In a recurring Stanford Business magazine series, Graduate School of Business faculty open up about the personal objects that have earned a place in their offices. More than decorations, the items represent formative experiences, serve as teaching tools, and reflect on big ideas.
Here, we spotlight a few standouts, including a celebratory pickle costume, a long-held banknote collection, a leather whip used to explain supply chain dynamics, and a photo with a former Fed chair carrying an important lesson.
Annamaria Lusardi’s photo with Ben Bernanke
Annamaria Lusardi’s photo with Ben Bernanke. | Elena Zhukova
In the fall of 2010, I was invited to give a seminar at the Federal Reserve. At lunch with some Fed economists, I asked if it would be possible to meet with Chairman Ben Bernanke. I could almost read their minds: This newcomer thinks she can just walk in and meet with the chairman?
As I tried to explain, I had studied with Bernanke when I was a graduate student at Princeton. My work was focused on the nascent field of financial literacy, and Bernanke was a strong advocate of its importance, not just for individuals’ economic well-being but the country’s. I figured that, given our common interests and proximity, we might do some projects together.
After my initial meeting at the Fed, a kind soul sent me the email address of Chairman Bernanke’s secretary with a note that assumed I would not have the audacity to actually contact her. I wrote to her right away. She responded the same day (I still remember her name: Rita), and we set up a meeting with the chairman the following week.
I must admit, I became increasingly nervous as the time approached. As I went through three layers of security to get to his office, I became even more tense. Chairman Bernanke welcomed me with a big smile, and we talked about our time at Princeton and my move to Washington, D.C. Most importantly, we talked about how the Fed could help with research on financial literacy. We agreed to start a joint seminar series on the topic.
That seminar series lasted for more than 10 years, well beyond Bernanke’s tenure as Fed chair. And it lives on: It recently moved to the GSB and has become the Financial Literacy Colloquia, a series of lectures and discussions sponsored by the Initiative for Financial Decision-Making, which I direct.
Chairman Bernanke also agreed to teach a course at GW’s business school on the role of the Federal Reserve. He gave the first four lectures, and then a group of academics, including myself, did the rest. (You can bet it was very difficult to teach after him!)
We took a group photo at the end of the course in the spring of 2012. I keep it in my office as a reminder that you do not get what you want if you do not ask for it.
Michele Gelfand’s pickle costume
Michele Gelfand’s pickle costume. | Elena Zhukova
When I was at the University of Maryland, we submitted a paper to Science. It was a long shot. Science is the kind of journal where typically you publish something about how you found a new planet. I told my postdoctoral student, “Look, if this gets accepted, then I’m going to dress up as a giant pickle and we’re going to go around Washington, D.C., in a limousine and celebrate.”
I’m a cross-cultural psychologist. I’m interested in social norms – unwritten rules for behavior that sometimes get formalized into laws and other codes. Tight groups have a lot of order; they have more coordination and synchrony and self-discipline. “Loose” groups struggle with these things, but they corner the market on openness. They’re more tolerant, more creative, more adaptable.
Part of our culture group’s recent work is looking at ambidexterity: How do you help systems that are very tight have some looseness inserted into them? We call this “flexible tightness.”
The pickle costume’s connection to all this is that I was trying to insert some looseness into a pretty tight agenda. It requires a tight ship when you’re trying to implement large-scale research projects, when you’re trying to get funding, when you’re exploring interdisciplinary collaborations. We do very ambitious projects, some of which fail. Providing a space for people to feel celebrated and relax a little bit is really important because I think it helps deal with the difficult demands of research.
When the paper got accepted by Science, I went into my postdoc’s office and I said, “I have really bad news. It looks like I’ve got to wear this ridiculous pickle costume and we’ve got to go around D.C.” And that’s what we did.
I promised my students here at Stanford that we’ll continue the tradition. When we heard from the Templeton Foundation that we’d be getting $1.7 million to study the evolution of trust across cultures, Ying Lin, my postdoc and partner on this proposal, dressed up as a pineapple. Pre-doc Basti Weitz dressed up as an avocado and grad student Alex Landry dressed as a lion. And of course, I broke out my pickle costume.
Hau Lee’s bullwhip
Hau Lee’s bullwhip. | Micaela Go
After I got my tenure, I had a sabbatical and joined Hewlett-Packard because I wanted to see how real companies operate. One time, I was invited to visit Procter & Gamble. The vice president of supply said, “We have a major problem because the demand for our diapers fluctuates a lot. It’s very unpredictable.”
But babies use diapers at a very stable, steady rate – there’s not much fluctuation. Yet, as we go from babies to parents, retailers, distributors, wholesalers, manufacturers, and suppliers, the order fluctuations get amplified. Why was this happening?
We observed that the same phenomenon was not just happening in diapers. It happened in apparel, it happened in semiconductors, in computers, in automobiles. Every industry has this kind of phenomenon. The danger is in overreacting. Sometimes you see a big demand, and you jump and produce a lot more. It turns out that is a peak, and then it will go down.
This is the bullwhip effect. Why is it like a bullwhip? When you are a cowboy and you crack the whip, you move the handle 60 degrees, and the tip will move more than 360 degrees. Sometimes, a signal can move a little bit from consumer to retailer to distributor to wholesaler to manufacturer to supplier. Everyone adds something to the signal, and it results in a big surge, up and down.
The pandemic is a great illustration of this. Even the media used the term “bullwhip”: bullwhip of toilet paper, bullwhip of hand sanitizers, bullwhip of everything. We were relying on short-term data and then we produced a whole lot more. Consumers panicked, too. They didn’t realize there was ample supply coming in.
Our paper describing the bullwhip effect was later voted one of the 10 most influential papers in the history of Management Science. Years later, I was giving a talk to executives. One was very impressed. He said, “Professor Lee, the description of the bullwhip is great, but why don’t you have a real whip to demonstrate?” A month later, he sent me a gift – a very nice box with a leather whip.
I use it in teaching. Maybe 60% of the time, I can crack the whip. I invite my students to crack the whip. They love it. I have students from 20 years ago who come back and say, “Professor Lee, I still remember your bullwhip. I don’t remember anything else. But I remember your bullwhip.”
Matteo Maggiori’s banknote collection
Matteo Maggiori’s banknote collection. | Elena Zhukova
This collection of banknotes was originally assembled by my grandfather. He was interested in international finance and started it while traveling and getting banknotes from places he had visited. I inherited it when I was 12 or 13 and started adding to it with him. We were very close and part of my interest in finance certainly came from speaking to him.
The earliest specimens are from the 1920s and 1930s. A lot of the banknotes are from the ’60s, the ’70s, and the ’80s. One of the most beautiful is this one-pound banknote from the Bank of England with a young Queen Elizabeth. It’s such an elegant banknote. It’s really gorgeous.
I’ve used the collection as a teaching prop, mostly to make concrete what a currency is. All of us are familiar with banknotes. But when you look at how they reflect historical episodes and changing boundaries through the ages, they really give you a sense of why this is something that a government does.
Coins and hard currency have 3,000 years of history. Paper currency has a much more recent history as a viable instrument. For a long time, currency was backed by gold. The modern nation-state could be trusted in many dimensions, but monetary affairs weren’t one of them.
Unbacked currency is a recent phenomenon. It came with trust in both the fiscal parts of the government and monetary policy that would keep prices relatively stable. When you get a dollar, you think the full faith of the U.S. government is going to honor that payment. But really, we mean a much deeper statement of the value of the currency: It’s a statement about inflation.
Inflation – to print more money – is a cheap way to finance the state. And governments, even reputable governments, have repeatedly resorted to this. I have a collection of banknotes from Zimbabwe when it had runaway inflation in the 2000s. You can see they kept adding zeros and zeros: 200 million, 500 million, a billion dollars. These illustrate how a currency can get completely debased over a short period.
The history of currency is the history of the rise and fall of geopolitical powers – from the Medici in the Renaissance to the Netherlands to Britain in the early part of the 20th century to the U.S. since World War II. One can take a lot of comfort in the idea that another currency is not going to rival the dollar in many of its uses anytime soon. If anything, from a share of usage perspective, the dollar is even more central than it has ever been. Yet the more the U.S. uses the current system to exert influence, the higher the incentives are for countries like China to try to build an alternative.
