Saturday, September 15, 2007

Raj Chetty

Caren Cheslerin a series about young American economists writes about Raj Chetty, son of old friend V.K.Chetty in The American:
"While his study on dividend taxes was influential, Chetty hopes to have his greatest impact in another area: social programs that help cushion risk. In a study entitled “Consumption Commitments and Risk Preferences,” published this year in The Quarterly Journal of Economics, Chetty and Berkeley colleague Adam Szeidl contest the popular belief among economists that unemployment insurance is too generous. George Akerlof, who also teaches at Berkeley and won the Nobel Prize for Economics in 2001, describes Chetty’s insight in the study as revolutionary. “He had a new way of looking at the problems of the unemployed,” Akerlof says. “Raj emphasized that they find it very difficult to meet their prior commitments. For example, they must pay their rent or their mortgage, and these commitments very much add to the difficulties of being unemployed. Economists were just not thinking of that until Raj came up with it. This is a very big innovation in the theory of unemployment.”

Chetty believes that if he can bring models and theories into better alignment with real-world evidence, he will help shape economic policy. It’s an ambition that runs in the family: his father, V. K. Chetty, was an economic adviser to Indian Prime Minister Indira Gandhi in the 1980s, helping her privatize the government-run cement industry as India’s economy began to make the transition from socialism to free-market capitalism."
Since none of children took to academics, I seem to be gloating in Veerappa'a son's success. V.K. Chetty himself was considered a brilliant economist after his thesis on 'Chetty money', but my impression is that he did not fulfil his potential. Probably got caught up in the caste prejudices that he encontered in his younger days. It seems that caste still takes an inordinate toll on the energies of Indians.

No comments: