Sharon M. Oster leaves many legacies. There are her children Emily, Stephen and John. There is also her extended family: her countless students and colleagues (aka her children) for whom she was a role model and mentor. Count me on that list.
Sharon was the embodiment of SOM. The motto of the school is Educating Leaders for Business & Society. She was the “&” for many years. SOM is usually ranked first in nonprofit management. Sharon was the reason for this ranking. Much like LeBron James in his prime, she had the ability to lead a team to victory. your textbook Competitive strategy in the nonprofit sector was the gold standard at Yale and everywhere else.
Speaking of nonprofit management, I think it’s fair to say that at Yale we were the best-run nonprofit, not least because of our influence. Sharon created a community culture that has enabled us to attract and retain the best talent in the world. In a world of givers and takers, Sharon was the greatest giver and imparted that spirit to those around her. She trained the new hires, myself included, to be part of an organization that cares. Much of the success of our group is due to their leadership. Oster’s approach to teaching, research, and community set the tone for those around her.
Sharon has been passionate about gender equality in her research and practice. She was the first permanent woman at SOM and helped set up a business group with four senior women, almost 30% – and she wasn’t included. Her efforts on behalf of women in the profession, both at Yale and beyond, earned her the American Economic Association’s Carolyn Shaw Bell Award.
Sharon was equally passionate about the school and teaching. When we redesigned the MBA curriculum, she taught virtually every course in the new core – no small feat – and her teaching virtuosity ensured that an otherwise chaotic transition was a great experience for the students.
No one has their ability to know every student’s name, both in class and for years afterwards. She was kind of tough and caring. She wouldn’t let a misguided answer get away. If the answer was wrong, she could say, “Well, Mr. So and So, why do you think that?” Hint: This was a signal to take a new path. Despite her active cold calling, there was never an atmosphere of fear in her classroom. Her disciples, much like fermenting yeast, faced the situation. She maintained lifelong friendships with her students. She is a three-time Yale Teaching Award winner and the Academy of Management’s 2018 Irwin Outstanding Educator Award for Excellence in MBA/Executive Education.
Aside from her personal touch, she had the ability to make any idea as simple as possible, but not simpler. It also made her an ideal subject matter expert and unparalleled textbook author. she Modern competitive analysis was Yale’s superiority over Harvard competitive strategy Text by Michael Porter. In 2007 she joined Chip Case and her husband Ray Fair to create modern and relevant editions of their principles of economics Text.
Sharon had no patience for bureaucracy. She understood why people entered into for-profit ventures (to make money). She understood why people got into nonprofits (to make a difference). But as she wrote in her 1994 essay “The Postal Service as a Public Enterprise,” she had trouble figuring out how a big bureaucracy could motivate its workers. “It’s an interesting question as to whether government can have a highly motivated workforce.” Perhaps the forest service was the exception, but even there she had her doubts.
With her dislike of bureaucracy and her quest for titles or power, she never aspired to be dean. But when a crisis hit in 2008 and the school suddenly found itself without leadership, she stepped in and was the best damn dean we’ve ever had. She was crucial. She knew how to deal with donor and faculty egos. She put the interests of Yale and the school ahead of herself. As always, she set a good example. She took a $100,000 pay cut from what she would say her inflated dean’s salary to fund internships for students. She was the living paradox, the embodiment of John Stuart Mills’ homo economius– the truly rational actor – and yet one whose utility function places the most weight on others.
Sharon was widely known for her wise advice. It was part of the kitchen cabinets of SOM and Yale for many years. Everyone wanted her on their board. Choate Rosemary Hall and Yale University Press were two of the luckier nonprofits they landed. These panels are often staffed by very wealthy donors with strong opinions. Sharon’s intellect and charm helped donors provide the support the organizations really needed.
She wasn’t without faults. Besides a search in Cmabrigde Uinervtisy it doesn’t matter what order the letters are in a wrod; The only important point is that the first and last must be on the correct PClae.1 Sharon took this research to heart and didn’t bother with proofreading or spell checking. Here’s a recent example: “Amazingly, my husband teases the theory that a mace should know how taxes are calculated.” (For those in doubt: “Ray makes our taxes on the theory that a macro guy should know how taxes are calculated.”) When we got an error-free email from Dean Oster, we knew it was written by an assistant.
I have known Sharon for about 33 years. I didn’t see the motorcycle jacket hipster Sharon of the 60s and 70s. And yet that effortless coolness was always there. It created a shudder in her presence. She was the Mick Jagger of academics, infinitely cool and ageless, yet ready to hang out with nerds. She made us feel cool. And she loved a great party.
Sharon would probably have wanted me to drop the party theme. Of course, there were her academic research contributions. Her research may seem mainstream today, but she was at the forefront of using the lens of an economist to look more broadly at women’s rights and discrimination. Here is a very selective view of some of their 40+ published articles.
In A Note on the Determinants of Alimony (1987), Oster used court records to examine alimony payments in New Haven. Back then, maintenance payments only went from men to women (and only to faithful women!). In Connecticut, women were not legally allowed to pay child support to men. While this might seem beneficial for women, Oster explained why this was a problem, not a benefit. Unless wives have the ability—nay, the obligation—to pay child support when they are breadwinners, husbands would be less willing to invest in their spouses’ careers, since that investment would be lost if the couple separates. Therefore, the inability to arrange alimony payments from women to men holds women back.
Her 1987 work with Paul Milgrom on the invisibility hypothesis was a brilliant inversion of Peter’s principle. According to the Peter principle, people are promoted until they are no longer competent at their job; People get one too many promotions. In the invisibility hypothesis, women and minorities get too few promotions to hide their talents lest rivals poach them. This is the malice of invisibility.
Because invisibles predict they won’t get promoted, they don’t have enough incentive to invest in human capital. Invisibility also distorts career choices. If invisible, it may be better to train as an electrician as a history major since there is less room for arbitrariness in the distribution of occupations.
Oster’s paper says no company can solve this problem alone. Nevertheless, she did her part to promote the talents of women and make them visible. When Yale lost the now visible talented women to other places, those women and the world were better off for it.
In her 1975 paper Industry Differences in Discrimination Against Women, Oster found a better way to show evidence of sex discrimination. You cannot compare the proportion of accountants who are women to the proportion of nurses who are women. There are too many possible disruptive factors that determine career choices. Instead, Oster looked at the differences in the proportion of female accountants across industries. Why should there be fewer women accountants in the automotive sector than in the printing shop? Such differences are evidence of systemic discrimination.
She was also an early leader in understanding income inequality. According to data analysis by Andrew Brimmer, the first African American on the Federal Reserve Board, black Americans’ incomes were more unequal than white Americans’ in the 1960s. This result did not seem entirely correct to Oster: Whites earn more on financial capital and also receive a better return on human capital.
This led to her first published work in 1970, the year of her graduation from Hofstra. “Are Black Incomes More Unequally Distributed?” explained what was really going on with intraracial income inequality. It showed that in every region of the country, black incomes were more evenly distributed than white incomes. However, a much larger proportion of blacks lived in the South, the most unequal region.
This is the classic aggregation paradox. In every department, Yale’s average quality is better than Harvard’s. And yet, on average, Harvard can do even better when the worst faculty at Yale are much larger than their equivalents at Harvard. The same aggregation paradox explained the confusing statistics about apparently greater income inequality among blacks than among whites.
Sharon Oster had a slightly cheeky side. Her 1980 work in the American Economic Review (AER) was titled “The Optimal Order for Submitting Manuscripts”. She applied classic operations research techniques to figure out the correct order in which articles should be sent to journals. The answer, of course, depends on your career level, impatience, prestige value, and so on. While AER was the top journal, it wasn’t always the best first choice. But for Oster, that was it. She ends the paper with:
Finally, as will surely be asked, I figured out the optimal order for me, a somewhat impatient, prestige-seeking 32-year-old assistant professor. My optimal order is AER, REStat, econometrics, JPE, HER, SEJ, QJE, EGG. So, given the journal you are reading now, you know how many times this work has been rejected.
Sharon was known to have high standards. A few years ago I gave a talk at a co-author’s retirement party. I conducted Sharon’s talk and she thought it was pretty good. She told me to be sure I was doing at least as good a job for her. If this memorial does not live up to Sharon’s standards, it is only because I sadly miss her guiding hand. We are all.
Read an obituary for Sharon Oster.