Chapman University in Orange has big hopes for its latest recruit.
Nobel Prize winner Vernon Smith will join the university in January, bringing with him his Economic Science Institute, which consists of a team of four academics.
“This is something we want to build around,” said James Doti, president of the university.
Smith shared the Nobel Prize in 2002 with Daniel Kahne-man. His most notable work has been with laboratory experiments, which laid the foundation for the field he created known as experimental economics.
His presence at the school will help attract new talent as well as endowments, Doti said.
He has already seen some interest from other world-renown academics that Chapman had been unable to previously recruit.
In the next two years Doti expects the school could raise $20 million in endowment funds with the help of Smith. The money would go to add more positions and resources.
Chapman initially will invest about $2 million a year in Smith and his team to cover salaries, facilities and scholarships, Doti said. That could bump up to $5 million a year for more space and resources for the team, he added.
Experimental economics requires more space and funds than some other finance studies because it uses laboratory experiment techniques to break down classic economic theories.
“We work on problems that force you to go outside of economics,” Smith said.
The hands-on approach sets Smith’s team apart from other economists in his field and sets Chapman apart from other universities.
Smith wants to expand his study of economics to other areas, including engineering, something Chapman would embrace as a springboard to an engineering school, Doti said.
Though the school is still only in a discussion phase, Smith said it is one of the main things that attracted him to the school.
Smith will also help Chapman create a new master’s degree called economic systems design.
The degree will blend a variety of fields such as math, computer science and statistics to be applied to economic problems. Students who were interested in designing municipal power and utility systems or environmental credit systems, which allow companies to trade credits to reduce pollution, would be candidates for the degree, said Daniele Struppa, university chancellor.
Much of Smith’s work has to do with creating efficient markets. He and his team create algorithms that are applied by computers to tackle complex issues such as freeing electrical power networks from manipulation.
Smith also has a keen interest in other fields such as philosophy, law and neuroscience, said team member David Porter.
“Vernon is a great listener. He is well read in many fields and is the best person to bounce ideas off,” he said.
Other team members include John Dickhaut, Stephen Rassenti and Bart Wilson.
Smith will also work with Chapman’s law school where he will teach a course, Doti said.
Getting Smith into a variety of school settings is a priority for Chapman. The real value in Smith and his team is their intellect, Struppa said.
“They will stimulate and challenge colleagues and students alike,” he said.
Local businesses may even benefit from Smith’s expertise, but only if they have a financial problem that piques his interest.
“I don’t consult for the money, I need to see they have a problem that would be interesting to us,” Smith said.
The team will also run workshops for college and high school students.
Smith is currently working at George Mason University in Virginia. He will be moving to Orange County with his wife Candace. The two have eight grown children.
