Avinash Dixit | India’s future Nobel winner in economics?

Avinash Dixit | India’s future Nobel winner in economics?
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First Published: Thu, Jun 28 2007. 03 09 PM IST
Updated: Thu, Jun 28 2007. 03 09 PM IST
Avinash Kamalakar Dixit likes to play a game or two—even as he teaches game theory to his students at Princeton University.
There is an old Princeton tradition that Dixit uses to bring to life what can sometimes be an esoteric and math-heavy subject. Students at that university thank a teacher with a polite and brief round of applause when he finishes a course with them. From that comes the “applause auction”, which is now part of the folklore of economics. Dixit pays anything between $20 and $50 to the student who claps last. So there is an incentive to keep the applause going. Most students drop out of the game after 15-20 minutes, says Dixit. The record is four and a half hours. Often, there is more than one student in the running for the prize, sometimes as many as five or six.
These students learn to compete and collaborate among themselves, and how people and organizations do so is the central quest of game theory.
But, Dixit’s contribution to game theory—the science of strategy—goes far beyond this strikingly original way of teaching it.
He is widely recognized as one of its great theoreticians, on par with the likes of the polymath mathematician John von Neumann and the troubled genius John Nash, whose battles with his inner demons were portrayed by Russell Crowe on the screen in A Beautiful Mind (Dixit believes that “a lot of game theory is wonderfully illustrated in films”).
Besides game theory, Dixit has made seminal contributions to other branches of economics—international trade, organizational theory, growth and development, and what is called new institutional economics.
“My research agenda is opportunistic. I work in a rather unsystematic manner and pursue various issues that I find interesting at that point of time,” says Dixit, who was in town to give the second P.R. Brahmananda Memorial Lecture in Mumbai, hosted by the Reserve Bank of India.
Dixit is one of a trio of Indians who stand on the highest peak of academic economics.
One of them, Amartya Sen, has already won the Nobel Prize. And the names of the other two—Jagdish Bhagwati and Dixit—are inevitably tossed in the air when the new Nobel season starts every year.
Yet, in 2003, Dixit and Bhagwati wrote a letter to The Economist in response to another letter there that said that either of them was more deserving of the prize than Paul Krugman. They publicly disagreed with that claim, an indication of their modesty and intellectual honesty. Even as it is notoriously unpredictible, many believe that Dixit will win the Nobel Prize some day.
Dixit says he came to economics via mathematics. “I enjoyed math, but more of the applied variety. It was used a lot in physics, which I studied. But a couple of people pointed me towards economics.”
Born in Mumbai in 1944, Dixit studied at St. Xavier’s College before heading to Cambridge en route to Massachusetts Institute of Technology (MIT), where he took up economics and where he was taught by two of the most accomplished post-war economists—Paul Samuelson and Robert Solow.
He made his mark there, in more ways than one. Stanley Fischer, former deputy managing director of the International Monetary Fund and now the governor of Bank of Israel, once told an interviewer that Dixit used to finish the daily crossword in The London Times in 10 seconds.
“I did develop this habit to do the crossword during lunch or certain seminars. But the time needed was closer to 15 minutes,” he says, with a soft laugh.
After teaching stints at the University of California, Berkeley and Balliol College, Oxford, and the University of Warwick, Dixit joined Princeton in 1981.
One of the issues that Dixit has been increasingly working on in recent years is institutional economics, as part of a growing band of economists who believe that there is more to development than dry and technical issues such as investments and productivity.
Institutions matter, which means that concerns like secure property rights and respect for commercial contracts should be at the centre stage of the development debate, rather than at the periphery.
Does he think that Indian economists have ignored institutional factors?
“India is not special,” says Dixit. “The importance of getting institutions right has been recognized in the world only over the past 10 years.”
So does India have the institutions to help rapid development? “I don’t know enough. I am trying to find out by talking to people,” says Dixit, modestly.
He does offer an example. When people realize that they cannot depend on the courts for justice when someone reneges on a contract, they depend on organized crime to help them out. “People tell me this happens in India as well,” says Dixit.
In April 2005, the otherwise non-controversial economist lobbed a hand grenade down the corridors of the World Bank. In a speech, Dixit pointed out that the research in economics is ambiguous and confusing, with high-quality economists disagreeing with each other even on the most basic issues. “Faced with all these contradictions and shifts, I can identify only one consistent policy prescription. It is the quality Napoleon valued most in his generals, namely luck,” he told his audience. “It was written deliberately to provoke people in the World Bank to be more skeptical, not to take research at face value and be sensitive to the context of place and time,” says Dixit.
In short, there is no magic recipe for development.
Sixty in Sixty is a special series that we plan to run through 2007, the 60th anniversary of India’s independence. We will introduce you to sixty Indians—both here and abroad—who are not rich or famous. These are people who are making quiet, but important, contributions without seeking headlines, to help make India and, in some cases, the world a better place. We also welcome your suggestions on people whom you think should be profiled in this series. Please send your suggestions by email to interview@livemint.com
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First Published: Thu, Jun 28 2007. 03 09 PM IST
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