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9/6/2005 10:30 AMBy Carol Pogash
He came from a home so remote his family lacked running water and electricity. He wasn't exposed to the theater, movies, museums, or even the radio. His only form of entertainment was reading, which Nobel laureate Daniel McFadden (B.S. '57, Ph.D. '62) did voraciously. He plowed through several libraries, literally, going from one side of a shelf to another and down to the next one, absorbing four to five books a day.
“Most of the distractions that kids normally have, I didn't have,” McFadden says, as if anyone would have done what he did. In school, his habit was interrupted only when his teacher called upon him. He conspired with classmates to signal what the subject was so he could ad lib the answer. He devoured encyclopedias, dictionaries, and almanacs, memorizing as he went. Those formative years-and his fruitful time at the University of Minnesota-set the course for his life's work in economics: making connections.
Having read so much when he was young, his mind remains “full of mostly extraneous and worthless stuff,” McFadden says, “but occasionally a synapse will close and I'll see that two completely different fields have something in common.” He attributes part of his success to timing: to the availability of computers and data. He is generous in praise for peers. If he hadn't made the discovery he did, someone else would have, he says.
That's pure McFadden: beyond humble. “I don't know any point in my life where I said, 'You know, McFadden, you're smart.' I just think I run my mind in overdrive,” he says.
Compare his observations with that of his admirers: “Whether it's an opera singer who is out of this world, or Eric Clapton on a guitar solo or [Sir] Laurence Olivier performing, or Dan McFadden solving an economics problem, it's all the same,” says Clifford Winston, a senior fellow at the Brookings Institution. “You don't even think it's possible for a human to do. It just opens your mind.”
In 2000, McFadden, now 68, was awarded the Nobel Prize in Economics (along with James Heckman of the University of Chicago) for his contributions to the development of microeconometrics-the branch of economics that welds statistics to economics-and in particular the development of the theory of “discrete choice.” His microeconometrics work on the Bay Area Rapid Transit (BART) system so revolutionized the field of economics that “it's become a part of the fabric of science,” says Charles Manski, professor of economics at Northwestern University. “Younger people think it's been there since biblical times.”
McFadden's best-known work derived from his effort to help a graduate student analyze data on how California officials chose to route freeways, not the sort of data that economists dealt with at the time. McFadden thought about it overnight, suggesting an approach that became the model for discrete choice, which has allowed economists to look at what individuals would do as opposed to what large groups would do on average. To prove his approach, he studied commuter behavior before the opening of the Bay Area Rapid Transit system in 1972. “I tried to tell them what their ridership would be,” McFadden says. “They did not necessarily welcome my involvement.”
BART officials did it the old-fashioned way, analyzing data on commuter car and bus use. McFadden drew on a psychological theory, transporting and adapting it for economic applications. He asked a few thousand commuters to keep diaries of their daily commute behavior and developed computer programs to calculate his findings. BART boosters predicted 15 percent of commuters would switch to BART. McFadden predicted 6.3 percent. Two years later, the percentage of commuters using BART was 6.2.
Discrete choice allowed economists to predict more accurately who will be in and out of the labor force, choice of occupation or college, or whether someone will sign up for welfare programs-information that can shape government policy. It also is used in the other social sciences, marketing, and predicting the outcome of elections.
“We all had avoided a class of problems because we didn't know how to do it,” says Richard Schmalensee, dean of the Sloan School of Management at the Massachusetts Institute of Technology. McFadden, he says, “posed the question and rolled the ball a good deal down the road. He gave people a set of methods and underlying theory that opened the door to studying empirically with evidence a whole set of things you couldn't study before.”
“He's been very, very influential,” says University of Minnesota economics professor John Chipman, whose work, along with that of retired U professor Leo Hurwicz, led McFadden to study economics. “He can't work on anything without making a really original contribution,” Chipman adds.
McFadden also changed the tenor of economics study. “He turned many seminars from adversarial battles into collaboration,” says McFadden's former student Gregory Duncan. “If you went to the University of Chicago and you had a mistake in your paper, you would come out with your body parts in baggies carefully labeled and sent home to your spouse,” Duncan says. “In contrast, if you made a mistake and Dan was in the room, he would say 'Maybe you should look at it another way.'”
Duncan, an economics consultant and former economics professor, says that the day he met McFadden was the most important in his life. Until then, he says, “I was really arrogant. I was going to prove myself by destroying everyone else. A lot of bad characteristics I unlearned from being around him.”
Photographer Beverlee Simboli McFadden, his wife of 42 years, says he's so agreeable it's sometimes embarrassing. He is, she says, a person without demands. When he's working on a problem, he sleeps fitfully (he needs only four hours a night) and comes up only for meals or if he's needed by his family. “Research progresses in a different plane for me than daily life,” he says.
When their children were young and McFadden was working on a problem, Beverlee says the family “would defer to his creative mind. He had a special light of his own that exceeded ours. We couldn't figure out what it meant but we knew it was significant.”
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McFadden grew up in rural North Carolina, “a product of the 1930s,” when many people's lives, including his parents', were disrupted. His father, Robert Sain McFadden, who had only four years of schooling, was half-owner of a chartered bank in 1928. Three years later, along with most other banks, it failed.
His mother, Alice Little McFadden (B.A. '22), once a professor of architecture, taught school. Compared to them, McFadden says, “I was not unusual.” At 14, his father had kept the books at a local bank. At the county fair he beat the then-most-advanced adding machine-and was more accurate. “If I had had his mind and my ability to focus I would have made something of myself,” McFadden jokes.
His mother advised her son to live a simple life and not try to earn a lot of money or become famous. Had she lived to see him win the Nobel Prize, “she would have been pleased,” McFadden says, “but she wouldn't really have approved.”
Early life wasn't easy. At school, McFadden had to join a gang to protect himself. He carried a knife and, he says, won some knife fights. “One of the things I love about life,” he observes, while sitting in his home in the Berkeley hills with a bay view, “is that I don't have to do that anymore.”
Before and after school McFadden had farm chores, including milking five cows. He had no playmates. He and his younger sister, who didn't enjoy reading, never had much in common. He learned to “think things through for myself. I didn't look to others to get through my day.” He taught himself that to understand something fully, he needed to “take it down to the foundations and start up again,” which he continues to do.
Thrown out of high school for judicial activism (protesting a policy for automatic suspension of students reported off campus by the police), McFadden moved to an uncle's farm in Minnesota. If he had remained in school, poor grades in algebra would have kept him from being valedictorian of his class of 62 students back in North Carolina; because he solved algebra problems instantly, his teacher was convinced he was cheating. At 16, he entered the University of Minnesota where he was classified as deficient in math and advised to take a remedial course. Nevertheless, he enrolled in a course on analytic geometry and calculus-and failed the first test. Ten weeks later, he was first in the class of 1,600 engineering students required to take the course.
McFadden says he majored in physics primarily “because it was the hardest subject.” He always took the maximum number of courses allowed. “I took so many courses there was no way I could attend all the classes.” It takes 180 credits to graduate; he took 280, so many, in fact, that some classes he never attended. “The night before an exam I'd read my textbook to get my 'A,'” he recalls. At 19, he graduated with the highest honors. “In my quiet way,” he says, “I was probably unbearably cocky.”
McFadden entered a rigorous Ph.D. program at the U of M that required students to take the core Ph.D. courses in psychology, sociology, economics, anthropology, political science, mathematics, and statistics. The program, he says, “absolutely shaped my life.” What he learned allowed him to “see patterns in things, to find commonality in disparate fields.”
McFadden was so poor that he had to sell a cow to have enough to live on his freshman year. Over time, he worked the food line in the dorms, was a library page, served hot dogs at football games, and was a card sorter for the psych department, where he grew interested in psychological measurement, which led directly to his seminal work on transportation. Late in his graduate school career, McFadden switched to economics because he wanted to study with professors Chipman and Hurwicz. “Anyone who got through that program was an unusual person,” Hurwicz says, recalling that his student also had a “rare virtue: He never claimed more than he was able to prove.”
McFadden rushed through his major, taking all his economics courses in one year and writing his doctoral dissertation the next. Determined to finish before he was 25, he completed his dissertation a day before his 25th birthday, graduating in 1962.
While on an externship at Stanford University, McFadden had what he calls his “eureka” moment, a 10-minute conversation with Hirofumi Uzawa, now University of Tokyo emeritus professor. “It just clicked in me how to use math and economics,” McFadden says, and it opened up a vast territory for economic analysis.
He did his postdoctoral work at the University of Pittsburgh, not known for its economics department. For McFadden, though, it was the most fortunate of moves. The first woman McFadden met was an assistant in the statistics department, who a few weeks later would break her engagement to another man and, a few weeks after that, would become McFadden's wife.
Although he had yet to publish any paper, McFadden was hired as an assistant professor at the University of California, Berkeley. One of six new hires, McFadden describes himself as “the least articulate, least knowledgeable” about economics. He had come late to the subject. “I had my own worldview of economics,” he says. Three years later, having published one paper, he was granted tenure. “That was a rare time when the right decision was made on the quality of work,” says Northwestern's Manski, and not the number of articles published.
In his early years, McFadden published so little that his lecture notes were floated from student to student, Manski says. McFadden admits that “for me, the excitement is in the discovery,” not in publication. His BART research might never have been published had another professor not asked him to contribute a chapter for his book.
In 1977, he moved to MIT, an intellectually stimulating environment where he taught and was director of its Statistics Research Center. While there, he lived for a while on a cul-de-sac with six houses. Four of the residents would go on to receive Nobel Prizes. In 1991, McFadden returned to Cal.
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Five years ago, McFadden was awakened in the early hours of October 11 with a call announcing he had been awarded the Nobel Prize (he donated the prize money to the East Bay Community Foundation to promote arts and education). Since then, his e-mail in-basket has been jammed with requests for ribbon cuttings and keynote speeches. “This is something that seems to be a characteristic of the Nobel, not of me,” he says. UC Berkeley did what it does for all its Nobel Prize winners: It awarded McFadden a much-coveted parking space. Until then, McFadden had ridden his bike, but the space induced him to begin driving. “It's given me a somewhat less healthy life,” he says.
McFadden-who is among 15 Nobel laureates and other scholars from the University of Minnesota who will be honored on the new Scholars Walk on campus-continues to teach and direct Berkeley's econometrics lab. In work he has done for the National Institute of Aging, McFadden found that the older people are, the more optimistic they become about their longevity. He is studying how people form their perceptions about their future drug costs. And he has criticized President George Bush's plan for privatizing part of Social Security benefits because, he says, it “calls on people to be more foresighted than all the evidence suggests they are.”
Fourteen years ago, McFadden and his wife bought 30 acres in Napa, California, took courses at a local community college, and began growing cabernet and zinfandel grapes. It is back on the land where McFadden does his best thinking. Astride his tractor or clipping vines, he puts together “all the pieces of things you've learned in your life and you try to sort them out, to bring them to bear on a problem.
“You're poking in the corners to see if there's anything useful there,” he continues. “You're trying to weave connections.”
Carol Pogash is a Bay Area freelance writer and frequent contributor to The New York Times.