Be Our Guest, Take 2 by Mitra L. '07

I have had the good fortune to hear several excellent guest speakers recently.

1. Steven Levitt (author of Freakonomics and MIT PhD) came to campus on Monday and spent two hours at events for undergraduates

2. Iqbal Quadir (head of MIT’s Program in Developmental Entrepreneurship and founder of the Grameen Phone program) spoke to our D-Lab class a few weeks ago about his work with the Grameen Foundation

3. Paul Polak (President of IDE: International Development Enterprises) spoke to my D-Lab class on Monday about the importance of small farms

4. Brigitte Madrian (Aetna Professor of Public Policy and Corporate Management at the Kennedy School of Government at Harvard) educated my freshman advising seminar a few weeks ago on the ways form logistics affect retirement savings

Read on for more!

1. Professor James Poterba, the head of the Department of Economics, very awesomely emailed the Undergraduate Economics Association (UEA) and told us we would get 12:00 – 2:00 with Steven Levitt in early December. Naturally, we ran with it.

Before Levitt co-authored the book Freakonomics (which my boyfriend adorably writes as “Freakeconomics”) with Stephen Dubner, he received his PhD in economics from MIT in 1994. His thesis advisor? Professor James Poterba. Now that he’s a best-selling author, though, he’s a pretty busy guy. We were pretty lucky to get him for a whole day until he flew down to New York City to appear on The Colbert Report. *Double swoon*

We decided to host a large talk with Levitt from 12-1 in one of the large Tang classrooms, and it ended up being Standing Room Only, so yay. From 1-2, we hosted a round-table discussion for Levitt and a small group of undergrads.

Levitt started out the large talk with a cute story about his first day of grad school at MIT. He told us he went to Harvard for his undergraduate economics degree and didn’t have a very solid background in mathematics, so he was really confused during his first math lecture once at MIT. His professor wrote all sorts of symbols on the board, and after copying them down dutifully, Levitt whispered to the person next to him, “Are the regular d and round d symbols different?” Heh. The person then whispered back to him, “You are so screwed.” A cute story, no? Surprisingly, Levitt did not re-tell it to Stephen “Green Screen Machine” Colbert Hthe following evening.

A big chunk of the lecture was centered on recent research around the dictator game. The traditional game puts two students together anonymously; the researcher gives one student $10 and names him “the dictator.” That student can give as much or as little of the $10 to the other student, whom he does not see, will never see, and will never play against a second time. Economists expect that the dictator (rational consumer) will give the other student $0 since there is no point of giving any money at all. That the dictators give on average $3 is evidence, some argue, for altruism (or non-rational behavior). An economist has rigged the game by allowing dictators the option of giving up to $10 *or* stealing up to $10 from the other student. This, in theory, should not affect the students who were giving money. When this is a choice, more students give $0, and some students steal up to $10. These results suggest that the dictator game reveals more about the relationship between the student (oftentimes undergrad econ majors) and the researcher (oftentimes their professor) than it does between the two students. If these results hold, they would discount much research about altruism and also force experimental economists to re-think their experimental design. Intriguing,

He closed his talk with another nice story. Levitt teaches a class on the economics of crime at University of Chicago, and reserves a lecture for the economics of prostitution. The story is sort of long and uninteresting unless you are a huge fan of pricing mechanisms, but the punchline is as follows: What do economists and prostitutes have in common? They are the only two people in the world who can put a price on anything. Heh.

That proved to be the perfect segue into our gift to Professor Levitt — the “Economists do it with models” t-shirt.