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Booth in the News; Winter 2012, Vol. 2

(Covering January 4 to January 18, 2012)

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.

  • BLOOMBERG BUSINESSWEEK. Booth was one of the schools featured in an article headlined “Early Indicators Bode Well for MBA Hiring,” published January 17. Scheduled internship interviews at Booth are up 13 percent this year over last, the article said. “This number does not correlate precisely to the number of offers a firm will make or how many interns they seek to hire, but it’s a good indicator of a firm’s appetite,” said Julie Morton, associate dean of career services and corporate relations. Scheduled interviews for consulting internships are up about 5 percent, investment management is up 9 percent and marketing is up 16 percent, she said. 
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  • THE ATLANTIC. Booth’s Class of 2001 and how it weathered economic shocks was the basis for a story headlined “The Graduates,” in the January/February issue. “The author attends her 10-year business school reunion for lessons on how MBA’s can survive a recession,” the magazine said. The article was written by Megan McArdle, MBA ’01, a senior editor at the magazine. 
    Read article
  • FINANCIAL TIMES. An article headlined “Chicago Booth economics professors join the G30,” was published January 16. The appointment of Raghuram Rajan and Axel Weber to the group “shows that Booth’s faculty influence is growing even strong in the public debate over key issues affecting the world economy,” Dean Kumar said. The G30 is an international body that examines the impact of financial and economic decisions in the public and private sectors. 
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  • BLOOMBERG BUSINESSWEEK. Entrepreneurship at Booth was featured in a school profile posted January 5. At Booth more than $100,000 in cash prizes is available to students who participate in the New Venture Challenge, the Social New Venture Challenge, and the Global New Venture Challenge, the article noted. An additional $70,000 in business services is up for grabs during SeedCon, an annual entrepreneurship conference. 
    Read article

Section 2: News coverage quoting Chicago Booth faculty.

  • THE WALL STREET JOURNAL. Professor Austan Goolsbee published an op-ed titled “Washington Isn’t Spending Too Much,” January 6. “It’s normal for deficits to rise during a downturn,” he wrote. “The real fiscal challenge is decades down the road … An aging population and rising health-care costs mean that spending will rise again and imply a larger size of government than we have ever had but with all the growth coming from entitlements – while projected federal revenues as a percentage of GDP after the rate cuts of the 2000s will likely remain below even historic levels of 18%,” he wrote. 
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  • THE NEW YORK TIMES. Professor Richard Thaler wrote the Economic View column titled “The Art of Bargaining, So Lost Upon Washington,” January 7. “Almost everyone agrees about one thing these days: Congress is malfunctioning,” he wrote. “To help our representatives escape from their current morass, I suggest that they read ‘An Essay on Bargaining,’ the classic 1956 article by Thomas Schelling, the Nobel laureate economist. It is profound, and it doesn’t contain a single equation.” 
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  • BLOOMBERG NEWS. Professor Chad Syverson published an op-titled “Why Companies Acquire Their Supply Chains,” January 11. “Business lore and business school classes are full of stories about vertical integration,” he wrote, including Carnegie Steel Co., Ford Motor Co.’s River Rouge complex, and General Motors Corp’s, 1926 acquisition of Fischer Body “Yet a closer look at the data shows that, even among vertically structured firms, this sort of self service is the exception rather than the rule.” The op-ed was written with Ali Hortacsu, a professor in the University of Chicago Department of Economics. 
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  • BLOOMBERG NEWS. Professor Anil Kashyap published an op-ed titled “Four Economists Come Together to Say ‘We Agree,” January 4. The article, written with faculty members at Harvard, Yale and MIT Sloan, explains the goals of the Economics Expert Panel organized by Booth’s Initiative on Global Markets. The panel of 41 economists at top universities answers questions on major public policy issues. “By harnessing the wisdom of crowds, we hope to distill the best economic knowledge and present it in a clear and succinct format,” Professor Kashyap wrote. 
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  • THE ATLANTIC. Professor Steven Davis published a commentary titled “Private Equity Is a Force for Good,” January 16. The article looks at “what it really is, whom it really helps, and why it really matters to capitalism,” the magazine said. “Governor Romney’s defenders have argued that critics of his role at Bain Capital are really attacking capitalism itself,” Professor Davis wrote. “Given the academic evidence, we would have to agree.” The commentary was co-authored with Kevin Hassett of the American Enterprise Institute. 
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  • THE NEW YORK TIMES. Research by Professor Steven Davis was featured in an article headlined “As Romney Advances, Private Equity Becomes Part of the Debate,” published January 10. The study by Professor Davis and several co-authors found that private equity-owned companies shed slightly more jobs than similar companies, though the difference was quite small, the article noted. In total, they shed about 1 percent more jobs. GOP presidential candidate Mitt Romney has been criticized for carving up companies and cutting jobs when he was CEO of Bain Capital. 
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  • THE WALL STREET JOURNAL. Professor Steven Kaplan was one of the experts quoted in a front page article headlined “Romney at Bain: Big Gains, Some Busts,” published January 9. Bain was investing in “riskier deals,” when Romney was CEO, Professor Kaplan said. “For every one that went bankrupt, they had one that was a screaming success. The overall effect was terrific performance” for the firm’s investors, he said. 
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  • THE WALL STREET JOURNAL. Professor Lubos Pastor was quoted in an article headlined “Growth Stocks or Value? Yes,” published January 7. Nowadays, the sweet spot for investors might be the place where growth and value meet, he said. Booth’s Center for Research in Security Prices has been launching investible indexes in recent years, and Professor Pastor has been working on one that will combine stocks that rank highly on both growth and value metrics. “It will allow stocks to be high growth and high value at the same time, he said. The index could be launched this year, according to the article. 
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  • NATIONAL PUBLIC RADIO. Professor Nicholas Epley discussed the psychology of “price anchoring” during an interview on Marketplace January 6. “Any time a number pops into your mind, it influences your judgment,” he said. “If you come into the (car) mechanic’s shop and you say ‘Do you think this will cost more or less than $1,000?’ they’ll estimate that it’ll cost less money than if you ask ‘Do you think this will cost more or less than $5,000.’” 
    Listen to broadcast
  • THE WASHINGTON POST. Professor Steven Kaplan was featured in a Q&A interview headlined “Private-equity returns and the Carlyle Group,” January 14. The $400 million in compensation paid to the three founders of the Carlyle Group “obviously … is a large amount of money,” Professor Kaplan said, “but they earned it because compensation is heavily tied to performance in private equity.” The company “returned at least $15 billion to its investors this year … and $400 million is less than 3 percent of the $15 billion,” he said. 
  • THE ECONOMIST. Separate research by Professors Amir Sufi and Luigi Zingales was featured in an article containing highlights from the American Economic Association annual meeting earlier this month. Professor Sufi’s research shows why good government policy is often most difficult to implement in the wake of a financial crisis. The work by Professor Zingales focused on conflicts of interest by economists. Economics has internalized the views of rich patrons, according to the magazine’s summary of his research. Professor Zingales’ “scathing analysis of journal publications revealed that papers providing justification for high executive pay were 55% more likely to be published than those opposed, and were more heavily cited by others,” the Economist wrote in the January 14 issue. 
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  • CNBC. Professor Austan Goolsbee discussed the improved December employment number during a live interview January 6. “This is a good number, for sure,” he said. 
    Watch video
  • CNBC. Professor Randall Kroszner discussed the decision by the Federal Reserve to start issuing interest rate forecasts during an appearance on the Kudlow Report January 5. Rather than focusing on long term rates, the Fed is likely to issue forecasts for “the policy rate, the fed funds’ rate,” he said. 
    Watch video
  • CNN. Professor Steven Davis discussed his research on private equity job creation during an appearance on The Situation Room January 9. Firms that come under the control of private equity companies tend to have unusually large amounts of job loss and unusually large amounts of job gains, he said, which makes it easy for critics of private equity to cherry pick the best cases and worst cases depending on the position they are trying to put forward.
  • THE WALL STREET JOURNAL. Research by Associate Professor Emir Kamenica was featured in an article headlined “Europe’s Political Economy: Pay More, Get Less,” published January 9. Professor Kamenica found that doubling the salary of an elected member of the European Parliament actually decreases by 14% the probability that the official attended a university ranked among the top 500 in the world. “Higher salaries lower the quality of elected MEPs,” he and his co-authors wrote. 
    Read article
  • FRANKFURTER ALLGEMEINE ZEITUNG, FAZ (Germany). A Q&A interview with Professor Raghuram Rajan was published January 9. 
    Read article in German
  • CHICAGO TRIBUNE. Professor Steven Kaplan laid out the case he would make if he were on the receiving end of criticism about Mitt Romney’s tenure as head of Bain Capital in an article published January 18. 
    Read article
  • FOREIGN POLICY. A Q&A with Professor Austan Goolsbee was published in the January/February issue of this magazine. The article was headlined “Epiphanies from Austan Goolsbee; President Obama’s former economic advisor speaks out.” 
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  • THE ATLANTIC. Separate research by Professors Steven Davis and Steven Kaplan was featured in an article headlined “Is Private Equity Bad For the Economy?” published January 11. “Mitt Romney’s private equity record is suddenly the talk of the GOP presidential contest,” the magazine wrote. “What do we know about the industry he helped to create?” Research by Professors Davis and Kaplan helps answer that question. 
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  • THE WALL STREET JOURNAL. Professor Steven Davis was quoted in an article headlined “Unemployment Scars Likely to Last for Years,” published January 9. The risk is that the U.S. will develop an underclass of semipermanently unemployed workers, with severe consequences for productivity, public finances and even social stability, the article said. Europe, which faced a similar problem in the 1980s, is still dealing with the consequences. “We know that once you get into that type of situation it’s very hard to get out,” Professor Davis said. 
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  • NATIONAL PUBLIC RADIO. Professor Steven Kaplan termed “ridiculous” allegations that GOP Presidential candidate Mitt Romney looted companies while was CEO of Bain Capital. “Looting a company and destroying a company does not creative value,” Professor Kaplan said. “At the end of the day, in order to make money you have to sell the company to somebody, and if the company … has been looted and is unproductive, nobody is going to buy it.” The broadcast on Morning Edition aired January 13. 
    Listen to broadcast
  • NATIONAL PUBLIC RADIO. Professor Steven Kaplan discussed the role of private equity firms in the U.S. economy during a one-hour appearance on The Diane Rehm Show January 12. 
    Listen to broadcast
  • MSNBC.COM. Research by Professor Steven Davis was featured in an article headlined “Role reversal: Employers say they can’t find workers,” posted January 13. Professor Davis regularly tracks “recruiting intensity per vacancy,” which is essentially a measure of how hard employers are looking for the right employees, the article said. Recruiting intensity declined a lot at the onset of the financial crisis in 2008, he said, and has only recovered partway as the economy has improved. 
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  • THE TIMES OF LONDON. Professor Steven Kaplan was quoted in an article headlined “Rivals round on Romney business record as ‘job killer,’” published January 10. “Romney did deliver for his shareholders (of Bain Capital), who included public pension funds,” Professor Kaplan said. “Whether the American people will see it like that, I just don’t know.”
  • THE NEW YORK TIMES. Research by Assistant Professor Wilhelm Hofmann was featured in an article headlined “Be It Resolved,” published January 5. In a large experience-sampling study, Professor Hofmann found that the people with the best self-control are the ones who have to exercise their willpower in the heat of the moment less often. Instead of fending off one urge after another, these people set up their lives to minimize temptations, the article said. They play offense, not defense, using their willpower in advance so that they avoid crises, conserve their energy and outsource as much self-control as they can. 
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  • BLOOMBERG TELEVISION. Professor Austan Goolsbee said he expects “gridlock” in Washington in 2012, during an interview broadcast January 10. U.S. policy makers won’t make progress clearing up uncertainty for businesses and Americans, he said, adding “I don’t know if there’s a whole lot we can do about that.” 
    Watch video
  • BLOOMBERG TELEVISION. Professor Randall Kroszner said it is unlikely the Federal Reserve will make any “major moves” in the near future. While recent economic data has been encouraging, “the key is, is this going to be sustainable?” he said during the January 6 broadcast. 
    Watch video
  • BLOOMBERG BUSINESSWEEK. Professor Steven Kaplan was quoted in an article about Wilbur Ross, the billionaire chairman of WL Ross & Company, a firm that purchases distressed companies. “He’s been brilliant and contrarian in discerning opportunities,” Professor Kaplan said in the article published January 5. 
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  • CHICAGO TRIBUNE. Professor John Cochrane was quoted in an article about the fact that the Federal Reserve did not see the recently financial crisis coming. “It’s impossible for an economist to be clairvoyant,” he said in the January 18 article. 
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  • FINANCIAL TIMES. Research on leadership by Professor Luigi Zingales was featured in an article published January 6. The study, “The emergence of male leadership in competitive environments,” looks at men’s natural overconfidence, the article said. Professor Zingales conducted the study with several co-authors. 
    Read article
  • NPR PLANET MONEY BLOG. Professor John Cochrane posted an answer to the question “How much fat can we cut out of Wall Street,” January 17. “Before you feel too jealous of managers and traders, note that working on Wall Street is one of the riskiest occupations in the country,” he wrote. 
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  • WBEZ RADIO (Chicago). Professor Erik Hurst was featured in a story about the decline in home mortgage foreclosures. “Shocks are still coming, people are still getting laid off, the job market isn’t great,” he said. “But we should see declines in the foreclosure rates relative to periods when unemployment was unimaginably high and house prices were plummeting at a very fast rate.” The story was broadcast January 12. 
    Listen to broadcast

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

  • FORBES. Glen Senk, MBA ’80, was named CEO of David Yurman, according to an article published January 11. His appointment includes an ownership stake in the privately owned and operated luxury jewelry and timepiece company, Forbes reported. Previously Senk was CEO of Urban Outfitters. 
    Read article
  • THE WASHINGTON POST. Michael Holmes, MBA ’08, was featured in article headlined “Driving some big changes at auto-service chain.” He runs a chain of 11 auto service centers in Northern Virginia. He earned his Booth MBA while working full time at the Carlyle Group, the January 9 article said. 
  • REUTERS TELEVISION. Helmuth Ludwig, MBA ’90, said U.S. manufacturing is seeking a renaissance, but that government needs to invest more in increasing productivity. He is CEO of Siemens Industry Section in North America and was interviewed at the annual Reuters Summit December 12. 
    Watch video
  • FINANCE ASIA. Manuel Vazquez, a current student in the Executive M.B.A. Program in Singapore was profiled in an article headlined “Manuel Vazquez helps make Nestle, the world’s largest food company by sales, a sweet success.” He heads the company’s Latin American treasury center. The article was published in the October 2011 issue of this magazine.