Dawn of a New Econ

During the official launching of USC Dornsife’s Economics Leadership Council (ELC), organizers announced that within eight months nearly $8 million had been raised.

The ELC was established to:

• enrich and strengthen the student experience;
• link academic expertise with the marketplace;
• enhance the reputation of the Department of Economics in the community; and
• identify opportunities for financial support.

Comprised of prominent USC alumni and friends, the ELC connects the Department of Economics to residents of Los Angeles and the surrounding area interested in economics and USC Dornsife. 

“ELC will be beneficial to our students by offering internships, financial support for scholarships and by providing contacts with potential employers,” said Geert Ridder, professor and chair of economics. “We hope to benefit from the experience of ELC members in our teaching and make people aware what economics and our department can offer them. Funds we raise will improve the position of our department in the competitive market for talented economists.”

The ceremony was held Oct. 8 at USC’s University Club.

“We’d like to publicly thank Charles Isham, Robert and Karin Lackman, and Union Bank,” Terry Flynn, ELC councilmember, USC alumnus and senior investment analyst at Crowell, Weedon & Company, based in Los Angeles, told the audience.

ELC Councilmember Isham, a USC Dornsife economics 1965 alumnus, is emeritus executive vice president of the Apartment Association of Greater Los Angeles. He made a key donation to the economics department, as did Robert and Karin Lackman, both USC alumni, and Union Bank through efforts by USC alumnus and the bank’s senior executive vice president Pierre Habis.

“In eight short months, we’re off to a great start,” said councilmember Peter Resnick, who earned his bachelor’s in economics from USC Dornsife in 1982 and is former chief operating officer of Precision Dynamics Corporation, headquartered in Valencia, Calif. “We’re just getting off the ground and already we have some excellent programs.”

In February 2013, the first economics alumni panel discussion took place, ELC Councilmember Christine Cooper, who earned her Ph.D. in economics at USC Dornsife in 2008, told the audience. One month later, a Department of Economics open house was held, which included a tour of the behavioral laboratory of Juan Carrillo, professor of economics, and Isabelle Brocas, associate professor of economics. Following the open house, Precision Dynamics Corporation provided a summer internship to an undergraduate economics student. Union Bank has agreed to provide five more in 2014.

At the launching ceremony, Nobel Prize-winning economist Daniel McFadden, Presidential Professor of Health Economics at USC Dornsife and USC Price School of Public Policy, gave the keynote speech. McFadden elaborated on his paper, “The New Science of Pleasure,” which bucks classical economists’ thought that people make choices to maximize pleasure. It’s not that black and white, McFadden said. Drawing from psychology, anthropology, biology and neurology, he said the forces behind preferences can be mercurial.

“Social networks as information sources, reciprocity and altruism enter human behavior and cannot be ignored,” McFadden said. “There are new opportunities to study the sociality of choice through experiments that manipulate the information provided through social networks, the effect of approval, and — through comparative study of isolated societies — the role of cultural and social norms.”

The striking ties between brain physiology and behavior in economic decisions, and new methods for measuring and manipulating brain activity, offer the possibility of powerful experiments in which economic, social, and physiological treatments are employed to identify and isolate the causal foundations of economic choice behavior, he said.

“In particular, the ‘warm glow’ attached to bonding and trust in family and social groups seems to be tied to reward pathways in the limbic system that we experience as pleasure,” he said. “It may be this chemistry that has worked with selection to promote social cognition and empathy in humans, giving them the mental capacity to function as social animals in large groups, to organize complex and productive economic systems, and to internalize cultural norms for reciprocity, trust, fairness and altruism.”

The challenge facing economic consumer theory, McFadden concluded, is to utilize the disparate measurements and experimental methods that have become available to synthesize a new behavioral science of pleasure.

This science should retain the quantitative, predictive features of neoclassical theory in the economic settings where it works well, and extend these features into areas of individual sensation of well-being and choice in the context of social network information and approval. That way, the theory can better predict the impact of novel economic policies on consumer well-being, he said.

Simon Wilkie, professor of economics and the liaison between the new council and the department, thanked all participants.

“We hope everyone is excited about the prospects moving forward and continues to stay engaged,” he said.