Chicago Booth in the News, Autumn 2011, Vol. 4
(Covering November 8 to December 2, 2011)
Here are highlights of the latest Chicago Booth news coverage. The digest below represents only a portion of recent coverage.
Section 1: News coverage of Chicago Booth.
- BLOOMBERG BUSINESSWEEK. Booth’s Executive M.B.A. Program was ranked #1 in the magazine’s biennial ranking of the world’s best EMBA programs, released November 10. The top programs are 1) Booth, 2) Columbia, 3) Kellogg, 4) IE Business School in Spain, 5) UCLA, 6) Michigan, 7) Southern Methodist, 8) USC, 9) Wharton, 10) Duke. In the previous ranking, Booth’s EMBA program was second. Among part-time MBA programs Booth ranked 17th nationally and 2nd in the Midwest, compared with 14th nationally and 4th in the Midwest two years ago. In non-degree executive education Booth ranked 13th in open enrollment programs and 16th in custom programs. In 2009, we were 15th in open programs and unranked in custom programs.
- FINANCIAL TIMES. An article headlined “Indian MBAs Given Boost to Study at Chicago Booth,” was published November 15. “The University of Chicago’s Booth School of Business has announced a new scholarship for MBA students from India, courtesy of a $1 million donation from the Tobaccowala Foundation of India,” the article said. “Scholarship support is important in our efforts to continue attracting the best and brightest students,” Dean Kumar said. “For that reason, we have as one of our goals to increase such support for students.”
- THE WALL STREET JOURNAL. A new website by Booth’s Initiative on Global Markets “is assembling what it calls ‘the world’s best economics department’ in a bid to give prominent academic economists a louder and unfiltered voice in key public-policy debates,” the newspaper reported. The site plans to pose one question a week and post answers from 40 senior professors at elite U.S. universities. Survey results and a list of participants are posted at www.igmchicago.org/igm-economic-experts-panel.
- CNBC. Booth won this year’s MBA Face-off investment challenge with a return on capital of 23% during four weeks of trading a $1 million virtual portfolio of equities and currencies. During the trading period, the broader S&P Index declined 8.3%. The Booth team of full-time and part-time students was David Feldstein, Ramanathan Sundaram, Alexander Stein, Chris Myers, Manas Babbili, Michael Kuszynski, Nikhil Shenoy, Scott Shiao, Vasily Gorev and Michael McCann. The announcement was made November 29.
- BLOOMBERG BUSINESSWEEK. Booth was featured in an article headlined “MBA Admissions 2.0: Technology Makes Inroads,” published November 7. Booth was one of the first schools to bring technology into the application by requiring a PowerPoint presentation since 2007, the article noted. “Traditional essays were too familiar, and applicants had access to hundreds of essay-writing books, websites, and consultants,” said Kurt Ahlm, associate dean of student recruitment and admissions. “We wanted to get at something that was more authentic, get an answer that was thoughtful, strategic, and added some depth.” Read article
- FINANCIAL TIMES. Chicago Booth has an active role the new Institute for Law and Economics, formed recently at the University of Chicago, according to an article published November 25. The Institute brings together 34 faculty members as a catalyst for strengthened interdisciplinary research between Booth, the Law School and the Economics Department, the article said. Read article
- CHICAGO TRIBUNE. Booth was featured in an article about the decline in the number of new MBAs going to Wall Street. In 2010, 45 percent of Booth graduates accepted positions in financial services, compared with 51 percent in 2006, the article said. Still, “Wall Street’s presence on (Booth’s) campus is palpable. From the moment students arrive, the courting begins.” Kurt Davis, ’12, said anger at Wall Street is overblown. The article was published November 10. Read article
- CRAIN’S CHICAGO BUSINESS. Booth was featured in an article about increased hiring by consulting firms. “This year, 28 percent of newly graduating MBAs at the University of Chicago Booth School of Business joined consulting firms, a four-percentage-point increase over 2010,” the November 28 article said. Read article
- CHICAGO TRIBUNE. Booth’s annual business forecast and economic outlook luncheon made news December 1 when remarks by Professors Austan Goolsbee and Randall Kroszner appeared on the front page of the business section. Professor Kroszner said the latest action by the Federal Reserve and five other central banks “keeps the markets from freezing up.” Professor Goolsbee said the situation in Europe is bleak because eurozone leaders have “undermined their credibility” by providing “multiple versions” of potential plans. Also speaking at the luncheon was Professor Erik Hurst.
- UNIVERSITY OF CHICAGO MAGAZINE. A Q&A interview with Dean Kumar was published in the November/December issue. “It is crucial that Chicago Booth have a symbiotic relationship with the rest of the University,” he said. “It’s important not to have just joint programs but also collaboration at all levels.” Read article
Section 2: News coverage quoting Chicago Booth faculty.
- THE NEW YORK TIMES. Professor Richard Thaler wrote the Economic View column headlined “When Business Can’t Foresee Outrage,” November 19. “If you run a business, you might think twice about charging for a service that has traditionally been free,” he wrote. “Consider Bank of America’s move to charge customers $5 a month to use their debit cards. The bank eventually decided against the fee, but not before helping to create a storm big enough to induce many people to move their business away from large banks to credit unions.” Read article
- THE WALL STREET JOURNAL. Professor Austan Goolsbee published an op-ed headlined “Europe’s Currency Road to Nowhere,” November 29. The euro has punished southern Europe the way China’s currency has hurt the United States, he wrote. “The countries of Southern Europe must find a growth plan without the normal export-based option. Ultimately they must raise their productivity faster than Northern Europe does to reverse the fundamental currency imbalance.” Read article
- CNN.COM. Professor Luigi Zingales published an op-ed titled “Why Congress can freely trade on insider information,” November 29. “Congress and the U.S. Supreme Court are the only federal agencies whose employees may, without restrictions, trade stocks based on non-public information,” he wrote. “Not only can members of Congress legally trade on confidential information, they do, despite the potential cost to their reputations.” Read article
- THE NEW YORK TIMES. Research by Professors Matthew Gentzkow and Jesse Shapiro on whether we are drawn to news media that reaffirm our personal ideologies was featured in a column headlined “Liberal or Conservative, the Problem Is Ignorance.” They analyzed data on both online and non-Internet news consumption and face-to-face social interactions, and concluded that there is far less ideology-driven news consumption than we assume, the column said. “The origin of the paper was a sense that the conventional wisdom was wrong,” Professor Gentzkow said in the November 12 article. “We had looked at survey evidence a few years ago, and there seemed less segregation than you’d think. So we asked if we could get data good enough to document the extent to which it is true.”
- BLOOMBERG BUSINESSWEEK. Professor Amir Sufi published an op-ed headlined “How Household Debt Contributes to Unemployment” November 17. “The weakness in household balance sheets and the associated pullback in spending are directly responsible for the lion’s share of employment losses in the U.S. economy,” he wrote. “This deficiency remains the most significant impediment to a robust recovery.” The article was co-authored by Atif Mian of the University of California, Berkeley.
- BLOOMBERG NEWS. Professors Lubos Pastor and Pietro Veronesi published an op-ed headlined “When Markets Are Hostage to Political Flux” November 9. The article is based on their research which examines how government actions affect stock prices. “The European crisis is far from over, and the wrangling over taxes and budget cuts in the U.S. is bound to continue,” they wrote. “As long as politicians keep us in suspense, businesses will hold back and investors will keep on struggling to diversify. Gold, anyone?”
- SYDNEY MORNING HERALD (Australia). Professor Raghuram Rajan published an op-ed headlined “Don’t blame the rich for inequality, it’s the broken education system,” published November 15. “The U.S. needs to improve the quality of its workforce by developing the skills that are relevant to the jobs that its firms are creating,” he wrote. “Several steps can be taken toward these goals, including improving attitudes toward education, reforming schools, tying the curriculum in community colleges and vocational institutions more closely to the needs of local companies, making higher education more affordable, and finding effective ways to retrain unemployed workers.”
- BLOOMBERG BUSINESSWEEK. Professor Douglas Skinner wrote an op-ed headlined “Japan’s ‘Window Dressing’ Hid Olympus Fraud,” published December 1. “The recent disclosure of a longstanding accounting fraud at Olympus Corp. has drawn fresh attention to Japan’s corporate-governance practices, and raises important concerns for investors in companies there,” he wrote.
- THE WASHINGTON POST. A Q&A interview with Professor Austan Goolsbee headlined “Austan Goolsbee on why the euro zone won’t survive” was published November 30. “If you look at the history, there have been places where what would seem to be not-optimal currency areas have stayed together,” he wrote. “North and south Italy would seem to be one. But those tend to entail large, permanent subsidies from the rich side to the poor side, and a general social willingness to put up with these vast differences, usually because they’re all of the same nation state, and you have that mobility aspect. It’s harder to apply that model to Europe.”
- FREAKONOMICS.COM. Professors Anil Kashyap, Randall Kroszner and Christian Leuz participated in an online forum “Can the Euro Be Saved, Or Is It Doomed?” November 30. “…(T)he most likely outcome is that the euro will survive,” wrote Professor Leuz. “The elites in Europe created the euro without really consulting the people,” Professor Kashyap wrote. “They ought to let the people decide its fate now.” Professor Kroszner said “Simply having the ECB (European Central Bank) buy the debt of troubled member states, however, will not solve the fundamental fiscal and governance problems that are necessary to sustain the Euro.” Read article
- CNBC. Professor Randall Kroszner discussed why central banks made an effort to boost liquidity in the global banking system and whether it will fix the problems in Europe. The interview was broadcast December 1, one day after the Dow Jones Industrials Average jumped nearly 500 points.
- CNBC. Professor Randall Kroszner discussed the European debt crisis and its potential impact on the U.S. during an appearance on The Kudlow Report. “There’s no reason for the Fed to act now,” he said, but they need to monitor the situation closely. The 4-minute interview was broadcast live November 17. Watch video
- THE WALL STREET JOURNAL. Professor Anil Kashyap was quoted in an article headlined “Bernanke and Banks Tested by Latest Market Strains,” published November 3. The collapse of MF Global seems unlikely to lead to a repeat of 2008, the article said. However, “All it takes is some kind of panic for the markets to freeze up again,” Professor Kashyap said. “If trust vanishes and markets freeze up, it will still be a big problem.” Read article
- THE WALL STREET JOURNAL. Professor Steven Kaplan was one of the experts quoted in an article about how much economic mobility exists in the U.S. “There’s a lot of persistence” among the top 1% of earnings, he said in the article published November 11. Read article
- TIME MAGAZINE. Professor Steven Davis was quoted in an article about the growing number of Americans who have left their jobs by choice. “We have lots of evidence that shows that higher quits is associated with a better labor market,” he said. The reason is that people tend to quit when they are confident they will get another job, the November 17 article said.
- MINT (India). Professor Raghuram Rajan received the 2011 Infosys Prize “for his prescient work on the 2008-09 financial meltdown,” this business newspaper reported. The prize includes a cash award valued at approximately $100,000, making it the largest monetary award in India given for research. “His recent book, ‘Fault Lines,’ is a masterly overview and analysis of the complex interaction between financial institutions, governments and people,” the award citation said.
- THE NEW YORK TIMES. Professor Steven Kaplan was quoted in an article about presidential candidate Mitt Romney’s career as a private equity executive, heading Bain Capital. By marrying traditional financial engineering with management consulting, Bain produced much higher returns than its rivals, the article said. “They were unusual in doing that in the ‘80s,” said Professor Kaplan. “Romney figured it out, and everyone else copied it.” The article was published November 12.
- THE WALL STREET JOURNAL. Professor Steven Kaplan was one of the experts featured in an article headlined “The Best Advice Around, From Those Who Took It.” Professor Kaplan said the book that has given him the best advice is “The Art of the Start,” by Guy Kawasaki. It tackles an old topic – starting a business – but is much more clear, focused and entertaining. It centers on “substance rather than fluff, encouraging entrepreneurs to focus on customers and be specific about their business model,” he said in the November 14 article. Read article
- BLOOMBERG BUSINESSWEEK. Professor Raghuram Rajan was quoted in an article headlined “How Inequality Hurts the Economy: The gap between the rich and the rest makes for short recoveries,” published November 16. Political systems in economically divided countries become polarized by the sort of zero-sum politics now gripping Washington, Professor Rajan said. “It makes the politics more difficult, and that makes it more difficult to grow … There is no consensus on any of the solutions that are proposed.” Read article
- BLOOMBERG TELEVISION. Professor Randall Kroszner said the disappointing third-quarter GDP’s 2 percent rise is not likely to cause a double-dip recession. The interview was broadcast November 22.
- CBS NEWS.COM. Research by Professor Steven Davis was featured in an article headlined “Do private equity firms really destroy jobs?” published November 28. “Recently, a team of researchers led by Steven J. Davis, of the Booth School of Business at the University of Chicago, released a new paper that sheds some light on the complexity, and eventual outcome, of private equity transactions,” the article said. “It finds that while private equity transactions do often lead to job loss, they also lead to job gains – and the net results are nowhere near as dramatic as widely believed.”
- FINANCIAL TIMES. Professor Douglas Skinner was quoted in an article that said Olympus’s disclosure of a financial cover-up threatened to shatter the reputation of Japan’s leading auditing firms. The company’s auditors during the period were KPMG Azsa and Ernst & Young ShinNihon. “The auditors should have been able to identify and do something about this,” Professor Skinner said in the article published November 10.
- FOX BUSINESS TELEVISION. Professor Randall Kroszner said it is difficult to have a robust recovery in the U.S. when there continues to be so much uncertainty. “People and businesses don’t know the level of taxes and the structure of taxes – not only next year, but in 10 years,” he said. In addition, the situation in Europe is adding to the uncertainty in the U.S., Professor Kroszner said in an interview broadcast November 21.
- BLOOMBERG TELEVISION. Professor Luigi Zingales talked about income inequality in the U.S. and Europe’s sovereign-debt crisis during an interview broadcast November 21.
- RUSSIA 24 TELEVISION. Professor Raghuram Rajan was interviewed for 7 minutes on this television network. The interview took place in Moscow November 12.
- FINANCIAL TIMES. Professor Steven Davis was quoted in an article examining why unemployment in the U.S. is so high despite a steady rise in the number of job openings. One possible explanation is that employers are not aggressively trying to fill the jobs, he said in the November 9 article. Another explanation is that, after being unemployed for a long time and being repeatedly turned down for jobs, then workers stop looking so hard.
- THE NEW YORK TIMES. Professor Steven Kaplan was quoted in an article about Freedom Group’s rise to dominance in the American commercial gun industry. Freedom is a unit of Cerberus Capital Management. “There’s much less competition for buying these companies,” Professor Kaplan said in the November 26 article. “They must have decided there is an opportunity to make money be investing in the firearms industry and trying to build a big company.”
- EL MERCURIO (Santiago, Chile). Professor Raghuram Rajan was featured in a Q&A interview about the eurozone crisis and the latest on the Greek debt situation. The interview was published November 4.
- THE TIMES OF INDIA. Professor Richard Thaler was featured in a long Q&A interview about “nudging” and decision-making published November 19. His latest book is “Nudge: Improving Decisions About Health, Wealth, and Happiness.”
- REUTERS. Professor John Birge was quoted in an article about the value of free online investment message boards headlined “Is social networking while investing bad for your wallet?” Items posted online could be manipulated, the article said. Professor Birge responded by referencing a 1993 New Yorkers cartoon in which two dogs sit at a computer and the caption reads, “On the Internet, nobody knows you’re a dog.” The article was published November 16.
- BLOOMBERG MARKETS MAGAZINE. Professor Anil Kashyap was quoted in an article headlined “Secret Fed Loans Gave Banks Undisclosed $13 billion,” published November 27. Employees at the six biggest banks made twice the average for all U.S. workers in 2010, according to the article. “The pay levels came back (after the crisis) so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” Professor Kashyap said. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”
- BLOOMBERG NEWS. Professor Randall Kroszner was one of the experts quoted in an article headlined “Fed Seeks to Boost Banks With Stress Tests,” published November 23. “To make the stress-testing credible, it is important to be very clear about what the stress assumptions are and to announce some set of the results,” he said. “Given the real concerns about Europe, it is prudent to make sure that bank management has thought through how they would deal with such a shock.”
- STRAITS TIMES (Singapore). Research by Professor Steven Davis was cited in an article headlined “Work and wages versus wealth and welfare.” Each worker displaced by a recession loses $112,095 in present value of lifetime earnings, Professor Davis found. The article was published November 17. Read article
- DOW JONES MARKETWATCH. Professor Richard Thaler was quoted in a commentary headlined “Financial literacy is a big, fat Wall Street hoax,” published November 8. Wall Street “needs investors who are irrational, woefully uninformed, endowed with strange preferences, or for some other reason willing to hold overpriced assets,” Professor Thaler said.
- CHICAGO TRIBUNE. Clinical Professor Linda Darragh participated in a live online chat about women in innovation posted on the newspaper’s website November 29. Read article
Professor Darragh was also featured in an earlier Q&A on innovation November 9.
- EOS (The Netherlands). Professor Robert Fogel was featured in a long Q&A interview about his latest research in this Flemish science magazine. The interview appeared in the September issue.
- THE TIMES (Johannesburg, South Africa). Research by Professor Nicholas Epley was featured in an article headlined “Inner circle outcasts.” The research found that people who have strong social connections are more likely to dehumanize those outside their social circles. The article was published November 14.
- THE WALL STREET JOURNAL. Visiting Professor Axel Weber’s appointment as chairman of UBS has been moved forward to May 2012 from early 2013, according to an article published November 15. Before joining Booth, Professor Weber was the head of the German Bundesbank.
- CHRISTIAN SCIENCE MONITOR. Research by Professor Amir Sufi was cited in an article about the role of debt in the current economic slowdown. It is clear that the U.S. economy has been weakened – both during and after the recession – in regions where household debts are highest, according to Professor Sufi’s research. Even after two years of recovery, debt remains the economy’s major challenge, he said in the article published November 21.
- BUSINESS & ECONOMY (India). Research by Assistant Professor Bryan Kelly was featured in an article headlined “Bend It Like Bernanke: How Government Guarantees Shape Asset Prices.” The research looks at how government intervention and economic outcomes offer new insights into the effect of bailouts on the value of the banking sector. The article was the cover story of the magazine November 10. Read article
Section 3: Chicago Booth students and alumni in the news.
- THE ECONOMIST. Ricardo Taveira, MBA ’13 published an MBA Diary column about why he picked Booth over several other schools. “During Chicago's Admit weekend, current students laid down a challenge for any undecided applicants,” he wrote. “They displayed a picture of an art installation by Jeppe Hein, a Danish artist. It features prominently in the school’s Harper Centre, asking passers-by a simple question: ‘Why Are You Here and Not Somewhere Else?’ My choice between schools wasn’t about whether I held the same opinions or shared the same career objectives as my would-be classmates. It was about whether those around me asked the same questions as I did—challenged the same things and were motivated by the same reasons.” Read article
- CNBC. David Feldstein, MBA ’12, was interviewed live in the Winter Garden of Harper Center, discussing the investment strategy of Booth’s MBA Face-off team. The team went on to win the equities and currency investment competition. (See item in Section 1.) The interview was broadcast November 17. Watch video
- CHICAGO TRIBUNE. A company co-founded by Phil Nevels, MBA ’10 and Seyi Fabode, MBA ’10 was featured December 1 in an article headlined “Energy startup powers past fundraising target.” Power2Switch, a Chicago startup that helps consumers acquire cheaper electricity, raised $1.3 million, closing its first round of funding and exceeding its $950,000 goal, the article said. Fabode is CEO of the company and Nevels is COO. Read article
- CRAIN’S CHICAGO BUSINESS. A company co-founded by Richard Gengler, MBA ’09, was profiled in an article headlined “A startup that aims to give a helping hand.” Prevail Health Solutions “is creating a new way for veterans to get mental-health treatment,” the November 7 article said. Gengler is CEO of the company that went live while he was a Booth student. Before earning his MBA, Gengler was a U.S. Navy fighter pilot in Iraq.