formation of such policy. UCSB has a strong, young research group in labor economics and a senior chair would complement that group very well.
Macroeconomics is the study of growth and business cycles in aggregate (i.e., national) economies. As is widely known, UCSB's Finn Kydland was recently awarded the Nobel Prize for his research in macroeconomics. UCSB hosts Kydland's Laboratory for Aggregate Economics (LAEF), a developing world center in this specialty. Together, these factors would make an endowed chair in macroeconomics a wise investment.
The field of public economics studies the economics of government and its impact on the economy, including, for example, the effects of taxation on economic activity, and the effectiveness of government spending programs. Among other contributions, UCSB's specialists in public economics have shed important light on the economics and politics of California's public schools. Given the massive and multidimensional impact of governments on all modern economies, a research chair in public economics could have important social benefits.