UC San Diego’s Department of Economics
The Latter Years: The 1980s to Present Day

By Ross Starr, Ph.D.

Ross Starr, Ph.D.

Part I, “The Early Years: The 1960s and 1970s,” was published in the October 2010 issue of Economics in Action.

Now in its 51st year, UC San Diego and the Department of Economics in particular has grown from a small institution to one known internationally for its academic research. The year 1980 brought significant transformation to the Department of Economics faculty. The theory faculty was bolstered by the appointments of Mark Machina and Ross Starr, and Hal White’s grant of tenure solidified the robust econometrics group.

The distinctive event of 1980, however, was moving house. Since the founding of the department, the economics faculty had been housed at Revelle College amid distinctive architecture, a striking quadrangle, a gracious lawn and our own piece of the Stuart Art Collection, the La Jolla Project (a.k.a UC San Diego’s Stonehenge). Despite the faculty’s vigorous objections, the department moved to its current quarters in what is quaintly called the Motel 6 building. Its saving grace is the hint of an ocean view, and more important, the ability to expand and strengthen our faculty. Much of our growth would occur over the next three decades. The period from 1980 to 2011 is characterized by several major trends: continued strength and growth of the faculty in its traditional areas of econometrics and economic theory, establishment of distinctive areas of concentration in applied economics and economic policy and a generation of success and prominence for UC San Diego graduates, at both the bachelor’s and doctoral levels.

Economics Outreach

Starting in the 1990s, the Department of Economics began to relate more actively to alumni and the San Diego community. The semiannual publication Economics in Action was initiated with profiles of faculty and articles on current issues. It has now, like many publications, gone fully electronic. The UC San Diego Economics Roundtable started up, with quarterly meetings featuring guest speakers. They form a colorful collection: Some speakers, like Ben Bernanke, became famous; others, such as William Lerach, became notorious.

UC San Diego Economics in the World and in Policy

UC San Diego’s Department of Economics isn’t just in San Diego, and it isn’t in an ivory tower. There has been an active flow of our faculty to China: Roger Gordon, Mark Machina, Ross Starr and Michelle White have taught at RenDa (People’s University of China) in Beijing. A few time zones away, Richard Carson was in charge of the government’s economic damage assessment for the Exxon Valdez oil spill that resulted in the largest settlement at the time for harm to the environment. In the late 1990s, he helped oversee the technical negotiations between Israelis and Palestinians over water issues when he was research director for International Environmental Policy at the University of California’s Institute on Global Conflict and Cooperation.

In 2011, after a decade of research, Karthik Muralidharan conducted and participated in many high-level meetings with several agencies within the government of India, focusing on education policy. Karthik also gave briefings to the U.S. Congress’ Caucus on Foreign Aid Effectiveness and to the British Department for International Development (DFID).

Closer to home, Julian Betts founded the San Diego Education Research Alliance (SanDERA) at UC San Diego in May 2010. Over the past dozen years, SanDERA has evaluated and influenced a number of educational reforms in San Diego, from literacy reforms to charter schools, as well as the impact of California’s High School Exit Exam. Betts is currently the principal investigator of the National Evaluation of Magnet Schools for the U.S. Department of Education.

On a cultural note, our own country western duo of professional guitarists emerged in the 1990s: James Hamilton and Garey Ramey, better known as The Country Doctors.

Econometrics at UC San Diego

By 1980, the core of faculty concentration in time-series econometrics – Clive Granger, Rob Engle and Hal White – was in place. It was supported in part by the Project for Econometric Analysis, with significant funding. That strength was augmented by a succession of additional appointments. David Hendry – now Sir David – from Oxford University joined the faculty in 1990. James Hamilton, author of the leading textbook in time-series econometrics, joined in 1992. Graham Elliott joined in 1994. Yixiao Sun joined in 2002, Ivana Komunjer in 2005, Andres Santos in 2007, Brendan Beare in 2008 and Patrik Guggenberger in 2009.

Granger published the concept of cointegration (underlying coherent structure of economic data accruing over time) in 1981. The 1980s started a cascade of studies by Engle, along with his students and colleagues, of models emphasizing the time-varying error structure of statistical models, summarized as ARCH (autoregressive conditional heteroskedasticity). UC San Diego doctoral students of econometrics in that era have progressed to leadership positions both in academia and in the private sector.

The climactic event for UC San Diego econometrics – and the department – occurred in the fall of 2003 when Clive Granger and Robert Engle won the Nobel Memorial Prize in Economic Sciences. Unparalleled pride and joy broke out and carried on for weeks. This joint award was a homegrown prize, reflecting decades of work at here at UC San Diego. Granger had been on the faculty for 30 years, and at the time of the award, he was retired as professor emeritus, spending long vacations in New Zealand, where he received the news. Engle was an active faculty member for 25 years, and at the time of the award was a professor emeritus and a New York University faculty member, spending long vacations in France, where he received the news. The summary of the award stated “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2003 was divided equally between Robert F. Engle III ‘for methods of analyzing economic time series with time-varying volatility (ARCH)’ and Clive W. J. Granger ‘for methods of analyzing economic time series with common trends (cointegration).’” An additional benefit of the prize was that Granger, still a British subject, was knighted by Queen Elizabeth in an elaborate ceremony. He became Sir Clive, a title he never used in San Diego.

The Nobel Prize was celebrated on many occasions, hosted by UC San Diego Chancellor Marye Anne Fox, where Granger spoke publicly. In a more personal conversation at one of these events, Granger mentioned to Chancellor Fox that Nobel laureates at Berkeley are accorded reserved parking spaces. She took the hint and Granger enjoyed a reserved parking space near the Economics Building throughout the rest of his time at UC San Diego.

There was a grand reunion of Engle’s students and colleagues in San Diego in June of 2008, launching a Festschrift (birthday celebration volume of essays) in his honor. Students and colleagues traveled from all over the globe to celebrate and reminisce. Spirited conversations following the conference dinner lingered into the wee hours the following morning. In 2011 the department hosted another grand reunion celebrating the lifetime achievements of Hal White. The Festschrift for White was a smashing success with two days of conference proceedings that were capped by White himself leading big-band music with his trumpet during the closing banquet.

Economic Theory at UC San Diego

By 1980 the core of UC San Diego’s economic theory faculty was in place: John Conlisk, Vincent Crawford, Theodore Groves, Walter P. Heller, Mark Machina, Joel Sobel and Ross Starr. That group covered game theory, price theory, growth theory, general equilibrium theory, uncertainty and public economics. The year 1983 provided a unique opportunity for deepening the theory faculty: The Department of Mathematics hired Linda Rothschild from the University of Wisconsin, and the Department of Economics was glad to cooperate by hiring her husband, Michael Rothschild. Michael was already a prominent economic theorist, and in a few years he became dean of Social Sciences at UC San Diego. The theory faculty was augmented by appointments of Maxwell Stinchcombe in 1986, Joel Watson in 1994, Navin Kartik and David Miller in 2004, James Andreoni in 2005, Nageeb Ali in 2007 and Christopher Chambers in 2010. Following trends in the field, these faculty increased coverage in decision theory, game theory, industrial organization, experimental and behavioral economics.

Applied Economics at UC San Diego

By the mid-1980s the faculty recognized that it was applied economics’ turn for attention. In 1980 the principal applied economists on the faculty were Dennis Smallwood, medical economics and industrial organization/law; Luis Guasch, economic development and industrial organization; Jeffrey Hammer, economic development; and David Lilien, macroeconomics. New appointments throughout the 1980s included Robyn Phillips, urban economics; Graciela Kaminsky, international finance; Richard Carson, environmental economics; James Rauch, international trade and economic development; Garey and Valerie Ramey, macroeconomics; Alfredo Pereira, public finance and computational modeling; and Andrew Levin, macroeconomics. The capstone of this effort was the 1990 appointment of George Borjas, one of the world’s leaders in the labor economics of immigration.

By the early 1990s, to general astonishment, it was possible to convene and populate a weekly seminar in applied economics at UC San Diego. Most students of economics are not primarily interested in pure theory or pure econometrics; strengthening applied economics at UC San Diego provided a productive balance. The interaction of a strong econometrics faculty with a broad and talented applied faculty is a fertile mix. UC San Diego graduate students in applied studies have at their disposal the most advanced statistical techniques available. The applied faculty now includes Kate Antonovics, labor economics; Eli Berman, labor economics and insurgency; Julian Betts, economics of education; Prashant Bharadwaj, fertility and labor; Julie Cullen, economics of education; Gordon Dahl, labor economics; Melissa Famulari, labor and medical economics; Marjorie Flavin (the first tenured female economist at UC San Diego), applied macroeconomics; Silke Forbes, industrial organization; Roger Gordon, public finance; Gordon Hanson, international economics; Mark Jacobsen, environmental economics; Marc Muendler, international trade and finance; Karthik Muralidharan, economic development; Paul Niehaus, economic development; Irina Telyukova, computational macroeconomics; and Michelle White, law and economics.

The Institute for Applied Economics creates and maintains research infrastructure for applied economic research at UC San Diego. The Center for Environmental Economics promotes research in environmental economics and provides a community for scholars – faculty, graduate students and others – interested in various topics on environmental economics.

Undergraduate Economics at UC San Diego

In the 1980s, the Department of Economics offered two undergraduate majors: management science and economics. There was significant overlap in coverage: management science emphasized microeconomics – firms and markets – and quantitative methods, including programming; economics included macroeconomics.

The majors were popular. Courses were often over-enrolled, putting a strain on teaching resources. Following the example of other UC campuses in the late 1980s and early 1990s, UC San Diego tried to control economics enrollment with separate admission requirements to the majors and renaming management science as the less-attractive quantitative economics and decision sciences (QEDS). The attempt to limit enrollments proved daunting (it annoyed undergraduate students and required considerable faculty and staff effort) and unpredictable (enrollments fell far more than planned). The plan to limit enrollments was abandoned and management science got its name back.

Modern economics is distinctly mathematical. In the late 1990s, UC San Diego introduced the joint major in mathematics and economics, a cooperative effort between the Departments of Economics and Mathematics. This major is excellent preparation for graduate study in economics and for professional degree programs such as an M.B.A.

By the early 21st century, the scale of the economics undergraduate programs had grown massively. Several sections of undergraduate core courses – each with hundreds of students enrolled – with several different instructors were offered each quarter. That meant there was room for immense variety in the course content. A little variety is good; a lot becomes unpredictable. In middecade, under the direction of Melissa Famulari, vice chair of undergraduate studies, the department undertook a systematic reformulation of the majors. The aim, successfully achieved, was to bring the majors up to date and to standardize the core courses so that they could be relied on as prerequisites. The department is justifiably proud of three undergraduate majors that provide an excellent coherent presentation of modern economics.

The majors provide a sound education in modern economics and management science, including its quantitative methods, for hundreds of graduating seniors each year. For the most ambitious undergraduate students, there are opportunities go more deeply into the field. The core upper division microeconomics and macroeconomics courses (Econ 100ABC, Econ 110AB) offer honors sections where extra time and work is spent on advanced topics. The senior honors essay course (Econ 191AB) provides a two-quarter exercise in independent research for qualifying students. In 2010–11, 755 bachelor’s degrees in economics were earned by UC San Diego seniors, representing more than 12 percent of UC San Diego’s graduates.

Baccalaureates Pursuing Further Study

With several hundred graduating seniors annually – and many foreign exchange students – it’s not really possible to keep track of all of them, but we’re delighted with the progress of those who kept in touch, especially those who go on to advanced degrees in economics.

Graduate Study at UC San Diego

Since the inception of the Department of Economics in the 1960s, there has been an emphasis on graduate students pursuing doctoral degrees. UC San Diego economics graduates are now faculty members at colleges and universities in the United States, China, South Korea, Japan and Europe. They are in Federal Reserve Bank research departments, investment banks, commercial banks and consulting firms. Their specialties are diverse: econometrics, finance, international trade, education, behavioral economics, labor economics, industrial organization and public finance. There are roughly 100 graduate students in residence and more than a dozen graduate with a Ph.D. each year. While on campus they fulfill significant research and teaching functions as teaching assistants, helping to teach undergraduate and graduate courses and grading exercises and examinations, and research assistants, helping with faculty research while pursuing their own. According to the most recent U.S. News & World Report rankings of graduate programs in 2009, the UC San Diego Department of Economics is ranked as the 14th best Ph.D. program in the United States and ranked 6th in the nation for econometrics. That ranking puts UC San Diego on a par with our sister campus UCLA – 45 years older than UC San Diego – and in the same league with such economics powerhouses as the University of Wisconsin, Brown University, and Cornell University.

Women in Economics

The proportion of women on the faculty and in graduate study has grown substantially – a more precise mathematician might say that it (the proportion) has grown infinitely. Judith Mann was a valued member of the faculty in the 1970s but by 1980 there were no women on the UC San Diego economics faculty and none in doctoral study. By 2011 that situation had changed dramatically, highlighted by Valerie Ramey becoming the first female chair of the department. Approximately one quarter of the graduate students and faculty are women, and a majority of our female faculty members are tenured.

Into the 21st Century

Over the previous three decades, 65 faculty members have joined the Department of Economics, and 40 have left. Because of the nature of this highly competitive field, many have departed for promising opportunities elsewhere. Others have retired but remain active in their specialty as emeritus faculty. We mourn the deaths of some of our founders: Clive Granger, Walter P. Heller, John Hooper, Dennis Smallwood and Hal White. But the focus of the 1970s lives on: excellence and econometrics with room for excellence in the other areas of economic research. Growth has brought breadth as well.

That’s the story so far: from nowhere in 1965 to a contender in 2012, barely middle-aged. For more details on our graduate and undergraduate program, as well as faculty research and teaching, visit the UC San Diego Department of Economics website.