Sunday, March 16, 2008

UC Berkeley Gets "Saved"?

by Ken Houghton

In comments at DeLongville, save_the_rustbelt notes:
The University of California at Berkeley has accumulated a $1.1-billion “war chest” to fend off Ivy League poachers, the Bloomberg news service reported today.

Berkeley administrators hope the money, which will go toward endowed chairs for 100 professors, will dissuade faculty members from defecting to wealthier competitors like Harvard and Yale, where salary offers are significantly higher.

For the 2006 fiscal year, full professors at Berkeley earned an average of $134,672 and associate professors $88,576 — about 15 percent less than peers at private institutions. And, since 2003, the California university has lost at least 30 faculty members to its eight main competitors, chief among them Harvard.

This appears to be in reaction to rumors summarized concisely by David Warsh a few weeks ago:
Private universities raise tuitions at will and keep enrollments small while public universities, constrained by legislatures, must keep fees down while increasing their enrollments.

Something of a test of the balance of power may come this spring at the University of California at Berkeley, where professors in the economics department, one of the top half-dozen in the nation, are targets of ten outside offers. Every spring departments all over the country seek to improve their standing by hiring from their rivals, a little like free agent season in big league sports. Bids are always out. But the suspense at Berkeley this year is unusually intense.

Development economist Chang-Tai Hsieh already has preferred an offer from the Graduate School of Business at the University of Chicago to one from Stanford. Other targets of multiple offers include applied microeconomist David Card, a [John Bates] Clark medalist who is a department unto himself; husband-and-wife macroeconomists Christina and David Romer; growth economist Charles Jones; public finance specialist Raj Chetty; not to mention several members of Berkeley’s remarkable junior faculty, led by wunderkind theorist Yuliy Sannikoff and international economist Pierre-Olivier Gourinchas. Meanwhile, star information economist Hal Varian has gone off to be chief economist for Google (to whom he consulted for many years, growing wealthy from his options grants), and Nobel laureate George Akerlof, a youthful presence in Evans Hall, is retiring.

Akerlof turns 68 this year. Varian got a once-in-a-lifetime opportunity (and got rich from the options he had received before; maybe not Mankiw-rich, but rich enough). Card (Class of 1950) and Christina Romer (Class of 1957) already have endowed chairs, as does David Romer (Herman Royer Professor of Political Economy).

On the other hand, Chetty is an Associate Professor and is on leave, as are Professor Jones and Assistant Professor Sannikov. Gournichas is an Assistant Professor, a rung lower than Chetty.

And the institution will still have a host of riches:
Its behavioral economists are led by Nobel laureate Daniel McFadden, Oliver Williamson and Clark Medalist Matthew Rabin. The presence of Joseph Farrell, Michael Katz, Enrico Moretti, Daniel Rubinfeld and Carl Shapiro give it a lock on a certain kind of applied industrial organization. Maurice Obstfeld, Alan Auerbach, J. Bradford DeLong and Emmanuel Saez assure that Berkeley macroeconomics won’t wink out altogether.

Only after bemoaning all of this does Warsh note that UC-Berkeley isn't exactly just being taken in this roundelay:
The department has its own offers out, too, naturally, including one to James Hines of the University of Michigan. What Berkeley economics desperately needs is a faculty entrepreneur to serve as department chair, someone to wheel and deal for it the way John Dunlop did for Harvard economics in the 1960s. But the next chair has yet to be chosen.

There are some things Warsh seems to get wrong. His overall frame suggests that UCLA, not the obvious choice, would [have] supplant[ed] Berkeley before that $1.1 Billion came in. And the mere fact that Cal can raise a $1.1B "war chest" strongly suggests that its not exactly going to be the loser in these battles.

The losers are going to be the "land-grant schools," such as Minnesota, and the other schools whose budgets are being slashed and that don't have access to the type of war chest that Cal does.

But David Warsh won't write about those, and they'll only raise large sums of money if it's for a new football stadium.

Maybe I should change the title of this post.

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