People I (Mostly) Admire - Episode 149: Stanford’s President Knows He Can’t Make Everyone Happy

In this compelling episode of People I (Mostly) Admire, Steve Levitt engages in an insightful conversation with Jonathan Levin, the esteemed President of Stanford University. The dialogue delves deep into Levin’s impressive career trajectory, his academic contributions, leadership philosophy, and his perspectives on pressing issues in higher education today. This summary encapsulates the key discussions, notable insights, and significant conclusions drawn during their conversation.

1. Introduction to Jonathan Levin’s Academic Journey (00:52 - 04:35)

Steve Levitt begins by introducing Jonathan Levin, highlighting his rise from an assistant professor at Stanford to the university’s president. Levitt draws parallels between Levin and his father, Richard Levin, who served as president of Yale for two decades. Recalling Levin’s participation in a remarkable MIT Economics PhD class alongside future Nobel laureates like Esther Duflo and Emmanuel Saez, Levitt underscores the exceptional caliber of Levin’s academic peers.

Jonathan Levin reflects on his formative years at MIT, emphasizing the stimulating environment fueled by brilliant minds such as Daron Acemoglu and Abhijit Banerjee. He acknowledges the challenges of feeling inadequate amidst such high-achieving peers but credits his passion for economic theory and game theory for his academic focus.

"I was more familiar with that. And I just fell in love with economic theory and game theory. I read David Kreps microeconomics book my first year at Oxford, and it just captured my imagination." (04:00)

2. The University of Chicago Recruitment Saga (05:54 - 09:48)

Levitt transitions to an anecdote about Levin’s job market phase, revealing an aggressive recruitment effort by the University of Chicago. Despite compelling offers, Levin ultimately chose Stanford, a decision that Levitt humorously attributes to Levin’s exceptional interpersonal skills.

Levin recounts the intense and intellectually rigorous environment at the University of Chicago, which made his decision particularly challenging. He praises the university’s atmosphere but expresses no regrets about his choice to remain at Stanford.

Levitt shares a playful behind-the-scenes look at how he initially enticed Levin with a unique offer that included a substantial bonus for leaving if Levin chose to join Chicago. This unconventional tactic exemplifies the competitive nature of top-tier academic institutions.

3. Bridging Economic Theory and Practical Applications (09:48 - 24:56)

John Levitt commends Levin’s rare ability to excel in both economic theory and empirical research—a combination seldom seen due to the differing skills and status within the economics hierarchy.

Levin traces his transition from theoretical economics to empirical work, driven by his interest in testing game theory models with real-world data. He discusses the pivotal moment when the data revolution in economics opened new avenues for research, enabling him to explore diverse areas like internet marketplaces and health insurance.

"When you open them up and you could look at them in an Excel spreadsheet and look at, observation by observation... We had all of a sudden, tens of millions or hundreds of millions of data points on consumer behavior." (12:00)

Levitt highlights Levin’s influential paper, "Winning Play in Spectrum Auctions," as one of his personal favorites and a testament to the practical impact of economic theories. Levin narrates the story behind the paper, detailing how he and his colleagues devised a strategy that saved Comcast approximately a billion dollars in a radio spectrum auction—a real-world application showcasing the tangible value of academic economics.

"We have a budget in this auction, and every round we're bidding for as many things as we can, right up to our budget... We think we can assemble this collection of little licenses for this budget." (20:00)

Levitt expresses admiration for how Levin’s work transformed theoretical concepts into actionable strategies that significantly benefited a major telecommunications company.

4. Leadership Philosophy as Stanford’s President (26:31 - 35:07)

Transitioning to Levin’s role as Stanford’s president, the conversation explores the multifaceted responsibilities and the intrinsic rewards of leading a prestigious academic institution.

Levin shares his deep appreciation for Stanford’s unique blend of top-tier scholars and bright students from diverse disciplines. He emphasizes the joy derived from fostering an environment where faculty and students can pursue extraordinary achievements and engage in meaningful collaboration.

"Your job is first and foremost to gather those people and then ensure that they have the freedom and the resources to accomplish really extraordinary things." (28:00)

Levitt probes into the challenges of balancing research and education, a core tension in elite universities. Levin acknowledges this dichotomy, explaining how Stanford merges the German research university model with the British liberal arts education system, creating a dynamic yet sometimes conflicting environment.

5. Addressing Social Mobility and Educational Equity (35:07 - 39:02)

A critical segment of the discussion focuses on social mobility and the disproportionate representation of high-income families in elite institutions. Referencing a seminal paper by Raj Chetty and colleagues, Levitt presents sobering statistics about the low enrollment of students from the bottom socioeconomic quintiles at universities like Stanford.

Levin responds by lauding Chetty’s research and highlighting Stanford’s efforts to increase first-generation college students, now comprising 20% of the freshman class—a significant rise over the past decade. He underscores the systemic issues in K-12 education that perpetuate educational inequities, advocating for strengthened support and funding for large public universities that play a crucial role in societal mobility due to their broader student bases.

"If you look at our current freshman class, 20% are the first in their families to go to college." (38:00)

Levitt concurs, touching upon the inadequacies in public high school systems that hinder low-SES students from preparing effectively for elite institutions.

6. Upholding Free Speech on Campus (40:59 - 46:14)

The conversation shifts to the contentious issue of free speech on college campuses, particularly in the context of recent events surrounding Israel and Palestine.

Levin articulates Stanford's dual commitment to robust free speech and maintaining a respectful, disruptive-free academic environment. He emphasizes the importance of protecting diverse viewpoints to foster intellectual growth and argues that clear rules and a positive campus culture can harmonize free expression with community respect.

"Students have really respected that. There's been a lot of dialogue and debate and discussion, even on hard issues." (42:30)

Levitt raises concerns about the slippery slope of defining hate speech, noting the complexities and potential for controversy. Levin responds by adhering to constitutional protections while advocating for a culture that encourages curiosity and respectful discourse, transcending mere rule enforcement.

"We use the Constitution of the United States and the First Amendment as our formal rules. The Constitution protects a lot of speech that is not necessarily what you'd want to have on a campus." (43:09)

7. The Human Element in Academic Leadership (45:09 - 48:58)

Levitt praises Levin’s thoughtful and humanistic approach to leadership, contrasting it with the often purely analytical mindset of economists. Levin attributes his leadership style to his upbringing, particularly learning from his father’s empathetic and respectful administration.

He acknowledges the inevitability of making unpopular decisions but stresses the importance of maintaining respect and openness. Levin believes that effective leadership balances firm decision-making with genuine respect for diverse perspectives.

"You cannot make everyone happy. Every possible decision, you are going to have people who agree with you, who disagree with you, who vehemently disagree with you." (48:00)

8. Listener Question: The Economics of a Pokémon Card Decision (51:47 - 58:00)

In an engaging segment, Levitt and Levin tackle a listener’s dilemma involving the potential opening of a rare Pokémon card pack. The card could potentially be worth a substantial amount, but opening it introduces the risk of lowering its overall value.

Levin applies economic principles to advise against opening the pack, citing sunk cost fallacy and risk aversion. He explains that the initial purchase price is irrelevant to the current decision and emphasizes maximizing expected value by minimizing uncertainty.

"It comes down to two things. The first is risk tolerance... argues against opening the pack..." (55:02)

However, he also acknowledges the intrinsic human enjoyment Tyler (the listener) might derive from the excitement of opening the pack, suggesting a balance between economic rationality and personal fulfillment.

9. Closing Remarks and Future Episodes (58:20 - End)

The episode concludes with promotional segments and a teaser for the next episode featuring Hank Green. Both Levitt and Levin express gratitude to the listeners, wrapping up the conversation on a positive note.

Key Takeaways

• Interdisciplinary Excellence: Jonathan Levin exemplifies the synergy between economic theory and empirical research, demonstrating the profound real-world impact that rigorous academic work can achieve.

• Leadership with Empathy: Levin’s approach as Stanford’s president is rooted in respect, active listening, and fostering an environment where both faculty and students can thrive academically and personally.

• Commitment to Social Mobility: Acknowledging systemic educational inequities, Levin emphasizes the role of elite and public universities in enhancing social mobility, advocating for policies that support first-generation and low-SES students.

• Navigating Free Speech: Maintaining a balance between protecting free expression and ensuring a respectful, inclusive academic environment is a delicate yet essential aspect of modern university leadership.

• Economic Reasoning in Everyday Decisions: The listener question segment illustrates how fundamental economic principles can guide personal decision-making, albeit with consideration for human emotions and preferences.

This episode offers a profound exploration of the intersection between high-level academic leadership and practical economic application, providing listeners with both intellectual stimulation and practical insights into the functioning of elite educational institutions.