November 10, 2009

Econ prof appointed director of Milton Friedman Institute

Economics professor Lars Peter Hansen was appointed director of the Milton Friedman Institute for Research in Economics (MFI) last week. Hansen headed the faculty committee that proposed the MFI and was its acting director from its inception in July 2008.

The MFI has sponsored four conferences so far, but Hansen said he plans to bring more visiting academics to campus to teach and collaborate on economics research with Booth and Law School faculty members. The MFI has already hosted visiting fellows from Columbia, Stanford, the University of Zurich, and University College-London.

”I think it’s going to be a very interesting challenge for taking an institute that was non-existent into something that will have a full range of intellectual activity,” said Hansen, who has done major work in econometrics and asset pricing.

The MFI’s creators came out in support of Hansen, whose appointment comes after a prolonged debate over the institute’s creation. When it was proposed in 2007, the foundation was to be named the Milton Friedman Institute and came under fire for its namesake, an influential economics professor and Nobel prize winner who helped found the Chicago School of Economics, a form of free-market capitalism attacked by the Left in recent years.

“[Hansen]’s very bright and he’s a major leader. He’s a symbol of what Chicago economics is about,” said James Heckman, an economics professor and Nobel laureate who is on the MFI’s board of directors. “I think what sets [the Chicago School] apart is the fact that it’s empirically oriented and rigorous in that it defines problems carefully and in a clear way.”

Hansen said the MFI has a long way to go before it achieves the goals he’s set for it, which include inviting long-term visitors doing research on “a wide variety of themes in economics,” which he said would rotate.

Hansen has been a faculty member since 1981 and has served as chairman of the economics department. He won the Frisch Medal from the Econometric Society, and the University of Chicago Faculty Award in graduate teaching.

Faculty members protested for months following MFI’s announcement, originally called simply the Milton Friedman Institute, taking issue over donors’ potential academic influence and MFI’s alleged support of Friedman’s ideology. Many formed the Committee for Open Research on Economy and Society (CORES), which opposed the institute’s name. CORES petitioned President Zimmer to convene the University Senate, which consists of some administrators and all faculty members; it had not convened in 10 years.

The meeting helped garner a name change, which CORES co-chair and Divinity School professor Bruce Lincoln said at the time was a “wonderful” indication that the University had addressed their concerns.

Nonetheless, CORES’ other co-chair and statistics professor Yali Amit used Hansen’s appointment to further criticize the MFI, although he praised Hansen’s academic achievements.

“Lars Hansen is a world-famous economist and has been chair of the economics department. He has won multiple honors from his community. His work on stochastic processes motivated by economic questions is fascinating and of interest in fields beyond economics,” Amit said in an e-mail. “The problem is in the institute he is heading,” Amit added, saying the MFI is named after an “ideological flag-bearer.”

“Originally they had planned on finding an outside director. But I wonder who would be willing today to move to the U of C in order to head an institute named after Friedman?” said Amit, who is a member of the Committee of the Council of the Senate, one of the University’s highest governing bodies.

Heckman said he considers the issue of the institute’s name to be in the past. “I think all the controversy last year has been blown past. This is not a political unit—if you look at all the conferences that have been held and the ones that will be held, you’ll see a strong interest in creating a research center that is of the highest quality.”