Stanford Nobel laureate Alvin Roth on market exchanges and why economics is a humanistic discipline
Alvin Roth shared the 2012 Nobel Prize in Economics for his work on market design. Roth, MS ’73 PhD ’74, a pioneer in game theory, has used his research to improve kidney-donor exchanges, medical job markets and public-school choice systems.
“Economic institutions evolve, but they are also designed,” Roth, now a professor of economics at Stanford, explained on his website. “Market makers and regulators, as well as entrepreneurs and managers, have always been involved to some extent in the design of economic institutions.”
Roth’s specialty examines those institutions’ rules and procedures, both in theory, as the name implies, and in practice.
He’s most interested in matching markets – “situations in which each person must not only choose but must also be chosen,”as Roth put it in 2012 at his Nobel news conference. Such markets bear the potential to unravel as players stress the system in search of advantage. Roth’s book Who Gets What – And Why explains these concepts in lay terms.
He has advised the National Residency Matching Center on how to improve its pairing of physicians to U.S. residency programs. He’s done similar work for public schools in New York City, Boston, Denver and New Orleans. Always, the goal is to design a market that balances order and flexibility.
“I’ve always thought of economics as being not just part of the social sciences, but part of the humanities,” Roth said in 2012, “because it gives us a window into people’s lives at some of the biggest crossing points.
“When they get into schools and universities, when they get jobs, when they choose careers, when they get married – these are all matching markets.”
So are football bowls, as Roth noted before Stanford’s 2016 Rose Bowl win.
Roth is one of 20 Nobel laureates at Stanford, where his regular course offerings include Econ 285, Market Design. Committed to teaching, he has even led a freshman seminar in his specialty. He famously cut short his Nobel news conference to teach class.
In this video from the Graduate School of Business, Roth speaks on his prize-winning research and ground-breaking successes with exchange markets and his life-saving favorite, kidney exchanges.