Janet Yellen, vice chair of the Board of Governors of the Federal Reserve and a professor emerita at UC Berkeley, is one of two individuals currently being considered by President Barack Obama to replace Ben Bernanke as chair of the Federal Reserve.

Yellen is a professor emerita of economics at Haas School of Business, and if appointed, she would be both the first female and first UC Berkeley professor to serve as chair of the Fed.

Larry Summers, who was previously U.S. Secretary of the Treasury, director of the National Economic Council and president of Harvard University, is also being considered. Obama is expected to select either Yellen or Summers for the position at the end of August.

Yellen received her doctorate in economics from Yale University in 1971 and began her career at UC Berkeley in 1980 as a macroeconomics professor at the Haas school. In 1985 and 1988, Yellen received the school’s Earl F. Cheit Award for Excellence in Teaching.

“Janet was always a phenomenal teacher — partly because she worked very, very hard at it,” said David Levine, an economics professor at the business school, whom Yellen mentored. “She thought about literally every word she would say. As she has moved up in government, this level of thoughtfulness and reflection has always been increasingly important — and as a high official of the Federal Reserve system, where literally, the placement of a comma can move the markets.”

Yellen’s experience working at the Fed includes serving as a member of its board of governors and as president of the Federal Reserve Bank of San Francisco. She was also chair of Bill Clinton’s Council of Economic Advisers.

While Yellen and Summers rival each other in academic and government experience, their economic values are on opposite ends of the ideological spectrum.

Yellen advocates economic regulation, supports the usage of stimulus plans to boost the economy and is expected to continue Bernanke’s policies if appointed. Summers supports policies of economic deregulation, but following the economic crisis of 2008, he has openly stated that he wants more regulation of Wall Street transactions.

Although Henry Brady, dean of the Goldman School of Public Policy, acknowledges that Yellen and Summers have “tremendous ideological differences,” he said they would both know how to handle the responsibilities of the Fed, like knowing when to ease up on monetary expansion.

Campus economics professor Brad DeLong, who worked with Summers as deputy assistant secretary of the U.S. Department of the Treasury when Summers was treasury secretary, enthusiastically supported Yellen’s appointment but has been vocal about his preference for Summers for the position.

“Larry Summers has an edge as the most creative thinker likely to successfully think outside the box should outside-the-box thinking be called for, and least likely to bind himself to an institutional consensus past its sell-by date,” DeLong wrote in a New York Times article.

Andrew Rose, an economics professor at the Haas school, has known Yellen for 28 years and says that Yellen is very persuasive, easily forms a consensus and is very calm and collected.

“One of the gripes about her is that it isn’t clear how well she will respond to a crisis, but we went through the Loma Prieta earthquake together in Barrows Hall,” Rose said.  “We really both thought that the building was going to collapse, but she stayed quite calm during the earthquake, which is a pretty impressive thing.”

Brady also believes that if Yellen is appointed to the chair position, her well-developed inner circle will allow her to transition smoothly into the position.

Contact Sophie Mattson at smattson@dailycal.org.

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Brenna Alexander/File

The full-time MBA program at UC Berkeley’s Haas School of Business placed 12th in the world, according to rankings released this week by the Financial Times.

The Haas MBA program moved up two positions from 14th place last year and 13 positions from 25th place in 2011 in comparison to programs worldwide. The program maintained its seventh place among U.S. schools.

Haas faculty members were not surprised by the placement, noting that the rankings can vary slightly from year to year.

“It turns out that there is a tremendous amount of year-on-year variability, or you can think of it as noise,” said Haas professor John Morgan. “So the shift that we’ve seen till now probably reflects just random factors rather than anything that’s underlying about the quality of the program.”
The rankings were determined based on three major factors, including an alumni survey on career progress and satisfaction with the program, diversity of the program and intellectual capital of the faculty.

Students in the Haas MBA program thought the rankings were less important than finding a school where to which students felt they belonged.

“The rankings tell you one thing, but you’ve got to find for yourself the fit in the people and the culture,” said full-time MBA student Aaron Perez.

Harvard Business School ranked first, followed by the Stanford Graduate School of Business and the Wharton School of the University of Pennsylvania to round out the top three.

The full-time MBA program at Haas has seen a decline in applications recently, including a 2.7 percent decrease between 2011 and 2012. Applications to the part-time MBA program, which were not included in this ranking, increased 11 percent in 2012 compared to the prior year.

“We’re ranked higher in some studies and lower in others,” Morgan said. “I think you have to take a broader view than looking at one study and making conclusions. The fact of the matter is that opinion and reputation, which are largely reflected in this, are formed over years and decades and not over months.”

The Haas MBA program regularly places highly in rankings. The full-time MBA program was ranked sixth in North America by the Economist, ninth in the nation by MBA50.com and seventh in the nation by US News & World Report. The school was ranked second-best for Hispanics in 2012 by the publication Hispanic Business.

“We’re trying to improve continuously,” said Andrew Rose, an associate dean at the Haas School of Business. “We are working hard all the time to make this the best possible experience for our students.”

Mitchell Handler cover academics and adminstration. Contact him at mhandler@dailycal.org

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Ulrike Malmendier/Courtesy

UC Berkeley professor Ulrike Malmendier was awarded the prestigious 2013 Fischer Black Prize for her research in economics at this year’s American Finance Association conference on Jan. 7.

Malmendier was the first woman to be awarded the prize, given in honor of Fischer Black, a Nobel Prize-winning economist. The award honors the top finance scholar under the age of 40 who best exemplifies a commitment to original research.

“It’s a pretty big deal,” said Haas School of Business Associate Dean Andrew Rose. “This award is as difficult or more difficult to win than the Nobel Prize.”

The award recognizes Malmendier’s work in behavioral economics, a field of economics concerned with looking at behavioral models that might explain the apparent lack of rational decision-making by individuals in economics and business finance. The field, by Malmendier’s admission, is just now entering the mainstream discourse of finance researchers.

Stanford University associate professor Stefan Nagel, who co-authored a paper with Malmendier entitled “Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?,” commented further on the importance of behavioral economics and his colleague’s research.

“Behavioral economics is about trying to see if we can understand economic phenomena by looking at the question of whether people are always making rational decisions,” Nagel said. “We are looking at factors that might affect the idealized calculating machine that traditional economic models assume.”

By “idealized calculating machine,” Nagel refers to the common economic assumption that agents in economic models behave rationally.

Campbell R. Harvey, a professor of international business at Duke University, presented the award for the AFA and cited “Depression Babies” as a key example of Malmendier’s creativity and originality in her research.

“The idea of the paper is to test the idea that the environment you live in impacts your risk-taking, so people that experience the Great Depression have different risk attitudes than those that did not,” Harvey said.

While Malmendier’s results have been proven anecdotally, the results of her paper were also statistically supported, which, according to Haas finance professor Terry Odean, is not an easy task.

“Using surveys of consumer finance data, (Malmendier and Nagel) show that people that have experienced a low stock market return environment through(out) their lives are significantly less willing to take financial risk,” Harvey said.

Harvey also cited Malmendier’s research on CEOs and how overconfidence might produce rash decisions, saying that this research provided convincing evidence that individual CEO characteristics, like measured overconfidence, cause distortions in investment behavior.

“We wanted to look at the idea of optimum decisions and how psychological biases affect economic decisions,” Malmendier said.

Malmendier earned her doctorate in business economics from Harvard University in 2002 and currently holds faculty positions in the UC Berkeley department of economics as well as in the Haas School of Business. She credited UC Berkeley’s vibrant academic community for her success.

“Berkeley is heaven for studying behavioral economics,” Malmendier said. “Nowhere else is there more interest or resources.”

When asked if the prize included any extra money for research, Malmendier laughed.

“No, no money involved,” she said. “Just honor.”

D.J. Sellarole covers ASUC. Contact him at dsellarole@dailycal.org.

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The school announced Friday that two new professors and seven assistant professors have been hired for the fall 2012 semester.

Professors Ross Levine and Toby Stuart will join the Haas faculty, along with current assistant professors Brett Green and Alexander Nezlobin. Andreea Gorbatai, Yuichiro Kamada, Reed Walker, Jose Guajardo and Sameer Srivastava will become assistant professors upon the formal acceptance of their dissertations.

According to Andrew Rose, associate dean for academic affairs for Haas, the school hired these new faculty members mainly in order to fill vacant positions.  In recent years, many professors, including professor Robert Helsley, have retired or moved on to other positions. The school is also still growing, so it is necessary to increase faculty to adjust to increasing class size, Rose said. Beyond necessity, the school is always seeking to improve the quality of it’s faculty.

“The quality of teaching is extremely important to Haas,” Rose said in an email. “We were fortunate to be able to hire at the very top of the market.”

In 2007, prominent San Francisco real estate developer Gerson Bakar donated $25 million to Haas, which has since allowed the school to expand its permanent faculty.

“We continue to hire at the very top of the faculty market. It is a part of what’s making us stronger and stronger,” said Dean Richard Lyons in the press release. “Great faculty attracts great students and great staff.”

The business school has drawn the new professors and assistant professors from prestigious universities around the country. The new faculty members expressed enthusiasm about the exciting and rapid growth of the relatively young school, and many said they appreciate the energetic atmosphere at Haas and in Berkeley in general.

One aspect of Haas that the incoming faculty members appreciate is the quality of the students and the faculty.

“Haas has great students and faculty, and it is integrated into a great university,” said Levine, who will be coming from Brown University.

Srivastava, who recently gained his Ph.D. in organizational behavior and sociology from Harvard University, will begin at Haas in July of this year as a new assistant professor. Srivastava said that he was impressed by the quality of the student population, as well as the quality of the dialogue in the classrooms, when he visited Haas.

“Haas, and the finance department in particular, has assembled a group of talented junior faculty who are at the very top of the field in both their research and teaching,” said Green, formerly an assistant professor at Northwestern University, who has been a visiting professor at Haas since 2011. “It is really an ideal environment for a young professor to pursue and collaborate on research.”

Some of the new faculty members look forward to the fact that Haas focuses on combining research and teaching, and more generally, interdisciplinary integration. Srivastava said that he is most excited about being able to continue his research as well as teach in the spring.

One element that excites the new faculty members about Haas is the fact that it is in the Bay Area.

“The Bay Area is a great hub for information and entrepreneurship, ” Srivastava said.

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