Economics seeks to understand choices and their consequences. Why save rather than spend? Why put certain products on sale and charge top dollar for another? Why purchase instead of rent? Researchers and students at the Stanford Institute for Economic Policy Research (SIEPR) choose to examine the world and make an impact through the prism of economics. In this ongoing series, we’ve asked them one question: Why econ?
Heidi Williams started thinking like an economist as an undergraduate student. But it wasn’t an econ course that inspired her. It was a discussion in biology class about the developing world’s struggle with malaria.
“The fact that malaria is a problem in poor countries but not rich ones intrigued me, and I started doing some research,” Williams says.
That led her to discover a paper by Michael Kremer, an economist who would later become one of her mentors and a 2019 Nobel Prize winner. Kremer’s paper proposed a way for governments and private foundations to incentivize drug companies to develop malaria vaccines. His work essentially made the case that a compelling solution to curbing the disease could exist in the marketplace. Williams was hooked.
“I immediately realized that economics has a natural language and toolkit for addressing important social problems in a really practical way,” Williams said.
After graduating from Dartmouth as a math major, Williams headed to Oxford for a master’s in economics. She then received her PhD in economics at Harvard, and focused her research on the causes and consequences of technological change, particularly in health care markets.
Her work earned her a MacArthur “genius grant” and an Alfred P. Sloan Research Fellowship during her tenure as an economics professor at MIT. After two separate stints as a faculty visitor at the Stanford Institute for Economic Policy Research (SIEPR), Williams decided she wanted to make her academic home here. She joined the Stanford faculty in 2019 as the Charles R. Schwab Professor of Economics and is one of SIEPR’s newest senior fellows.
Along with her robust research agenda, Williams is also committed to encouraging the next generation of economists and working with students who are — as she puts it — “save-the-world types” wanting more experience before committing to a career in economics.
“I’m looking for students who have a passion for really making a difference in the world,” she says. “Just about anyone can learn the skills and tools of economics, but the passion is what is most important.”
Valerie Scimeca’s first lesson about an economy came in the third grade.
But it wasn’t a teacher’s assignment that made much of an impression. Rather, it was the struggles she saw her father having with his real estate development business. The year was 2007, and the Great Recession was just hitting.
“Economics wasn’t this distant idea from my third-grade report, it was very real,” she says.
Today, as a graduating senior and co-term master’s student, Scimeca’s view of economics — what she considers the science of decisions — is far more sophisticated. When she took Econ 1 during her first year at Stanford in 2016, she immediately knew economics would be her major.
The Illinois native — the first in her family to go to college — had been initially considering going into computer science. But the introductory econ course won her over. The concepts of the discipline resonated with her, everywhere in life.
“They say I could have already gotten an entry-level job at Google after I finished CS106B, but it was the ideas of econ that kept rattling around in my mind — probably because the things I was learning were providing explanations for the world,” she says.
Scimeca also found it rewarding to work as an undergraduate research assistant at SIEPR. The experience exposed her to empirical research on life expectancy rates, and health and labor gaps.
“There are real people at the end of that data,” she says.
Scimeca, who is getting a master’s in Management Science and Engineering and pursuing a career in finance, says her studies in economics have equipped her with a problem-solving foundation.
“I'll probably never need to draw a supply-and-demand graph in 20 years, but it's that framework that lets you think about the world in a different way, in a deeper way,” she says.
“I’m recommending econ to everybody. You can find the things in econ that click with you because you could use it for everything, and you can supplement anything you study with econ. It’s very versatile.”
Being a doctor and caring for patients, one-by-one, is a rewarding career. But what if your profession can improve the lives of many people, all at once?
That humanistic challenge is what inspired David Chan to take a hiatus from medical school to get a master’s in health policy — and a master’s and a PhD in economics — before completing his MD. And it’s what motivates him today as he juggles being an economist, doctor, and professor.
“The thing that appealed to me about economics is how you can help large groups of people as opposed to just the person in front of you,” Chan says from his office at Stanford Health Policy, a short walk from SIEPR where he is a senior fellow.
“Economics is fundamentally about people — the fact that people drive things, and we are designing policies to make the welfare of people better. That’s also something that we share in medicine — the business of helping people.”
No surprise — Chan is a health economist. And he is amid a growing group of economists developing groundbreaking insights into the delivery of health care.
“We know so much about the financing of health care from decades of research, but there's just a dearth of research in the delivery of it,” he says. “And now that we have a wealth of new data to start studying this, we can open the black box and literally ask why some hospitals spend less but have much better outcomes. We can really see what people are doing inside these hospitals.”
Chan’s research projects, for example, have found how emergency room doctors are more likely to quickly order costly tests when they’re about to end their shifts, and that the typical practice of relying on triage nurses to assign patients to ER doctors is far less effective than doctor-managed assignments.
In another study, Chan found significant cost differences between pneumonia cases handled by lower-skilled versus higher-skilled radiologists. The findings suggests more uniform policies for training.
“The currency of moving policy forward is increasingly going to be in the hands of those who can make recommendations based on data and analytics, and economics is definitely a field that has kept pace with that,” he says.