Economics in Crisis: Two Tenure-Track Faculty Terminated

To most Yeshiva University students, the week before Passover is seen as an opportunity to plan for the upcoming holiday break while winding down from stressful midterms and essays. However, the vacation-minded student body were unaware of a crisis developing within the Economics Department. As a result of the severe budget cuts being implemented at YU, Professors William Hawkins and Michael Richter, two popular tenure-track faculty members, had their contracts terminated, sending shockwaves throughout all of Yeshiva College.

[caption id="attachment_4053" align="alignnone" width="250"] Economics Professor Michael Richter is currently on leave this semester at Columbia University.[/caption]

The decision to part ways with Hawkins and Richter is noteworthy for two reasons. Until now, the presumption among faculty and students alike was that the austerity measures adopted by the institution’s administration would only affect the jobs of contract faculty; Hawkins and Richter, on the other hand, were both tenure-track. In addition, while the economics department at Yeshiva has been radically improved in recent years by new leadership, this turn of events signals that the improvements that transformed its academic reputation are now at risk.

In 2009, James Kahn, the former Vice President of the Federal Reserve Bank of New York, was hired as the Henry and Bertha Kressel Professor of Economics and department’s chair. The Provost at the time, Dr. Morton Lowengrub, tasked Kahn with the responsibility of putting a much larger emphasis within the economics department on research; until that point, the department  had been concentrated almost exclusively on teaching. The first step taken with this goal in mind was hiring - with tenure on arrival - Alessandro Citanna, a prominent economist who had been teaching for over ten years at HEC Paris, one of the top business schools in the world.

It did not take long for Kahn and Citanna to make their mark on Yeshiva’s Economics Department. Under their leadership, economics has become the third largest major in Yeshiva College, with a more rigorous mathematical track to the major recently made available to students. In 2012, the department also launched a new graduate program offering a Masters in Quantitative Economics (MQE). In order to build up the department, a new faculty was needed, and seven new tenure-track professors were brought in, joining just the one tenured professor (Prof. Elias Grivoyannis) from before Kahn’s time.

[caption id="attachment_4052" align="alignnone" width="200"] Popular economics Professor William Hawkins will be leaving YU next year.[/caption]

Revamping the faculty with experienced, research-focused professors naturally came at a significant cost; the hired economics professors were indeed receiving higher salaries than many other YC faculty members. Prof. Citanna justified this disparity using economic terms: “The marginal revenue is larger than the marginal cost. To speak more precisely, when you look at the revenues we generate [through undergraduate and graduate students] and divide it by the cost of faculty, you realize the cost of faculty has gone up, but so has our revenues. We are profitable and the university has never disputed that we make money for them.”

As Citanna explained, the department set up a business model which increased its number of students, generated revenue through a graduate program, improved academic quality across the department, developed long-lasting online courses, and integrated the faculty on the Wilf and Beren campuses (one of only two departments to do so, the other being History). These actions allowed the Economics Department to remain profitable, even while hiring more expensive professors that undertook serious research and taught fewer courses throughout the year.

The fact that rising economics stars like Hawkins and Richter are even teaching at a smaller school like Yeshiva University is a testament to the department’s transformation over the last few years. Hawkins did his research with famed economist Daron Acemoglu (author of Why Nations Fail), the top-ranked graduate school for economics. Similarly, Richter’s recent paper on competitive equilibriums that he co-authored with Israeli economist Ariel Rubinstein will soon be published by the American Economic Review, arguably the most prestigious economics journal in the field.

One of the main causes for this sudden move was alluded to in a recent email from Provost Selma Botman to all faculty at Yeshiva. She wrote, “As you know, we have made a very difficult decision to eliminate two tenure-track lines in the Department of Economics.  Unique circumstances drove this decision. The Economics Department was built up with the expectation of funding support that is no longer forthcoming, thus contributing to the financial strain on the University.” Botman’s email went on to reassure the that the “department remains robust” and that “decisions that we have made allow us to maintain a healthy number of...offerings for our students.”

When asked by The Commentator to elaborate about the financial motivations for the decisions, Botman said, “These positions were originally funded through partial gift income, which is no longer forthcoming.” Thus, the loss of donor money has played a central role in the contract termination of Hawkins and Richter, forcing the economics department to make these painful cuts despite still being profitable overall. Dr. Kahn, the department chair, commented,“Of course more external funding is always better than less, but net revenues from our Masters program are considerably larger than the external funding the department had received.”

Hawkins and Richter are extremely popular teachers among students of the major, and reaction to their termination has not been well received. Economics major Racheli Ramras (SCW ‘15), took one class with Hawkins and two with Richter, who is also mentoring her Honors thesis on game theory and big data. Responding to the recent news, Ramras said, “It upsets me that a major which is so interesting, challenging, and important is being put [at] such a disadvantaged position with the removal of its best teachers. Making matters worse, economics was growing and becoming more popular among students, but now what will happen?”

Shai Berman (YC ‘16), a history/economics double major and current president of the Yeshiva College Student Association, is similarly worried about the future of the department. “Professors Hawkins and Richter are two of the best professors in the department [who] excel not only in their research and teaching, but also in spurring student interest in their discipline and their investment in student success.” Berman took Intermediate Macroeconomics with Hawkins last semester and personally attested to his extraordinary dedication: “He must have spent hours upon hours, often in the early morning, responding to the every question, no matter how small or simple, that students posted on our online forum.” This devotion to students of the major is something that Berman thinks will be sorely missed.

Both professors will sorely miss Yeshiva. “I'm disappointed to be leaving YU. I'll miss interacting with YU students, and I've enjoyed my time here,” said Hawkins. Richter echoed similar sentiments.

In fact, there are a significant number of concerns facing the department as a result of losing Hawkins and Richter. One issue to be addressed is whether the MQE can continue to exist with a smaller faculty, and if so, determining what changes are necessary for the program. Looming far larger though, is the challenge of replacing these professors. Citanna explained, “We are not going to be able to hire faculty in economics for the years to come, at least the next ten years. It was already difficult three years ago, even last year, to convince freshly minted PhD students to come here because we weren’t offering incredibly generous working conditions or salaries compared to top places, and the school had no reputation to start with. [Now,] it’s going to be impossible because those people will be very much afraid of coming here when they see what consideration tenure and tenure-track receive. This is going to be a big, big problem.”

Another factor that would dissuade potential future faculty members from coming to YU, and even the ones still here from staying, is that budget cuts will also potentially force professors to teach a much larger number of courses. Therefore, while most economics professors would typically only teach three courses each year between the undergraduate and graduate level in the past, the administration is now pressuring them to increase that number to five or six. This is a level unheard of even at top liberal arts colleges according to Citanna, and it is a demand that essentially changes the nature of the profession because it makes research all the more challenging. “If I have to teach six classes,” Citanna said, “I can write papers at nights and over the weekend, but I am not going to have as much time no matter how hard I try - there is no magical formula for that.” Economics is a field of academia where the expression “publish or perish” holds a fair amount of weight, so it makes sense that the faculty are quite concerned about this change in course expectations going forward.

However, if there is one message that both Kahn and Citanna emphasized in light of the recent news, it is that the economics department will do its best to build on past successes and continue to supply a first-rate economics education to all its students, even while being stretched somewhat thin for the time being. Kahn stressed that “we will do our best to carry on with fewer resources,” and therefore students of the major should not be worried about neglect in the classroom.  Citanna added, “We were committed to teaching and serving students before and we are still committed the same. That’s not going to change, but it will be more difficult to make ends meet.”

Economics is infamously known as “the dismal science,” but the latest events have made its status at YU seem even more dismal than the adage suggests. The firing of Hawkins and Richter raises many questions with few comforting answers. Most introductory economics classes teach that in the boom-bust cycle of an economy, a period of recession is always followed eventually by period of recovery. One can only hope that the crisis facing the economics department will be short in nature, and a swift recovery is in turn right around the corner. Otherwise, an even more dismal situation could befall all the students and faculty of economics at Yeshiva.