Institute Professor Diamond may be next Fed member

Known for public policy work

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Professor Peter A. Diamond PhD ’63, an Institute Professor in the Department of Economics, is under consideration to join the Federal Reserve’s Board of Governors. Diamond joined MIT as an assistant professor in 1966 and is known for his work in optimal taxation.
Feng Wu—The Tech

On March 12, 2010, the White House identified MIT Institute Professor Peter A. Diamond PhD ’63, as well as Janet L. Yellen and Sarah B. Raskin, as possible candidates to fill in three vacancies on the Federal Reserve’s Board of Governors.

Diamond, an authority on Social Security, pension, and taxation was approached by the Obama administration, but has not been confirmed in this new role. According to the New York Times, press secretary Robert Gibbs said that both Diamond and Raskin were under “strong consideration for additional vacancies” on the board.

Professor Diamond is known for his work in both behavioral economics and taxation. Cited by BusinessWeek as a specialist who will “bring a consumer protection voice to the board,” Diamond has published prolifically on making adjustments to entitlement programs like Social Security. Diamond’s 2003 book, Saving Social Security, was written with Peter R. Orszag, the director of the White House Office of Management and Budget.

An Institute Professor in Economics, Professor Diamond joined MIT as a grad student in 1960, and became a member of the faculty in 1966 and served as the Economics Department’s head from 1985–1986. Diamond has been at MIT save for three years when he taught at the University of California Berkeley.

While Diamond is best known for his work with pensions, Social Security, and taxation, the breadth of his career far exceeds his most notable contributions to the science of Economics. Diamond has grappled with budget policy, tourism, debt, taxes, insurance, and has made significant strides in a new field called “search theory” that evaluates how individual decisions in labor markets can influence the broader economy.

According to the Boston Globe, Robert Solow, a professor emeritus of economics at MIT and Nobel Prize winner, has said of Diamond, “When he gets involved, he ends up knowing everything.” Likewise, Professor Ricardo Caballero, head of MIT’s Economics Department and Ford International Professor of Economics, said, “Peter is brilliant and very thorough on whatever he does.”

While it is unclear currently whether the offer has been formally extended to Diamond, if he were to accept it, he would be on temporary leave from MIT, said Caballero. Diamond declined to comment on any of the recent events.