Vernon Smith speaking at the SEEL event. Photo by David Schmitz.
When San Jose State University held a grand inauguration event in October celebrating the launch of the newly renovated Spartan Experimental Economics Lab (SEEL), Vernon Smith, the 2002 Nobel Laureate in Economics, one of the key dignitaries present on the occasion, talked about a certain Sidney Siegel, who was a pioneer in the early days of experimental economic research.
A social psychologist and San Jose State alumnus, Siegel is considered to be one of the founding fathers of experimental economics. Experimental economics is a branch of economics that studies human behavior in a controlled laboratory setting or out in the field, with appropriate controls to remove effects of external influences, rather than just using mathematical models.
According to Smith, Siegel was a master experimentalist, but much more. He also used theory and statistics with great skill in the design and analysis of experiments. “Few behavioral or experimental economists realize how much of their methodological tradition came from Sid Siegel.”
Smith’s reference to Siegel is important in many ways. Siegel and San Jose State go back a long way. In 1951, the master experimentalist graduated with a bachelor’s degree in vocational arts from San Jose State College, the precursor to SJSU.
Arguably, graduating from college was a defining moment in Siegel’s educational pursuits. The degree opened the path for many opportunities, one of which led him to Stanford where he completed his doctoral studies in psychology. It was there that Smith first met him.
“During the 1961-1962 academic year, I was a visiting associate professor at Stanford. At the beginning of the autumn quarter, I had the truly significant experience of meeting Sidney Siegel and discovering that we had both been doing experimental economics,” Smith recalled.
That moment has stayed with the 92-year-old Nobel Laureate. Little did he know then that it would be a brief association. Siegel passed away at age 45 in 1961.
In his “Tribute to Sidney Siegel (1916-1961): A founder of Experimental Economics,” Smith writes about how Siegel survived the rigors of impoverished and diabolical teenage years in the dark alleys of New York. He did not finish high school until later. His only saving grace was when he signed up for the U.S. Army Signal Corps.
Smith published his first experimental article in 1962, two years after Siegel collaborated with Lawrence Fouraker, a professor of economics and later a dean of the Harvard Business School, to publish their first bargaining experiments, which they did in the 1950s.
In Smith’s tribute to Siegel, at a panel where others were speaking in his honor, Smith said that if Siegel had lived he would not only have been a deserving Nobel Laureate, but also that the timetable for the recognition of experimental economics would have been expedited, perhaps by several years.
As experimental methods become more prominent among firms in Silicon Valley, SEEL is focused on joint academic-industry projects, as well as collaborations among departments and researchers, that would help establish SJSU’s position at the forefront of experimental work.
“The use of experiments in industry, particularly within tech companies such as Uber and Facebook, is a growing trend, and the SEEL lab provides us with the ability to not only make SJSU students familiar with the use of experimental techniques, but also to have them run their own experiments,” said Justin Rietz, assistant professor of economics.
“Research experimentalists in SJSU’s economics department did not have a lab, and as a result, they were either traveling to UC Santa Cruz or Chapman University to partner with faculty members and students as a standard protocol, and that has meant lost opportunities for SJSU students. But all that has changed now,” said Colleen Haight, interim associate dean, undergraduate education.