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Executive MBA

Nobel laureate Robert Merton returns to MIT Sloan

Robert C. MertonRobert C. Merton

Robert C. Merton, PhD ’70, an architect of modern finance theory and Nobel laureate in economics, has rejoined the faculty at MIT Sloan, where he taught from 1970 to 1988.

“As the world begins to rebuild its financial infrastructure from the ashes of the economic crisis, I believe that MIT is well positioned to play a leadership role in shaping the future of finance practice through its research and educational programs,” Merton said. “It is the right time to return.”

Merton is working with Harris & Harris Group Professor Andrew Lo to develop new methods of understanding and controlling the propagation of macro financial risk. He believes better collection and analysis of financial data will help researchers identify and possibly even anticipate major systematic and institutional problems.

“If you can measure and monitor systemic risk effectively, then one hopes that you can manage it well,” Merton said.

Merton is also pursuing the development of a next-generation retirement savings system. As the global population ages, both public- and private-sector retirement benefit schemes are putting enormous financial pressure on corporations, municipalities, and national governments. Traditional employer-provided define-benefit pension plans are disappearing worldwide, he said, and are being replaced with define-contribution plans, which were never intended as a solution for core retirement needs.

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