What motivates an MIT economist?
“I entered the field to figure out how to make some progress on big, fundamental problems in society,” says Parag Pathak, the Class of 1922 Professor of Economics in the School of Humanities, Arts, and Social Sciences, and a director of Blueprint Labs, a policy-oriented economic research group at MIT. “One of these problems is the inequality of opportunity.”
David H. Autor, the Ford Professor of Economics, specializes in the impacts of technology on work. He wants to understand “how we minimize adverse consequences of a changing economy and shape opportunities to create a world we all want to live in.”
Driven by such concerns, Pathak and Autor, as well as such departmental colleagues as Joshua Angrist, recipient of the 2021 Nobel Prize in Economic Sciences, and 2018 MacArthur Fellow Amy Finkelstein PhD ’01, are engaged in research with the power to reshape key sectors of public life. Their studies of health care, education, and the workforce— grounded in theory, novel experimentation, and data analysis—provide insights that frequently capture the attention of the press and sometimes shake up their field.
“We have been a pioneering department for decades, and successful because we are highly innovative while at the same time quite practical,” says Autor. “New ideas start at MIT and diffuse from there.”
Randomized trials light the way
In 2008, Finkelstein, the John and Jennie S. MacDonald Professor of Economics, encountered what she calls a “once-in-a-lifetime opportunity”: the state of Oregon was running a lottery to allocate a limited number of health care slots to uninsured citizens. She sprang into action to take advantage of this real-world, randomized trial. With research partner Katherine Baicker (now at the University of Chicago), Finkelstein evaluated the effects of Medicaid coverage on the uninsured, following both the lottery winners and losers over several years.
The study’s notable findings—that health insurance coverage diminished financial hardship, for example—landed on front pages and fed public debate about Medicaid expansion.
“What we did was not rocket science; it was economic science,” says Finkelstein. “The incredible response to Oregon showed a real demand and appreciation for evidence.”
Finkelstein realized that vanishingly few interventions tailored to improve the delivery of health care were subject to the kind of strict evaluations typical of medical research, and she decided that needed to change. She launched the US Health Care Delivery Initiative (HCDI), a research program based in MIT’s Abdul Latif Jameel Poverty Action Lab (J-PAL).
With a dual mission of research and policy action, the initiative identifies significant health care issues, and in partnership with affiliate researchers, health care organizations, and government agencies, conducts randomized controlled trials that generate evidence about the efficacy of a health care intervention.
In the past few years alone, HCDI researchers have investigated a wide range of health-related questions, such as the relative benefits of different treatments for renal disease, the possible effects of provider race on the health behavior of Black men, and the effectiveness of employee wellness programs.
In one case, HCDI research helped develop letters health care agencies could use to persuade physicians to stop overprescribing powerful opiates. Finkelstein worked with a former student who successfully designed and tested an effective version of this intervention, leading to a major reduction in prescription rates. “I see myself as a research activist, increasing appreciation for rigorous evidence, training the next generation to get evidence, and then getting that evidence out in the policy world,” she says.
Scanning future projects, Finkelstein says she is “incredibly excited about people in our network seeing what happens if we forgive people’s medical debt, which can be psychologically and financially crushing.”
Cause and effect in education
At Blueprint Labs, founded as the School Effectiveness and Inequality Initiative in 2012, Pathak and Angrist, the Ford Professor of Economics, wield research from the fields of market design and econometrics to illuminate issues in education that are of broad concern to the public and decision makers alike.
“The most important, systematic determinant of family income is the human capital of earners, the schooling of earners,” says Angrist. “If you get a college education, the odds of being in poverty go way down.” The corollary is that the quality of schools matters, Angrist adds, and if schools don’t impart essential skills to graduates “then schooling doesn’t have an inequality-ameliorating effect.” Angrist’s pathbreaking empirical strategies measure the effects of policies intended to influence the quality and accessibility of schools, research that can be used to improve policy.
With evidence from such research in hand, Pathak has in the past decade provided public school systems in Boston, New York, Chicago, and elsewhere with a more efficient and equitable method for allocating seat assignments in highly desirable schools. With an algorithm similar to that used by Uber to link riders with drivers, Pathak’s approach impartially matches students to their choice schools.
“Something that makes us distinct is that we love to interact with practitioners,” says Pathak of MIT economists. “Much of our research is animated by someone with real concrete problems, who calls us up and says, ‘What should we do?’”
Complementing this work, Angrist is refining the measurement of school quality. One of his studies challenges long-held claims of exceptional academic effectiveness by exclusive exam schools like the storied Boston Latin School and New York’s Bronx Science. Angrist, Pathak, and their collaborators demonstrate that attendance at these selective schools has “no actual causal effect on learning,” he says.
Breaking down what he calls this “elite illusion” serves as a great teaching moment in Angrist’s undergraduate econometrics class, he says. Students are surprised to learn that many of them likely did well academically not because of their school but because they were smart anyway, Angrist says.
Angrist, Pathak, and their Blueprint Labs partners have shown that public preschools boost college attendance, and they have revealed that urban charter schools can elevate student achievement. Now they are producing findings relevant to the ongoing debate about making education at all levels more affordable and accessible.
Blueprint Lab’s primary goal, says Pathak, is “understanding the role of schools in the production of opportunity.”
Taking agency in the workplace
In spring 2018, MIT President L. Rafael Reif handed Autor his marching orders: Organize a task force to address the ways that technology is changing the nature of work. Two-and-a-half years later, the interdisciplinary Work of the Future group wrapped up its challenging assignment with dozens of expert papers and a major report, Building Better Jobs in an Era of Intelligent Machines.
But the task force didn’t just focus on the impacts of artificial intelligence, autonomous vehicles, manufacturing, and supply chains, Autor says. “We also wanted to understand the levers that shape how we adapt to technology and how we shape technology itself.”
The idea of agency plays a major role in Autor’s research. “Technological changes and economic phenomena are driven by incentives and priorities and people’s vision of what the future is supposed to be,” he says.“This is something that MIT, and government, and we collectively as society, shape.”
Consonant with this view, Autor launched a Work of the Future initiative based at J-PAL, which focuses on exploring ways to help people who lack significant formal education to find high-quality jobs. “This is the biggest problem of the US labor market right now, with 35% of adults stuck in low-paid jobs,” he says. Technology has had a huge effect in hollowing out middle-tier jobs, and “the question is how to get people onto career ladders that lead elsewhere.”
In the drive for answers, Autor and a far-flung network of research partners are evaluating evidence from programs that explicitly address this problem. Among these is a program in New York that trains non-college-educated adults for 15 months, then places them in technology jobs where they earn on average four times their previous income.
Autor also devises his own real-world experiments. One project aims to determine whether establishing a minimum, livable wage for restaurant workers can also reduce employee turnover at their companies. Another involves studying whether relaxing criteria on criminal background checks can offer a path out of hardship to workers while sustaining employer satisfaction.
“Many employers won’t touch people with nonviolent misdemeanors, a category in the criminal justice system where minorities are hugely overrepresented,” Autor says. “This is a matter of equity in opportunity.”
He is eyeing another experiment with potentially enormous payoffs for employment equity: eliminating the college requirement for jobs in such areas as tech support, programming, and computer security. “A vast majority of people who are Black and Hispanic don’t have four-year degrees, and yet that has become the sine qua non for all kinds of positions—not always the correct decision,” he says. Autor is joining with partners from the corporate world to advance this research.
For Autor, this research is not just about “describing how the world is working but improving how things work.” He might well be speaking on behalf of his fellow economists. “Applying a scientific lens to the world’s most pressing problems— that’s where our energy is dedicated.”
What I would like to see, what I think society would like to see, is an economics study at MIT (and in collaboration with other universities) on how the cost of higher education can be brought down while maintaining and even improving its quality and benefits.
It is hardly a secret, and is in fact a great concern for families and society, that the cost of college has gone up faster than the rate of inflation. Looking back, I now wonder – and better appreciate – how my parents must have sacrificed to pay for my MIT education. At MIT and most universities, the cost is still harder to afford and, I suspect, the return on investment is lower. Not a lot of good data on this. Rather the main driver for going to college is the easily compared benefit of college vs. no college.
So is MIT not an excellent “lab” close to home to figure this out? Isn’t that what us engineers do?