A principal of economics
Teacher and mentor Martin Feldstein, now a candidate to lead the Fed, has reshaped the landscape of fiscal affairs
CAMBRIDGE -- Harvard professor Martin Feldstein advises presidents; collaborates with the world's smartest economists; runs the nation's preeminent center for economic research; and ranks among the leading candidates to succeed Alan Greenspan as Federal Reserve chairman.
But each September for the past 21 years, Feldstein has traded those rarefied circles for a lecture hall filled with college freshmen. There, leading Harvard's introductory economics class, he has invariably started each term with the same heartfelt counsel: ''This is a particularly good year to be studying economics."
Feldstein's decades of introducing students to economics is part of a teaching legacy that has arguably made him the nation's most influential economist. While a brilliant thinker, the author of more than 300 scholarly articles, and an intellectual force behind President Bush's tax cuts and Social Security proposals, Feldstein may have made his greatest impact through the remarkable concentration of his students in top echelons of government and academia.
To name a few: Lawrence H. Summers, Harvard president and former US Treasury secretary; David Ellwood, dean of Harvard's Kennedy School of Government; and James Poterba, MIT professor and member of Bush's tax reform advisory panel. Lawrence Lindsey, formerly Bush's top economic adviser, wrote his doctoral thesis under Feldstein, as did Harvey S. Rosen, the previous chairman of the president's Council of Economic Advisers, and R. Glenn Hubbard, Bush's first chairman of the council and now dean of the Columbia Business School.
Alan J. Auerbach, a professor at the University of California at Berkeley and leading authority on tax policy, advised Senator John F. Kerry in the last presidential campaign. He, too, is a Feldstein alumnus.
''He's like a pied piper,"' said Laurence J. Kotlikoff, chairman of Boston University's economics department, and yet another Feldstein student. ''Marty infects everyone with his zeal for applied economics."
Feldstein, 65, has taught at Harvard since 1967, save for two years as chairman of the Council of Economic Advisers under President Reagan. He says the secret of his success is really no secret: Smart students go to Harvard.
But Feldstein has attracted more than his share of the smartest, not only with zeal, but by example. Since his days as a graduate student at Oxford University in England, he has pushed the frontiers of economics, melding quantitative research with policy analysis and reshaping ideas about taxes, healthcare, and social programs.
His groundbreaking work has detailed how the promise of Social Security benefits can reduce savings; how generous unemployment benefits can extend periods of joblessness; and how lower tax rates can yield higher tax receipts, the intellectual foundation for what's called supply-side economics.
Unsurprisingly, bright, ambitious students are drawn to him because of the chance to do cutting-edge research with impact. Hubbard, for example, was set to go to MIT for doctoral studies, but, inspired by Feldstein's work and ''the idea of studying practical public policy in an empirical way," chose Harvard.
Deepa Dhume, 21, who wrote her senior thesis under Feldstein this year, recalled asking his advice on whether to pursue an academic career or take her Harvard economics degree to Wall Street. Feldstein summed up the choice: ''Do you want to think about small questions or big questions?"
Dhume chose big. She returns to Harvard in the fall to work toward a PhD.
On a day in late winter, Feldstein was on stage in Harvard's historic Sanders Theatre, cutting the figure of a banker in a blue suit, white shirt, subdued tie. The topic of his lecture was a big question: Social Security.
He took the class through the program's history, the growth of its obligations, and the challenges ahead, underscoring that these students would hit retirement about the time the Social Security trust fund is projected to run out of money. He concluded with his plan to fix the system, one that includes personal retirement savings accounts and that, according to the data he presented, boosts average benefits without raising taxes.
This lecture captures Feldstein's approach to teaching --a focus on real problems and an emphasis on how economics can offer solutions. As an undergraduate research assistant, Summers recalled, Feldstein's encouragement to ''do economic science that makes a difference" inspired him to graduate studies and beyond.
Alexandra Michael, 19, of Eden Prairie, Minn., never studied economics before enrolling in the introductory course last fall. But Feldstein's lectures, incorporating current affairs, made the class relevant, helping her, for example, to understand how a weaker dollar would affect friends' summer trip to Europe. She now plans to major in economics.
''You can really see that he's passionate about economics," Michael said, ''and passionate about passing on that knowledge."
Feldstein found this passion more than 40 years ago at Oxford. There, armed with a new tool, the computer, and applying techniques used to build statistical models, he analyzed the efficiency of the British national health system. To his surprise, government officials paid attention to his results.
''I figured if a 25-year-old graduate student could do something," Feldstein said, ''then economics was a pretty good activity to be in."
For Feldstein, economics proved to be more than pretty good. He returned to teach at Harvard, undertook his influential work, and earned recognition as one of the nation's leading economists.
For much of the past three decades, he has run the National Bureau of Economic Research, best known for dating the official beginnings and ends of recessions, but also for where top economists research, collaborate, and publish.
He is believed to be on President Bush's short list of possible successors to Greenspan, who plans to retire in January. Feldstein would not comment on this speculation.
At Harvard, Feldstein's classes have a conservative tilt, touting free markets and the enduring wisdom of Adam Smith, whose ''Wealth of Nations" is considered the bible of capitalism. He has been known to describe US tax brackets not as ''top, middle, bottom" but as ''high, higher, highest."
But colleagues say Feldstein is more interested in ideas than ideology. He urges students to do as he did at Oxford: Find new areas for economic research.
Raj Chetty, a teacher at Cal-Berkeley, earned his doctorate at Harvard in 2003. While working as a research assistant for Feldstein, he came up with a theory that higher interest rates could sometimes lead to higher corporate investment -- which runs counter to conventional views that the Fed must cut rates to stimulate investment.
Feldstein's reaction? ''You have good ideas, so why don't you just work on your own stuff," he told Chetty. ''I don't want to burden you working as a research assistant."
This year, Feldstein encouraged Jeff Clemens, 22, to explore an emerging field of economic study, national security. Clemens wrote his senior thesis on the economics of Afghanistan's opium trade, concluding that the United States would have to triple eradication programs to reduce opium crops by one-fourth.
Clemens recalled Feldstein contacting connections in Washington to help him track down data. E-mails from Feldstein offering advice would pop into his inbox at 2 a.m. When Clemens got stuck pulling together elements of his supply-and-demand analysis, Feldstein sketched a mathematical model that helped clarify his thinking.
But perhaps most important, said Clemens, Feldstein really cared about his work, often treating him like a colleague.
''That's what made it so exciting," said Clemens, who will work at the Council of Economic Advisers over the next year, then plans to go to graduate school. ''He really listened."
When it comes to economics, Feldstein is always ready to listen. He concedes he doesn't do much else other than economics. Nearly all his friends are economists. His wife, Kathleen, is an economist. About the only people he knows who aren't economists, it seems, are his two daughters.
''It's one thing to have other interests," said Feldstein, ''and another thing to have time for them. I keep accumulating books, and saying, 'Maybe next year.' "
And maybe next year, Feldstein will find a little more time. He decided last semester to turn the introductory Ec 10 over to another professor, in this case, N. Gregory Mankiw, who recently returned to Harvard from his own stint as chairman of the Council of Economic Advisers.
Feldstein stresses that he'll continue to teach graduate and other undergraduate courses. But at Harvard, where Ec 10 is described as ''iconic" and thousands of students have come to know its professor simply as ''Marty," Feldstein's decision could not pass unnoticed.
On the day he gave the Social Security lecture, Feldstein announced to the class that he would stop teaching Ec 10 at the end of the semester.
''Oh no," a cry went up. ''Who's going to teach our children?"
Robert Gavin can be reached at email@example.com.