By Douglas Clement
After teaching at the nation's most elite schools , Professor Pat Bajari has come back home
To understand Patrick Bajari (B.S. '92, Ph.D. '97), it helps to know that he spent five long hot summers shoveling asphalt for his father's company, Bituminous Paving Inc., and laying down roads around the Twin Cities. In a sense he was paving the way toward the dissertation that he would write some years later, an innovative analysis of how road builders bid for government contracts.
As an economist today, no less than as a manual laborer in his youth, Bajari continues to take pleasure in both the process and the payoff of demanding and exacting work. Indeed, this is one reason Bajari joined the University of Minnesota economics department as a full professor in June 2006.
"Economics at the U is unique," says Bajari. "Here everybody really values intellectual rigor. People don't cut corners. We go after big questions with a lot of generality and also a lot of care technically." Bajari can speak to uniqueness of the U's economics program because he's worked at many of the top departments in the country: Harvard, Stanford, Duke, the University of Michigan.
At Minnesota, Bajari observes, economists are concerned about knowledge, not about being known. "Something I like a lot about Minnesota is that people show up in their offices every day," he says. "They work. They talk about economics. In a lot of places I've worked, people are more concerned with who [in the profession] hit the New York Times this week. I joined academia to be a researcher, to create new ideas. And here that's really the focus. You're judged based upon the knowledge you produce."
Serious researchBajari -- "sounds like diary with a b" -- is widely viewed as one of the most prolific researchers in the field of industrial organization, the study of the strategic behavior of firms, and the structure of markets. His studies -- which have focused on government contract bidding, housing markets, online auction behavior, spectrum auctions, health insurance, and Superfund cleanups -- are renowned for their unique data sets, keen insights, and cutting-edge methodology.
Bajari's doctoral dissertation, a precursor to his more recent work, has a daunting title, "The First Price Auction with Asymmetric Bidders: Theory and Applications." But the focus, road construction, is a familiar one. Bajari's goal was to understand how prices are determined in bids for highway contracts. Unlike most academics, he began on the front lines and in the trenches. "One of the starting points was talking to my dad and other contractors about their bids," he recalls. "They told me that a lot of construction contracting is about location. Guys are running trucks, hauling asphalt, so it's more expensive the farther you are from the project site."
In his econometric model of procurement bidding, Bajari took great pains to incorporate what he had learned from road builders themselves -- namely, that the distance between firms and the projects they bid on matters. Indeed, incorporating the wisdom of actual economic actors has become a signature of Bajari's work. "I try to start with a humble notion, which is that I'm just an academic and I'm looking at this data from the outside. Maybe," he says wryly, "the people who have turned a buck successfully for decades know something about this industry." It's an approach that has led to an underlying principle central to his research: If you want to see how markets operate, talk to people who operate in those markets. "If you account for things that people in the industry say are important," Bajari says, "you'll probably find they're important."
Pragmatic rootsBajari's appreciation of people's wisdom flows from his family. His great-great-grandfather was a Finnish immigrant who worked in northern Michigan copper mines before moving to the farm country of western Minnesota. Today, his father and mother manage the family farm in French Lake township, about an hour west of the Twin Cities. His father runs the family's paving company with Bajari's brother; his mother, a nurse, coordinates the public health programs in a multicounty area. His sister is a nurse practitioner.
The family's pragmatic bent is joined with an intense curiosity about the world, says Bajari. Everyone reads widely. "My dad and grandfather -- neither went to college but both had libraries, as did my great-grandfather. People in my family were always curious."
Hooked on 'NomicsBajari began his education at St. John's University, where he took introductory courses in microand macroeconomics and was immediately hooked. "They talked about big questions in a rigorous way. Instead of just words, economics tried to use formal modeling." It's a two-stage process, he says. First, develop your intuition. Second, bring out the data and math to see whether your ideas hold up. "I've liked that since the time I was a college freshman."
St. John's provided a great introduction. "But Minnesota was one of the preeminent economics departments in the world," says Bajari, "especially if you cared about really rigorous modes of analysis." He read about leading economists like Tom Sargent, Neil Wallace, and Ed Prescott (all former U of M professors) and their painstaking search for economic truths. "It was clear to me that the type of economics that they did at Minnesota was the type I wanted to do."
He transferred in his junior year and immediately enrolled in the economics program for students hoping to enter the graduate school. He double-majored in math. And in true Minnesota fashion, he worked. "I spent a lot of Friday nights at the library, working through problems," he recalls. "The economics major forced you to work hard, very hard. I've taught at a bunch of very good, elite universities and sometimes they don't challenge their best students as much as they could . . . . At Minnesota, they took off the gloves."
Bajari received a B.S. degree from the U in 1992 and immediately entered the Ph.D. program. The gloves remained off and, Bajari says, that arduous preparation was invaluable. "A great thing about going to Minnesota was they gave you such a rigorous technical training that you could [pick up advanced techniques] on your own," he says. That rigor and advanced know-how also boosted Bajari's rising national reputation.
"When I got my doctorate [in 1997], I had 15 job offers from almost all the best econ departments in the country and a few of the top business schools as well," says Bajari, who accepted Harvard's offer first, then went to Stanford for five years, then to Duke for a professorship, and next to the University of Michigan. When Minnesota made him an offer in 2006, he couldn't say no. For one thing, both he and his wife, Phuong, an attorney and also a U of M graduate, have large families in Minnesota, and they love Minneapolis. "An absolutely first-rate city," says Bajari, who especially loves the lakes and parkways.
But even more important is the quality of the economics department. There's something about the culture of the economics program here, he says. Students and teachers alike are evaluated according to their ability, not their background. "Here you're judged on your merits, not who you are or where you're from," he says. "There's no such thing as entitlement. It's very rigorous, but also very egalitarian."
Hard workBajari works long hours and expects nothing less of his students. "I believe in hard work," he says. That commitment to hard work shows with his graduate advisees in particular. "I've picked up about 10 Ph.D. students since I moved here, and I ask them to do the work right. I ask them not to cut corners. I want them to ask good questions, gather original data, and be technically on the cutting edge. I work them very hard."
Bajari won't get any argument from Greg Lewis, a Bajari advisee at Michigan who just received a job offer from Harvard. "He believes [in] pushing people," says Lewis. "He's on top of what's going on in economics and he's willing to work with students to get good results for them. And you know, that's fantastic."
Of course, it wasn't that long ago that Bajari was a Ph.D. student himself. And John Geweke, one of his dissertation advisers at the U, recalls that Bajari not only worked hard, but also developed skills in a wide range of areas. Bajari's dissertation was outstanding, says Geweke, because it pulled together detailed data, advanced econometrics, Bayesian analysis, and auction theory.
"He did all of these things in one piece of work," recalls Geweke, "which is something that most economists never do in an entire career, at least not at the level that Pat did." Bajari also excelled at oral exposition. "He was so clear that, figuratively speaking, I just about fell off my chair," says Geweke of Bajari's first presentation of his work. Now at the University of Iowa, Geweke continues to follow Bajari's research: "He gets better and better. And he has certainly become a very highly respected economist in a very wide swath of the profession."
Back homeAfter years of teaching in private settings, teaching at a public university holds great appeal for Bajari. "I like teaching at a place with more of a public mission," he says. "Teaching at the elite private universities was enjoyable, but their mission is not a public mission in the way it is for a big land grant university. These institutions are here to serve the people of the state."
And in Minnesota, they serve people and places that Bajari knows well. Like the students at Sigma Nu fraternity, where Bajari serves as an academic adviser. Bajari knows people in the towns his students are from. It serves his sister, who just got her master's degree at the U, and two of his cousins, who currently attend. "I feel more of a bond with this place," he says. "I feel better about giving something back to Minnesota."
A big part of that loyalty is simply that the U gave him an opportunity that he probably couldn't have gotten elsewhere. "When I was a kid growing up in central Minnesota," he says, "the U of M was a research university that was accessible to the public." Students in rural America don't often have the chance to go to the private universities where Bajari has taught, he notes. "Those places aren't thinking about 'How can we serve kids from central Minnesota?' Well, the U does think about things like that. And I feel great about being part of that mission."