The Colgate Scene
January 2006

The humanistic economist

[Photo by Timothy D. Sofranko]

Takao Kato is a plutologist who prefers people equally to price-to-earnings ratios.

The economics professor is making a name for himself — and Colgate — in international economics circles with his people-friendly approach to studying labor and productivity. Rather than work with existing data and analyze it using abstract theory, Kato gathers information himself and then examines it. But he doesn't just pore through Department of Labor statistics; he travels to firms around Central New York, the United States, and the world to interview workers and learn about companies, as he says, from the bottom up.

"I guess I don't think of men and women just as data points," said Kato simply of his research technique. "I see them as human beings with lives, families, and homes."

Along the way, Kato has also taken great care in introducing his undergraduate collaborators to this new approach to economic research. Like many fellow professors on the second floor of Persson Hall, he will leave the door to his office open when he's expecting a guest — even if classes are ending and the corridor is full of noisy students. Even if his neighbors have visitors and are engaged in important conversations of their own. Even if he's heading out in a few hours to jump on an airplane bound for Korea and has work to finish. Still, the door will be ajar, the discussion unhurried, the smile disarming.

"Professor Kato is very friendly — you can see that in how he deals with his students, other professors, factory employees, everyone," said junior Pian Shu, who took a microeconomics course with Kato and has also worked as a student researcher for him. She said she stops by her former teacher's office unannounced from time to time to chat about her classes or a passion that they share, Buddhism. "He's really great at creating a casual atmosphere that is professional at the same time. It serves him well in his research."


Widening horizons
Kato's humanistic view of his studies and profession was passed along to him in the 1970s by his own undergraduate mentor, Nagoya University economics professor Kazuo Koike. Prior to meeting Koike, Kato said he was indifferent to the discipline. But Koike convinced him that he could combine his love of numbers with his interest in social science to influence public policy. Koike also transferred to Kato his own somewhat unconventional ideas about labor economics. His philosophies would later become the driving force behind Kato's career.

"He impressed on me — and still impresses on me — the importance of what happens on the factory floor with the employees, and showed me how enlightening it is to talk to the people who are doing what some consider `simple things,'" said Kato, explaining that many labor economists base their findings on data collected by someone else (governments, for example), rather than on their own field research. "Not everyone feels the same way," he said. In addition to opening his pupil's eyes to the possibilities of economics, Koike pushed Kato to enroll in a doctoral program outside of his home country of Japan, a move that he felt would provide Kato more perspective on the discipline. But Koike did more than just suggest it to Kato. "Basically, he threatened me," Kato explained with a laugh. "He said he wouldn't help me find a job unless I went abroad, and that meant no Japanese university would hire me."

Although Kato was at first a bit hesitant to leave home, the strong-arming worked out for the best. After graduating from Nagoya, Kato applied for the Government of Canada Award for foreign nationals (that country's version of the Fulbright Scholar Program) and landed a fellowship at Queen's University in Kingston, Ontario. At Canada's premier graduate economics program, Kato obtained what Koike had also encouraged: background in modern quantitative mainstream economics as it is practiced in North America. He brought to his next position — an assistant professorship at Colgate in 1986 — his already impressive curriculum vitae and some intriguing ideas about the nascent field of personnel and behavioral economics.

[He] showed me how enlightening it is to talk to the people who are doing what some consider 'simple things'

Leader in an emerging field
Kato figures among a small but growing group of scholars that uses an approach called "insider econometrics" to go beyond standard quantitative economic research. The technique enables investigators to conduct detailed qualitative field research at firms or other business establishments to develop a deeper understanding of each particular workplace's production processes. Economists obtain access to unique internal information that is typically available only to insiders, and then apply well-developed econometric methods to the data.

Using the approach, Kato conducted some of the earliest econometric analyses of employee participation and innovative work practices in Japan and Korea. He also studied corporate governance and executive compensation in Japan, Korea, and China using a similar method, and has several insider econometrics projects in the works.

One study, a collaboration with Derek C. Jones, the Irma M. and Robert D. Morris Professor of economics at Hamilton College, to examine high-performance work practices, recently received a seal of approval in the form of a $300,000 grant from the National Science Foundation.

This past October, Kato's contributions to the field were formally acknowledged when he was awarded a prestigious fellowship at the Bonn, Germany-based Institute for the Study of Labor (IZA), a private, independent organization that conducts internationally oriented labor market research. The appointment supports his work in personnel and behavioral economics and allows him to collaborate with other experts in his discipline. According to Don Waldman, Richard M. Kessler Professor of economic studies and chair of Colgate's economics department, the company in which Kato finds himself at the IZA speaks volumes about how highly he is regarded in scholarly circles.

"Through this fellowship, he is working with some of the world's leading figures in labor economics," said Waldman, adding that other fellows include Nobel Laureates and respected researchers from such world-renowned institutions as the University of Oxford, Harvard Business School, the Netherlands Bureau for Economic Policy Analysis, and Australian National University, among others. "He has really developed into one of the top economists in the world in the area of comparative management systems in the United States and Asia." Kato called it an honor to join the group, and modestly added that he was "particularly excited about all of the opportunities it presents, in terms of improving the reputation of the department globally and opening doors for our undergraduate researchers."

As for his students, they insist that Kato does both every day, and not just through his work in factories, but in the classroom as well. "He takes the time to explain what he is studying and to make you really understand the importance of the work," said Denica Yordanova, a senior. "He also makes sure to underline the importance of your contribution and to make you feel valued." At the same time, Kato literally opens the doors to his home and life, she said, citing a holiday dinner at his home in 2003. "He made a potentially dismal Christmas away from home a positive learning experience for me, one that I will always treasure," noted Yordanova, who is a native of Bulgaria. "He's a part of what makes Colgate truly special for me."

Jenkins is associate director of media relations at Colgate.
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