Meeting the Demand: Harvard’s Economics Department Works Past Challenges

The Economics Department had " a particularly dark year" in 2015, the department chair said. Now, things are changing.
By Mia C. Karr

The Littauer Center for Public Administration Building is home to Harvard’s Economics Department.
The Littauer Center for Public Administration Building is home to Harvard’s Economics Department.

One Tuesday last month, Harvard’s highest-profile administrators mingled with members of the Economics Department to celebrate the announcement of Oliver Hart’s Nobel Prize in Economic Sciences. Gathered in the ornate Faculty Room of University Hall, the crowd sipped champagne while listening to Hart reflect on his time at Harvard.

While he praised his colleagues and the University, Hart cautioned that his department—once considered the top economics faculty in the country—could no longer be certain about its status.

“It’s true that we face some challenges,” Hart, who won the prize with MIT professor Bengt R. Holmström, said to the crowd. “We like to think of ourselves as the best Economics department, and I think there was a period when we clearly were. I think that’s less clear now.”

Still, the joyful scene at University Hall painted a different picture of the department than that of the previous fall, when the department was still reeling from the loss of MacArthur “Genius” Grant winner Raj Chetty to Stanford.

His departure, in addition to no new hires in Economics, made 2015 “a particularly dark year,” Department Chair David I. Laibson ’88 said.

Some problems from 2015 remain this year—specifically, the need for more physical space. The Littauer building, where the Economics Department is currently housed, would need to expand by 50 percent to fully support the department.

But Hart’s Nobel Prize and the hiring of four tenure-track and one tenured professor leave Laibson optimistic about the future of the department.


Chetty is not the only professor from Harvard in the last decade to leave the Economics Department for Stanford. According to Laibson, the department has lost 10 professors to Palo Alto in the last decade, but has not attracted anyone from Stanford.

MIT, too, has poached several economists from Harvard in recent years. Just this year, Drew Fudenberg departed for MIT, and the department was not successful in recruited a tenure-track professor from their neighbor.

After this string of failures, the department turned a corner with the appointment of five new faculty members, including tenured economist Xavier Gabaix, formerly of New York University. Laibson cites a renewed optimism about the department among potential hires for this shift in fortunes.

“In some ways you might say that we’re rebuilding from a period of departures, and a period where our recruitments did not succeed,” he said.

Laibson said that administrative support, at the divisional and University level, made this spate of hires possible.

In an interview, Hart said that the shock of high-profile departures gave the Economics Department the opportunity to make a case for increased administrative support.

“I think people were feeling a bit demoralized,” Hart said. “With the help of the administration, [Laibson] has managed to move things in the other direction.”

Hart also said that the department’s recent success in hiring tenure-track faculty is a good sign. However, he said it is important not to become complacent.

In order for Harvard to retain its economists, University professor Jerry R. Green, a former chairman of economics, said the department must emphasize building relationships within the faculty.

“We have to be building strong personal ties,” Green said. “If someone gets another offer, there’s already a deep personal relationship.”


When Chetty left the department for Stanford, one of the main reasons for his departure was, according to Laibson, lack of space. Harvard did not have room for his lab, whereas its west coast competitor did.

“All of our chief competitor departments—Chicago, Stanford, MIT, Princeton—have obtained new buildings in the last few years,” Laibson said. “Literally in the last few years. And our building is from 1932.”

As a result of this lack of room, the department has converted common spaces such as lounges into offices, according to Laibson. In addition, many professors have labs far away from Littauer and there is not enough space in the building for every graduate student.

Green said he remembers a time when the layout of the department allowed for more informal communication and collaboration.

“That’s the kind of environment we should have in Littauer,” Green said. “An atmosphere where someone gets pizza and you sit around and talk and try something.”

Laibson said that converting lounges into office space is only a short-term solution, especially as enrollments in economics courses continue to grow.

“We’re really eager to solve this very serious problem,” Laibson said. “It’s a great department with a great disadvantage.”

The department faces even greater space constraints because the Fine Arts Library—which is not affiliated with the department—is also currently housed in Littauer.

“I think in the future we’ll be a department that desperately needs more space, housing the Fine Arts Library,” Laibson said.

Still, Laibson said, the department is on the upswing.

“I feel that we’re on a good path,” Laibson said. “Of course we won a Nobel Prize, so that’s certainly done a lot to boost morale.”

—Staff writer Mia C. Karr can be reached at Follow her on twitter @miackarr

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