Andrei Shleifer

Andrei Shleifer
Born	(1961-02-20) February 20, 1961 (age 63) Moscow, Russian SFSR, Soviet Union
Nationality	Russian American
Academic career
Institution	Harvard University University of Chicago
Field	Behavioral finance Law and economics Development economics
Alma mater	MIT Harvard University
Doctoral advisor	Peter A. Diamond[1] Franklin M. Fisher[1]
Doctoral students	Sendhil Mullainathan Matthew Gentzkow Jesse Shapiro Emily Oster Ulrike Malmendier John Friedman
Influences	Lawrence Summers Milton Friedman[2]
Contributions	Legal origins theory Big push model
Awards	John Bates Clark Medal (1999)
Information at IDEAS / RePEc

Andrei Shleifer (/ˈʃlaɪfər/ SHLY-fər; born February 20, 1961) is a Russian-American economist and Professor of Economics at Harvard University, where he has taught since 1991. Shleifer was awarded the biennial John Bates Clark Medal in 1999 for his seminal works in three fields: corporate finance (corporate governance, law and finance), the economics of financial markets (deviations from efficient markets), and the economics of transition.

IDEAS/RePEc ranked him as the second top economist in the world in 2011,^[3] and the top economist in 2024.^[4] He is also listed as #1 on the list of "Most-Cited Scientists in Economics & Business".^[5] On Google Scholar, as of 2024 he had over 400,000 citations.^[6]

Life

He was born to a Jewish family^[7] in the Soviet Union and emigrated to Rochester, New York, as a teenager in 1976, where he attended an inner-city school and learned English from episodes of Charlie's Angels.^[8] He then studied mathematics, obtaining his BA from Harvard University in 1982.^[9] Following this, he went to graduate school in economics, acquiring his PhD from MIT in 1986 at the age of 25. As a freshman at Harvard, Shleifer took Math 55 with Brad DeLong; he has said that the course made him realize he was not destined to be a mathematician, but the experience gave him a future co-author.^[8] Shleifer also met his mentor and professor, Lawrence Summers, during his undergraduate education at Harvard. The two went on to be co-authors, joint grant recipients, and faculty colleagues.^[10]

He has held a tenured position in the Department of Economics at Harvard University since 1991 and was, from 2001 through 2006, the Whipple V. N. Jones Professor of Economics.^[11] Previously, he taught at the Graduate School of Business at the University of Chicago and briefly at Princeton University.

Work

Shleifer's earliest work was in financial economics, where he has contributed to the field of behavioral finance. In 1997, he and Robert Vishny published "The Limits to Arbitrage" that addressed efficient markets.^[12] The article notes that investors who bet against a major overvaluation or undervaluation are exposing themselves to substantial risks if there is uncertainty about how long it will take for the misvaluation to be corrected. This is especially true for a hedge fund for which its investors might withdraw their money if the hedge fund temporarily has disappointing returns, forcing the fund to buy an overvalued asset that it has shorted, or to sell an undervalued asset that it has bought. In Roger Lowenstein's 2000 book, When Genius Failed: The Rise and Fall of Long-Term Capital Management, the author credits Shleifer and Vishny with describing the problem that led to LTCM's 1998 collapse.

Shleifer has also written influential papers on political economy, the economics of transition, and economic development, collaborating with his former colleagues in Chicago, Kevin M. Murphy and Robert W. Vishny. Their paper "Industrialization and the Big Push" was credited by Paul Krugman as a major breakthrough which ended a "long slump in development theory".^[13]

With coauthors Robert W. Vishny, Rafael La Porta, Simeon Djankov and Florencio Lopez de Silanes, Shleifer has also made significant contributions to the study of corporate governance. In particular, Shleifer and Vishny's 1997 article A Survey of Corporate Governance^[14] focused on the big differences across countries in the use of bank debt versus equity financing.

Starting in 1997, his research focused on the legal origins theory (also sometimes known as law and finance theory), which claims that the legal tradition a country adheres to (such as common law or various types of civil law) is an important determining factor for a country's development, most of all financial development.

The Clark medal citation described him as a "superb economist, working in the old Chicago tradition of building simple models, emphasizing basic economic mechanisms, and carefully looking at the evidence.... A recurring theme of his research is the respective role of markets, institutions, and governments."^[15]

Asset management

In 1994 Shleifer founded LSV Asset Management with Josef Lakonishok and Robert Vishny. As of February 2006, it managed about $50 billion. Shleifer has since sold his ownership stake.^[16]

Russian Project

During the early 1990s, Andrei Shleifer, a native Russian speaker, headed a Harvard project under the auspices of the Harvard Institute for International Development's Russian aid project from its inauguration in 1992 until 1997.^[10] Some people associated witht he project made Russian investments, and he settled a lawsuit from the U.S. government for such a violation of HIID's contract.^[17] Shleifer was also a direct advisor to Anatoly Chubais, then vice-premier of Russia, who managed the Rosimushchestvo (Russian: росимущество, lit. 'Russian assets' or Committee for the Management of State Property) portfolio and was a primary engineer of Russian privatization. Shleifer was also tasked with establishing a stock market for Russia that would be a world-class capital market.^[18] In 1996 complaints about the Harvard project led Congress to launch a General Accounting Office investigation, which stated that the Harvard Institute for International Development (HIID) was given "substantial control of the U.S. assistance program.”^[19]

In 1997, the U.S. Agency for International Development (USAID) canceled most of its funding for the Harvard project after investigations showed that top HIID officials Andrei Shleifer and Jonathan Hay had used their positions and insider information to profit from investments in the Russian securities markets. Among other things, the Institute for a Law Based Economy (ILBE) was allegedly used to assist Shleifer's wife, Nancy Zimmerman, who operated a hedge fund that speculated in Russian bonds.^[18]

In August 2005, Harvard University, Shleifer and the Department of Justice reached an agreement under which the university paid $26.5 million to settle the five-year-old lawsuit. Shleifer was also responsible for paying $2 million worth of damages, though he did not admit any wrongdoing.^[11][20]

Works

• Boycko, Maxim; ——; Vishny, Robert (1995). Privatizing Russia. Cambridge, MA: MIT Press. ISBN 978-0-262-02389-4.
• —— (2000). Inefficient Markets: An Introduction to Behavioral Finance. Oxford, UK: Oxford University Press. ISBN 978-0-19-829227-2.

References

External links

• Faculty page at Harvard University Archived 2013-03-25 at the Wayback Machine
• Who's Scheifer
• Citation rankings
• Institutional Investor: How Harvard Lost Russia
• Book review in Finance and Development (An IMF publication) of "Without a Map: Political Tactics and Economic Reform in Russia" by Andrei Shleifer and Daniel Treisman