Yaron Lahav, PhD

My life story (in a nutshell)

I was born in the hot Mediterranean summer of 1972, in the peaceful city of Ramat-Gan, Israel, as the youngest among three. Blessed with good math teachers during both elementary and high school, I was attracted almost immediately to the field. Throughout the years, regardless of the level of difficulty, I always found mathematics to be very intuitive. This interest of mine paid off when I was in my 6th grade, with an invitation to join the YPIPCE, an accelerated program designed to further enhance exhibited academic skills among gifted youngsters. Participating in this program at Tel-Aviv University, I took classes in infinitesimal math, electronics and computer programming. Looking back, I can say that this program stimulated my interests in science, shaped my intellect and influenced it the most. It was during that time that I began to see science as a challenge, rather than a difficulty. As a teenager, the difference between the two is interesting: a challenge is a difficulty that you have fun overcoming.

During high school, I participated in a track specializing in electronics. It was the late 80’s, where the field of electronics was relatively new and therefore attractive. During that time, electronics professionals were rare. Soon before graduation, my friends and I received several tempting job offers. However, as teenagers, we had other things on our minds.

My Romance with economics

Like all memorable moments in life, my first encounter with the world of economics happened by chance. Being a kibbutz member, soon after completing the term of my mandatory military service, I started to work as a farmer. In a short while I became part of the plantation management team. Therefore, it was only natural for me when I decided to go back to school to study at the Faculty of Agriculture, Food and Environmental Science of the Hebrew University in Jerusalem. After giving it some thought, I decided to major in Agricultural Economics and Management at the Department of Agricultural Economics. From the very beginning I have been fascinated by economics and was especially thrilled by the possibility to use mathematics as a platform for practical and far-reaching applications in our daily lives.

Following my graduation, I began studying for my master’s degree. At this point, I was mainly interested in the field of resource economics, but also in the contribution of agriculture to economic growth. For my masters’ thesis, however, I chose a subject that intrigued me ever since I was a kibbutz member: the problem of high fluctuations in farmers’ revenues. This was, and still is, a crucial factor in the process of decision making of every farmer all over the world. In my research, I tried to solve the fluctuation problem by creating a market for income insurance. My assumption was that a comparison can be made between an investor holding a futures contract and a farmer at sowing time, who holds a future commodity. If an investor can protect himself by purchasing put options, then so can the farmer. The price of this put option could be used as an estimate of the insurance policy premium.

In the year 2000, I began to work as a financial manager at the Israeli Aerospace Industries (IAI). At this point, I discovered a new and exciting world: the aircraft industry with all its ramifications. In the years to follow, I was fortunate to be a part of the economic world I have learnt about for five years. Within this setting, I came to understand the economic functioning of the industry, starting from adoption of new technologies, comparative advantage, pricing, the influence of governmental expenditures and public policies and preparing and reading financial reports. In addition, as the IAI is one of the biggest corporations in Israel in terms of sales and one of the largest exporters, I was involved in the financial aspects of trade with foreign countries.

In the year 2003 I left the industry and moved on, this time as a graduate student in the department of economics at Emory University in Atlanta, GA. It was during my first semester that I met my destiny: behavioral and experimental economics. I can still remember this as if it was yesterday: as an assignment, we were asked to read a paper written by two fellows, Kahneman and Tversky. I read it and ran straight to the professor that will soon become my advisor and mentor, Charles Noussair. I came to talk and I ended up listening. Soon after, this conversation developed into a directed study course, a course that served as a gate to the magnificent world of behavioral and experimental economics, which seemed to me then as a visit to the dark side of economic theory.

My Working Experience

Less than a week after my graduation, I started working again, this time as a senior consultant in the transfer pricing group of Deloitte Tax LLP, in their national office in Washington, DC.  With the combination of my corporate experience and my new PhD, it seemed only natural to continue “playing in my home field” and to consult multinational corporations on their inter-company transactions. Analyzing our clients’ activities, functions and risks on the one hand, and keeping them in compliance with tax regulations on the other hand, seemed like the right thing to do.

However, soon after I joined Deloitte, I realized that something is missing. Something important that filled my life is now gone, leaving me with insufficient power to perform. It was not very difficult to realize what it was: I missed academia! I missed teaching and research too much.

I missed my students. Entering the classroom, looking at them waiting for me to say something new that they haven’t heard before, answering my questions and coming up with their own. I surprised myself time after time with my ability to answer their questions and intrigue them with my lectures. Being in the academic ‘exile’, I suddenly realized the reason why I love teaching so much: it is the one second where my students nodded with agreement after I made my point. One second where I knew I made them better people. That feeling was even greater knowing that this moment will probably repeat itself in the next session. I was waiting for that, and I prepared my sessions accordingly. I can only assume that this is the same feeling athletes feel when they break a record or computer programmers when pushing the ‘Enter’ button and observing their project become alive. I could also assume that my clients at Deloitte can do without me…

For that reason, I started looking for teaching opportunities. I found it in American University. Soon after I contacted the economics department, I was offered to teach the course “Public Issues in Financial Economics” as adjunct professor. Once a week I had the chance to feel again my adrenaline flowing. I came home once a week around midnight after three hours of lecturing, feeling like I just woke up…

I also missed research – the work that goes home with you. It gives you a reason to beat the alarm clock every morning, and makes you wait impatiently for the weekend to end and for the Monday morning sunshine to rise so you can run to the office and dive into it. Exploring questions that nobody else did, and realizing many things that you did not know until now is a great feeling.  

I love everything about research, including the data gathering, the literature review, the analysis and the writing. I cannot wait to do it again. While working for Deloitte, I started collaborating with other researchers to conduct research. This attempt of mine resulted in several papers on tax policy, but it also made me realize that one cannot do what he loves as a part-time, after-hours activity.

This is why, after less than two years, Deloitte and I separated. Instead, I started working as a freelance consultant, mostly for the Urban Institute but also to small industrial firms. Feeding my desire for research, I assisted the Urban Institute with writing grant proposals and with ongoing projects in social policy. For other companies, I consulted mostly on transfer pricing issues.

The decision

During 2009, I made my decision. After being a witness to the strongest economic collapse since the 1930’, after watching my neighbors losing almost everything they worked for, watching their own lives as they evacuate their homes and wondering what would have happened in a different reality, I have decided that I am ready to pursue my destiny. The American dream will wait for a better dream: my dream! I decided to go back academia. On August 2009, my family and I left the U.S. and came back home, to Israel. Today, I am a lecturer at the Guilford Glazer faculty of management and business administration of Ben-Gurion University, specializing in behavioral finance and decision making, and conducting field experiments in asset markets.

I realize now that I am one of the few lucky ones that had the chance not only to ask ‘what if’ but also the experience the answer. I have never felt so certain about my life and my future, knowing that my spot in the universe has my name on it. What a great feeling it is.

Plans for the future

Whether in Israel, the U.S. or anywhere else in the world, my future, as I envision it, will be dedicated to teaching and research. Armed with my experience in both academia and the industry, I am certain that this is my calling. I do not regret the years I have worked in the industry. I strongly believe that research is better conducted with practical knowledge. Today, I recognize that the best way to understand the firm’s production function, for example, is to imagine the face of the production worker and his existence on the graph.

 

                                                                                    Yaron Lahav