This article is from the archives of the UB Reporter.

Questions &Answers

Published: August 31, 2006

Isaac Ehrlich is SUNY Distinguished Professor and chair of the Department of Economics, College of Arts and Sciences. He also is Melvin H. Baker Professor of American Enterprise in the School of Management and serves as director of the Center of Excellence on Human Capital, Technology Transfer and Economic Growth and Development.

Can you give me an overview of the Department of Economics? How many faculty members do you have? How many students are majoring in economics? What degree programs do you offer? What's the focus of the department's research and teaching?

The department has 18 tenured and tenure-track members—the same number as when I joined the department in 1978. To put this into perspective, over the same period of time, economics departments in peer research universities, such as Penn State, Maryland, Ohio State, Michigan State and Iowa State, have gone in the opposite direction, maintaining and even expanding their size-advantage over us. The faculty-size issue can be assessed from another angle as well: In 1991, the department was serving just two programs: undergraduate and Ph.D. Today, we serve four programs: undergraduate, M.A., M.S. and Ph.D. While the number of undergraduate majors has remained more or less steady, the number of graduate students jumped at least fourfold: The department currently has more than 200 students, of which more than 150 are master's-degree students and about 60 are Ph.D. students. The department is fulfilling a significantly expanded programmatic mission with the same limited resources, thus defying the laws of scarcity we teach our students. The focus of the department in both research and teaching has been "applied economics," by which we actually mean applications of economic theory in a number of mainstream areas of research. The department has achieved excellence in a number of areas as measured by objective criteria, such as citation analysis, professional recognition, and external grants and awards. These areas include economics of growth and development, industrial organization, international trade, crime and justice, uncertainty and information, urban economics and applied econometrics.

How does the UB Department of Economics rank among its SUNY and AAU peers?

There are numerous rankings published by economists—some in professional journals and others on informal Internet sites—and they differ in methodology, the criteria for ranking, the set of journals selected to gage productivity and other subjective judgments by which authors weight research productivity. Historically, the department achieved very high rankings, like the Hogan ranking, published in the American Economic Review in 1984, in which we placed 20th among U.S. economics departments based on the specific criterion "current faculty members contributing more than 100 total pages in the top four journals." This promise of the department was one of the factors that attracted me to move here in 1978. Since the late 1980s, and especially the early 1990s, the department's ranking declined in published studies, largely because of significant losses of senior and junior faculty. For example, in 1990-94, the department ranked 51st in terms of aggregate adjusted pages per faculty in eight journals (Dusansky/Vernon, Journal of Economic Perspectives, 1998). In the "National Research Council Ranking for Economics" report of 1995, we placed 58th among U.S. departments. In the latest working paper I am familiar with by Kim, Morse and Zigales (2006), we were placed in a group category ranked 26-100. The fundamental difficulty in monitoring and interpreting various rankings is that they often are based on the total research output, rather than per-capita output, and this is particularly detrimental to UB because of the severe decline in our size over much of the period following the 1980s. As Christian Roessler from the University of Melbourne, the author of one Internet survey noted in private correspondence: "The rankings are not adjusted for faculty size. (I don't even have such data.) They are not meant to predict the average publication record of a person working in the department"..."size is driving Buffalo's performance in my rankings to a significant extent." This means that any surveys of departmental research productivity that are based on total publications would give a greatly distorted view of productivity per-capita, which is the only fair measure by which to gage individual scholarly productivity. Academics with a minimal degree of statistical understanding would know the difference between the two measures. Yet, less-informed people or students could be confused by rankings that are based on total, rather than per-capita, productivity. It so happens, however, that UB's per-capita research productivity judged by publications in well-ranked academic journals has remained quite high, despite the shrinking in size over much of the period, the loss of senior lines, and the fact that publishing in the major journals that form the basis of the rankings is quite uneven across our senior faculty: At least some of our senior faculty members have been highly prolific and have increased their publications in the profession's top-ranked journals since 1990. A quick look at faculty Web sites would make this point easy to see.

You've been department chair for nearly 10 years. How has the department changed during this time?

I actually have been chair only since 2000. In the late fall of 1996, I was appointed "executive officer" of the department, reporting both to the social sciences dean and to a "governing board" headed by a professor from the management school, in which I had no vote. This unusual arrangement reflected some deep problems the department had with the UB administration during the previous 10 years or so. That was a low point in the department's history. The number of full-time tenured and tenure-track people was just 10, down from 18 in 1991. While other CAS departments also experienced some decline over this period, a decline in faculty of 45 percent has consequences that go far beyond the ability to staff courses. For example, the person-power available to direct Ph.D. dissertations is substantially hampered. Also, as I pointed out earlier, total research output declines by virtue of the small number of contributing faculty. Since the 1997 academic year, however, the department has experienced a multidimensional revival. Faculty size is back to 18 this fall. Percentage-wise, this is an 80 percent increase since 1997, although this has entailed investments in primarily junior faculty—no senior hire has been made since that time. We also have experienced a tremendous growth in the number of students we serve, primarily at the graduate level, which also served as the engine of faculty growth. How did that happen? In fall 1998, the department launched a terminal, stand-alone, daytime M.A. program in applied economics with six specializations ranging from financial and international economics to law and Internet economics. Starting with 24 students, the program has grown to more than 150 students. The Ph.D. program also has grown somewhat—it now includes about 60 students—so together the graduate economics programs have more than 200 enrolled students, making it the largest graduate program in the College of Arts and Sciences. In fact, Economics has contributed 65 percent of the growth in M.A. students in CAS between 1998 and 2005, and this growth has taken place without any reduction in the quality of the students we admit. Last year, we augmented this development by launching an M.S. program in economics with three specializations. Although Economics also serves a huge number of freshmen university-wide through "Micro and Macro Principles," our undergraduate majors program still has less than 150 students. This is not an impressive number, given that Economics often is the most popular undergraduate major in many colleges, but a major reason is that these colleges generally do not offer an undergraduate business major, as we do at UB, and also because the department's undergraduate offerings are much smaller than in peer public schools, where the faculty size is typically twice as large. Programmatic growth at the undergraduate level remains a challenge that could be advanced if adequate resources could be allocated to this purpose. More recently, the department has had other achievements as well. A proposal to establish a Signature Center of Excellence on Human Capital, Technology Transfer and Economic Growth and Development was selected as one of the areas of strength in the UB 2020 strategic planning process. Last spring, I was fortunate to win a Faculty Development Award from the New York State Office of Science, Technology and Academic Research (NYSTAR) in the amount of $750,000—with matching funds from the university —which is used to fund the center. Michael Gort obtained a grant of $150,000 from the Kauffman Foundation to study the dynamics of entrepreneurship—another aspect of human capital—so together the department has raised $900,000 in external research grants. Finally, one of the major components of the center's work plan has been the establishment of a new major economics journal, and in this regard we have just reached a major milestone: The board of the University of Chicago Press, which publishes some of the top journals in academia, has approved an advance contract to publish our proposed Journal of Human Capital. These developments complement the achievements Economics has had in program and faculty growth, and bode well for future faculty and program developments.

Can you provide some more details on the Signature Center of Excellence on Human Capital?

The center has its intellectual roots in a research project funded by a $1 million grant from the Agency for International Development (USAID) to UB in the late 1980s. That project, which was housed in the School of Management, was designed to study a new paradigm in economic growth and development called "endogenous growth"—growth emanating from internal forces operating within an economy. We held five international conferences that brought many leading economists to UB. During these conferences, "human capital"—by which is meant information, skill and knowledge—was consistently identified as the real engine of long-term productivity growth and economic development. This has been a major theme of research for me and a number of my colleagues ever since. The rationale of the new center is the growing recognition in economics of the importance of human capital as a key asset driving economic performance, structural change and general well-being, especially in today's economy. We live in a fast-evolving, increasingly global "knowledge economy" that is transforming economic activity and generating significant increases in technological innovation, international trade, human longevity and related demographic changes. This is a common research theme for a large number of my Economics colleagues who are center affiliates. The center will explore the role of especially higher education, health, innovation and technology transfer in determining these changes at the firm, industry, macro and global levels. The center also will conduct applied and sponsored research concerning economic development issues in Western and upstate New York. Center affiliates also include researchers from the School of Management, the Graduate School of Education and scholars from other universities. The inaugural conference of the center will be held at the Buffalo Niagara Marriott Oct. 27 and 28.

You mentioned bringing to UB a major new journal in economics—The Journal of Human Capital. This is a real coup for you and the department.

This is indeed an important development. It is the mark of any great university to house major scientific journals, and the Journal of Human Capital has a good chance of rising to this level. The idea of establishing this journal has been an important component of our NYSTAR proposal. The distinction of the JHC is that it is organized around a common research theme straddling all major areas of inquiry in economics—from education and health to innovation, trade and economic development—rather than any conventional area of specialization. It thus aims to become a general-interest outlet of economic inquiry with the "knowledge economy" being its subtext. Since obtaining the NYSTAR award, we had been exploring the possibility of finding a major academic publisher for the journal, and I am happy that we have found the best. The University of Chicago Press publishes top-ranked journals in economics, as well as in sociology, law, history, medicine and astrophysics, to mention a few, and it is committed to adding the JHC to its illustrious family of major journals. The board of editors of the JHC includes four Nobel laureates and two John Bates Clark medalists, and we are in the process of appointing associate editors who would work more closely with us at the center. This is a huge opportunity to house the editorial office of a major-league journal of economics at UB.

What question do you wish I had asked, and how would you have answered it?

Q: You have described frontier areas of research in economics as dealing with human capital, which is an intangible asset. Many academics think of economics as dealing with more materialistic issues like money and accumulation of physical capital. Is this a misconception?
A: This is clearly a misconception, as is the notion that economic science is based solely on materialistic self-interest. Economics is a behavioral science. It deals with the behavior of individuals, families, firms and aggregations of these micro units in and outside of the market place, based on an axiomatic framework that allows for altruism and charitable behavior, as well as for elements of a more narrowly defined self-interest. Physical capital is a central factor of production, but the most important complementary asset—and the one that drives self-sustaining technological innovation and productivity growth—is human capital, representing labor, skill, health and a store of knowledge. Economists generally study the conditions under which the accumulation of both assets leads to efficient economic outcomes and enhances individual and social welfare.