Philip Dybvig, Nobel laureate, on his time at Indiana University

A recent Nobel prize winner who began his post-secondary college career in Bloomington said he fondly remembers his time at Indiana University and said it proved pivotal to his future.

Philip H. Dybvig said he loved Bloomington and thought it was a great place to study. He came to IU in the mid-1970s to study the two things that interested him most: math and music.

However, the Jacobs School of Music would not allow him to do a double major in mathematics.

“Music school was too good,” Dybvig said.

He remained on campus most of the time and lived at the Men’s Residence Center, which is now the Collins Living-Learning Center. The MRC provided convenient access to the computer center in the School of Health, Physical Education and Recreation building (now known as the School of Public Health) and to physics and math classes at Ballantine Hall.

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Dybvig said one of his IU physics professors, the late ED Alyea Jr., who died in 2018, played a pivotal role in his undergraduate career. Dybvig said he skipped almost all of Alyea’s introductory class in physics class, which was awkward because the class had only seven students. However, Alyea soon realized that Dybvig could test most of the class and chose him to be the physics lab teaching assistant the following year.

Dybvig said he bet he was the only undergraduate student on campus to earn pocket money teaching physics lessons and accompanying opera singers on the piano.

The lessons he learned as a teaching assistant proved invaluable to his teaching career, said Dybvig, who has taught at universities including Princeton and Yale. He has been a professor at Washington University in St. Louis since 1988 and now serves as Boatmen’s Bancshares Professor of Banking and Finance.

At IU, Dybvig said he spent most of his time off campus with the varsity sailing club, an informal program whose results couldn’t even enter the student newspaper. The club sailed Lemon Lake on weekends and occasionally competed in regattas around the Midwest. Students would drive to a meeting on Friday, drink beers that night, cruise all day on Saturday, and go out drinking again on Saturday night.

“Those were great times,” he said.

During the week, Dybvig resumed his challenging studies in math and physics, as well as French lessons, which he said brought him closer to a third major.

“It tires me just thinking about it now,” he said.

Although he focused his undergraduate career on physics and math, he remained connected to music. Dybvig remembers hearing jazz pianist Bill Evans at the Bluebird and classical pianist Vladimir Horowitz at Assembly Hall.

“It was just a good time,” he said.

Even as a professor at the University of Washington, Dybvig continued to play piano in blues and R&B jam sessions, including with Marsha Evans and The Coalition. He taught full-time during the day and often blocked out weekdays until the wee hours of the morning. Sometimes the adrenaline from these sessions completely prevented sleep.

“When it ended I was relieved and disappointed at the same time,” he said.

Nobel Committee: research helps avoid crises

Dybvig received the Nobel Prize in Economics this month. He shared the 2022 Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel with Douglas W. Diamond, University of Chicago; and Ben S. Bernanke, former Chairman of the Federal Reserve and now at the Brookings Institution in Washington, D.C.

The Nobel Foundation said in a press release that the laureates’ findings “have improved our understanding of the role of banks in the economy, especially during financial crises” and said the research has laid the foundation for mechanisms that make banks less vulnerable in the event of a crisis.

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Dybvig said his research has shown that individuals and the economy benefit from giving people immediate access to the savings they have in banks – but the same mechanism also tends to make banks more fragile.

Being able to access the money they’ve saved in the bank at any time is invaluable to people because they never know when they might have an unexpected expense, like a medical bill or because their neighbor sells a Ford Mustang from 1963 at an unbeatable price. the price. Consumers would not be able to easily pay bills or make unexpected purchases if they had their money tied up in certificates of deposit, which require money to be invested for set periods of time.

However, said Dybvig, the immediate accessibility to savings has a downside: if everyone withdraws their money at the same time, the banks won’t have enough money to pay everyone. Congress has mitigated this risk to consumers by establishing the Federal Deposit Insurance Corporation., which insures deposits up to $250,000 per depositor. The agency states on its website that since the start of FDIC insurance on January 1, 1934, “no depositor has lost a penny of insured funds as a result of default.”

Tore Ellingsen, chair of the economics prize committee, said in a press release: “The ideas of the winners have improved our ability to avoid both severe crises and costly bailouts.”

Dybvig is one of 10 Nobel laureates with an IU connection. For a complete list, see tinyurl.com/nee5pujx.

Significant Recognition for Indiana University

Indiana University officials said seeing an alumnus honored with such a prestigious award instills a sense of pride, but also reinforces the importance of focusing student learning on critical thinking and communication skills. problems solving.

Kevin Pilgrim, Head of the Mathematics Departmentsaid that when he looks at Dybvig’s research, he sees a lot of math, the study of which helps people focus on many things – accuracy, pattern recognition, problem solving – that are important in many fields of study.

“I think in some ways math is like a sauce you can pour over all kinds of disciplines,” Pilgrim said.

Studying math also teaches students another universally useful skill, he said: tenacity. After all, some mathematical problems take decades, even centuries, to solve.

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Rick Van Kooten, Executive Dean of the College of Arts and Sciences at IU Bloomington, said Dybvig’s undergraduate work in math and physics shows that a love for puzzle solving and critical thinking prove useful for virtually any field of study, and that the he study and application of advanced mathematics can benefit society as a whole.

“It’s something that is extremely rewarding for the College of Arts and Sciences,” Van Kooten said. “We are very proud of the impact the college has had.

Brief biography

Philip Dybvig, Nobel Laureate and Indiana University alumnus, Boatmen's Bancshares Professor of Banking and Finance at Washington University in St. Louis.

Last name: Philip H. Dybvig.

Acknowledgement: Nobel Prize in Economics.

Bloomington Connection: Earned an undergraduate degree in Mathematics and Physics from Indiana University. He earned a doctorate in economics from Yale University.

Current title: Boatmen’s Bancshares Professor of Banking and Finance at Washington University in St. Louis.

Previously, he was a professor at universities, including: Yale, Princeton.

Boris Ladwig can be contacted at [email protected]