Professor Michela Giorcelli was awarded the Alexander Gerschenkron Prize for her dissertation “Economic Recovery and the Determinants of Productivity and Innovation: Evidence from Post-WWII Italy”. The Alexander Gerschenkron Prize is annually awarded by the Economic History Association for the best dissertation in economic history of an area outside of the United States or Canada. Congratulations!
Andrew Demetriou
Long before Andrew Demetriou became a partner at Lamb & Kawakami, a prestigious law firm in Los Angeles, he spent hours Bunche Hall like the thousands of students currently at UCLA. His subsequent career as a successful attorney in the healthcare industry is a testament to his intellectual curiosity, dedication, and passion for economics and law.
At Van Nuys High School, Andrew joined the speech and debate team and during his senior year the national debate topic concerned reform of the American jury system. As a result, he was introduced to law and the legal system and spent hours in UCLA’s Law Library, learning techniques for legal research. This experience was important in directing his ultimate career path.
Upon arriving at UCLA, Andy began studies in Economics, drawn by the rigorous problem solving approach to social problems of allocation of resources. He also gained insights into business organizations and the function of the broader economy. He joined the UCLA Debate Union, serving as its President in 1975-76, and established himself as a member of UCLA’s top team in his junior and senior years, twice qualifying for the National Debate Tournament. Andrew believes that his success in debate, and later as a lawyer, was bolstered by the critical thinking skills he acquired in his Economics classes.
After graduating from UCLA summa cum laude, Andrew went on to UC Berkeley to pursue his law degree. His law schools studies contrasted with undergraduate work due to the expectations of mastery over intricate details and demanding subject matter. He believes that his undergraduate studies in economics, coupled the research and thinking skills used in his debate career prepared him for such work and contributed greatly to his understanding of law. He notes that a lot of successful law students have economics or math backgrounds because these fields teach problem solving skills, and many aspects of the law address issues of risk allocation and responsibility, which are not unlike the allocation of resources in an economic system.
In the course of his law practice he was a partner at two major international firms, where he experienced a trend toward specialization and industry focus, dictated by demands from clients for deep understanding of their business models and financial needs. In the early 1990s, Andy began to focus on the health care industry, which had undergone enormous changes in the preceding decade, from a balkanized industry, dominated by standalone hospitals, therapy centers, and clinics, and small physician practices. The 1990s witnessed the emergence of large health organizations combining groups of providers and facilities, coupled with increased federal and state regulation of industry participants. For the last quarter century, Andrew has represented health care providers in a wide range of corporate and regulatory matters. He is especially proud of having represented the UCLA Health system for several years, including the negotiation of the between Santa Monica Hospital and UCLA Medical Center and the affiliation between UCLA Health System and Orthopaedic Hospital of Los Angeles, bringing world class orthopedic care into the UCLA system.
Today, Andrew is one of the leading lawyers in the healthcare industry. He attributes his success primarily due to his sound understanding of the industry and the clients he works with. Most clients come with technical questions in mind and he has to understand their problem, explain the legality of their issue, and develop a reasonable and applicable solution. Business law, unlike litigation, is not about ‘winning’ but rather about understanding the client’s risk tolerance and delivering solutions calibrated to the client’s risk sensitivity. Successful lawyers must understand the demands of the client.
Aside from his law practice Andrew has always been active in volunteer activities in the community. At age 29, he served as Chief Protocol Officer for the Swimming, Diving and Synchronized Swimming events in the 1984 Summer Olympics. His has devoted many hours of service to UCLA, as a member of the UCLA Foundation Board of Trustees and Board of Directors, Co-Chair of the UCLA Fund (from 1995-1999), an original member of the Board of Visitors of the Department of Economics and a member of the UCLA Athletic Hall of Fame Selection Committee. He has been active in a wide range of local state and national bar association activities, and served as Chair of the American Bar Association Health Law Section in 2007-08. Currently, he is advising a Presidential Commission, which includes members of the United States Senate, the House of Representatives and leading private citizens, charged with the construction of a memorial to President Dwight Eisenhower in Washington DC.
We asked Andrew about what advice he would give to current UCLA students and he posits that students have to be intellectually curious in whatever activity they pursue. He recommends that we use the freedom we have in college to gain new experiences. Most importantly, avoid the mercenary attitude of taking a linear path and fixating on making money as the end goal. Find opportunities that challenge your beliefs—ones that push you to learn and create new and more dynamic beliefs. Embrace the learning experiences these opportunities provide as a means of self-improvement.
By Harsh Gupta, with Adithya Kumar and Charles Qian.
Professor Volker Nocke is the scientific program chair of the 44thAnnual Conference of the European Association for Research in Industrial Economics (EARIE), which takes place from August 31 till September 2, 2017 in Maastricht, The Netherlands. With more than 400 participants from Europe, North America, and the rest of the world, it is the largest European conference in Industrial Organization.
Andrew Atkeson
In ongoing research, Professors Andrew Atkeson and Ariel Burstein study the role of firms’ investments in innovation (or, more generally, intangible capital) in accounting for economic growth. They ask questions such as: What changes should we expect to see in the growth rate of output in both the short term and long term if we were to increase innovation subsidies to induce firms to invest more in innovation? How big a change in firms’ expenditures on innovation would be required to raise the growth rate of output by a percentage point (or two or three) over the next 20 years? And what would be the fiscal cost of the policies needed to induce firms to make the required increased investments in innovation?
Their research is aimed at overcoming several theoretical and empirical challenges that make it difficult to give precise answers to these questions.
First, until recently, no comprehensive historical data had been available on the scale of firms’ expenditures on innovation. Starting in 2013, however, the Bureau of Economic Analysis (within the US Department of Commerce) has constructed measures of firms’ investments in software, intellectual property products, and research and development going back to 1929. Researchers within the main statistical agencies are also starting to construct measures of firms’ investments in other forms of intangible capital such as firms’ brands and organizational capabilities. The picture painted by these recent data collection efforts is that firms’ investments in intangible capital are large. In the United States, they are now roughly as large as firms’ investments in physical or tangible capital.
Ariel Burstein
Second, neither theory nor data have settled the question of what relationship exists between the private gains to an individual firm (in terms of increased profits and firm value) from increased investment in innovation and the gains to society as a whole (in terms of increased output and welfare) from an increase in firms’ aggregate investments in innovation. The private gains to an individual firm from an investment in innovation can typically be measured and are certainly the focus of attention of firm managers making the innovation decisions. The social gains from an increase in firms’ investments in innovation in the aggregate, however, are harder to measure. We do not have the data needed to answer the questions: To what extent does an innovation by one firm simply steal business from another? To what extent does the knowledge gained in one firm through innovation spill over to reduce the cost of innovation by other firms?
The work by Atkeson and Burstein, titled “Aggregate Implications of Innovation Policy” is focused on using newly developed theories of the relationship between the private and social gains from firms’ innovation expenditures together with newly collected data on the scale of firms’ investments in innovation to measure what scope we might have to increase economic growth through increased subsidies to innovative investments by firms. They find that the scope to improve economic growth through general subsidies to firms’ innovative investments by firms is likely quite limited given current estimates of the extent to which innovation by new firms simply steals business from existing firm (think of the impact of Uber on the taxi business). In contrast, if it were possible to direct subsidies to incumbent firms focused on improving their own products, then the gains in terms of economic growth from such directed subsidies might be quite large.
Professor François Geerolf is mentioned in The Economist magazine, in an article entitled “Kicking the can down an endless road“, for his work on dynamic inefficiency. One of the six big economic ideas chosen by the Economist in the summer of 2017, is this idea that some types of Ponzi schemes, such as pay-as-you-go systems, or public debt, are not always detrimental to the economy. In what are refereed to as overlapping-generations models, there can be such a thing as too much savings (or underconsumption), a situation called “dynamic inefficiency”. When the marginal product of capital (r) is lower than the rate of GDP growth (g), public debt allows the government to increase consumption without needing to ever raise more taxes in the future: in such a situation, the ratio of debt to GDP can stay constant, or even decrease, without any future rise in revenues. François Geerolf has shown that the condition for dynamic inefficiency is satisfied for Japan and South Korea, and probably for other advanced economies as well. In an international context, his empirical work lends support to the “savings glut” hypothesis (articulated by Ben Bernanke in 2005), this idea that countries with current account deficits such as the United States are consuming more than they produce to make up for deficient global aggregate demand.
The RAND Corporation published a study on working conditions in the U.S. that is coauthored by UCLA Professor, Till von Wachter. The study examines data from the American Working Conditions Survey and contains a number of interesting findings. For example, more than 25% of Americans surveyed say they don’t have enough time to do their jobs, while 20% report abuse or harassment over the past year.
The study has been reported by NPR and the LA Times.
The RAND press release can be accessed here.
Ariel Burstein and Jonathan Vogel, together with Gordon Hanson of UCSD, received a two-year grant from “Russell Sage Foundation” (RSF) to support the project “Tradability and the Labor Market Impact of Immigration.” The total award is $127,000. They study how differences in the tradability of goods and services determine how U.S. local labor markets adjust to the inflow of foreign-born labor. By combining theoretical models from international trade with empirical approaches from labor economics, they provide new insights into which types of workers gain from immigration and which types lose.
Julie Lee
You may have not heard of Julie Lee, but you have definitely heard music on Vevo. A founding member of Vevo, Julie helped revolutionize the music video industry. Immigrating to the United States as a child, Julie embarked on a journey that has since taken her across the world. Today, Julie is a business executive, entrepreneur, leader and mother.
In fact, she is just as energetic and driven today as she was when she first arrived at UCLA. A natural leader, Julie served as President for a business club on campus. She remarks that the greatest thing about UCLA was the network and mentors she had. In particular, one of her most influential mentors was Dr. McGarry, the former chair of the UCLA Econ Department. A confluence of great beginnings happened as one of Julie’s first Economics classes was also one of the first classes taught by Dr. McGarry at UCLA. Julie remarks that Dr. McGarry mentored her outside the classroom even though she had no obligation to do so. These interactions taught her the importance of learning through experiences, and understanding how the knowledge you learn in the classroom translates into the real world. Perhaps the most crucial impact in Julie’s life was when Dr. McGarry encouraged her to apply to the Departmental Scholar Program (DSP). Julie was initially hesitant about the program, since it required her to add another year to her education which was beyond her financial means. However, Dr. McGarry told her to apply for the Regent Scholarship which would fully fund her education. Heeding her advice, Julie applied to both the programs. Given the high bar of being accepted into into the DSP, Julie thought she had no shot. However, Julie was wrong: she got accepted as a Department Scholar and a Regent Scholar.
The Departmental Scholar Program proved to be the highlight of her life at UCLA. She got the opportunity to interact with graduate students who had a lot more experience than she did. She considered this to be an extremely humbling experience as she realized she was not the smartest person in the room. In addition, the graduate students came from a multitude of countries and walks of life. This was an enriching experience and prepared her for life outside UCLA. Furthermore, graduate classes were much more intimate. She believes the camaraderie that came from suffering together allowed all of the students to become extremely close. The is exemplified by the fact that she met Dr. Nahm, her best friend of twenty years on the first day of classes. Dr. Nahm, who is currently the Chair of the Economics Department at Kookmin University, and Julie are still as close as they were during their time at UCLA.
After graduating with a master’s and a bachelor’s degree in 4 years, Julie entered the professional world by working at Ernst & Young. She describes moving into the professional world as being dropped into the ocean. However, due to mentors like Dr. McGarry, she was able to wade in the water through her numerous internships while still at school. Furthermore, by studying Business Economics at a large school, her transition into professional life was made much easier. She decided to work at EY because she wanted to understand the service industry and learn how to professionally manage money. She believes that these skills are important whether you are a CEO, CIO, or President, all of which are positions she has held in the past 20 years.
After working at EY for a few years, Julie worked for Universal Music Group and then decided to move onto a project where she would have a larger impact. Beginning in the early 2000s, there was a substantive surge in music video demands; however, revenues for music companies like Sony and Universal were stagnant. To fill this void, Julie incubated a joint venture by Sony, Universal and Abu Dhabi Media which ended up as Vevo. While working at Vevo, Julie worked with companies like Google to redesign how music videos were distributed to consumers in the age of the internet. She played a key role in devising the hyper distribution model where consumers can access content whenever and wherever they want. Using then unheard-of media channels like YouTube and AOL, Vevo helped revolutionize how music is heard today. Vevo’s relationship was a landmark one in that it set the stage for a publisher ecosystem that ultimately paved the way for multi-channel networks.
However, revolutionizing the world’s music doesn’t come without hard work and long hours. Working at Vevo eventually began to take a toll on her work-life balance. “While incubating Vevo, I incubated a little boy” wryly comments Julie. In the years after her son’s birth, she spent a lot of time at work and not enough with her son. One day, when she was working on the Asia strategy for Vevo in Singapore, her 4-year-old son asked her why she was working. Julie had no answer. On the flight back to LA, she contemplated the simple question her son had asked, and the very next day, she decided to start a ten-month transition process onto her next adventure.
After departing from Vevo, she traveled the world with her son for 9 months which allowed her to spend quality time with him. It was her son’s curiosity that drove her to start EdTwist, a curated search engine for children. The project partnered with entities like UNESCO and JPL to foster curiosity among children. However, EdTwist eventually began to move in a direction which was beyond Julie’s realm of expertise. This subsequently spurred Julie’s recent move to Hong Kong to serve as the Chief Innovation Officer at Edipresse Media Asia, a premium media company inspiring, enabling and connecting communities of discerning consumers across Asia with brands including Asia Tatler. As an Asian mother, she wanted her son to live in Asia and become a true global citizen. She believes that although LA is described as a melting pot, it is really a salad bowl and the best way to learn about a culture is to live amongst its people. With a desire to work in a dynamic growing economy, she looks forward to the adventures which Asia has to offer.
Julie attributes her success to her affinity to take calculated risks. She argues that as economists, we should never take decisions without considering the short and long-term return of our decisions. She often agreed to work for less money if the opportunity was a new adventure that promised good returns. Furthermore, her decisions are made based on four major factors: money, people, legacy and location, emphasizing that you need to understand your expectations and priorities. When she was fresh out of college, money was a very important factor. However, as her career progressed, her focus shifted away from earning money and towards other people and her own legacy. Her advice for students would be to embrace risks. An easy life is not an interesting life. Risks are intimidating at first. However, climbing over one mountain will give you the confidence and the motivation to climb over the next mountain. As you continue to take risks, you will become more and more comfortable with overcoming hurdles. She contends the importance of finding a network of people that support you when you fail. Her success would not have been possible without the support of Dr. Lee, her husband, and Dr. Nahm, her best friend (both extremely successful fellow Bruins). Going to UCLA has enabled her to acquire both a close network of supporters and a handle for calculated risk taking which has brought her success in her professional and personal life.
By Harsh Gupta.
The department would like to congratulate Marek Pycia for winning the Warren C. Scoville Distinguished Teaching Award for excellence in undergraduate teaching.
Professor Pycia’s Econ 106D course discusses the design and use of markets and other institutions to solve problems of matching markets and resource allocation. The course uses both theory and case studies to help students understand how the design of markets can have substantial effects on the efficiency and fairness of outcomes. Congratulations Marek on winning the award!
Youssef Benzarti
Value Added Taxes (VAT) don’t exist in the US but they are actually one of the most important and powerful forms of taxation. They are in fact so powerful that they have been labeled the “money making machine”. In European countries, they raise 30% of total tax revenue, which amounts to 12% of GDP. VATs exist in every single developed country and were introduced in 160 countries over the past 50 years. In spite of the importance of VATs, there is very little research investigating them
In “What Goes Up May Not Come Down: the Asymmetric Incidence of Value Added Taxes”, Professor Youssef Benzarti explores the effect of changes in VAT rates on prices. He finds something surprising: when VAT rates increases, prices inclusive of the VAT rate tend to increase to compensate for higher VAT rates; however when VAT rates decreases prices inclusive of VAT remain constant. This implies that firms tend to benefit from VAT cuts, but it is consumers who pay for VAT increases.
Some Governments use temporary VAT cuts to stimulate demand. This research implies that because prices tend not adjust downwards, temporary VAT cuts are not a good measure to stimulate demand. They are desirable if Governments want to stimulate supply by providing them with a transfer of money. However, ultimately Governments cannot control what firms will do with the windfall of money they receive as they can distribute it to their shareholders with no direct benefits to the economy.
Second, if VAT cuts are temporary and are supposed to be repealed once the economy recovers, the asymmetric pass-through suggests that this might result in a higher equilibrium price and will end up being paid for by consumers. As an illustrative example, assume a VAT cut of 10 percent that lasts three years. If firms pass through 50 percent of the VAT decrease but 100 percent of the VAT increase, then firms will receive a permanent windfall of 50 percent of the VAT decrease, consumers a three year long windfall of 50% which will be paid for by the Government through lower taxes. But once the VAT rate is increased, will stop receiving the 50 percent windfall and instead will start paying for the 50 percent windfall that firms are receiving through higher equilibrium prices. For this reason, a temporary VAT cut can hinder the demand side and is only desirable if the Government wants to permanently transfer money from consumers to firms.
