Nobel Laureate Speaks at 2016 Trinity Economic Forum
Posted on: 19 February 2016
At the recent Trinity Economic Forum (TEF), the 2002 Nobel Laureate in Economics, Vernon Smith, spoke to a packed theatre of students, academics, and policymakers, from Ireland and abroad.
Professor Smith’s address, co-hosted by the Student Economic Review on February 6th, had the distinction of making this year the first time a Nobel Prize winner partook in the TEF.
Born in Kansas before the Great Depression, Professor Smith, who is currently at Chapman University in California, has enjoyed a long tenure at the pinnacle of his field. Celebrated for pioneering the establishment of laboratory experiments as a tool in empirical economic analysis, it was about this area he chose to speak, though his expertise ranges to include capital theory, finance, and natural resource economics.
Professor Smith introduced his talk by placing experimental economics in context against the traditional experimental sciences. He explained how in physics error can be controlled through precision in experimental design, whereas due to the heterogeneity of human beings, error in his own field must be controlled through repetition. With the challenging subtleties of experimental economics made apparent to the audience, Professor Smith began to speak about disproving false economic beliefs.
The first of the beliefs in question was that a market would be theoretically perfect only when all traders have perfect knowledge of the conditions of supply and demand, the second was that bubbles would not form in markets for tradables if prices were known and transparent.
Professor Smith surprised his audience by admitting that he initially experimented on both topics in order to confirm the hypotheses. That his work revealed that a small number of people with only private information could find equilibrium, and that even with perfect information traders in a market could create a bubble, fascinated the academic community.
Professor Smith explained that these results had far-reaching implications for the understanding of the rules that govern the markets and the interaction of people within them. He reflected that though these experiments had given him answers to questions he wouldn’t have thought to ask, what he found most remarkable was how long the false beliefs persisted, and how hard it was to convince people that the evidence to the contrary mattered.
Mentioning some of the further research his work and the work of experimental economists in general had prompted, in topics as diverse as using house prices to predict recessions, and constructing markets to trade high voltage electricity, Professor Smith ended his speech on a note of excitement about what the future of his field would bring.
Trinity Economic Forum
The Trinity Economic Forum is Ireland’s first student-led economic forum. Its goal is to bring together the brightest and most ambitious third-level students, from across all Irish academic institutions, to facilitate engagement and discourse on economic issues. It aims to encourage student participation in the future direction of Irish economic policy.
The 2016 Forum, which took place on February 5th and 6th, attracted over 300 students from all disciplines of Irish universities. It combined individual talks and panels with collaborative workshops which addressed topics such as Brexit, China’s global dominance and The Black Economy amongst others.
Student Economic Review
Trinity’s Student Economic Review (SER) is an undergraduate journal, published annually by students, which prides itself in the encouragement and promotion of undergraduate research within the field of economics. The SER Committee is chosen from the third-year economics undergraduates by the Economics Department. These students are responsible for all matters relevant to the Review: editing, production, finance, sponsorship, web-design and event organisation. Typically the Committee also hold a series of debates and workshops throughout the year. Professor of Economics, John O’Hagan has presided over the work of the SER since its inception thirty years ago.