When Nobel Prize-winning economist Daniel McFadden, Berkeley, Calif., reflects on his childhood in rural Rowan County, some of the memories he recalls with the most fondness revolve around his days as a 4-H’er, making friends and earning recognition for work well done.
Indeed, McFadden’s love of learning and his ability to break new ground — the traits that earned him a trip to Stockholm during December’s Nobel Week — were perhaps also the ones that led him to Raleigh in 1953 for State 4-H Congress. That’s when he and a friend won first prize for a soil conservation demonstration project.
In developing the demonstration, McFadden drew on what he’d learned by helping his father build a pond on the family farm, in the eastern part of Rowan County, near High Rock Lake.
Soil erosion was then a key concern among farmers (“There were gully-washes all over the place,” McFadden recalls), and well-managed farm ponds were seen as a potential solution.
With the help of a county Extension agent, the young McFadden came up with a plan to use landscaping and contour plowing to keep soil from running off into the pond.
Today, McFadden says, the pond is “still going strong,” yielding some of the county’s largest bass. Farm ponds may be commonplace in North Carolina these days, but back in the 1950s, the McFaddens’ was a novelty. Novel, too, was the approach that McFadden would later take as an economist. McFadden came to the discipline in a roundabout way, his curiosity having been piqued by a research assistantship in the University of Minnesota’s social psychology department.
By the time he began work on his doctorate, he had chosen to focus on economics, using statistical tools to understand behavior in ways that challenged the classical notion in economics that people were motivated by their own rational economic self-interest.
As McFadden told the Raleigh News & Observer, “I came into economics from psychology and with the notion that behavior is more complicated than simplistic economic models.”
It was his work in microeconometrics — where statistics and economics meet — for which McFadden, now a professor at the University of California, Berkeley, shared the 2000 Nobel Prize in Economic Sciences. The other winner was University of Chicago economist James Heckman.
In part because of the groundwork that McFadden and Heckman laid, microeconometrics has become increasingly important. Today’s powerful computers and vast sets of data make the possibilities almost endless.
McFadden was cited specifically for models he developed to help economists and other social scientists understand how people chose among discrete alternatives — whether, for instance, they decide to ride the bus to work or drive.
Not only has his work changed the way social scientists understand decision- making, it also has had a profound influence on public policy. That’s because McFadden has chosen to focus on complex societal issues of widespread importance.
Public transportation, savings behavior, demographic trends and housing mobility are among the topics he’s tackled over the past 30 years. He even weighed in recently on California’s energy crisis.
“In my work,” he says, “I’ve always been motivated to solve the problem of the day.”
If there is anything that McFadden hopes others will recognize in him, it is his commitment to his students. He’s proud to have advised more than 100 students pursuing their doctorates. Among his former students are two central bank heads and the president of Costa Rica.
“I take so much pleasure in seeing people able to expand their minds,” McFadden says, “and in having given them the free rein to push their own limits.”
Of his 4-H years, McFadden says they opened for him new possibilities, allowing him to realize “there are lots of things that you can do with your life.”
While he left North Carolina for good in 1954, he finds himself revisiting his childhood days quite often. Like his father, he’s become a part-time farmer, living with his wife on a small vineyard in Napa Valley.
“I may have gone off and left the farm,” he says, “but once you get it in your blood, it stays there.”
—Dee Shore
