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Faculty News February 23, 2022

Office Hours with Gene Grossman

Gene GrossmanFor Gene Grossman, the year 2022 marks 42 years since he arrived in Princeton to join the faculty of the Department of Economics and the Princeton School of Public and International Affairs (SPIA). In that time, Grossman has written three books on international trade, edited many more, and published well over 100 academic papers and journal articles.

But even Grossman, who has long been recognized as a giant in the field of international trade, can admit that sustaining a research agenda is hard, consistently challenging work.

“The hardest part of being a researcher is coming up with the idea for the next paper,” Grossman said. And yet, the ideas keep coming.

Today, Grossman is busy studying if and how governments should intervene to make supply chains more resilient.

“Supply-chain disruptions have become the new normal since the pandemic began,” Grossman said. “Many politicians and commentators blame globalization and believe that governments should be taking actions to encourage firms to diversify their supply sources and to bring sourcing closer to home. But firms have their own incentives to avoid disruptions, so it’s not obvious that their investments in resilience will be sub-optimal without government policy intervention.”

For Grossman, the promise of economics lies in its ability to combine rigorous analytical thinking with a focus on social interactions, thereby allowing us to understand complex systems and explore important policy questions. To produce research with real-world impact, Grossman encourages young researchers to look beyond professional journals for research inspiration.

“Read the Economist and the Financial Times and think about how the questions and issues being raised there can be better understood using our tools. Focus on important questions that are more than slight technical advances on the last published paper.”

Where human behavior meets trade policy

From his early work on the role of innovation in the global economy to decades of study of the political and social forces that shape trade policy, Grossman’s research—often conducted in partnership with Harvard’s Elhanan Helpman—helped build the foundation for our understanding of an increasingly globalized world.

That work has continued today. In “Identity Politics and Trade Policy,” Grossman and Helpman study how trade policies are influenced when a voter’s sense of wellbeing is influenced by not only material concerns (for example satisfaction from consumption), but also psychosocial components.

Highlighted Research
 Identity Politics and Trade Policy
with Elhanan Helpman
 Supply Chain Resilience: Should Policy Promote Diversification or Reshoring?
with Elhanan Helpman and Hugo Lhuillier

Borrowing from social identity theory, Grossman and Helpman study the pride and self-esteem individuals draw from seeing themselves as parts of a group, along with the cognitive dissonance they may bear from identifying with those whom they see as different from themselves.

“In this setting, changes in social identification patterns that may result from, for example, increased income inequality or heightened class or ethnic tensions can lead to pronounced changes in trade policy.”

“This observation may help to explain the protectionist policies of recent years, when the white working class has narrowed its identification to exclude elites and, as a result, has become more populist in its trade policy preferences.”

“The academic life suits me.”

When he’s not teaching and conducting research, Grossman enjoys a calendar full of varying experiences from theater to sporting events, downhill skiing and scuba diving, and lots of international travel and cuisine.

Grossman acknowledges that his desire to learn new things and seek out new experiences is part of what makes anyone—himself included—well-matched to an academic lifestyle.

“The academic life suits me, with its freedoms and opportunities to constantly learn,” he said. “I am always amazed that someone is willing to pay me to spend my time thinking about things that interest me and to learn more about the world.”

He says the opportunity to “interact with really smart people” and to “forge friendships across generations” is what has made his time at Princeton so enjoyable.

“I also appreciate that so many of my colleagues and students have an international background, which opens the window to many different cultures and ideas.”

To learn more about Grossman’s research, visit his personal research page.

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