Behind the Research:
Collaboration and Friendship
Image by Chris Strong
Erik Hurst and Kerwin Charles have been colleagues and close friends since they met at the University of Michigan in 1997, when Charles was a new assistant professor and Hurst was finishing his PhD. They spoke with Chicago Booth Magazine recently about how their friendship shapes their research.
On their friendship
Charles: Our mutual love of sports played a large role in our initial interactions. In Ann Arbor we watched NFL games together every Sunday. Apart from our never-ending sports talk, we are really good friends. I was at Erik’s wedding, at the baptism of his kids.
Hurst: While he was still in Michigan, after I came here, we would talk three to four times a week. Sometimes we talked about our joint work together, sometimes we talked about the papers we’re writing with other people, and sometimes we just talked.
On their joint research
Hurst: Kerwin is one of my main collaborators. We always have one or two papers in development at any given time.
Charles: We like working together because we view the world similarly enough to make collaboration productive. While our various differences ensure that we do not see things exactly the same way, it is generally true that we have similar tastes about what constitutes interesting work or how research should proceed.
Hurst: Our friendship enhances our ability to collaborate. We know how each other thinks when we are not talking economics, and we can draw on that when determining how to proceed with a paper. This comes in handy sometimes when we both have strong ideas or disagreements about specific aspects of research.
On their research ideas
Charles: One of us sees or hears something interesting or weird in the world or in a seminar. We chat about it. Soon what started as a series of discussions becomes something we try to more deeply understand in a paper. We spend a lot of time talking with each other about economics. I know that sounds boring, but it’s true. Sometimes in mixed settings—say, at dinner with Erik’s wife and my girlfriend—we have to work hard not to talk about economics.
Hurst: My wife actually likes when Kerwin and I talk about economics. She just doesn’t like it when that is all we talk about.
Charles: Because we are always talking about economics,
research topics always seem to develop. Apart from work we have done on
race, we have papers exploring questions like how savings propensities
get passed from parents to their children, who people marry and how
that affects their economic resources, and the importance for young
people to develop social capital. A consistent theme of most of these
papers is that they stem from our curiosity about the relationship
individuals have with others—parents, spouses, friends, strangers—and how those interactions affect behavior.
On the importance of race
Hurst: We have a series of papers exploring economic differences between blacks and whites across a variety of dimensions: wealth accumulation, home ownership propensities, rates paid for vehicle loans. We show that in many settings, there are differences in outcomes and, sometimes, behavior between blacks and whites.
Charles: Interestingly, a key result of this particular paper is the unimportance of race in this context. Blacks and whites seem motivated by the same impulses when they spend on visible goods; it is differences in their peer groups that generate average racial differences.
Hurst: When “Conspicuous Consumption and Race” was first released as a working paper on NBER, some people asked, “Why can’t the higher spending on visible goods by blacks just be a black thing? Why can’t it be style or something correlated with racial identity, rather than anything about signaling or status?”
Charles: We argue that it’s too easy to say people are different because they’re different. As economists, that’s intellectually unsatisfying. To be fair, it is true that dramatic differences in average income by race do generate average differences in the behavior in question. But that masks the fact that if you focus on whites you observe the same behavior. The difference between rich or middle-income or lower-income whites is much smaller than the vast difference between whites, on average, and blacks, on average. So that latter difference tends to swamp the other thing. There are lots of whites who, given their own average income in their particular group, buy a bigger truck than they need. It’s almost a “keeping up with the Joneses” phenomenon.
Hurst: You don’t want to be behind the mean; you also want to be a little bit above the mean. You don’t want to be left behind because then people will treat you bad. If I lived alone on an island, I’d choose some optimal level of consumption. Once you put other people around me, it changes the amount I’m going to consume in ways that are either not too different from below—or above, if from above.
Charles: If people spend extra money on clothes, cars, and jewelry, they must think it’s worth it. Otherwise, they would not do it.
Hurst: They might prefer to get the status without paying the price of the additional consumption. They’d prefer getting all the status without distorting their consumption. But that’s not the world they live in.
Charles: It’s an optimal decision. Given that I’m embedded in a particular social milieu, what I am observed to consume matters, and I don’t regard the expenditure as being wasteful. And I might care about it differentially at different points in my life. A 26-year-old guy who’s trying to make his way in the world, to find a job and a wife, probably cares a lot about how others view him. As he rationally should!
On their own lives
Charles: It’s not why we wrote the paper, but I am a way better dresser than Erik.
Hurst: That is very true. He was better dressed than me at my own wedding!