Honoring Distinguished Economist Daniel McFadden
The University of Minnesota was honored to host Daniel McFadden for a series of events in September. Professor McFadden, who received his BS and PhD degrees from Minnesota, was awarded the Nobel Prize in Economic Sciences in 2000 with James Heckman for developing theory and methods for analyzing discrete choice. McFadden made the most of his campus visit, carving out time to spend with students, faculty members, and alumni, and even to cheer on the Gopher football team.
On September 27, undergraduates packed the room to hear McFadden share advice for economics majors and stories about his own path to becoming a professor. He shared the history of developing a new model for discrete choice—an idea he initially thought was unworthy of publication that went onto merit the Nobel prize. When asked about his time at the University of Minnesota, he likened it to an all-you-can-eat buffet where there was an endless amount to learn on a variety of subjects. “Study broadly, study deeply, and study hard,” he advised. In closing, he reflected on his love for economics as a discipline that allows him to tackle problems that affect real people by using his brain in a programmatic way.
Later that afternoon, McFadden discussed his working paper “Foundations of Welfare Economics and Product Market Applications” with graduate students and faculty at the Minnesota Economics Seminar. A common problem in applied economics is to determine the impact changes in prices and attributes of marketed products have on consumers of as a consequence of policy changes. Professor McFadden’s paper reexamines the foundations of analysis for these scenarios.
On September 28, McFadden gave a public lecture titled, “Consumer Heal Thyself! A Prognosis for American Health Care.” Compared to other leading economies, the US is simply not keeping up. The US spends more money per person and has a shorter life expectancy than comparison countries. Among the 4.3 million Americans who reach age 15 each year, there will be 447,000 premature deaths before age 60. According to McFadden, poor performance in the US can be attributed to a variety of factors including bad genes, bad behavior, income inequality, poor organization of health care delivery, inconsistency in government, and health insurance market failure. Looking toward the future, McFadden is concerned that the US has not identified a viable path forward. Pushing responsibility to the states isn’t economically feasible while a single payer system like in Canada isn’t politically attainable. He acknowledged that his prognosis was bleak, and urged the audience not to allow the excess of premature deaths in this country to continue.
After the lecture, University of Minnesota president Eric Kaler and Regent David McMillan presented McFadden with an honorary doctor of science, the University’s highest honor, in recognition of his enormous contribution to the field of economics. McFadden thanked the University for his own experiences, and also for the service it provides students and the opportunities it creates for intellectual pursuits.