by Janet Haney
Alvin Roth can be described as any of the following: karate enthusiast, high school dropout, and most recently, Nobel Prize winner. An eclectic blend of characteristics but all true of Roth, who in October was awarded the prestigious Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, an honor he shares with Lloyd S. Shapley of University of California, Los Angeles. The two scholars were recognized for their contributions to the theory of stable allocations and the practice of market design.
A native New Yorker, Roth attended public high school in Queens, and while a student, he was enrolled in the Columbia Science Honors Program.
He never received his high school diploma though and admits he was “sort of an unhappy high school student.” But this bump in the road is all ancient history and did not deter Roth from earning his bachelor’s degree in operations research at Columbia Engineering, and his master’s and PhD in 1973 and 1974, respectively, from Stanford University. “I had an abrupt break with my high school,” says Roth. “People at Columbia knew me and they wrote me letters of recommendation. So that was a college I could get into without credentials, and I was very happy to go there. Talk about life-changing experiences. Columbia threw me a lifeline.”
In typical Nobel Prize fashion, Roth, the Craig and Susan McCaw Professor of Economics at Stanford, got the news via a 3:30 a.m. phone call. “By 4:30 a.m., a team of Stanford public relations staff was in our dining room,” he recalls with a laugh. “I had 1,500 email messages that day and a lot of them were from news organizations. I would talk to someone for seven minutes and then do it all over again.”
So needless to say, when asked what it feels like to be a Nobel Prize winner, Roth simply states, “Hectic but good.”
Roth, who is also the Gund Professor Emeritus of Economics and Business Administration at Harvard, remains consistently humble and always mentions “we” when referring to his vast accomplishments, rarely using “I.”
While Roth and Shapley worked independently, the combination of Shapley’s basic theory—the Gale-Shapley algorithm—and as cited by the Royal Swedish Academy, “Roth’s empirical investigations, experiments, and practical design has generated a flourishing field of research and improved the performance of many markets.” The men were recognized for their outstanding example of economic engineering.
Roth’s market examinations have led to the redesign of aligning kidney donors to patients, matching medical residents with hospitals, pairing students with public schools in large urban settings, and more.
“One way to tell my story is that I started out as an operations researcher who studied game theory. I stood my ground while the disciplinary boundaries in operations research shifted around me,” he says. “I’m still doing what I set out to do, but it turns out that that makes me an economist these days.”
To date, 82 Columbians—including alumni, faculty, adjunct faculty, researchers, and administrators—have won a Nobel Prize at some point in their careers. Within that number are two Columbia Engineering graduates who have won the Nobel Prize in Economics: Robert C. Merton BS’66 in 1997 and now Roth in 2012, both from programs housed in the Industrial Engineering and Operations Research Department.
Roth made his way back to Stanford just last year after having taught at Harvard for 14 years. At Harvard, he created two new courses—Market Design and Experimental Economics—that he plans to teach to Stanford students.
“When I was a student at Columbia … I eventually got interested in things that involve a lot of people, and that led me to market design,” Roth says. “The same thing that was exciting as an undergraduate is still exciting.”
Q Please explain the research that was recognized by the Nobel Committee.
A There are two parts to that. One is the study of matching, which they call the study of stable allocations. The other is market design. My colleagues and I study matching markets, which are markets where price doesn’t do all the work the way it does in commodity markets. So there are markets in which people on both sides of the market care who they are matched to. These are some of the most important markets in our lives; they determine where you go to school and college, what job you get, maybe even who you marry. In matching markets, you can’t just choose what you want; you also have to be chosen.
As we start to understand how these markets work a little bit better, we can help fix them when they’re broken. We’ve helped to design school choice procedures for New York high schools, Boston public schools, and, lately, a number of other cities. We’ve helped design labor market clearinghouses for a variety of health care professions. We’ve helped design kidney exchange protocols. A lot of what we do is make small changes that make existing market places run smoother.
Whenever we successfully make a market design solution that gets implemented, there are always a lot of people on the ground associated with that. When we design a school choice system, it means that in the city where it succeeded there are some dedicated educators who got excited about it and carried it forward. When we design a medical marketplace, it means that some doctors got excited about it. When we design a kidney exchange, it means that there are kidney surgeons who are pushing it forward. We help them. Market design is a team sport.
Q When did you know that Shapley’s basic theory combined with your research would help to improve some markets?
A When I first started studying the markets for new doctors, I found that the way they had been organized in the 1950s was closely related to the work the late mathematician and economist David Gale and Shapley did in the 1960s. When I noticed that, I started to understand how the work of Lloyd and his colleagues would help me understand how markets worked. The specific work they did on market clearing algorithms has been of big practical importance in designing clearinghouses, and it also serves as a guide to many of the things that even decentralized marketplaces have to accomplish.
Q How do you come up with your research ideas?
A There are times when we reach out and there are times when we’re reached out to. New York City called me. The medical marketplace called me. There are other markets where we’ve approached them. We wrote about the kidney exchange and sent papers to surgeons, and one of them followed up. That was Dr. Frank Delmonico of Harvard Medical School, who was one of my guests in Stockholm. We helped him form the New England program for kidney exchange once we had gotten his interest. I’m still doing lots of work on kidney exchange—that’s not done. As things get established, people develop new strategies; the marketplace has to react a little bit. That’s an ongoing process of design and redesign. Markets have rules. That’s part of what market design is, setting the rules of the marketplace.
Q What are some of your favorite Columbia memories?
A My main activity at Columbia wasn’t academic. My most vivid memories of Columbia involve being a karate player. It wasn’t a varsity sport, it was a club, but we had a team and we played other clubs. I was involved in a Japanese style of karate called Shotokan karate. I was only at Columbia for three years, so it was something I did all three years. I also have fond memories of many of my professors, including Cyrus Derman, who convinced me to go to graduate school.
Q After Stanford, you set off on an academic career. Where have you taught?
A I taught at the University of Illinois (1974–1982), the University of Pittsburgh (1982–1998), and Harvard (1998–2012). Illinois was my first job, and I started the work on kidney matching there, and I met my wife there. Pittsburgh was a great job, and we built a big center of experimental economics there. I did my first design work there. I redesigned the medical match while I was at Pittsburgh. Our children were born there. Harvard was great, and that helped make these things into recognizable fields. Here at Stanford, I’m going to be colleagues of some of my Harvard students. That’s a special thing.
Q Is anyone in the family following in your footsteps?
A Our son Aaron graduated from Columbia College with a joint major in computer science and mathematics in 2002. He’s now a professor of computer science at the University of Pennsylvania. Our son Ben is a first-year PhD student in economics at MIT, thinking about development economics. My wife Emilie has the exciting job in the family. She’s a human factors engineer. She thinks about the man—the person—in the system. She and I are both concerned with complicated systems that involve people, but she’s concerned with them dealing with machines. I’m concerned with them dealing with markets.
Q Who was with you in Stockholm for the Nobel Prize ceremony?
A We were allowed 14 guests. Our guests were our children, some relatives and friends, and a bunch of colleagues on market design projects—other economists, operations researchers, practitioners, two kidney surgeons, an education professional, and a job market matchmaker.
Q How will you use your shared $1.2 million award money?
A I haven’t really thought about that.
Q Where does a Nobel Prize winner go from here?
A It’s a great honor to be chosen, and it’s a great honor to share the prize with Lloyd. He was a giant of game theory when I was a graduate student. Going forward, I’m hoping to write a book on market design addressed to a broad audience. It’s going to be called “Who Gets What?” I’m also still deeply involved in work on school choice and kidney exchange, and other aspects of transplantation, and I’m looking forward to seeing what new projects materialize.