Welcoming Remarks:
Event Introduction by Paul Rohde, Economics Department Chair. Special guest Hal Variant, former professor, Dean of Information School at Berkeley, and current Chief Economist at Google.

Interaction with Students:
Discussion with undergraduates, focusing on career opportunities. Combining economics training with technology-focused jobs.

Economic Alumni Relationship Network:
Encouragement to enroll in the network. Part of the university’s opportunity hub or LSA’s opportunity hub. Contact person, Lisa.

Future Events:
Economics Leadership Council visit and interaction. Building career networks and strengthening alumni connections.

Guest Speaker Introduction:
Hal Variant, former professor, now Chief Economist at Google. “Godfather of the in-house economists in Silicon Valley” Role model and contact for many in the field.

Becoming an Economist:
Hal Varian grew up on a farm in Ohio, fueling his interest in science fiction and the idea of predicting societal behavior using social science models. Pursuing his passion, he majored in economics at MIT, supported himself through computer programming, and earned a Ph.D. in economics from UC Berkeley.

Computer Programming and Economic Research:
Varian’s programming skills proved valuable in developing economic models. During his undergraduate years, he worked on a Fortran model of the Indian economy, and as a graduate student, he used programming to contribute to Nobel Prize winner Dan McFadden’s econometric techniques.

Teaching and Technological Tinkering:
Varian taught economics at MIT and the University of Michigan. Concurrently, he kept abreast of the emerging personal computer field and the technological developments related to the internet.

Exploring Internet Economics:
Recognizing the need to understand the economics of the rapidly evolving internet, Varian collaborated with Frank Stafford to examine funding and costs. Their work centered on the privatization of the internet, which was initially limited to universities and research organizations before becoming publicly accessible in 1995.

Reforming Library Education and Digital Libraries:
Varian’s involvement in a committee tasked with restructuring the library school at the University of Michigan led him to study the emerging field of information technology. The National Science Foundation’s Digital Library Program highlighted the potential of broadening access to academic and research content online.

From Committee Member to Dean:
Varian’s interest in the intersection of information technology and academia led him to apply for the position of dean at UC Berkeley’s new School of Information. Despite initially discarding the offer letter, he reconsidered, appreciating the school’s vision, and eventually became its first dean.

Building a Faculty and shaping the School’s Direction:
As dean, Varian hired experts in copyright and cyber law, human-computer interaction, and security, forming a diverse and interdisciplinary faculty. This groundwork laid the foundation for the School of Information’s innovative approach to educating students in the rapidly changing digital landscape.

Google’s Early Days and Economic Insights:
Hal Variant joined Google in 2002 after meeting Eric Schmidt, who had read and been impressed by Variant’s book, Information Rules. Variant was drawn to the excitement of a startup and spent a year working on various projects, including the ad auction system that would become a major revenue source for Google.

Consulting and Full-Time Role at Google:
After returning to Berkeley for a year, Variant continued to consult for Google one day a week. In 2007, Variant made the full-time switch to Google, where he has worked for the past 14 years, serving as chief economist since 2007.

Focus on Economic Policy Related to Technology:
In recent years, Variant has focused on economic policy related to technology, including security, privacy, antitrust, taxation, copyright, and patents.

The Importance of Information Economics:
Variant believes that economics plays a crucial role in analyzing and shaping policy questions related to technology. Information economics, a field that he has helped pioneer, has become increasingly critical in understanding the digital economy.

Mentors in Hal’s Undergraduate Years:
Hal’s undergraduate advisor, Duncan Foley, played a significant role in guiding him towards interesting areas of exploration. Foley’s influence led Hal to write his PhD thesis on a topic that Foley had originally examined, driven by curiosity about his advisor’s work.

Mentorship from Dan McFadden:
In graduate school, Hal worked with Dan McFadden, who developed econometric techniques due to computerization and increased computational availability. McFadden was another mentor for Hal.

Hal’s Experience as a Mentor:
Hal has also been a mentor to students during his career. He recalls mentoring students at the University of Michigan, keeping in touch with some even after many years.

Importance of Mentors:
Hal emphasizes the value of having a mentor, who can provide guidance, point out interesting resources, and facilitate collaboration. Mentors can take different forms, from those who provide general guidance to those who work closely on structured projects.

Michigan’s Strength in Mentorship:
Hal acknowledges the strength of the University of Michigan in fostering mentorship despite its size. He highlights the remarkable level of personal interaction that can occur within the university, enabling meaningful mentoring relationships.

Interview Overview:
This interview focuses on industry insights, particularly in technology, as shared by Hal Variant, a renowned expert in the field.

Technology Bubble and Google’s Success:
Variant shares that he believed the technology bubble had burst in the late 1990s when he co-authored the book “Information Rules.” The timing of the book’s publication, which addressed the economics of information technology in depth, fortuitously coincided with the dot-com boom, contributing to its success. The dot-com bust in 2000 was advantageous for Google as it allowed the company to hire experienced website professionals who were available and willing to work for options.

Impact of Information Technology:
Variant emphasizes how the widespread adoption of personal computers in the early 2000s significantly influenced business practices. He observes that despite the remarkable advancements in technology, productivity gains have not fully matched expectations, citing the smartphone as the revolutionary technology of the time. Variant highlights that people have become increasingly connected and communicative due to smartphones, extending into social and business activities.

Advice for Students Entering the Tech Industry:
Variant suggests two career paths for students interested in the tech industry. For those with undergraduate experience in computer science or engineering, roles such as program manager or product manager combine technical and business knowledge. Alternatively, students can pursue traditional business fields like marketing or finance, while also acquiring sufficient knowledge of technology to engage in meaningful conversations. Variant emphasizes the importance of having a solid understanding of databases, econometrics, statistics, and some basic business topics to adapt to various roles. He encourages students to take advantage of specialized courses offered at the university to enhance their skillset.

Value of a PhD:
Variant acknowledges that PhD programs have become lengthier, taking approximately five years to complete. He suggests that a PhD is suitable for individuals deeply passionate about a specific subject and willing to commit to extensive immersion. However, he notes that a master’s degree or even a bachelor’s degree can suffice for many roles if supplemented with additional skills. Variant advises students to carefully consider their goals and ensure that they are fully committed to pursuing a PhD before embarking on the five-year program.

Opportunities in Big Tech Giants and Startups:
Variant confirms that big tech giants offer comparable opportunities for individuals with economics degrees to those found in small tech startups. He highlights the benefits of working for a startup, including the opportunity to learn broadly and gain exposure to various aspects of the business. However, he cautions that the failure rate of startups is high, with only a small percentage achieving significant success. Variant encourages exploring startups for the learning experience and possible financial rewards but advises aligning financial goals with this path. He mentions the increasing demand for talent in the technology sector, leading to a broader search for candidates in various locations, including Ann Arbor.

Personal Experience and Expertise:
The narrator is a micro economist who has worked in the macro economy. They stay updated by reading economic blogs, newsletters, and newspapers.

Education and Career Path:
Most people with a Ph.D. go directly from undergraduate to the program. The narrator went from undergraduate to a Ph.D. program. Some people work in other areas, but return to economics or finance. The narrator has also worked in finance in areas like financial markets.

Differences Between Working in Business vs. Academia:
In academia, projects might take months or years to complete. In business, you are lucky to have two weeks. In business, you constantly have new problems to solve. In academia, you can work on a problem for a long time.

Current Preference:
The narrator prefers the business environment where there is a new question every week.

Google’s Hiring Process:
Google employees are often described as “smart creatives” due to their ability to solve non-routine problems. Interview questions are designed to assess a candidate’s creativity and problem-solving skills.

Interview Question Example:
A question about forming teams of people with different interests and skills. The interviewer is looking for a thoughtful and operational approach, rather than a perfect solution.

Assessing Creativity:
There is no right answer to the question; the goal is to evaluate how the candidate approaches the problem. The candidate’s ability to think critically and come up with practical solutions is key. The interview is more about the process of solving the problem than the solution itself.

Change in Variant’s Role after Alphabet’s Creation:
With the establishment of Alphabet as Google’s parent company, Variant’s role as chief accountant remained largely unchanged. This is because Alphabet acts as a holding company, allowing individual companies within the group to maintain their autonomy in terms of capital budgeting, spending, and earning expectations. The focus of Variant’s work continues to be financial cost management, revenue reporting, and resource allocation across these disparate groups.

Variant’s Approach to Undergraduate Theses:
Variant emphasizes the value of exploring small, local, well-defined economic problems for undergraduate theses. He believes that such topics offer a rich opportunity for original research and insights. He cites examples of successful theses written by his students on topics such as barber compensation, liquor licenses in Michigan, and the local taxi industry in relation to Uber.

Importance of Originality and Local Focus:
Variant urges students to select thesis topics that are unique and contribute original insights into how economic institutions operate in specific environments. He encourages them to look for economic puzzles or problems within their own communities that can be studied and analyzed.

Google Consumer Surveys and IRB Considerations:
Variant mentions Google Consumer Surveys as a tool for conducting surveys at Google. These surveys are inexpensive and allow researchers to ask a single or qualifying question to online audiences. Variant acknowledges that IRB approval may be required for surveys, but he notes that Google’s system allows for quick deployment of surveys, which can be advantageous in some cases.

Collaborations with Publications and Financial Benefits:
Google Consumer Surveys provide a unique opportunity for researchers to collaborate with online publications. Publications can use these surveys to gather valuable information from their readers and gain revenue through the paid answers model. Publishers can earn five cents per answer, which is far more lucrative than ad revenue for them.

Versatility of Google Consumer Surveys:
Variant highlights the versatility of Google Consumer Surveys, allowing researchers to ask a variety of interesting questions. He mentions an example where he asked about the overall impact of international trade on the U.S. economy. Such surveys can yield valuable insights into regional variations, demographics, and correlations with other factors like educational attainment.

Google Consumer Survey (GCS):
GCS is a valuable tool for conducting surveys, allowing researchers to examine patterns and analyze responses. It provides insights into people’s attitudes and preferences.

GCS Incentives:
GCS offers compensation for participation through Google Play credits, encouraging people to become regular survey panelists.

GCS Demographics:
GCS gathers basic demographic information about panelists, enabling researchers to target specific populations and conduct longitudinal studies.

Short, Direct Questions:
GCS surveys are designed with short, straightforward questions to minimize cognitive load and encourage rapid completion.

Productivity Measurement:
Case study: Estimating the number of photos taken globally using GCS data and Google Photos uploads. Calculation: Leveraging market share data from the GCS consumer survey to estimate the total volume of photos uploaded. Insights: Productivity in the photo industry increased significantly due to declining costs and increased volume, with photos taken in 2015 estimated at 1.6 trillion.

Teaching Career and Textbook Authorship:
Hal Variant taught intermediate microeconomics (401), graduate microeconomics (601), and a finance class at MIT. When he taught graduate microeconomics, there was no textbook available, so he wrote class notes that eventually became the successful graduate book “Microeconomic Analysis.” In response to requests for an undergraduate textbook, he wrote “Intermediate Microeconomics,” which combined rigorous thinking, mathematics, and real-world examples. This undergraduate textbook is now in its ninth edition, with the 10th edition expected in the coming years.

Working in Both Economics and Software Engineering:
Variant had experience in both economics and software engineering, working as a computer programmer while an undergraduate at MIT. He sees some cultural differences between the two fields, but for him, the alignment with his interests was a good fit. To succeed in the software engineering industry, a deep understanding of technical and engineering concepts is essential.

The Integration of Tangible and Intangible Goods in the Global Economy:
In the modern global economy, there is a growing interaction between tangible and intangible goods. Companies like Apple design and develop products like the iPhone in locations like Cupertino, California, and then ship the design to manufacturing facilities in China, where the physical product is assembled.

The Global Supply Chain and Factory-Less Goods Production:
The production of goods now often involves a global supply chain, where different components of a product are manufactured in different countries. This model of factory-less goods production is exemplified by Apple, which designs the iPhone in the U.S., assembles it in China, and sells it worldwide.

The Distribution of Value in Modern Goods:
In products like the iPhone, a significant portion of the value lies in the design and software, which are developed in the U.S., rather than in the physical assembly, which takes place in China. This contrasts with traditional manufacturing, where the majority of the value was associated with physical labor and materials.

Challenges in Measuring Economic Output in a Globalized World:
The emergence of global supply chains poses challenges in calculating economic output using traditional measures like Gross Domestic Product (GDP). The movement of physical goods is recorded in customs data, but the transfer of intellectual property and intangible value is not captured, leading to an incomplete picture of economic activity.

The Impact of Intangible Factors on Economic Measurement:
Factors such as intellectual property, design, and customer preferences, which influence product sales and value, are not adequately reflected in GDP calculations. This omission leads to inaccuracies in measuring economic output and understanding the dynamics of modern economies.