Peter Diamond’s parents were married on the eve of the Great Depression — the worst economic slump in U.S. history. But the event, he says, has little to do with his becoming an economist.
“The Depression was not something that we discussed. A lot of the focus was just on coping,” says Diamond, who nonetheless is now one of the world’s leading economists.
Diamond advised Congress on the Social Security debate, which began in 1974, and he is best known for his pioneering work in applied economic theory and for his analysis of world Social Security systems. He enhanced understanding of modern public finance, the functioning of financial markets, the significance of fiscal policy in a growing economy, and he made major contributions in macroeconomics.
A former head of the economics department, Diamond served as president of the American Economic Association and the Econometric Society. He has written, co-written, or edited nine books, 126 research papers, and 11 working papers. He joined the faculty in 1966 and became an Institute Professor in 1997.
Institute Professors are not obligated to teach, but Diamond teaches grad students because not to would be a loss. “If you’re explaining things to this incredibly discerning audience, it’s the mental equivalent of getting your adrenaline flowing. Their intelligence focuses your mind on the material,” he says, adding that students really call you to perform at a higher level.
Also, he loves teaching, he says, because it so informs his research. “Once, in the classroom, I was standing at the blackboard explaining a problem, and I got a great idea about how to design taxes optimally. I rushed back to my office and got to work, and the students got to see it in the next class.”
Diamond says his early work helped to stop some negative economic policy proposals in the nation — it is easier, he says, to be effective opposing bad suggestions than trying to promote good ones. And now, his hope for the future is, “I would again love to see the economic policies of the country changed longterm. I’d be happy to see my research, writing, and lecturing about them contribute to turning things around.”