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Alumni Newsletter 2003

Bob Marshall

Robert C. Marshall

Professor and Head

Greetings from the Economics Department at Penn State. I am writing to provide you with some information about the recent progress of the department. Before doing so, however, allow me to inform you of a social event. The "big" annual meeting for economists will be in San Diego, CA., this January. We will have a reception for Penn State Economics-Sunday, January 4 (the second day of the meetings) from 6-8 p.m. at the San Diego Marriott Hotel and Marina. Many faculty will be in attendance. You are invited and I hope you can make it. That said, I have much to report about the undergraduate program, the graduate program, and faculty recruitment.

Faculty Recruitment

We made four important additions to our faculty this year-Quang Vuong and Isabelle Perrigne (formerly of USC) as well as Ed Green and Ruilin Zhou (Ed and Ruilin have accepted but will join us in Fall 2004; they are currently at the Chicago Federal Reserve). Isabelle and Ruilin both join us as tenured associate professors. Isabelle brings additional visibility to our existing strength in empirical industrial organization whereas Ruilin adds substantially to our macro/money group. Both Ed and Quang are Fellows of the Econometric Society, one of the most prestigious accolades in the profession. We now have five faculty who are Fellows-Ed, Quang, Jim Jordan, Vijay Krishna, and Neil Wallace.

Graduate Program

As I reported in an earlier letter, two years ago we placed one of our graduate students as an assistant professor at MIT and another at Cornell. Last year, one of our graduate students, Roland Fryer, had an outstanding market. Roland ended up with assistant professor offers from the economics departments at MIT, Harvard, Wisconsin, Cal Tech, and Virginia. But, perhaps his best offer was to join an incredibly elite group-Roland was offered a Harvard Junior Fellowship. Roland ended up accepting the Harvard Junior Fellowship as well as the offer to become an assistant professor in the economics department at Harvard. A description of Roland's research, prepared by his thesis supervisor, Tomas Sjostrom, is at the end of this letter.

The consequent reputation gains for the department from the last two years of graduate student placement success are something that all future, current, and past graduate students of Penn State's Department of Economics should enjoy. As I mentioned in my last letter, the faculty have worked hard to develop foreign feeder sources to our graduate applicant pool. Because of the deep involvement of Professor Barry Ickes in the New Economic School in Moscow, we have been able to attract numerous top Russian students. Currently, there are eleven Russians in the program. Emeritus Professor John Riew not only travels to the Far East each year to interview potential applicants, but he now makes a spring trip to South America for this purpose. We continue to make significant investments in preparing our students for the demands of the job market. It is typical, and appropriate, for students to be focused on the substance of their research prior to the job market. But the packaging and marketing of the work, both in writing and through the seminar presentation, can make a big difference in the market's reaction to a student. Much faculty time is now spent on the making sure students can effectively communicate the substance of their work. Every graduate student on the market makes multiple seminar presentations; one is three hours in length, after which faculty and fellow students critique all aspects of the talk.

Neil Wallace did an excellent job in his four years as Director of Graduate Studies. Vijay Krishna has taken over as DGS and I am excited by the energy and initiatives that he is bringing to the job.

Undergraduate Program

 In the fall of 1995, the Economics Department had 200 undergraduate majors and total enrollments of 8,000, where 5,000 of those were in principles. At this time, we have over 600 majors and total enrollments of approximately 12,000, where 7,700 of those are in principles. The demand for both our major and our courses has increased significantly since 1995.

The Department of Economics' enrollments continue to grow, and the demand for both our major and our courses has increased significantly since 1995. Penn State Economics continues to outperform the national trend. Many things have contributed to better undergraduate education. We have hired talented i nstructors dedicated solely to principles teaching, and required writing projects in our principles classes.

I would like to stress to you a particular initiative that holds promise for our undergraduate program. The department has established an increasingly deep relationship with a Washington, DC based economics consulting firm-Bates White, LLC (BW). One of our Ph.D. students is a manager while a former instructor for the department is a partner at the firm. Several of our very best undergraduate students have gone to work there, and the firm continues to actively recruit our very best. Almost 20 percent of their employees are Penn State graduates. The firm is also quite active in offering internships to our undergraduates. Furthermore, BW is funding a graduate fellowship in the department as well as two undergraduate research assistant positions. Overall, we are thrilled with this new relationship.

That's all for now. I hope to see you in San Diego at our reception. If possible, I would also appreciate hearing from you, on topics addressed in the letter or on anything germane to the department, so please send me an e-mail at


Bob Marshall signature

Robert C. Marshall, 

Professor and Head

P.S. If you would like to make a financial contribution to the Department the directions are below. If the money is to be earmarked for a specific fund please note this in the memo section of the check. 

Payee : Penn State Department of Economics

Address : Liberal Arts Development Office, 13 Sparks Building, Penn State University, University Park, PA 16802

Possible Designations (in memo section) :

· "Blank" - unrestricted gift.

· Anna M. McMullin Fund in Economics 

· Philip A. Klein Fund in Economics 

· Thomas G. Fox Fund in Economics 

· Prybyla/Riew Lectureship in Economics .


Research of Roland Fryer 

Roland Fryer uses tools from microeconomics, sociology and psychology to study the problem of discrimination. Among his major interests are the consequences of affirmative action programs, the psychological basis of racial bias, empirical studies of the achievement gap between white and black students , and the sociology of "black culture". In his Penn State Ph.D. thesis, he formalized a sociological phenomenon called "acting white". Kids in black and Hispanic neighborhoods who get good grades are sometimes treated badly by their peers, and they are accused of "selling out", or "acting like a white person". Roland used tools from game theory and microeconomics to explain why investing in "cultural capital" (such as playing basketball) instead of "human capital" (such as getting good grades) can be used as a signal which facilitates cooperation within poor neighborhoods. His research shows that the "acting white" phenomenon is consistent with rational behavior, but the implication is that students in poor neighborhoods do not have the right incentives to invest in human capital. The theoretical arguments are supported by Roland's empirical research, which shows that in fact there is no unexplained achievement gap between black and white kids in kindergarten, but the gap starts to appear during the first two years of school. 
Roland argues that the psychological basis for racism is "stereotyping". For example, rather than remembering all the Swedes you have met, you develop a category called "Swede" and represent the class of all Swedes by a stereotypical Swede who drives a Volvo and listens to Abba. The human brain seems to operate in this way. But what determines the number of categories that we use? One might have a category for "Swede", or two separate categories for "highly educated Swede" and "poorly educated Swede", or any other number of infinite possibilities. The number of categories that we use will have a profound effect on our behavior towards the person that is being "stereotyped". Roland's most recent work explain the categories that we actually use as the solution to an information-processing problem solved by our brains.