Category: Campus News

Are you learning “rational” economics?

By Leif Olson

It began with a simple question: Are people rational actors? More importantly, are people rational enough that we can predict and model their behavior?

Many SAISers will recognize this as the fundamental question that economics, and, to an extent, social science in general, is trying to answer. 

But, to what degree do economics courses at SAIS get at this fundamental question? After slogging through hours of calculus or game theory to answer ostensibly simple questions like which combination of goods satisfies a consumer’s preferences, many students may feel exasperated and discouraged. After all, I certainly don’t use calculus to decide what I’m buying at the grocery store, and I assume you don’t either.

Consider a game of Tic-Tac-Toe. When children play the game, normally the child who is older and has played the game before will win. This is an example of asymmetric information. Now, imagine that both players are SAIS students who have played the game several times in their respective lives. The game will, nearly every time, lead to a draw. Imagine that the game is an analogy for the simplified economic models SAISers learn in our economics classes, where a tie is the market-clearing equilibrium. Simplified systems lead to predictable outcomes.

By contrast, the real world market functions somewhat like a hyper-complex game of chess, where rational choices often are obscured amidst the complexity. Even in situations where the rational choice seems obvious, people often choose the economically irrational option for reasons that range from altruism to bias to emotional attachment. 

How, then, do intelligent people reconcile the economic models they learn in Micro, Macro, Trade and Monetary with the complex reality of global economics?

When asked about the assumption that people are rational actors, Dr. Mine Senses, an Associate Professor of International Economics at SAIS, responded in good humor: “I do believe people make irrational choices…I do interact with people in my daily life.” She went on to say, “But in the aggregate—especially when we think about macro questions or trade questions, how people respond to prices in aggregate, how they respond to income changes in aggregate—do I think the models describe reality in a reasonable way? I do.”

Rather than provide a perfect model of human interaction, Dr. Senses explained that economics is just one part of a more holistic understanding. “I can totally think of contexts where the rationality assumption is invalid,” she said. “But once you understand how the model works when individuals are selfishly making decisions, it’s not too hard to modify the model so that you have individuals who also think about the greater good as well as their own welfare.”

Indeed, the models we learn in the International Economics Concentration are simplified. But one must first develop a sophisticated understanding of a simplified model in order to then incorporate more variables and bring the model closer to reality. So what are these complex variables and how can SAIS students learn about them?

Say you enter a restaurant. Should it makes a difference whether calorie count is listed before or after the price on a menu? In an economic model based on perfect information, the order in which you receive the information should not matter at all. However, as Dr. Jason Fichtner, Associate Director of the Masters in International Economics and Finance (MIEF), teaches in his Behavioral Economics course, the order often significantly alters a person’s choice. Dr. Fichtner explains that it is not just the information or the choice that matters but also “the framing of that choice, the architecture of that choice [which] changes the behavior.” “This,” Dr. Fichtner continues, “technically, is not rational.” Yet behavioral economists have discovered that calorie counts only entered the “choice architecture” of a consumer when it was the first thing they read (i.e. when the calories were on the left). According to Fichtner, when calorie counts appeared on the right side (after the price), they rarely affected people’s decision-making. This subtle behavioral tic would be left unaccounted for in a basic rational decision-making model. 

When asked how to reconcile this with the four courses of the International Economics concentration, Dr. Fichtner said, “You have to understand the basics of how any sort of historical model of economics is taught before you can have discussions of the nuances and why the models don’t necessarily apply in the real world.” He continued, “In some places, behavior trumps standard economic models—but you won’t understand why, you won’t understand that nuance, until you have the foundational economics to begin with.”

The four International Economics courses are an introduction to how economics works in the real world, but they do not tell the whole story. However, if we want to understand how people act in the real world, we need a starting point to extrapolate from. “You can’t build the second floor before you build the first,” Fichtner said.

SAIS alumna Emily Hardman Rodgers, who currently works at the Millennium Challenge Corporation, agreed with Fichtner’s analysis, saying, “The basic economics courses at SAIS certainly gave me a better understanding of policy.” When asked what she would change about the economics requirement at SAIS, Rodgers stated, “I would definitely make sure students understand more policy and real-world implications surrounding economics… a lot of the courses center on figuring out equations and models that aren’t necessarily relevant in all lines of work.” She continued, “I’ve found that the fundamental assumptions [of economics] do hold in theory, but when one experiences these models in the real world, they’re normally much more complex.”

Perhaps changing the way our economics courses are taught is not the solution. As Dr. Fichtner stated, “It could be a question, not of changing the courses, but of offering more courses, and allowing students to take one of the electives as a core.” By taking a policy-oriented course which uses economic intuition, SAIS students may feel that their economics courses are more relevant. Courses like Fichtner’s Behavioral Economics will give students a perspective that may be more palatable to those left unconvinced by the assumption of human rationality.

Life after SAIS: Dialogues with young alumni at the International Monetary Fund

September 24, 2019

By Yilin Wang

WASHINGTON, D.C. – This week, the SAIS Observer sat down with four recent SAIS graduates who shared a common interest in macroeconomics despite their different backgrounds. They shared stories of how attending SAIS changed their lives—often in ways they had not expected—and which courses from SAIS’s extensive catalog have had the greatest impact on their careers.

For Miguel Mendes, a 2017 MA graduate who concentrated in Latin America Studies, his path to his current job in the African Department of the International Monetary Fund (IMF) was all but linear. “My first job out of college was a financial auditor, and then I also worked as an economic adviser in the Portuguese cabinet for a while. My work at the government focused on private sector development and export promotion, and it was through this experience that I first got to engage in work related to the emerging markets. I kind of built on that experience later when I pursued a specialization in emerging market at SAIS; I also did an internship at the World Bank office in Brazil through my concentration, which was a valuable on-ground experience that allowed me to observe different worlds and see different realities.”

While at SAIS, Miguel took a broad variety of regional studies courses deepening his knowledge of Asia, Africa and Latin America, along with coursework in emerging markets. “I think courses where you could learn hard skills are important, but it’s also imperative that you understand the story behind the numbers. In that sense, the regional courses at SAIS are very helpful,” he said.

Fellow SAIS alumna Mengyi Li, who graduated from the MA program in 2018 and recently joined the Commodity Unit at the IMF, also found that her career aspirations changed over the course of her time at SAIS. “I initially wanted to work in the development field. In the past, I had some experience researching [the] poverty trap and working on microfinance projects. I enjoyed the work in international development and believed that people in the field had very respectable ideals, but I had my reservations. Over time, I thought that getting out of poverty required a lot more than just external aid; people in poverty need to have motivation on their side, and what we could do was limited.”

At SAIS, Mengyi took several classes that proved to be imperative for her later career development, one of them being “Energy Markets in the Middle East and Central Asia”—a class she took simply because, she said, the subject material sounded interesting. “I never thought that I would end up working on the commodity team here at IMF, but you know, things just happen like that. Another class I really liked was called ‘Financial Market Development,’ in which I wrote a paper about the financial sector of Saudi Arabia. I was just curious at the time when I chose the country, but it turned out that at my first job after graduation at the World Bank, I was assigned to research Saudi Arabia and other Middle Eastern countries. My advice to current students is that, instead of only picking those ‘practical’ classes, it might be a good idea to explore a little bit and choose classes out of your personal interest—you will be surprised by how they will come to influence your career later.”

Of the four alumni interviewed, perhaps 2019 SAIS MIEF graduate Manchun Wang, who currently works in the African Department at the IMF, experienced the biggest change in her career trajectory while at SAIS. “SAIS gradually changed my views on how I should plan my career, and it was the first time that I had ever considered working in the public sector,” she said. “I didn’t know about other choices but private-sector jobs when I first arrived at SAIS. After talking to several SAIS alumni working at multilateral organizations, I learned about public sector jobs. Then, I started to realize, it’s very important to keep your options open. And this would probably be my only chance to work at a job like this—I could always go back to work at securities or corporates at a later time. Therefore, I made up my mind to pursue a position in the IMF.”

Manchun found the courses in the MIEF program extremely helpful in preparing for her job at the IMF—especially the four econometrics courses she took. Nonetheless, she stressed that for students seeking solid, quantitative theory training in preparation for a Ph.D. program, they might need to take more advanced economics courses than those offered at SAIS. When asked about her future plans after the IMF, she said, “I am now doing research as part of my job while learning more skills to help me in my research. I still did not make up my mind if I should pursue a Ph.D. degree, an MBA degree or even take other options. After all, people choose differently at different phases of their lives.”

In contrast to the other three alumni, Simon Paetzold, who graduated from the Tsinghua-SAIS dual degree program with a concentration in International Political Economy (IPE) in 2018, said he had a clearer sense of his career plans before attending SAIS. Simon, who joined the Finance Department at the IMF after graduation, said, “Prior to my undergraduate study, I lived in China doing a cultural diplomacy program and thus formed strong connections with this country. I was specifically interested in dual degree programs in international relations between a Chinese university and a university in the United States or Europe. Among all programs that met this criterion, the one at SAIS had the strongest quantitative and economic component, and that’s what I valued.”

Of the IPE program at SAIS, Simon said, “The IPE discipline is, in my understanding, and especially the way it was taught at SAIS, a very academic discipline. But there were also classes at SAIS that focused more on applying economic and political analyses, one of them being ‘Financial Market Analysis in the Public Sector.’ We looked at how political processes and financial markets interacted in the real world and it was truly fascinating. Nevertheless, I do find the academically-oriented classes in IPE as well as econometrics courses taught at SAIS very important, as they allow you to speak more intelligently about the literature and quantitative research methodologies.”

SAISer Book Review: “The Financial Markets of the Arab Gulf: Power, Politics and Money,” by Professor Jean-François Seznec and Samer Mosis

By Leif Olson

For many, the Arab Gulf is associated with generous rentier states, opulent monarchs with fantastical material wealth, and behemothic buildings like the Burj Khalifa. One might wonder how the region developed such a robust financial ecosystem. Jean-François Seznec, an adjunct lecturer in the Middle East Studies department at SAIS, and Samer Mosis, a SAIS Strategic Studies alumnus, seek to answer this question and peer into the future of Gulf finance in their 2018 book, “The Financial Markets of the Arab Gulf: Power, Politics and Money.” Seznec and Mosis delineate a detailed financial history of the Gulf economies and their structural dependence on culture. Seznec and Mosis argue that several interrelated factors changed the form and function of financial institutions in the Gulf and led to its current wealth. They  predict that, given economic pressures, Gulf states will slowly relinquish their stranglehold on markets, allowing them to develop practices and norms typical of Western markets. For students interested in the role of the Gulf economies globally, especially regarding investment in Asia, financial diversification, and cultural-economic “Westernization,” this book is an essential resource.

Seznec and Mosis trace the history of financial markets in the Gulf Cooperation Council (GCC) states, taking note of Islamic banks that shaped interest creation in the region, money-changers who went from individual entrepreneurs to institutions, and the Bahrain Offshore Market, which, with the development of new financial technologies, became obsolete, excluding Bahrain from financial dominance. They then transition to individual analysis of each GCC state—the United Arab Emirates (UAE), Saudi Arabia, Bahrain, Qatar, Kuwait and Oman. The UAE chapter revolves largely around Dubai, which the authors compare to Abu Dhabi. The authors explain that the UAE is an excellent business location, highlighting how well-managed Free Trade Zones (FTZs) like the Jebel Ali Free Zone Authority facilitate foreign investment.

Where the UAE’s financial markets are relatively free, Saudi Arabia seems intent on total control. The Saudi Arabia chapter explores the relationship between the Saudi Arabian Monetary Authority , the Saudi Public Investment Fund, and the rest of the financial market. Since the 1970s, the Saudi Crown has regulated or controlled much of the economy—but Samer and Mosis predict that it will likely cede some control as the industrial sector grows and Crown Prince Mohammed bin Salman’s “2030 Vision” unfolds. 

The chapter devoted to Bahrain, Qatar, Kuwait, and Oman paints a less optimistic picture. Bahrain has become economically reliant on Saudi Arabia and the UAE, despite its once hopeful position as a banking hub. Qatar suffers from some form of “Dutch Disease” with little indication of diversifying significantly from its major export, natural gas. Kuwait is a stereotypical rentier-state with an anemic private sector—which prevents it from attracting investment and precludes its candidacy as a major financial power. Finally, Oman, while benefiting from a miraculous transformation at the hands of Sultan Qaboos bin Said Al Said, has economically stagnated. Unless Omanallows privatization at a greater rate, these conditions may generate political unrest. The remainder of the book is made up of four case studies which illustrate in detail the interaction between financial markets and power structures in the Gulf. 

Seznec and Mosis excel when combining stories of the past with projections into the future. In one example, the authors examine the Gulf’s new focus on Asia. Between 1990 and 2013, the percent of total GCC exports to Europe and North America shrank from 40% to 19%. In the same time frame, the share of GCC exports to India and China grew from 2-3% to 12%.  The authors use this data as a warning to Europe and North America. The authors describe the run-up to the 2008 financial crisis, a time when Gulf states were treated as second-class economies, and xenophobia punctuated their interactions with the West. As the crisis deepened, the West changed its tone toward the GCC, pressuring them to bail out the global economy with their massive dollar-denominated liquidity. While the GCC eventually conceded, they have not forgotten how the West treated them. The authors contend that this could mean trouble for Europe and North America in the event of another major recession. 

GCC funding organizations, like Mohammad bin Salman’s Public Investment Fund, are leading investment in Asia. The PIF is tasked with carrying out Vision 2030 by investing in diverse, high-risk, high-return investments. In the 1970s, Saudi Arabia created the PIF, the Saudi Industrial Development Fund, the Agricultural Development Fund, and the Real Estate Fund, to prevent chronic “backwardness” in their economy. The authors chronicle the push from the Saudi monarchy to ensure economic diversification and modernization. They describe a similar process in the UAE. Abu Dhabi and Dubai have intertwined economic and cultural structures that drive diversification. Again, the authors demonstrate that financial and economic change are driven by more than just economic factors, citing the unique political structure as one factor in the shift from non-oil GDP of 37% in 1972 to 69% in 2015. The authors also explain that the UAE’s growing private sector is due, in large part, to the proliferation of FTZs in Dubai.

FTZs and diversification are indicators and drivers of modernization in GCC markets. This modernization comes with a degree of “Westernization.” Seznec and Mosis make a tentative, but astute, observation that as Saudi industry continues to develop, more people from diverse familial backgrounds will meet each other in the workforce. Perhaps, they surmise, this will lead to cross-cutting cleavages within the society which may reduce historico-cultural separation. More broadly, financial markets across the region are becoming more dependent on the private sector, which may mean similar cultural shifts in other states. 

Seznec and Mosis’s compelling storytelling and forward-looking conclusions make this book both an engaging read and an excellent resource for students interested in transitioning economies in the GCC. Students looking to learn more might consider Professor Seznec’s classes, which include Business in the Middle East, Energy in the Gulf, and Politics in the Gulf. Mosis, who now works as a Senior Analyst at Global Platts Analytics, serves as a student mentor through the SAIS Career Center and may represent another resource for interested students.

Club Corner: SAIS Soccer

September 16, 2019

By Khun Nyan Min Htet

WASHINGTON⁠, D.C. — As DC SAISers return to school, the SAIS Soccer Club–one of the few purely recreational clubs on the DC campus–begins a new season. 

“Clubs tend to be themed towards what we are here for at SAIS: career development and/or specific areas of studies,” said Lindsay Jagla, one of the club’s co-captains. “SAIS Soccer is one of those activities that is purely for fun and recreation.”

Students may join the club for the soccer, but stay for the social aspect. 

“I thought it was a great way to not only exercise but also to meet other people. It’s an easy way to integrate with students from other campuses, like Bologna or Nanjing,” said Caroline Miranda, a second-year student who joined last fall.

“It is a good competitive outlet from being in the classroom all the time,” said Emily Ing, a second-year Bologna student. “Just having a different social scene is good.”

This fall, in response to increasing interest among students, the club organized two coed teams for the 9v9 District Sports league. The teams consist of first and second-year students from all SAIS campuses and are organized based on respective competitiveness of the league. 

We have a Saturday team that plays in the D3 League. It’s less competitive than the Sunday Team that plays in the D2 League,” said Chris Merriman, another co-captain. 

According to Lindsay Jagla, the club has recently seen an increase in female participants. 

“I think [having a female co-captain] just makes it more obvious that women play. They see me and they see that one of the captains is a woman,” Lindsay explained. “So obviously, there are women on the team and they should be playing. They can play and they are welcome to play. I know sometimes joining a predominantly male sports league can be intimidating. So, it was a good step. We will continue to make sure everyone is aware that it’s coed and everyone is welcome.”

The option to play in two different leagues allows students to choose their level of competition. The majority of the members of the club have played in high school and/or college. Joining the club also provides an opportunity for students to take a breather from studies and professional development.

“For me, I’m at my happiest when I’m on the field,” said Andrew Pince, a first-year student. “I think a lot of people live for those moments where they can just forget everything else. They do that in many different forms…reading, working out, meditating…For me, soccer is that thing.”

Currently, the club is coordinating its semesterly game with the Georgetown University School of Foreign Service. 

“The Georgetown game is probably going to be in late October or early November. I just spoke with their captain and he is in the process of booking a field,” said Chris Merriman. 

SAIS Soccer is also planning to organize friendly matches with the American University School of International Service and the George Washington University Elliot School. Further, the club is planning to add more social events to the calendar. In the works are a happy hour and soccer match screening. While participation in the weekly league games is limited to members only, invitations to social events are open to the entire SAIS community.

For more information on how to get involved with the SAIS Soccer Club, contact Lindsay Jagla ( or Chris Merriman (

We have liftoff: SAIS welcomes first Doctor of International Affairs (DIA) cohort

September 18, 2019

By Sandra Salvatori

WASHINGTON, D.C. — After years of focused effort, the Johns Hopkins School of Advanced International Studies (SAIS) inaugural cohort of Doctor of International Affairs (DIA) students has arrived on campus. The SAIS Observer will be following this first DIA cohort—of which the author is a member—throughout the semester. 

The DIA program intends to serve as a platform for experienced international affairs practitioners to conduct applied research on pressing global issues. Compared to SAIS’s Ph.D. program, the DIA is relatively fast-paced. Students who already hold a master’s degree can complete the program in two years. A three-year track is available for all other students.  

In year one, students have a full-time course load as part of the Master’s of International Public Policy (MIPP) program. The only required courses are DIA Methods I & II. The goal of the “Methods” courses is to provide DIA students with tools to generate and conduct research. The second year of the DIA—which carries a remote/part-time option—is spent completing a dissertation.

There are 19 members in the initial group. While many are SAIS graduates, some come to SAIS from the international business community, and about one-third are attending through military academic training. Like most of SAIS, students in the inaugural DIA cohort are multinational, multilingual and have an impressive range of backgrounds. 

Equally impressive are their wide-ranging areas of study. These include cross-organizational space/satellite architecture, improving in-country immigration processes, strategic power politics, U.S. policy regarding Ukraine and the New Europe, efficacy of international finance tools and policies (credit analysis, money transfers, debt instruments and negotiations, economic strategy for insecure/unstable communities, impact of sanctions), influence operations in the U.S., U.S. foreign policy in the 21st Century, nation-building in the post-Arab Spring Middle East, dynamics of cyber conflict and Russia in Africa. Also included are a number of topics regarding China, such as the growth of lending/economic/maritime capabilities, expansion policies and the impact of Chinese elite and intellectual migration to the U.S. over the past 20 years.  

DIA candidate profile: Serwat Perwaiz

The SAIS Observer asked Serwat to discuss how her background motivated her to apply to the DIA program and how she has enjoyed her time at SAIS so far. 

Growing up in Tulsa, Oklahoma, Serwat was bilingual from an early age. As a result, she said, she has always sought to “analyze a situation from different frames of reference,” and find opportunities for divergent groups to work together. She began her professional career as a lawyer. When asked what motivated her to apply to the program, Serwat said, “(I am a) SAIS MIPP graduate, and when I heard (from Dean Cohen’s information session) that the DIA could build on my educational and professional experience and provide another opportunity for growth, with an ever higher-level practitioner approach, I was immediately intrigued!” 

Serwat focuses on U.S. foreign policy development and implementation from a diplomatic and strategic view. She hopes to apply her dissertation’s findings to the field of civilian-military relations “in a way that can add value to the making and implementation of policy decisions and promote U.S. peace and economic stability.”

So far, so good, Serwat said. “I am more confident than ever that applying for and being in this program was the right decision for me. I am in awe of my fellow DIA colleagues’ background, knowledge, experience and contributions! I love the energy at SAIS and its space to discuss and debate various views in a respectful and productive environment.” 

Future articles will feature additional interviews with cohort members and faculty, insights into DIA research and activities, and, perhaps most importantly, a meet and greet, scheduled for later this semester. Details to come!