Harvard University economist Alvin Roth’s groundbreaking research on decision-making and choices earned him a number of honors, including the Nobel Prize, which he was awarded on Monday.
But the prize also shines the spotlight on a man who made his own unconventional life choices, from dropping out of high school as a teenager to leaving Harvard at the pinnacle of his academic career to take a job at Stanford University, which he officially begins in January.
Roth, 60, was awarded the Nobel Economics Prize with Lloyd Shapley, 89, a professor emeritus at the University of California at Los Angeles, because their work has helped revolutionize the performance of many markets, leading to more efficient and successful matches between doctors and hospitals, students and schools, and organs and transplant recipients, the Royal Swedish Academy of Sciences said.
Shapley made early theoretical inroads in the 1950s and ’60s, using game theory, the study of strategic decision-making, to examine how markets match buyers and sellers. He developed a mathematical formula to show how 10 men and 10 women could be coupled in such a way that no two people would prefer each other over their current partners.
The algorithm was developed further by Roth to better understand bargaining behavior in different markets. Roth used it in the 1990s to create a new way to match US student doctors to hospitals. His method was adopted by the National Resident Matching Program, which helps match medical residents with hospitals.
‘Most economists can’t point to a whole bunch of people who are alive today because of their work, but Al can.’
Roth also used his mathematical models to help redesign the application processes of New York and Boston public schools, ensuring that more students ended up in schools among their top choices. He applied similar formulas to better match kidney donors to patients needing a transplant.
“Most economists can’t point to a whole bunch of people who are alive today because of their work, but Al can,” said Brian J. Hall, a professor and colleague at Harvard Business School.
Before Roth’s system was applied to live kidney donations, a person in need of a kidney not only had to find a willing donor, but one with the right blood type and other medical criteria. In many cases, patients found donors, but they were not a medical match.
Roth devised a model that, in the simplest case, enables patients to trade nonmatching donor kidneys for those that match, connecting people who need kidneys with the right donors.
“Al reinvented the way living organs are donated,” said Ruthanne Hanto, program manager for the UNOS National Kidney Paired Donation Program in Richmond. “His work enabled thousands of living kidney paired donation transplants that otherwise would not have occurred.”
Roth dropped out of high school in Queens in New York City, but then started taking weekend classes at Columbia University. He became a full-time student, graduating with an engineering degree in 1971, and then earned a master’s and doctorate from Stanford. After teaching at the University of Illinois and University of Pittsburgh, he joined the Harvard faculty in 1998.
Earlier this year, with their two children grown, Roth and his wife, Emilie, were itching for a change. Roth accepted an offer from Stanford, where he began teaching as a visiting professor last month. He formally joins the Stanford faculty in January.
“It was hard to explain it to our colleagues at Harvard,” Roth said, a few hours after taking a call from the Nobel committee in Sweden. “But we’re still young and we thought we’d have an adventure all over again.”
Roth’s work focuses on a field known as market design, which identifies where markets fail and seeks ways to fix them. In classic economics, markets match buyers and sellers through prices; they get together when the price is right.
But markets in the real world are more complex and prone to failures. And some — such as kidneys and public school assignments — don’t revolve around prices.
“His work with real markets shows a realization that there are lots of markets out there that have to be designed,” said Hall. “These markets don’t happen on their own, and if they do, they happen badly.”
In Boston, the school assignment system was operating badly. Parents competing for popular schools were often penalized if they did not get their first choice; if their second and third choices were also popular, those slots would be filled by students choosing them first.
So parents tried to game the system by selecting less popular schools first, hoping to land a spot that was not totally unacceptable, but denying even more families their first choices. Roth used matching theory to devise a system that provides incentives for parents and students to select their preferred schools.
Students are tentatively accepted at their first choices, but final assignments are deferred until students who may have higher claims on admittance are evaluated.
Jerry Burrell, director of enrollment planning and support for the Boston public schools, said Roth’s assignment model, implemented in the 2006-2007 school year, was “a leap forward” for parents and students.
“Now, they can just pick the school that they really want, without worrying that they will be penalized,” he said.
Colleagues describe Roth as a collegial and generous, an inspiring teacher and mentor, frequently surrounded by students and young faculty.
Parag Pathak, a professor of economics at the Massachusetts Institute of Technology and one of Roth’s students at Harvard, called Roth “one of the most likeable guys in the profession.” In a discipline often pursued in solitary thought, Roth had the habit of gathering students each morning at 11 a.m. for coffee, sharing ideas while sipping.
“I can think of a bunch of research papers that came out because of 11 o’clock coffee,” Pathak said. “Al has a certain optimism about the ability of economic science and economic theory to do something good, and I think that’s infectious.”