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VOL. 23, NO. 7OCTOBER 24, 1997

Engineering Grad Merton Is 57th Columbia Nobelist


By Bob Nelson

The latest Nobel laureate in economics has some fond memories of his undergraduate days at Columbia.

  "I had terrific training," said Robert C. Merton. "I was in engineering mathematics, a small program that allowed me the freedom to take lots of different courses, including graduate courses, in various parts of the University. That's what so attracted me. And so I took accounting in General Studies, and mathematical sociology with the late Paul Lazarsfeld in the graduate school, and, of course, Contemporary Civilization in the College, and lots of mathematics everywhere, along with engineering courses in plasma physics, fluid dynamics and electrical engineering.

  "In fact, I didn't realize until I arrived for orientation that there was any difference between the College and Engineering. So I switched from Columbia College to the engineering school two days after I arrived."

  Merton, a 1966 alumnus of Columbia's Fu Foundation School of Engineering and Applied Science and son of renowned Columbia sociologist Robert K. Merton, will share the 1997 Nobel Prize in Economics for his work in options pricing. "It's such a signal honor, how could you not be thrilled and happy?" he said.

  He is the 57th Nobel laureate who taught or studied at Columbia, and the third Nobelist to graduate from the engineering school. Irving Langmuir, who earned a 1903 Metallurgical Engineer degree and was awarded an honorary doctorate in 1925 from Columbia, won the 1932 Nobel Prize in Chemistry for his work in surface chemistry. And Edward C. Kendall, a 1908 B.S. in engineering and a 1910 Ph.D., was awarded the 1950 Nobel in Physiology or Medicine for his investigations of the adrenal cortex and isolation of cortisone.

  Merton, the George Fisher Baker Professor of Business Administration at the Harvard Business School, will share the prize with Myron S. Scholes, professor emeritus at Stanford's Graduate School of Business, for work they did with the late Fischer Black in the early 1970s at M.I.T. The two economists will formally receive the prize in Stockholm in December and will share a cash award of $1 million.

  In the preface to his book, Continuous-Time Finance, published in 1990 and revised in 1992, Merton lauded Columbia's engineering school. "With its small and flexible program and fine faculty, Columbia was a great place for an undergraduate to explore mathematics and its applications. It was there I first became intrigued with stochastic processes and optimal control theory." He inscribed a volume to John Chu, his professor for a course in heat transfer, noting that Chu introduced him to his first partial differential equation and to much advanced mathematics.

  "He really did learn how to apply mathematics to real life, and apparently he liked the course sufficiently that he discussed with his father what he had learned," said Chu, now Fu Foundation Professor of Applied Mathematics.

  "It's gratifying to know that Columbia's engineering school provided the grounding that saw Robert C. Merton through a career in advanced mathematics and economics," said Zvi Galil, dean of engineering.

  "That he solved his first partial differential equation at Columbia, and decided to keep solving them, is a wonderful inspiration to our engineering students and faculty."

  After receiving a B.S. in engineering mathematics from Columbia, Merton went on—with John Chu's encouragement—to graduate study at CalTech, where he received an M.S. in applied mathematics in 1967. He earned the Ph.D. in economics in 1970, then taught at M.I.T.'s Sloan School of Management until 1988, when he joined the faculty of Harvard Business School.

  Born in New York in 1944, Merton had always had a keen interest in markets and trading. He bought his first share of stock at the age of 10. "Mathematics was for him a language from the very early years," said Robert K. Merton, now University Professor Emeritus at Columbia. "He certainly did not get that from me. But he liked solving problems, and he liked it even better if those problems involved the world."

  On learning of his son's Nobel, Robert K. Merton raced up to Cambridge to be with his son. Merton founded the sociology of science, and his wife, Harriet Zuckerman, vice president of the Mellon Foundation, professor emerita of sociology at Columbia and the Nobel winner's stepmother, is an expert in how the Nobel can affect its recipients. Often they experience a loss of productivity once increasing public demands are made of them, and Merton passed on to his son what Zuckerman had learned.

  But Merton is happy and proud for his son. "We know the prize represents the judgment of his most knowing peers," the elder Merton said. "In the world of learning, there isn't a more demanding judgment."

  Has the father influenced the son? "I'd answer that by telling you that for the last 30 years, we have pretty much talked every day," Robert C. Merton said. "And often many times a day.