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Booth in the News, Autumn 2010, Vol. 4

(Covering November 13 to November 30, 2010)

Here are highlights of the latest Chicago Booth news coverage. The digest below represents only a portion of recent coverage.

Section 1: News coverage of Chicago Booth.

  • THE ECONOMIST. A feature article about Booth’s Center for Research in Security Prices was published November 18. Fifty years after its founding, CRSP data “provide the foundation of at least one-third of all empirical research in finance,” the article said. One of the earliest uses of the data was by Professor Eugene Fama to support his efficient market hypothesis. Read more
  • THE WALL STREET JOURNAL. Booth’s Center for Research in Security Prices was featured in the Intelligent Investor column November 27. CRSP will introduce new “investable” indexes early next year, the article said. “CRSP was a pioneer in calculating long-term returns on assets; it gathers and analyzes massive amounts of data for investment firms and academic researchers.” The article noted that Professor Lubos Pastor helped design the new indexes.Read more
  • CHICAGO TRIBUNE. Booth’s annual Business Forecast Luncheon made news November 30. “I don’t agree with those who say we are in an extended period of low growth, but we are unlikely to have a powerful recovery either,” said Professor Randall Kroszner, one of the speakers. The article also quoted Professors Erik Hurst and Raghuram Rajan, the other speakers at the event at the Sheraton Chicago Hotel attended by 900 alumni and friends of the school. Read more
  • Professor Rajan’s predictions for China were reported by Xinhua, the official Chinese news agency. Due to the country’s increasing domestic demand, China is likely to be the engine of the world economy in five to 10 years, Professor Rajan said at the Business Forecast Luncheon. Read more
  • WLS-TV (ABC, Chicago). A story about Booth’s annual Business Forecast Luncheon was included in the 4 p.m. news November 30. Those who expect a recovery in housing prices will be disappointed, said Professor Erik Hurst, one of the speakers at the luncheon. Read more
  • BLOOMBERG BUSINESSWEEK. Booth was featured in an article about the increased attention senior corporate leadership is giving to executive education programs. “More initiatives are being driven by the C-suite, with education being leveraged to achieve corporate goals,” said Steve LaCivita, associate dean of executive education. He cited an example in which Booth worked with the C-suite of a major European company, together with 200 managers. “Without the participation of top leadership in this process, the desired organizational change wouldn’t have happened,” he said. Read more

Section 2: News coverage quoting Chicago Booth faculty.

  • LOS ANGELES TIMES. Professor John Cochrane published an op-ed titled “Stimulus: Neither needed nor free,” November 14. “Inadequate stimulus is an unlikely diagnosis for our problems,” he wrote. “Banks are sitting on about $1 trillion in reserves, up from $50 billion before the recession. If they don’t want to lend the first trillion, is giving them another half-trillion going to make any difference? The Fed did a great job of putting out the fire in the financial crisis. Alas, once the fire is out, more water will not make the house grow back,” Professor Cochrane wrote. Read more
  • MONEY MAGAZINE. Professor Raghuram Rajan was featured in a four-page Q&A interview about the economy published in the December issue. He was asked: If the recession is officially over, why doesn’t it feel like it? “We haven’t had this kind of recession – created by a financial meltdown and high leverage – since the Depression,” Professor Rajan said. “These take longer to recover from. It used to take eight months from the trough of a recession until jobs came back. In 2001, it took 38 months. It will probably take five to six years this time around.”
  • THE WALL STREET JOURNAL. Professor Raghuram Rajan was quoted in an article about the financial bailout of Ireland. While a number of economists say default is the best option, “There are countries that believe making the default process easier would reduce their ability to issue debt” because creditors would demand higher interest rates, Professor Rajan said. The article was published November 23. Read more
  • FINANCIAL TIMES. Professor Anil Kashyap was quoted in an article headlined “Financial regulation: A garden to tame,” published November 14. His worry is that the Financial Stability Oversight Council will spread its responsibility too thinly, the article said. “If there was some person that you knew was going to be barbecued and was going to be hauled up in front of Congress, that was going to be the poster child of the regulatory failure, I think the chances of this working better would be substantially improved,” Professor Kashyap said. Read more
  • THE NEW YORK TIMES. Professor John Cochrane was quoted in an article headlined “Some Very Creative Economic Fix-Its,” published November 27. While some economists have suggested new government programs are the answer to our economic woes, Professor Cochrane disagreed. “Growth doesn’t come from big federal programs,” he said. “The government didn’t tell us” to create the vast variety of profitable businesses on the Internet, but “it did tell us to buy houses and look what that got us.” Read more
  • THE ECONOMIST. Research by Professors Marianne Bertrand, Chad Syverson, Pietro Veronesi and Luigi Zingales was posted on the magazine’s Executive Briefing website November 19. Professor Bertrand’s research looked at cash incentives in education, Professor Syverson’s research examined why firms own production chains, and the research by Professors Veronesi and Zingales focused on the costs and benefits of government intervention. The articles appeared earlier in Capital Ideas, a Booth publication highlighting faculty research.
  • NEW SCIENTIST. Separate research by Professors Nicholas Epley and Ann McGill was featured in the cover story headlined “In our own image: Why we treat things like people,” published November 29. Our habit of endowing everything around us with human attributes runs deep -- and it can get us into big trouble, the article said. Read more
  • FOREIGN POLICY MAGAZINE. Professor Raghuram Rajan was named one of the “100 global thinkers of 2010”, in the magazine’s December issue. “U.S. policies encouraged over-consumption and over-borrowing,” Professor Rajan said, “and unless we understand where these policies came from, we have no hope of addressing the causes of this crisis.” Read more
  • PBS TV. Clinical Professor James Schrager was featured in a news story about the return of General Motors to the New York Stock Exchange 18 months after the firm was delisted. During that time, GM has gone through four CEOs. “This injects a whole lot of questions about what the future is going to be,” Professor Schrager said. “As an investor bets on a stock, he bets on that management team. And right now, things look good, but we just haven’t seen much.” The story aired on The Nightly Business Report November 18. Read more
  • BLOOMBERG TELEVISION. Professor Luigi Zingales discussed the housing market and the European economy during a five-minute interview broadcast November 30. “The sad part is that so far the (Obama) administration is trying to support house prices rather than to let the market work,” Professor Zingales said.
  • BBC RADIO (London). Professor Richard Thaler was a guest on the popular program Moral Maze November 24. The program examined behavioral economics and the question “How far should we go to stop people from doing something that’s bad for them?” Professor Thaler also discussed his latest book, “Nudge: Improving Decisions About Health, Wealth, and Happiness.” Moral Maze airs on BBC Radio Four.
  • IRISH TIMES (Dublin). Research by Professor Canice Prendergast was featured in an article headlined “Rewarding good performance crucial, but bonus culture no longer pays off,” published November 29. The success of pay for performance programs is limited to a small group of employees in certain professions and does not seem to be effective in other settings, Professor Prendergast said. Read more
  • CHICAGO TRIBUNE. Professor Randall Kroszner said the Federal Reserve’s monetary policy can provide the conditions for growth, “but it can’t get people to actually make the investments to hire the workers.” To help stimulate the economy, Congress and President Obama’s administration need to rethink the tax code, he said during a Chicago Tribune forum on the economy. An article about the forum was published November 17. Read more
  • FORBES. Professor Raghuram Rajan was named one of the seven most powerful economists in the world, according to a compilation by economist Nouriel Roubini. Also on the list are Fed Chairman Ben Bernanke, Harvard professor Kenneth Rogoff and outgoing director of the National Economic Council Lawrence Summers. The list was published in the November 22nd edition. Read more
  • ELEFTHEROTYPIA (Athens). A Q&A interview with Professor John Cochrane about conditions in the European Union was published November 28. Economic troubles in Ireland and Portugal do not have to mean the end of the Euro, he said. “The Euro will work better if countries can default. The major threat to the Euro right now is this constant string of bailouts. Eventually, it has to lead to inflation – to printing up Euros to bail out country after country,” Professor Cochrane said. The article, in Greek, can be viewed here: Read more
  • CITY-JOURNAL.ORG. Professor Luigi Zingales published an op-ed November 23 titled “How to Improve the Financial Reform Law: A brief proposal to protect the system – without stifling innovation.” The plan “would have no cost in terms of the financial system’s stability,” he wrote, and “it will spare the most vibrant financial institutions from the rigidities and bureaucratization that a strict application of the Dodd-Frank bill would entail.” City Journal is a quarterly magazine published by the Manhattan Institute.Read more
  • BLOOMBERG NEWS. Professor Steven Kaplan was quoted in an article about the failed $531 million initial public offering from Harrah’s Entertainment Inc. “What do IPO investors want to see?” he asked. “A growth story. If you’re one of the big behemoths, it’s hard to give them that. You need a strong economy.” The story was published November 22. Read more
  • WBBM RADIO (Chicago). Professor Randall Kroszner said the economic recovery is fragile but there is no longer any chance of a double-dip recession. During a six-minute live interview on the Noon Business Hour he supported the latest move by the Federal Reserve to stimulate the economy, and he said the Fed has an exit strategy in place to tighten monetary policy once the recovery has taken hold. The interview was broadcast November 12.
  • REUTERS. Research by Assistant Professor Amit Seru on delinquent home mortgages was featured by this news service November 18. Professor Seru found that banks are much less likely to foreclose on delinquent loans if they own the mortgage themselves than if they’re simply servicing the mortgage for investors. Foreclosure destroys value for the owner of the loan but it does not destroy value for the servicer, who therefore has very skewed incentives, the article said. Read more
  • BLOOMBERG NEWS. Professor Raghuram Rajan’s latest book, “Fault Lines,” was named one of the 30 top hardback business books of the year by this news service. “The University of Chicago professor shows why our flawed financial order risks driving us ‘from bubble to bubble,’” Bloomberg wrote in its November 15th article. Earlier, the Financial Times and Goldman Sachs named “Fault Lines” the best business book of the year.
  • THE WASHINGTON POST. Professor Richard Thaler was featured in an article about mental accounting, a behavioral-economics phenomenon he was first to describe, according to the newspaper. Professor Thaler gave the example of cab drivers who tend to knock off for the day after they’ve reached a certain level of income – in other words, after they’ve filled a certain mental account. On a rainy day, when cab use is highest, they’ll hit their mark quickly and knock off early. On a slow day, they’ll work longer. Irrationally, they’re working fewer hours when making money is easy and more hours when it’s hard, the November 14 article noted. Read more
  • CHICAGO TRIBUNE. Professor Randall Kroszner was quoted in an article about the impact of the Federal Reserve’s quantitative easing policy on China. Chinese leaders have complained that the action is making food more expensive there. Professor Kroszner said the Fed’s action is not to blame. If food was rising because of the quantitative easing policy, globally “you would see overall inflation; not just food,” he said. The article was published November 24.Read more
  • CRAIN’S CHICAGO BUSINESS. Professor Steven Kaplan was quoted in an article looking at whether the founders of Groupon, the Chicago-based online coupon phenomenon, should sell the company. Their $1 million initial investment is now worth an estimated $2 billion to $4 billion, according to the article. In the end, “it all comes down to valuation,” Professor Kaplan said. “You sell when you think the price is greater than what you get from continuing to run it.” The article was published November 29.
  • CHICAGO SUN-TIMES. Professor Luigi Zingales was quoted in an article headlined “Honorable mention for local professor in Palin’s new book,” published November 24. In her latest book, “America By Heart,” Sarah Palin cites Professor Zingales as a champion of the type of free market principles she supports. “I’m impressed that she knows me because I’m not sort of a national figure and somebody on the front page of magazines all the time,” he said. “Not only that she knows my name but she seems to have gotten my ideas right seems remarkable.” Read more

Section 3: Chicago Booth students and alumni in the news.

  • FINANCIAL TIMES. David Booth, MBA ’71 was featured in an article headlined “David Booth: A firm believer in market efficiency,” published November 21. To deny markets are efficient is to assume there is extra money lying around waiting to be picked up, he said, so “who got all that extra money during the market turmoil? I don’t know many people who had a great investment experience during this.” Booth is founder, chairman and co-CEO of Dimensional Fund Advisors. Read more
  • MILWAUKEE JOURNAL-SENTINEL. Ashish Rangnekar, MBA ’11 was featured in an article about Watermelon Express, the company he co-founded. The company, which won Booth’s 2010 New Venture Challenge, offers test preparation applications for the iPhone, iPad, and computer. The article was headlined “GMAT, LSAT, MCAT or SAT? There’s an app for that,” and was published November 18. Read more
  • CRAIN’S CHICAGO BUSINESS. Mary Tolan, MBA ’92 (XP-61) was named the Ernst & Young Entrepreneur of the Year in the services category, according to an article posted November 16. She was recognized for founding and building Accretive Health Inc. into “a significant hospital revenue-cycle operations manager,” the article said. Read more
  • CHINA BUSINESS REVIEW.COM. Francis Bassolino, MBA ’02 published an article about the impact of China’s rising disposable income levels in second- and third-tier cities. Instead of targeting Tier 1 cities, companies that sell luxury goods and other branded goods in China should focus on reaching top-tier customers in all cities, he wrote. Bassolino is president of Alaris Inc., Shanghai.