I was approached last month by Junyao Ying, a UCLA alum who is now working in China. Junyao and his wife Weiyi Qiu have recently translated Jack’s book, Investment Interest and Capital into Chinese. Junyao asked me to write a few words about Jack for the translation. This is what I wrote.The economics department at ...
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I was approached last month by Junyao Ying, a UCLA alum who is now working in China. Junyao and his wife Weiyi Qiu have recently translated Jack’s book, Investment Interest and Capital into Chinese. Junyao asked me to write a few words about Jack for the translation. This is what I wrote.
The economics department at UCLA was a very exciting place in the 1980s, not least because of Jack Hirshleifer. Many of us ate lunch every day in the Faculty Center, and being in Southern California, most days we ate outdoors in the sunshine. Jack would arrive at 12.00 sharp with an economic question for the day that he would pose to the table. Jack’s questions would be from the news of the day and the analysis he expected would be in the UCLA style.
The department had a unique approach to economics and Jack, along with Harold Demsetz, Armen Alchian, Ben Klein and later, Al Harberger, were a huge part of that. Their economics was intuitive, often verbal, but always incisive. One story, relayed to me by another UCLA giant of the era, Axel Leijonhufvud, expresses well the Socratic teaching style that permeated the UCLA curriculum. As Axel relays it, he was sitting in on Armen’s first graduate micro class when the master appeared, paced back and forth for a few minutes, and then boomed loudly: “So why don’t we sell babies anyway?”
Jack had the same approach. Many of our discussions would end up around one of his favorite topics: the economics of disasters. Earthquakes were never far from our minds and Jack was an expert on what today we might call black swan events. LA earthquakes are relatively frequent but they typically register less than 5.0 on the Richter Scale, enough to shake the floor, but usually not to do much damage. Sometimes we see larger quakes and every century or so, an 8.0 magnitude quake brings significant loss of life. Jack pointed out that, if you go far enough back in the fossil record, there have been earthquakes large enough to cause a slippage in the earth’s crust large enough to move two points that were previously next to each other five miles apart!
Jack was an economic imperialist. He believed passionately that the economic method can and should be applied to all of the social sciences. While we may not all share that opinion, in this time of crisis, we can nevertheless benefit from Jack’s insights. He may not be here in person to opine on how to deal with black swan events, but we can still learn from Jack by reading his written words.
Roger Farmer April 2020
For my Chinese readers, here is the translation