( da Forbes.com)
Alvin Roth sees plenty of ways economics can make a difference in people's lives. In contrast with the authors of bestselling books like Freakonomics, who are fascinated by obscure but intriguing questions like how to detect cheating by sumo wrestlers, Roth relishes real-world challenges. "Some say economics has all kinds of good tools and techniques, but it has an absence of interesting problems," notes Roth, 58, who holds a joint appointment in the Harvard economics department and the business school. "I look around the world, and I see all kinds of interesting, important problems we ought to solve with the tools we have."
In particular Roth uses the mathematical tools of game theory to find fixes for big, broken systems. Over the last 20 years he has pioneered a branch of economics known as market design. Among Roth's accomplishments: designing networks for kidney donations and creating elegant systems that enable huge urban school districts to optimally place multitudes of students among hundreds of schools.
"He's unusual, because he's highly respected as a theorist, but he's also working directly in the field," observes Eric Maskin, an economist at the Institute for Advanced Study in Princeton, N.J. and corecipient of the 2007 Nobel Prize in economics for theoretical work on market design. "Al has managed to find ways to adapt the theory in very clever and ingenious ways."
The most daunting real-world problem Roth has solved so far: New York City's high school match, which he tackled in 2003. While many American kids simply attend their neighborhood high school, eighth graders in big cities like New York face a staggering number of choices. In theory, at least, each of the city's 80,000 eighth graders has the option of going to any one of 700 high school programs. The right match can be especially meaningful for kids who live in impoverished neighborhoods with lousy schools. Before Roth got involved, the matching system was so screwed up that a third of the city's eighth graders didn't even participate. "It was like a crowded, crazy bazaar somewhere in the Middle East," recalls Neil Dorosin, a former New York Department of Education official.
Roth, aided by a Harvard graduate student and a young economist at Columbia, redesigned the system using a version of what's known as a deferred-acceptance algorithm. Roth has used modified forms of this same algorithm to design matching systems for Boston's public school system and for placing medical school graduates with residency programs.
