Rough draft: statement of purpose

The primary motivation for me to enter UC Davis’ Economics PhD program is my desire to make a lasting impact on the world. In Economics, I’ve found a subject that, I believe, I will love to practice and has the ability to have a great impact on the world. The methods of economists are very attractive to the scientist in me (I’ve been a regular reader of Scientific American since I was 10 years old). Meanwhile, the subjects that economics takes (e.g. people) appeal to my humanistic side. Most importantly, however, is the audience Economics has. The people that listen to economists are powerful people like politicians, policy makers and business people. Economists have a strong influence on the workings of the world.

I’ve come to Economics in a round-about fashion. Over the last decade, my own protracted optimization problem has been: given my priorities and world view, in what area I can make the most impact on the world. In school, I didn’t fall in love with any the numerous subjects that I took classes in. I had toyed with the idea of majoring in several subjects including history, computer science, math and chemistry. None of these worked for me because they were either too esoteric or too unconcerned with the affairs of the ‘real world’. I only became a business major because it was the last major I toyed with before I had to declare. Since graduating, experience in the business has shown me that its primary impact on the world has been its impact on the size of my wallet. Perhaps irrationally, this provides me with little utility. I have discovered that business’ secondary impact, the one it has on world at large, is minimal. The good news is that my experience in business, which is just applied economics, showed me that Economics has a great appeal to me. I realized that it is a social science that can verifiably confirm what I see in the “real world”! I can’t tell you how excited I was when I came to this realization.

What I know now is that in school I was looking for a discipline that combined the affairs of humans in the real world with the discipline and rigor of a science. My experience in business has brought me to that realization.

I’m interested in both the descriptive and prescriptive modes of Economics (positive and normative to use the parlance). It occurs to me that unlike most sciences, Economics describes systems while simultaneously helping to change the systems it studies. Image if this was true in Physics. By studying the laws of Physics, you would change them! I can imagine that this becomes a complicating factor in the study of Economics, but I tend to see the power that it gives the Economist. How jealous the physicist must be of the economist. What physicists wouldn’t want to change reality to match their theory! Also, this post-modern aspect of economics also means that Economists gets to play two parts in their work. First is the scientist, objectively weighing and measuring the world using various models of how the world works. Second a sort of social engineer, imaging alternative realities and then prescribing policy to help us get to those more ideal realities.

In the descriptive mode, I’m most interested in the history of economics and comparative international economics. Specifically I’d like to return to my studies of Japanese history, that I began as an undergrad, but concentrate more on its modern economic history. From the point of view of an American trying to anticipate the near term economic future for this country, I’m interested to reason by analogy between other countries’ experience and our own. Paul Krugman sees an Argentine-like future for the U.S, but I prefer to see the Japanese analogy. Low interest rates, aging demographics, a burst equity bubble all point to the ability for us to learn lessons from Japan’s most recent and protracted economic slump. In this area, I’m most excited to see Dr. Woo’s work on East Asia. While his work concentrates on China and south-east Asia, it is my opinion that America’s economic interests in all of Asia will depend largely on our relationship with Tokyo.

Once Economics has determined how the world looks and how we got to where we are, you have the context to begin understanding how to change it for the better (hopefully!). This is where the prescriptive mode of economics kicks in. Today’s international environment, post 9/11, has really focused my thoughts on international development, trade liberalization, technology diffusion, the study of how labor markets compare across countries and income distribution within and across countries. The neo-liberal agenda seems especially attractive in a world whose poorest parts are producing ideologies that are the most destructive and extreme. That said, I want to understand the issues surrounding globalism and I want to understand its discontents. .

My assumption going into all my work in these areas will be that if we can decrease poverty (not necessarily by increasing equality) we can reduce extremism and therefore increase the security of the world. My contribution will be to analyze causes of poverty emanating from the rich/western world and from policy in the depressed areas themselves. What decisions have we (Americans) made to exacerbate poverty across the world? What can we do and what can we encourage the poorest areas in the world to do to decrease poverty?

As its core function, Economics informs policy making. There are three types of policy. Policy that preserves the status quo (generally, these are unstated policies). Policy that creates sub-optimal outcomes (relative to assumptions and goals). Policy that is optimal given the assumptions and goals society has chosen. First, I want to be an economist that exposes implicit policy which leads to the revisiting of the status quo. Second, I want to articulate an accurate description of the world in its sub-optimal state (while being non-partisan). Finally, I want to articulate theory simply such that decision makers can take appropriate action and not be confused by esoteric jargon. For example, it’s a major failing of Economics that it hasn’t been able to articulate the advantages of trade to the lay person.

I look forward to beginning my study of economics at Davis. The methods for describing the world that I will learn there and the methods for generating and evaluating policy options will get me closer to my goal of having an impact on the world.


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