Professor Hugo Sonnenschein: the Barcelona GSE interview

His career boasts positions with some of the world’s finest universities. He’s been a teacher of leading economists, including Barcelona GSE’s Salvador Barbera and Andreu Mas-Colell.  For work on the theories of general equilibrium and demand, he shared the 2009 BBVA Foundation Frontiers of Knowledge Award for Economics, Finance and Management with Mas-Colell. And, of course, he’s the president of the Barcelona GSE Scientific Council.

Hugo Sonnenschein is academic and economic royalty.

With a career spanning six decades, Professor Sonnenschein has one of the most distinguished résumés in academia. Currently president emeritus at the University of Chicago, he served as president from 1993 to 2000. He’s been both provost and professor of economics at Princeton University, dean of the School of Arts and Sciences at the University of Pennsylvania, and holds honorary doctoral degrees from universities throughout the world, including the Universitat Autonoma de Barcelona.

Against this background of academic distinction, Sonnenschein has much to say about the role of alumni at our schools and universities. He is also eager to reflect on the significance of our universities to society, and on what he views as most critical for excellence.

“Alumni play a central role in defining the future of their university,” he says from his office at the University of Chicago. “From their time spent as students, they know the place in an intimate way and many will testify that their school years were transformative. They care about the character and standing of the school.  They are invested in it.  They may hope that other members of their family will someday attend ‘their’ school. They benefit from the achievements of the faculty and its reputation.  Friendships that begin in school sometimes continue into later life and, as the alumni network grows, professional relationships are formed thanks to the shared experience, regardless of the year of graduation.”

During his presidency of the University of Chicago, Sonnenschein substantially raised the resource base of the institution and reinforced the recruitment of outstanding students from throughout the world. Key to these successes, he says, was the involvement of alumni.  And, as president of the Barcelona GSE Scientific Council, he has recognized the ability of our own alumni to lead us into future success.

“In the tenth anniversary year, it’s a young alumni body, but an excellent and truly global one,” he says. “I’ve been to graduation ceremonies and it’s a very impressive group of people, all of whom seem to be very positive about their experience. Alumni are securing outstanding jobs in important places, and over time their ability to give back will grow. I fully expect they will play an increasingly important role in the future of the school.”

As honorary president of the Scientific Council since the school’s inception – which he describes as a great honor – Sonnenschein is more qualified than most to comment on its development. In this regard, he acknowledges the leadership and vision of the school’s founder, Andreu Mas-Colell.

“Bringing together two very strong faculties at leading universities in addition to two outstanding research centers was really quite brilliant,” he says. “The quality of the combined faculties immediately gave the school a claim to international standing and top ranking as a European center for economics.

“The high regard for Andreu Mas-Colell in the Catalan community and throughout Europe deserves particular recognition. He is a trusted leader in both the academic and public worlds, and he has been singular in generating support for the school. Eduard Vallory [co-founder] also deserves great credit. He was pivotal in getting the correct message to the community of potential students. And thus the school was off to an excellent start.”

And, Sonnenschein believes, Barcelona GSE has taken full advantage of its auspicious beginnings.

“Faculty have come together to initiate a collection of master’s programs which, in a very short period of time, have become well known throughout the world,” he says. “These programs build on the international standing of the faculty and are responsive to the demand of perspective students and the needs of society.  They draw students from more than fifty countries, with a third of the intake from outside of Europe. Placements have been outstanding, both for those who enter industry and for the smaller number who choose to study further.

“The director of the School, Teresa Garcia-Milà, and many faculty have played leadership roles in this initiative.  And on the research side, they have been equally successful, with activities enhanced through the funding of professorships, lecture series, the award of prizes, and summer forums. Congratulations for this collective effort! As an important marker of their success, I note that the school recently received Severo Ochoa distinction for the second time, which was accompanied by four million euros to support research and other programs.  This is a source of pride for alumni who are substantially represented not just in Barcelona, but also now in London, Madrid, Frankfurt, New York and Latin America.”

Although Sonnenschein is forthright in his praise for the school, he is keen to stress that it is very much in its infancy and that a significant amount of hard work will be required for it to realize its ambitions.

“The ability to hold onto an outstanding faculty and to attract the best young talent will continue to be a challenge,” he says. “Greatness requires substantial resources, but resources are not enough. Great universities must have a ‘following’ not only within the student and alumni community, but locally, nationally and internationally.

“They are the pride of regions and nations; they influence their communities and the world; they change accepted thought and generate ideas that start companies and influence policy. The public attaches itself to them because they have a desire to be associated with their excellence, or to use their ideas.

Great universities have a global reach and a global following, and current students and alumni are a critical part of this.”

And it’s the faculty, says Sonnenschein, which is the lynchpin that brings all the essential elements together.

“At great universities, ideas flourish.  The faculty is invested in and responsible for research and teaching, and thus they receive very substantial deference in academic decision making, such as hiring, promotion and program formulation.  Breakthrough ideas and excellence are celebrated.  At great universities, faculty are truly in the lead.  They are comfortable with the allocation of resources and the manner in which administrators exert their authority, which depends on the support of the faculty.

“Great universities take risks and invest in new fields. They are custodians of knowledge and history, but they prune, and are constantly at work to refine and to improve on what is known. In a short time, the Barcelona GSE has come a long way; it has an outstanding faculty and outstanding leadership.  It has changed the landscape of economic research and teaching in Barcelona and it has the beginning of a global following.”

An added benefit for Barcelona GSE in this regard is an impeccable pedigree in the form of its Board of Trustees and Scientific Council.

“The School has benefited from the guidance and support of its Board of Trustees, chaired by Ramon Marimon,” says Sonnenschein. “The generous financial contributions of the Board and the institutions that they represent have generated a modest but growing endowment.  It is a start, but more is needed for the support of faculty salaries, scholarships, research, and program enhancements. Excellence is expensive, and all of the excellent universities have large endowments.

“The Scientific Council, which is now 32 strong with 12 Nobel Laureates, is grateful for having been asked to advise and attach its name to the School and help to steer it in this direction. And, of course, our members have been delighted to visit Barcelona on a regular basis!”

Sonnenschein’s expert opinion of the characteristics of the greatest universities isn’t viewed solely from his much-deserved position at the highest levels of academia. In 2001, he returned to the classroom after 20 years in leadership positions, so he is well placed to observe the landscape at grass-roots level.

“I have been struck by the remarkable pace of change at our universities,” he says. “Biology has been redefined by a mix of technical achievements in x-ray diffraction technology, which led to basic changes in our understanding of the structure of life. We now have the ability to edit our genes in substantial ways, and how we will use this ability raises profound issues.  Engineering at the molecular level has been the basis for new academic departments. Computer science and artificial intelligence are exciting new fields.

“Again, these lead to new academic departments. These areas are attracting some of our best and brightest.  All of this comes with profound application. The big changes are not so much in the way we work: we read, we think, we look at data, we collaborate. The big leaps forward involve conceptual breakthroughs and they go hand in hand with technical advances that let us see and express these breakthroughs.”

With regard to advances in economic knowledge, Sonnenschein believes economists may not fully appreciate the fundamental nature of recent advances in their own discipline.

“Not so very long ago – let me refer to this as the pre Mas-Colell, Whinston and Green era – the standard PhD course in economics would start with a run through Hicks-Samuelson style consumer theory, followed by a theory of production that minimized any idea of what firms really do. This was followed by market equilibrium and various notions of multimarket equilibrium. Uncertainty was not often central to the analysis, and the forays into imperfect competition had not advanced appreciably over what one learns in Cournot. I have exaggerated a bit, but not so much.

“The better courses would include some social choice a la Arrow, expected utility theory, an introduction to game theory through Nash, and some Arrow-Debreu general equilibrium… all good stuff.  When I returned to the classroom, asymmetric information and strategic considerations in a dynamic context had become central. I had much to learn!”

So who does one of the world’s leading economic academics turn to when he finds his own knowledge lacking?

“I went back to my former students: Roberts, Barbera, McLennan, Abreu, Pearce, Reny, Mailath, Krishna, Jackson, Cho, Zhou… it is a much longer list and I leave out too many good ones! My former students were a very valuable source in helping me to learn what was most important that I had missed!  I was very proud when I was teaching that I was teaching a very up-to-date course, and when I returned 20 years later this was not so up-to-date. I had to learn, I had to read papers and go to lectures; humiliating and exhilarating!

“During my absence, contract theory, mechanism design, auction theory, matching markets, rational expectations and dynamic choice theory had all revolutionized our thinking about the most basic economic processes.  Advances in game theory have provided some complementary technical infrastructure and at times led the way.  Also, I am impressed by the practical applications of these ideas.  It is a proof of the extent to which breakthroughs in thinking have changed the face of what we do. I had to become a student again in a very fundamental way.”

With such rapid pace in the advances of economics, what does Sonnenschein think the future holds?

“We continue with the eternal struggle over the appropriate role for government policy,” he says. “One looks toward a stronger integration of political theory and economic theory. There is great concern in many countries regarding matters of income inequality. How one manages the health of our populations and how one most efficiently develops our human capital are of central concern.  Energy and the environment properly occupy our attention.  How will we address these important issues in a new world?

“Many of us believe that changes in our ability to collect meaningful microeconomic data and to process and synthesize this data will play a defining role. I do not know precisely in what ways; however, I am struck by how much information my favorite supermarket has about my shopping patterns, via the plastic that I pay with, and I am sure that they use it! How are my shopping patterns changing? How are they influenced by what my neighbors consume? How responsive am I to ‘sales’ and to information that I receive in the mail? And this is the tip of an iceberg.

“There is an explosion in the way that information is shared, knowingly or not.  The manner in which agents are connected and the information they share is likely as determinate of economic and social outcomes as are tastes and technology.  Advances in mechanism design and computer science, together with the availability of data will influence the functioning of markets and the possibilities of democracy.

“What are the policy implications for this new world?  Will we use these innovations to create a better world? What are the welfare economics? What is at the heart of these ideas that will influence our approach to healthcare, education, and the distribution of wealth and political power?  What is their importance for information economics? Incidentally, Matt Jackson, a member of the BGSE Scientific Committee, is doing much to advance the systematic development of a network economics.”

Sonnenschein is keen to stress that he believes this is a most important time for economics and economists.

“It’s changed, but our techniques and capacities have been revolutionized,” he says. “One only has to look at the next generation of great scholars and economists in our universities and schools. It is my expectation that the Barcelona GSE will play a leadership role.

“Students are our future. They come to our universities with a variety of backgrounds and goals.  Critical thought and the advancement of knowledge is at the heart of what we offer. We believe that this can confer great benefit, both to students and to the larger society.  Our work is expensive and demanding. It is at times quite imperfect, and we can claim too much. However, in the words of one of my colleagues, it remains our best hope for a transformed existence.

“And, for economic study, the Barcelona GSE is a major player in this effort.”

This article was written for the Barcelona Graduate School of Economics alumni magazine