By Jacquelyn Wong
John B. Shoven is a Professor of Economics at Stanford University and also serves as the Wallace R. Hawley Director of the Stanford Institute for Economic Policy Research (SIEPR). During his career, he has published over one hundred articles and eighteen books. As a professor and researcher on campus, John Shoven continues to study the implications and results of the financial crisis, in particular, its association with the growing Social Security dilemma.
As a physics major who eventually decided to pursue Economics, what particularly got you interested in Financial Economics?
I was always interested in finance, especially in the stock market and investing. From a very young age—probably around high school or junior high—I had already started investing. Part of my interest in finance and economics came from my friend, Charles Schwab. Over time, he and I stayed in communication, but there were still no finance courses available to us. I agreed with him that the financial segment of the economy was extremely important, and I later became one of the early teachers of finance. By supporting the need for more financial courses, I myself became more interested in finance in both a research and teaching perspective. Today, I think that Stanford offers a strong set of business and economic courses. For example, if you are interested in finance, there are a couple of accounting courses that undergraduates can take.
You are involved in several research projects on both the economy and domestic needs. Could you briefly share what project you are working on now?
Well, most of my research in the last few years has been reliant on the great crash [financial crisis of 2008-09]. You might have thought that people would choose to work longer because of either unemployment or personal choice (such as retirement or savings). How do they choose to structure those savings? Do they buy a life annuity (payments for the rest of their lives), or do they do it themselves through individual payments, which seems to be the case. Given that we’ve seen some pretty amazing bankruptcies, such as Lehman Brother’s bankruptcy, or the bailout of AIG, some of the choices individuals make on life savings can reflect growing uncertainty with the economy.
Given your research studies and experience with the growing Social Security dilemma, what are some ideas and complications to solving this situation?
Social Security is really a giant problem. One element of that problem is that Social Security may need to be adjusted in terms of how long people are expected to work. This is what sets apart younger generations, such as Stanford students, from their parents and grandparents. For a system that is in great financial trouble, we need to understand that the system will need to pay individuals a certain amount, but cannot afford to pay more than it is able to do. For example, let’s say that by the time prices have doubled and the economy has done alright, the Social Security benefits are structured to triple under the current law. There is a growing idea that benefits should be paid in alignment to what the system has to offer (versus payments that the Social Security cannot even fund). Therefore, you will not be getting what your parents are getting, nor will you be getting triple the benefits.
From your experience as a student, professor, author, and researcher, what do you think is the most important thing linking these professions and interests together?
I have always seen myself as a teacher. I enjoy working with young people and interacting with them. Though some people may find enjoyment in working by themselves, I find most joy in teaching.
What do you see yourself doing in 10 years? Do you plan to put more of your time in researching, teaching, or something else?
As I said before, there is a lot of uncertainty, especially in what I will be doing years from today. Conceivably, I could be doing the same thing as what I have been doing for a long time because I love it. Probably the best guess of what I will be doing is what I am doing now.