Content area
The University of Chicago's Sherwin Rosen has been chronicling the ''Economics of Superstars'' since the beginning of the 1980's. But even he was astounded to learn that Columbia University has just agreed to pay nearly $300,000 a year to lure Robert J. Barro, one of the nation's most distinguished economists, away from Harvard.
The kind of six-figure salary that Professor Barro, 53, will command at Columbia, while perhaps commonplace for economics Ph.D.'s on Wall Street and not unheard of for finance whizzes at major business schools (including Columbia's), is a record-breaker in the market for academic economists who work in more traditional fields like macroeconomics and trade theory. It exceeds by roughly $100,000 the most lucrative offers reported for leading university researchers just a year or two ago. And it is roughly twice the current salary caps for arts and sciences faculty at Harvard, Columbia and other elite universities.
As the bidding for Professor Barro shows, the market for top economists is starting to look like those for movie stars, basketball players and bond traders. It carries all the trappings, too -- complex negotiations, signing bonuses and highly organized raids. And the forces that have turned top economists into what the Columbia provost, Jonathan R. Cole, ruefully calls ''free agents without salary caps'' are not all that different: lots of customers (rising enrollments), lots of cash in a few pockets (swelling tuition payments and endowments at elite institutions) and a tight consensus on who the most valuable players are.
The University of Chicago's Sherwin Rosen has been chronicling the ''Economics of Superstars'' since the beginning of the 1980's. But even he was astounded to learn that Columbia University has just agreed to pay nearly $300,000 a year to lure Robert J. Barro, one of the nation's most distinguished economists, away from Harvard.
The kind of six-figure salary that Professor Barro, 53, will command at Columbia, while perhaps commonplace for economics Ph.D.'s on Wall Street and not unheard of for finance whizzes at major business schools (including Columbia's), is a record-breaker in the market for academic economists who work in more traditional fields like macroeconomics and trade theory. It exceeds by roughly $100,000 the most lucrative offers reported for leading university researchers just a year or two ago. And it is roughly twice the current salary caps for arts and sciences faculty at Harvard, Columbia and other elite universities.
''This is a big deal,'' said Claudia Goldin, a colleague of Professor Barro at Harvard. ''It's broken the sound barrier.''
An ex-New Yorker with attitude, Dr. Barro has exuded stardom since his graduate school days at Harvard in the late 1960's. He has changed the way economists think about everything from the long-run effects of government deficits to the forces that favor economic growth. A mainstream conservative with a libertarian streak who writes for The Wall Street Journal and Business Week, he has produced scholarly articles that are cited by other researchers as often as those of Paul Samuelson, Milton Friedman and Robert Lucas.
As the bidding for Professor Barro shows, the market for top economists is starting to look like those for movie stars, basketball players and bond traders. It carries all the trappings, too -- complex negotiations, signing bonuses and highly organized raids. And the forces that have turned top economists into what the Columbia provost, Jonathan R. Cole, ruefully calls ''free agents without salary caps'' are not all that different: lots of customers (rising enrollments), lots of cash in a few pockets (swelling tuition payments and endowments at elite institutions) and a tight consensus on who the most valuable players are.
Add to that the growing feeling among a number of institutions of higher learning that as one academic put it, ''If you don't have a good economics department, you can't have a great university.''
The focus on money has moved into the uppermost tier of schools, which have traditionally counted mostly on their reputations to lure talent. ''At the top schools, there's been a reluctance to play the game, to think that we can score a tremendous coup if we pay a lot for X,'' said Peter Kenen, an economist at Princeton University who was chairman of Columbia's economics department in the 1960's. ''But the pressure to push against salary caps and exceed them is getting stronger and stronger.''
In making its dramatic bid, Columbia hopes to break back into the top league, where it used to rank alongside Harvard, Princeton, Stanford, M.I.T. and the University of Chicago. It sees Professor Barro as a kind of franchise player who can not just pull up the team by his mere presence but also act as a magnet for talented young faculty.
For Harvard's highly ranked economics department, which has not lost a senior professor to a rival department since Stanford recaptured Kenneth J. Arrow in 1979. Columbia's coup has come as a wake-up call. The faculty dean, Jeremy Knowles -- who used to brag that ''I have never matched an outside offer!'' -- is, by all accounts, building a war chest to fend off future raids.
Just as extraordinary as the salary Columbia will pay is the cornucopia of perks and privileges Professor Barro won in months of negotiations. To lure him, Columbia helped place his teen-age son in an exclusive Manhattan private school, offered a $55,000-a-year university post to his wife, Judy, who is just returning to the work force and eased out the prior tenant of a 2,300-square-foot university-owned apartment on Riverside Drive, which the Barros coveted. The rent is subsidized at half the apartment's estimated market rate, with a lavish renovation, courtesy of Columbia, thrown in for good measure.
While Professor Barro also has other sources of income, it all adds up to at least a $150,000 gain for his family.
Other parts of the deal entail even heftier investments by Columbia. Professor Barro will occupy three spacious offices on the impossibly cramped and overcrowded campus. He will direct a sizable chunk of resources at the university's new social science research center. Most important, Professor Barro will have a green light from the administration to recruit a half-dozen promising younger economists.
The whole thing started more than a year ago when Professor Barro, who was feeling underpaid, began dropping hints that he might be willing to move. The first to respond was Boston University, which failed to put together a $250,000 offer last spring. When Columbia heard that he might be ''gettable,'' the economics department and business school teamed up to go after him. Until the deal, which has not been made public, was finally consummated in February, hardly anyone at either Columbia or Harvard expected it to come off. Around Christmas, a Harvard friend offered Columbia's department chairman 20-to-1 odds against Professor Barro's accepting.
The extras clinched it. The Columbia dean, David H. Cohen, made the salary offer at the beginning of the negotiations and hardly raised it. The promise that Professor Barro would have six new slots to fill was made in October.
Soon afterward, however, the negotiations almost foundered because Columbia was unable to find a suitable apartment. But by the time Dean Knowles of Harvard invited Professor Barro to a long, wine-drenched dinner in February to present Harvard's counteroffer -- involving a new research center -- Ms. Barro was already meeting with architects, their son had received his acceptance letter from the Dalton School and a job offer was about to go out to one of Professor Barro's former students, Casey Mulligan at Chicago.
Harvard was too late, if not exactly too little. ''If he had offered me in November what he did in February, I probably would have stayed.'' Professor Barro said.
To be sure, academic recruiting beyond the junior level -- particularly in New York, where housing and schools are major stumbling blocks -- has always been a complex, expensive undertaking. But Columbia's willingness to put together a deal of these proportions shows how much it expects to benefit from Professor Barro's presence. ''We're capturing a lot of the surplus that Robert will generate,'' said R. Glenn Hubbard, an economist in the business school and one of the main flag carriers in the Barro negotiations.
Economics is now the No. 1 major at Columbia. As enrollments have doubled, the faculty has shrunk. The business school, now one of the most competitive in the country, also considers a highly rated economics department vital to its own continuing success.
The business school dean, Meyer Feldberg, consulted Milton Friedman on the hire. ''Milton was very positive,'' Dean Feldberg recalled. ''He said: 'Barro's young. He's got visibility. People are drawn to him.' ''
Not all of Professor Barro's peers are equally enthusiastic. Some consider his recent empirical work superficial, others feel his theoretical work is less elegant than, say, that of Professor Lucas, who first coined the phrase ''rational expectations'' and is revered for his rigorous, spare style. Still others point to Professor Barro's prickly persona. (He was known, as a young professor at the University of Chicago, for his outbursts during debates and his scathing attitude toward less stellar colleagues.)
But even his critics acknowledge that Dr. Barro is productive, influential and a ''builder,'' who in the early 1980's strengthened the economics department at the University of Rochester, and he continues to train an impressive number of first-rate students -- Barroids as they are called.
The notion that a big push can restore Columbia's faded glory is a tantalizing one. Columbia once had students like Kenneth Arrow, Milton Friedman and Alan Greenspan. Its faculty included some of the great pioneers of empirical economics -- Wesley Mitchell, Arthur Burns, George Stigler. But by the time Gary Becker, who taught at Columbia throughout the 60's, decamped for the University of Chicago in 1970, student revolts, a dysfunctional administration and New York City's decline were pulling the university down and the economics department with it.
That said, Columbia boasts some remarkable thinkers, one or more of whom could easily win a Nobel Prize. These include Jagdish Bhagwati, Kelvin Lancaster and Robert Mundell in trade, Edmund Phelps in macroeconomics. (William Vickrey, a member of the department, died within days of receiving a prize last year.) But this group is about to retire. Columbia also has some promising researchers recently out of graduate school. What it lacks is a vital middle -- those in their prime years of 35 to 55 -- that normally forms the intellectual and administrative leadership. It is this ''great void'' that Professor Barro has been elected to fill. As Professor Bhagwati put it: ''The students don't care if we get four Nobels. They want to learn the latest stuff.''
In the past, great departments were built slowly. But armed with a growing endowment and emboldened by the comeback of New York City, Columbia thinks it might just be able to engineer a big leap up by buying its way into the top bracket. ''We saw a chance to jump-start the process,'' said George Rupp, the president of Columbia.
In one of the earliest rounds of talks last summer, Professor Barro handed Professor Cole, the Columbia provost, a list of 10 to 12 ''young seniors'' he would like to see at Columbia. (Young seniors are newly tenured professors or those about to be tenured.) They included Caroline Hoxby, Ed Glaeser and David Laibson at Harvard as well as Michael S. Kremer, a MacArthur Fellow at M.I.T.
''It's a great test,'' commented Kevin Murphy at the University of Chicago. ''I'm a little skeptical, but if it's successful, it will change the way people think about the build-or-buy decision: money will talk and blitz campaigns will work.''
The trouble is, says Dale Jorgenson, former department head at Harvard, ''Everybody's trying to do the same thing. It's happening all at once.''
Senior hiring, as angling for stars is called, has been hot and heavy for a while. Princeton has lucrative offers out to ''half of the Chicago department,'' as one Chicagoan anxiously put it. Upwardly mobile schools like Boston University have been making aggressive offers, as has New York University, which is paying one of its home-grown stars, Boyan Jovanovic, a macroeconomist, a cool $200,000.
Well-heeled business and public policy schools are also eager to hire economists. Harvard's Kennedy School, under its dean, Joseph S. Nye, has been on a shopping spree, with handsome offers currently out to five economists, including Alan Krueger and Ken Rogoff at Princeton. .
''Everybody's budgets have been liberated,'' complains Professor Rosen, the expert on superstars. ''Recruiting is getting harder.''
Harvard's newfound determination to fight back partly reflects the fact that Professor Barro's departure comes on top of others in the core economics disciplines. Lawrence Summers left to join the Treasury Department; Andreu Mas-Collel decamped to the presidency of a research university in Barcelona. Now Princeton and Berkeley are making aggressive plays for a key price theorist, Drew Fudenberg.
The risks are not all Harvard's of course. Professor Barro will be leaving behind world class students and younger colleagues. ''Robert is making a terrible mistake,'' said Jeffrey Williamson, chairman of Harvard's economics department. ''It's a big step down.''
ROBERT J. BARRO -- Columbia hired away this star in macro-economic theory from Harvard to revitalize its economics department. DREW FUDENBERG -- This star in micro and game theory at Harvard is being aggressively courted by Princeton and Berkeley. ALVIN E. ROTH -- The world's top experimental economist will start at Harvard this fall after spending his career at the University of Pittsburgh. PAUL ROMER -- One of the inventors of modern growth theory, he was hired by Stanford after stints at other top universities. THOMAS J. SARGENT -- A co-author of the theory of rational expectations, he left Stanford for the University of Chicago two years ago. Now Stanford wants him back. PAUL KRUGMAN -- Creator of new trade theory, he abandoned M.I.T. for Stanford only to be lured back again. (pg. D1)
''The Top Economics Schools''
Which economics departments are the best? It depends on how you look at it. Here are two rankings of the top programs. One, from U.S. News & World Report, is based on faculty surveys. The other, by Richard Dusansky and Clayton J. Vernon, measures the volume of work published in top journals from 1990-94 by faculty members of each university. Schools that tied have the same ranking.
Ranking based on
REPUTATION
1. Harvard Univ.
M.I.T.
Stanford Univ.
4. Princeton Univ.
Univ. of Calif. at Berkeley
Univ. of Chicago
7. Yale Univ.
8. Northwestern
9. Univ. of Pennsylvania
10. Univ. of Minnesota at Twin Cities
Univ. of Wisconsin at Madison
14. Columbia University
Ranking based on
PUBLICATION
1. Princeton Univ.
2. Harvard Univ.
3. M.I.T.
Univ. of Pennsylvania
5. Northwestern
6. New York Univ.
7. Boston Univ.
Yale Univ.
9. Stanford Univ.
Univ. of Calif. at San Diego
22. Columbia University
(Sources: U.S. News & World Report; Journal of Economic Perspectives)(pg. D3)
''The Fight Over an Economist''
While Harvard's Robert J. Barro was being courted by Columbia, Harvard tried to persuade him to stay. Over dinner, its dean of faculty, Jeremy R. Knowles, drew a diagram to illustrate how Dr. Barro's standing in the economics world -- his cosmic distinction -- would suffer if he went to Columbia. Here is a look at Dr. Barro's credentials.
ROBERT J. BARRO
BORN -- September 1944
JOB HISTORY
1987-present -- Harvard University
1984-87 -- University of Rochester
1982-84 -- University of Chicago
1975-82 -- Rochester
1972-75 -- Chicago
EDUCATION -- B.S., physics, Cal Tech; Ph.D., economics, Harvard
PUBLICATIONS OF NOTE
Are Government Bonds Net Wealth? Journal of Political Economy, 1974
Economic Growth in a Cross Section of Countries Quarterly Journal of Economics, 1991
Macroeconomics, M.I.T. Press; fifth edition, 1998 (pg. D3)
Copyright New York Times Company Apr 8, 1998