Regardless of what happens when the interstate entrance ramp meters are shut off this morning, some Minnesotans might wonder why they were turned on in the first place.
Work by University graduate and recently announced Nobel Prize winner Daniel McFadden holds the answer.
The Royal Swedish Academy of Sciences awarded the University of California-Berkeley economics professor the Nobel Prize in Economic Sciences last Wednesday. He will share the prize with University of Chicago professor James Heckman.
McFadden’s work studies how and why individuals make choices in their lives by applying statistical theories to economics, a field known as econometrics.
In a written statement, the Nobel committee said before McFadden developed his ideas, other theories on individual choices lacked a sound base in economics.
The most well-known aspect of his work deals with transportation systems. Innovations such as toll booths and ramp meters on major interstates sprung in part from McFadden’s theories.
University emeritus economics professor Leonid Hurwicz said he can’t think of an area of economics that has not benefitted from McFadden’s work. It was even applied to the economic aftermath of the Exxon-Valdez spill.
McFadden’s work has uprooted superficial analyses of consumer needs by taking human factors, as well as economic factors, into account, he explained.
Hurwicz served as McFadden’s doctoral thesis adviser in 1962, and said he believes the University uniquely prepared McFadden for the work that won him the Nobel Prize.
In the late 1950s McFadden enrolled in a rigorous five-year program, incorporating humanities, political sciences and behavioral sciences into his doctoral work in economics. Hurwicz said the workload equated to simultaneously earning four master’s degrees on top of his doctorate.
Combined with his undergraduate degree in physics, McFadden’s studies gave him a broad perspective.
But even after this demanding academic career, McFadden was hardly burnt out.
Both University economics professor John Chipman and Hurwicz said they remember McFadden as laid back. McFadden wrote his dissertation in less than one year, a “record time,” Hurwicz added.
Chipman recalled thinking McFadden would win the Nobel Prize some day because of his brilliant work.
As a Nobel Laureate, McFadden will gather with other Nobel winners in Sweden. The King of Sweden awards the prizes annually on Dec. 10, the anniversary of patron Alfred Nobel’s death.
In addition to the prize, McFadden will split 9 million Swedish krona — about $900,000 dollars — with the other economics prize winner.
Neither Chipman nor Hurwicz knew for certain what McFadden planned to do with the money, although both mentioned the possibility of him further investing in his Northern California winery.
Sam Kean covers faculty and welcomes comments at [email protected]