The World Uncertainty Index, co-created by SIEPR Senior Fellow Nicholas Bloom, is the broadest assessment tool yet to measure global uncertainty, which is now approaching a record high.
It was a typical Monday evening at Paul Milgrom's home. Ten of his star PhD students had gathered to dine on salmon with garlic potatoes and debate, as they do every week, big-picture topics facing world economies. This night, the discussion centered on an especially intractable problem: the dearth of women in their profession.
As budding economists with a particular interest in the mechanisms that enable the exchange of goods and services, they took a clinical approach to the topic. First, they asked whether the lack of women constituted a failure in what is fundamentally a market for talent. Then, they analyzed policies and tools for breaking the glass ceiling.
For Milgrom, a SIEPR senior fellow and the Shirley and Leonard Ely professor of Humanities and Sciences, the Monday salons are crucial to his role as an economist and mentor. Students take turns choosing a weighty subject to dissect — say, the roots of income inequality, new definitions of antitrust in the digital era, or the long-term implications of a looming shift to tiered Internet access commonly referred to as net neutrality.
The 30,000-foot view is critically important, says Milgrom. Economists often "do brilliant technical work about a problem nobody cares about. That's not always a bad thing, but there are plenty of problems in the world that need solving. I want to make sure we are also constantly thinking about, and working on, issues that people do care about."
Milgrom's drive to apply practical solutions to real-world challenges is at the center of his groundbreaking ideas and research over the last 40 years. His work has touched almost every facet of the field of microeconomics, most notably in the areas of game theory, auction theory and the design of markets.
His impact on consumers and businesses has been extensive. His innovations, for instance, enable mobile phone carriers to provide service to their customers, advertisers to reach web users and, before long, farmers to access groundwater and fishermen to search for their daily catch at a time when climate change is radically altering the supply of key resources.
Milgrom is "one of the great leaders" in economics, says Roger Myerson, who won a Nobel Prize in Economic Sciences in 2008 and has known Milgrom for four decades. "There is much in economic analysis that I understand because he explained it to me."
From his earliest days, Milgrom set out to reconceive the way economists think about problems. A math whiz and anti-war activist in the 1960s, he was studying for an MBA when he came across the work of William Vickrey, a Nobel laureate whose earlier work on commercial auctions and the use of mathematics to explain human behavior fascinated Milgrom. He quit the MBA program, earning instead a PhD in economics from Stanford in 1979. Next, he joined the faculty of Northwestern University's Kellogg School of Management, where he met Myerson and a handful of other budding economists, including a few women, who would become giants in the field. Milgrom taught at Yale for four years in the mid-1980s before returning to Stanford as a professor in 1987.
The author of more than 100 seminal research papers and three books, Milgrom is most admired for his role in 1993 in designing, along with Stanford Professor Robert Wilson, the format used by governments to lease airwaves to mobile phone carriers. To date, the U.S. Treasury has received more than $100 billion from these spectrum auctions, in which Milgrom and Wilson developed a way for bidders to see prices as they change and adjust the types of licenses they seek. Countries around the world use the format.
In 2017, the U.S. government undertook a novel spectrum auction that may prove to be Milgrom's greatest professional achievement to date. Leading a small team of economists and computer scientists, Milgrom created a simple bidding format for a highly complex problem in which the rights to TV broadcasting airwaves were, for the first time, converted and sold to mobile carriers and broadband providers. The feat was remarkable, not just because it led to $19.8 billion in licenses, but because its success depended on the ability to conduct enormously complex computations instantaneously.
"This [was] by far the most complicated resource allocation ever attempted, anywhere in the world," says Milgrom. It was also his first real encounter with artificial intelligence — and the power of it to transform his work and the entire field of economics has Milgrom thinking about radically new ways of constructing markets in coming decades.
Thanks in part to the team’s work, the FCC received the 2018 Franz Edelman Award for Achievement in Advanced Analytics, Operations Research, and Management Science.
He's also been thinking a lot about the next generation of economists. While Milgrom has long been celebrated in economics — in the last year alone he has received a top graduate teaching honor as well as two research awards, including the prestigious CME-MSRI Group Prize (in which five of the past 10 CME-MSRI recipients have gone on to win Nobel prizes) and the Carty prize from the National Academy of Sciences — he is more gratified by his students. "These great young minds are going in directions I've never dreamed of," he says.
He started the Monday night dinners several years ago to give students an opportunity to practice presenting their research and to bond with peers in the same way he connected with his early colleagues while scribbling ideas (and competing) on the blackboards in the faculty breakroom at Northwestern. The problem of too-few women economists has been especially troubling to him.
He sees, however, "peer effects" as key to closing that gender gap, and has taken steps big and small to foster them. He's noticed, for instance, that women are less likely to speak up or to collaborate, opting instead to undertake research on their own and potentially missing out on career-defining opportunities. To counteract this, Milgrom this year doubled the size of the Monday group, to 10, and invited first-year doctoral students so as to achieve a 50-50 balance between women and men. Now, everyone is required to contribute to discussions. And, after observing women handling much of the dinner cleanup, he has everyone take turns cooking and washing dishes.
"He wants to provide an environment where everyone works together and thrives," says Ellen Muir, a dinner group member and doctoral student who came to Stanford last fall.
Negar Matoorian Pour, a second-year PhD student who has teamed with Muir on a research project after bonding on Mondays, agrees.
"Paul is aware of, and cares about, the challenges women face. The bigger effect is not just limited to this group, but possibly to future generations as well."
Krysten Crawford is a freelance writer.