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U of M News Wire: October 18, 2007 University of Minnesota professor wins Nobel Prize Leonid Hurwicz's work puts the human factor into economic theory By Deane Morrison and Douglas Clement U of M News Wire When he got the call at 6 a.m. on Oct. 15, Leonid Hurwicz thought it was a joke. But the caller couldn't have been more serious: Hurwicz, a University of Minnesota Regents Professor Emeritus of Economics, had just won the Nobel Prize in Economics. Along with fellow Americans Eric Maskin of Princeton University and Roger Myerson of the University of Chicago, Hurwicz reaped the honor for theories that help set rules for transactions ranging from auctions to elections. At 90, Hurwicz is the oldest Nobel winner in history, according to the Royal Swedish Academy of Sciences. Asked if he suspected a Nobel Prize was in the offing, he replied that he'd been on the short list for 30 years. University President Robert Bruininks was thrilled when he heard the news. "Professor Hurwicz has influenced in a very significant and transformative way the study of economics and the application of economics to important issues on an international scale," he says. A quiet revolutionary A colleague describes Hurwicz as somebody who revolutionized the way people think about how to bring about desired economic change, sweeping away old ways of thinking that relied on central planning without regard to incentives for individuals. “Before Leo, people said, ‘Let’s just ask people to achieve outcomes, such as how much steel to produce or how many shoes to make,'" says V.V. Chari, the University's Paul Frenzel professor of liberal arts and economics professor. But, says Chari, one can achieve the desired outcomes only if people are provided with the right kind of incentives. "That was a fundamental breakthrough in thinking about economics policy and economic reform." In practice, he says, Hurwicz's work gives a much better understanding of why centrally planned economic mechanisms such as communism fail so often. The main reason is they do not take adequate account of the incentives people face. "He explained in mathematical, but commonsense, terms when we should expect markets to function well and when we should expect them to function poorly," says Chari. "He introduced two words that revolutionized all of economics when he insisted that every economic mechanism should be 'incentive compatible.' That is, it should provide people with the right kind of incentive to use the information they have in the best possible way." The competitive market system, for example, works well in many cases, but when coping with problems like pollution or how to provide for the public good, markets fail. In such situations, mechanism design excels in the creation of alternatives. Hurwicz's work has indirectly affected a wide range of economic policies; for example, it influences the way the government auctions off bandwidths to cellular companies. The theory is that the highest bidder, having invested much, will have an incentive to provide top-notch service. Hurwicz's work also had a big effect on the way people think about development problems in very poor countries. "We've shifted focus away from the role of governments in solving the problems of poor countries to a focus on the rule of law, stable property rights, and provision of incentives to farmers, businesspeople and others to act in ways that further the social interest," explains Chari. "The way Leo taught us to think has changed the world." Hurwicz has received many honors before, most notably the National Medal of Science in 1990. At the university, he was the graduate adviser to Daniel McFadden, who won the economics Nobel in 2000. The long road to Stockholm Born in Moscow, Hurwicz left Russia in 1919 in a horse-drawn wagon when his family, fearing political persecution, fled to their native Poland. "It was something you could make a Dr. Zhivago movie about," Hurwicz muses. He studied at the University of Warsaw, graduating with a law degree in 1938. The legal education was his father's idea. Besides attending law school, Hurwicz indulged his real interests by studying physics and entering the conservatory as a piano student. Then, during a second-year course in economics for his law degree, he discovered a new love. Law degree in hand, he entered the London School of Economics. His English was rudimentary, and the classes he understood best were taught by Nicholas Kaldor, a renowned Hungarian economist. "He had a worse accent than I did, but I could understand it, so I took all the courses he was teaching," says Hurwicz. The economics department's national standing owes a huge debt to Hurwicz. "I would say he's responsible almost single-handedly for its high reputation," says Chipman. In 1939 he went to Geneva for further study, but Hitler's invasion of Poland forced Hurwicz, a Jew, and his family to flee again. His parents and brother left Warsaw only to be interned in Soviet labor camps. Hurwicz spent several anxious months in Switzerland and Portugal, then emigrated to the United States. He completed his studies at the University of Chicago and Harvard, and his family eventually joined him. He taught meteorology at the University of Chicago from 1942 to 1944, and hired, sight unseen, economics undergraduate Evelyn Jensen, a farm girl from Wisconsin, as his teaching assistant. In July, the two, along with their children Sarah, Michael, Ruth, and Maxim, celebrated their 63rd anniversary. "The hardest part of marriage is the first 63 years," Hurwicz quips. Hurwicz arrived at the University of Minnesota in 1951, recruited by legendary economist and presidential adviser Walter Heller. The two created an independent spirit and identity for economists at the university, recruiting talented young economists and teaching students the technique and beauty of economics. The department's national standing owes a huge debt to Hurwicz. "I would say he's responsible almost single-handedly for its high reputation," says Chipman. He is known for his knowledge of fields ranging far beyond economics. "Leo was and is a Renaissance man," Chari recalls. "The very first time I met him, he engaged me in a long discussion about the intricacies of the dialects of Tamil, my native language, which is one of the languages of South India." Narayana Kocherlakota, chair of the Department of Economics, was ecstatic at Hurwicz's selection. "Leo's research and teaching have been at the center of life in the Department of Economics for nearly 60 years," he says. "We are delighted to offer our congratulations to our longtime colleague and friend for this recognition of his extraordinary and foundational research." ---------- University of Minnesota-managed database on plant information is the largest of its kind in the world By Christopher James U of M News Wire Wondering where to order the best marigold seeds? Need gardening information to help your favorite plant survive and thrive? Want to locate a photo of the latest rose you just heard about or a drawing of the heirloom tomato variety your grandma grew in her garden? Start your search with Plant Information Online, one of the world's largest resources for botanical and horticultural information. Managed by the University of Minnesota Libraries, Plant Information Online is a collection of databases of interest to plant and gardening enthusiasts as well as professional botanists, horticulturists, and plant scholars. Best of all, it's freely available to the public. To visit the Website, go to https://plantinfo.umn.edu/arboretum/default.asp Plant Information Online offers a range of resources, including: • Information on where to purchase plants and seeds, with shipping sources for more than 100,000 plants from nearly 1,000 North American plant suppliers (the largest listing of currently cultivated plants in North America) • Contact information and links for over 2,000 North American retail and wholesale seed and nursery firms • Bibliographic details for more than 300,000 images of wild and cultivated plants from around the world in botanical and horticultural books and magazines from 1982 to the present • Links to expert-selected sites on growing plants in all regions of Canada and the U.S. Plant Information Online began in 1970 as an unpublished collection of printed resources. It was first published in print form in 1976 and moved to a web-based format in 1997 with access available only to subscribers. The service is now free and available to anyone with access to the Internet. "We want to make this important resource available to the widest audience possible," said librarian Kathy Allen, editor of the service. "Previous subscribers have found Plant Information Online to be an invaluable tool to find information on many of the world’s plants." ---------- Growing Concerns Question: My wife and I are expecting our first child in four months. Although we get along pretty well together, I’m worried that will change when the baby comes. My wife’s parents were very permissive and spoiled their kids by giving them everything. My parents were much stricter and always made us toe the line and earn the things we wanted. How can we present a united front as parents when our backgrounds are so different? |
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