What is most impressive about the work of economist José Alexandre Scheinkman, honored on May 17th at a conference in Insper’s auditorium, is the breadth of his contributions. Just look at the variety of work presented by his alumni and colleagues. Among the research developed in partnership with Scheinkman himself and others influenced by his previous work, the topics covered an extraordinarily broad spectrum: from the economic scenarios for adapting to tragedies such as the one that struck Rio Grande do Sul in May to the inequalities in learning opportunities for women in large cities; from the impact of digitalization on banks’ ability to maintain profitability to the development of an economic model to help save the Amazon.

 

This breadth, according to the economist himself, derives from his quarter-century spent at the University of Chicago, where he joined in 1974 as a teaching assistant (later to become an associate professor, full professor and head of the economics department).

 

“At that time, the department was incredibly interactive,” he recalls. “It wasn’t acceptable for someone to say that a subject was outside their area of expertise.” Because of this, he learned to cross the boundaries between the subfields of economics – and mathematics; after all, his skill with equations had been honed during a master’s degree at the Institute of Pure and Applied Mathematics (IMPA), in Rio de Janeiro before he left for a doctorate at the University of Rochester, already married to his wife, Michele Zitrin. He also understood quite early on that his research would be “better and more enjoyable if it were guided by real economic problems, rather than by the internal debates of economic theory.”

 

However, Scheinkman doesn’t recommend that current students pursue this. “Because I haven’t delved into the development of my own work, my curriculum may give the impression that I suffer from attention deficit,” he joked in his speech at the end of the ceremony honoring his 75th birthday (celebrated last year).

 

Scheinkman therefore identifies with the fox camp in the famous essay “The Hedgehog and the Fox”, defined by British philosopher Isaiah Berlin as “those who pursue various, often unrelated and sometimes contradictory goals”. On the other side are the hedgehogs, an opposition that Berlin borrowed from a fragment of the Greek poet Archilochus (7th century BC): “the fox knows many things, but the hedgehog knows one great thing” (Berlin allocates to the latter camp those thinkers who “relate everything to a single central vision, a more or less coherent or articulated system”).

 

Influence on influencers

 

It was when he moved to Princeton University in New Jersey, just over an hour away from New York, that Scheinkman realized that his career strategy might not be the most appropriate. “At my first faculty meeting, where we were discussing the granting of positions, someone asked if a candidate was the best in his field of study,” he said. His immediate thought was: “I wonder which area they hired me for, I’m not the best in any, I keep changing…”

 

Such a path makes it more challenging to be recognized, said Scheinkman. But there are those who disagree, of course. No wonder Scheinkman is known as an “economist’s economist”, as his former student and collaborator Aureo de Paula, from University College London, defines it: someone whose open vision, combined with a great power of analysis, makes him an ideal partner to work with.

 

According to Lars Hansen, who won the 2013 Nobel Prize in Economics and has been a regular partner of Scheinkman’s since his days at the University of Chicago (where he still works), a friend’s importance may go unnoticed by him, but it is felt in unexpected and lasting ways.

 

“I once gave a seminar on my work on decision theory in an uncertain environment,” Lars recalled in a videoconference lecture. “The research was in its early stages, and José told me: ‘you’re overthinking about this problem, making it more complicated than it needs to be’. ‘ I sort of agreed and changed my view on the subject; then I talked to other decision theorists, who took the ideas even further and wrote one of the best articles in the field in the last two decades – in which they mentioned my research in the initial abstract.”

 

That conversation with Scheinkman, Lars summarized, “affected not only my work, but made other researchers change the direction of their studies”. Scheinkman then protested against this story. He said that, yes, in the old days, when Lars came up with a surprising perspective on a problem, he used to say that it was too complicated. “But in general, he was simplifying the issue. This was an exception, like a broken clock that sets the time twice daily.”

 

Foxes and hedgehogs

 

If Scheinkman can be put on the fox team, he’s a peculiar fox – one that has bred and developed several hedgehogs. One example is Edward Glaeser, from Harvard University, an economist whose professional rise was as fast as his speech. The only economist to have published an article with Scheinkman while he was still his student, Glaeser is now head of Harvard’s economics department and director of the city studies program at the International Growth Centre, a British research center.

 

“He led me as if by an invisible hand, to study cities, which has been my job all my life,” he said. However, dedication to a single area doesn’t mean neglecting variety. In his lecture, Glaeser talked about the difference in the number of deaths by covid between areas with more and less educated people (four times higher in the latter); the failure to provide protection for women entrepreneurs in Zambia; comparisons of happiness between men with different income brackets and the jump in dissatisfaction that comes with unemployment (showing that work is not only a source of income but also a source of social relations); an evaluation of children’s movements, showing that the richest have a very different experience of the city from the poorest; and a study on the segregation between low-skilled and high-skilled employees, based on data from Brazil (in companies in the south, the less qualified have more contact with the more highly qualified, giving them a greater chance of advancement than in the northern states). All this in just half an hour. No wonder he talks so fast.

 

However, the variety in Scheinkman’s case is of a different order. “His work is so extensive that it is difficult to systematize it,” wrote Marcos Lisboa and Vinicius Carrasco in the inaugural article of a series dedicated to Scheinkman last year. And it’s a variety with impact: “from the theory of economic growth to industrial organization, from finance and speculative bubbles to urban economics and social interaction, his research has already received almost 50,000 scientific citations.”

 

Ten years ago, at a dinner in Scheinkman’s honor at Columbia University (where he moved in 2013), among the less than 30 attendees were four who had won or would win the Nobel Prize in Economics. In the following ten years, say Marcos and Vinicius, Scheinkman would produce 11 more relevant scientific articles, three of them published in the Journal of Finance, the most prestigious in finance.

 

In his essay, Isaiah Berlin puts people like Plato, Hegel, Nietzsche and Proust in the hedgehog camp, to varying degrees. In the fox camp would be Aristotle, Goethe, and Balzac. But the Russian writer Leon Tolstoy challenges this classification: “When we come to Count Liev Nikolayevich Tolstoy and ask whether he belongs to the first or second category, whether he is a monist or a pluralist, whether his vision is of the one or the many, whether he is of a single substance or composed of heterogeneous elements – there is no clear or immediate answer.”

 

As Berlin himself cautions, any schematic separation cannot withstand the force of reality for long: every fox has something of a hedgehog and vice versa. Scheinkman’s case, however, is perhaps more like Tolstoy’s, who defies dichotomy even at its most basic level. He has multiple interests, but achieves an unusual level of depth in each of them.

 

And there is, on a more essential level, something that links all of Scheinkman’s contributions, as Guilherme Martins, president of Insper, said in his presentation. He “always challenges us to question our assumptions, to deal with complex problems and to seek innovative solutions”. In addition, he continued, he has a habit of inspiring countless young minds to explore new frontiers. These qualities align with Insper’s mission, which is not coincidentally an institution that Scheinkman supports intellectually and through donations to scholarships.

 

It’s symptomatic that almost all economists start out thinking of him as Professor Scheinkman and soon, as Juliano Assunção, from PUC-RJ, pointed out, come to call him José Alexandre, José or simply Zé.

 

Services to Brazil

 

To present an overview of Scheinkman’s contributions would inevitably be an incomplete task. The choice made by the organizers, led by Rodrigo Soares, Insper’s vice-president of academic affairs, was to separate the presentations into four blocks: finance, social interactions, theory and methods, and, finally, Brazilian economics. In the end, there was also a session of reflections on academic life, opened by Pedro Moreira Salles, a shareholder in Banco Itaú-Unibanco, his friend since the beginning of this century.

 

The variety in Scheinkman’s work can be measured from yet another angle. The presentations in the Insper auditorium reached varying degrees of complexity, from enumerating and explaining everyday facts to formulating equations incomprehensible to laypeople (or even less experienced scholars). It was a demonstration of how, in the words of Marcos Lisboa and Vinicius Carrasco, “his contribution stands out for a rare combination of erudition with precise arguments that allow the robustness of conjectures to be verified”.

 

According to Lars Hansen, Scheinkman represents the University of Chicago at its peak: “I think it has to do with taking economics very seriously, not respecting any kind of boundaries between subfields, and being very broad in economic thinking. In addition, he cares a lot about Brazil and has made many contributions to the country.”

 

The Brazilian aspect is also notable. His kindness and ease of dealing with people are characteristics we like to associate with our culture. In addition, Scheinkman demonstrates a certain “jeitinho”, not only through creativity but also by identifying loopholes in academic rules.

 

“My work on ICMS,” recalled Aureo de Paula, “analyzed how this cascading tax, which allows you to deduct the part of the tax already paid by a supplier, creates an incentive for formal companies to connect with other formal companies (and informal ones with informal ones).” When it came time to give the paper a title, Scheinkman said that his research with the rather general title of “Growth in cities” had been cited a lot and, based on this, he recommended that it be called “Informal sector”. This was the title of the working paper, changed by the editor when the article was published. The result: the provisional article had more citations than the published version.

 

In his many years at prestigious universities, Scheinkman has also helped open doors for many Brazilian students to attend leading study centers worldwide.

 

Perhaps most importantly of all, he put his hand to work. Or rather, he put his gray matter at the country’s service. As Marcos Lisboa recalled in his presentation, Scheinkman contacted him in 2002 to help draw up a proposal for then-presidential candidate Ciro Gomes. Marcos proposed that they draw up a document for all the candidates, which ended up becoming a guide for significant institutional advances in the following years.

 

“We held a meeting with various economists, but everyone had to follow Zé’s rules,” said Marcos. “When someone was asked to give their opinion on a point, anyone could object – but only if they presented an alternative solution.” In just a few nights of work, the document – “The Lost Agenda” – was ready. It was later accepted and expanded by Finance Minister Antonio Palocci during President Lula’s administration. The final version ended up being about a hundred pages long. Marcos was asked to take part in the government, as secretary of economic policy at the Ministry of Finance. “Like an older brother, always there to support me, Zé promoted meetings in Brazil and started a column in Folha de S. Paulo, explaining the economy’s direction.”

 

The forest rises

 

More recently, Scheinkman has become involved with another crucial issue for the country: the protection of the Amazon in particular and the environment in general. Called upon by Juliano Assunção and João Moreira Salles to think of alternatives for the forest in the Amazônia 2030 project, the economist enlisted his friend Lars Hansen. The pair were instrumental in establishing a way of valuing the forests.

 

“Not only did we clear almost 20% of the forest, we also did it for practically nothing,” said Juliano. “A large part of the deforested area was simply abandoned.” The good news is that this area has started to grow back, naturally, without any kind of human intervention. It’s the forest taking back its space.

 

From there, Scheinkman and his colleagues calculated the returns of the most harmful activity to the forest – cattle ranching – and concluded that for 25 dollars per ton of carbon captured on the international carbon credit market (where companies or countries pay to offset their greenhouse gas emissions), the Amazon could raise about 375 billion dollars over 30 years. This is much more than the returns from destructive activities.

 

In addition to this research, Scheinkman acts as a driving force for other collaborations. “In four years, the project has already published more than 60 articles and has a network of more than 100 researchers involved,” says Juliano.

 

For work like this, economist Harrison Hong, from Columbia University, expressed his surprise at the tribute to Scheinkman. “This ceremony is a bit strange to me,” he said. It’s right to celebrate José’s past contributions. But what I see is that he’s fully active, as vibrant as ever.”



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