Method in the madness
By Michael Fitzgerald, AB’86, courtesy University of Chicago Magazine
As a citizen I’m worried [about the recession], but as an economist it’s fascinating. When you learn what you don’t know, you find new research questions. ”
—Iván Werning, AM’99, PhD’02
Iván Werning, AM’99, PhD’02, isn’t sure how old he is. “34? 33? I’m horrible about this,” he says (he’ll be 35 in June). Werning doesn’t lose himself in life’s details, like his age.
What preoccupies Werning is economic theory. Complex equations for a paper on tax theory cover a whiteboard on one wall of his office at the Massachusetts Institute of Technology, where he is a professor of economics. The paper was submitted months ago, but Werning can’t get to the board to erase it—chairs, boxes, and stacks of the detritus of his research block his way, so he’s using another whiteboard for his latest work.
That near-obsession with economic thought (Werning occasionally refers to economics as an addiction) has catapulted him into elite company. In December the Economist tabbed him as one of the world’s top eight young economists—perhaps the most promising macroeconomist. The magazine called him “an economist’s economist; an elegant theorist, whose early contributions provided streamlined proofs that other thinkers could make use of.”
Werning wasn’t the only University of Chicago economist on the Economist’s list. It also featured Jesse Shapiro, an assistant professor at the University of Chicago Booth School of Business; Roland Fryer, who as a postdoctorate fellow worked with Gary Becker, AM’53, PhD’55, and economics professor Steven Levitt; and Xavier Gabaix, who spent the 1999–2000 academic year at the University.
For Werning a career in economics was almost inevitable. As a child he lived in Hyde Park, attending the William H. Ray Elementary School while his father, Pablo Werning, SM’76, worked toward a Chicago PhD in mathematics. His father tended house in the summers for Arnold Harberger, AM’47, PhD’50, who taught Latin American finance and, along with Milton Friedman, AM’33, shepherded “the Chicago Boys,” a cadre of young South American economists who helped shape economic policy in several Latin American countries, notably Chile.
Werning himself has been absorbed with bridging the ideas of two giants of economic thought, Frank Ramsey and Sir James Mirrlees. Ramsey developed seminal ideas on the most effective ways for nations to invest its income to maximize economic growth. Mirrlees won the 1996 Nobel Prize in economics for work on how to create tax policy when individuals can report incomplete or false economic information to revenue collectors. Werning’s work with Farhi on inheritances applies Mirrleesian models to tax policies.
The downturn has Werning even “more jazzed up now” about economics—bad news for the state of his office. The recession has exposed a lot of things even economists don’t know. “As a citizen I’m worried, but as an economist it’s fascinating. When you learn what you don’t know, you find new research questions. If you’re an academic economist, what more could you hope for?”
Originally published on June 1, 2009.