Nobel Prize winner, IU graduate fondly remembers his time in Bloomington

A recent Nobel Prize winner who began his post-secondary academic career in Bloomington said he fondly remembers his time at Indiana University and said it proved critical to his future.

Philip H. Dybvig said he loves Bloomington and thought it was a great place to be an undergraduate. He came to IU in the mid-1970s to study the two things that most interested him: math and music.

However, the Jacobs School of Music would not allow him to double major in math.

“The music school was too good,” Dybvig said.

He stayed on campus most of the time and lived in the Men's Residence Center, which is now the Collins Living-Learning Center. The MRC provided convenient access to the computer center in the School of Health, Physical Education and Recreation (now known as the School of Public Health) building and physics and math classes at Ballantine Hall.

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Dybvig said one his IU physics professors, the late E.D. Alyea Jr., who died in 2018, played a pivotal role in his undergraduate career. Dybvig said he skipped almost all of Alyea’s introduction to physics class, which was awkward as the class had only seven students. However, Alyea soon figured out that Dybvig could test out of most of the class and picked him to be the teaching assistant for the physics lab the following year.

Dybvig said he bets he was the only undergraduate on campus who earned pocket money by giving physics lessons and accompanying opera singers on piano.

The lessons he learned as a teaching assistant proved valuable for his teaching career, said Dybvig, who taught at universities including Princeton and Yale. He has been a professor at Washington University in St. Louis since 1988 and now serves as Boatmen's Bancshares professor of banking and finance.

At IU, Dybvig said he spent most of his off-campus time with the university sailing club, an informal program the results of which the participants could not even get into the student newspaper. The club sailed at Lake Lemon on weekends and sometimes participated in regattas around the Midwest. The students would drive to a meet Friday, drink beers that evening, sail all day Saturday and go out drinking again Saturday night.

“Those were great times,” he said.

During the week, Dybvig would return to his challenging studies in math and physics, plus classes in French, which he said put him close to a third major.

“It makes me tired just to think about it now,” he said.

Though he focused his undergraduate career on physics and math, he stayed connected to music. Dybvig remembers hearing jazz pianist Bill Evans at The Bluebird and classical pianist Vladimir Horowitz at Assembly Hall.

“It was just a great time,” he said.

Even as a professor at Washington University, Dybvig continued to play piano in blues and RnB jam sessions, including with Marsha Evans and The Coalition. He taught full-time during the day and often jammed on weekdays until the early morning hours. Sometimes the adrenaline from those sessions prevented sleep altogether.

“When that ended, I was relieved and disappointed both,” he said.

Nobel committee: Research helps stave off crises

Dybvig was awarded the Nobel Prize in economics this month. He shared the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2022 with Douglas W. Diamond, of the University of Chicago; and Ben S. Bernanke, former chair of the Federal Reserve and now with the Brookings Institution in Washington, D.C.

The Nobel Foundation said in a news release the discoveries of the laureates “improved our understanding of the role of banks in the economy, particularly during financial crises” and said the research laid the foundations for mechanisms that make banks less vulnerable in crises.

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Dybvig said his research showed that it is beneficial for individuals and the economy to give people immediate access to the savings they have in banks — but the same mechanism also tends to make banks more fragile.

Being able to access at any time money they have saved in the bank is very valuable to people because they never know when they might have an unexpected expense, such as a medical bill or because their neighbor is selling a 1963 mint Ford Mustang at an unbeatable price. Consumers would not be able to easily pay bills or make unplanned purchases if they had their money tied up in certificates of deposit, which require the money to be invested for set periods.

However, Dybvig said, immediate accessibility to savings comes with a downside: If everyone takes out their money at the same time, banks won’t have enough money to pay everyone. Congress has mitigated that risk for consumers by establishing the Federal Deposit Insurance Corp., which insures deposits of up to $250,000 per depositor. The agency says on its website that since the start of the FDIC insurance on Jan. 1, 1934, “no depositor has lost a penny of insured funds as a result of a failure.”

Tore Ellingsen, chair of the Committee for the Prize in Economic Sciences, said in a news release, “The laureates’ insights have improved our ability to avoid both serious crises and expensive bailouts."

Dybvig is one of 10 Nobel laureates with an IU connection. For a full list, see tinyurl.com/nee5pujx.

Important recognition for Indiana University

Indiana University officials said seeing an alumnus recognized with such a prestigious prize elicits a sense of pride but also reinforces the importance of focusing student learning on critical thinking and problem-solving skills.

Kevin Pilgrim, chair of the mathematics department, said when he looks at Dybvig’s research, he sees a lot of mathematics, the study of which helps people focus on a lot of things — precision, pattern recognition, problem solving — that are important in many areas of study.

“I think in some ways mathematics is like a sauce that you can pour over all kinds of disciplines,” Pilgrim said.

The study of mathematics also teaches students another universally useful skill, he said: tenacity. After all, some math problems take decades or even centuries to solve.

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Rick Van Kooten, executive dean of the College of Arts and Sciences at IU Bloomington, said that Dybvig’s undergraduate work in math and physics shows that a love for solving puzzles and critical thinking proves useful for virtually any field of study, and that studying and applying high level math can benefit society at large.

“That’s something that’s tremendously rewarding for the College of Arts and Sciences,” Van Kooten said. “We’re very proud of the impact that the college is making.”

Bio brief

Name: Philip H. Dybvig.

Recognition: Nobel Prize in economics.

Bloomington connection: Obtained undergraduate degree in math and physics at Indiana University. He obtained a doctorate in economics from Yale University.

Current title: Boatmen's Bancshares professor of banking and finance at Washington University in St. Louis.

Previously served as professor at universities including: Yale, Princeton.

Boris Ladwig can be reached at bladwig@heraldt.com.

This article originally appeared on The Herald-Times: Philip Dybvig, Nobel Prize winner, on his time at Indiana University