Rajk Vocational College, one of the specialist colleges of Corvinus University in Budapest, celebrated its fiftieth anniversary last year, along with two other anniversaries: the 25th anniversary of the Neumann János Prize and the 15th anniversary of the Herbert Simon Prize. As part of a year-round series of celebrations, in January 2020, college students traveled to the United States with a cameraman, visiting several prestigious universities during the travell making personal interviews with 11 former awarded.
Alvin E. Roth, who won the Rajk College College Neumann Prize in 2016 and visited Budapest, was interviewed on the economics campus of Stanford University. Roth won the 2012 Nobel Prize in Economics for his achievements in pairing theory and for developing various market design practices. The professor was asked about the functioning of the markets around us, the practical benefits of his research, and the limits of theoretical economics.
According to Roth, market planning — not planned management — is needed because systems that are regulated by existing prices often fail to lead to ideal solutions. Like kidney transplants, school admissions or spouse choices can’t (at least according to Roth) be monetized. Based on his models, selection processes operate today across America, primarily in public education institutions. Roth believes that market and mode design can work really effectively in small markets that are malfunctioning that people have invented before. An example is the recruitment process in public education, where a poorly designed method of setting preferences can lead to serious inequalities. In his work, the professor seeks to eliminate problems that affect a wide section of society, yet receive little attention.
He also attributes the success of the largest players in the sharing or gig economy, such as Uber or Airbnb, to market planning solutions. Thanks to our smartphones and easily accessible broadband internet, countless pairs can be created per second, reducing friction in the economy and allowing many people to find part or full work. Pairing markets and, more broadly sense, planned markets can also be useful in the distribution of public goods, for example by facilitating congestion pricing and urban traffic regulation, which are typically “repulsive” policy issues. And how much we will enjoy the world of planned markets can only be justified by time. The original and complete article can be read at g7.hu .