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Michael Spence
Former Princeton hockey player Michael Spence once took shots at a future Canadian Member of Parliament and provided instruction to the richest man in America. The Nobel Prize winner has had an interesting life.

Imagine a college hockey game with a future Nobel prize-winning economist coming up the ice, aiming a shot at a future Canadian cabinet minister in goal.

It really happened. In goal for Cornell University was future Canadian Member of Parliament, Minister of Social Development, and NHL Hall of Famer Ken Dryden. And the player coming up the ice, Princeton's A. Michael Spence, future Rhodes Scholar, Stanford Business School Dean, and 2001 Nobel Prize winner in economics.

Spence remembers it well. Dryden "was so fast on his skates and so big and so good that as you came down the ice, you often couldn't see the net." Just one aspect of a career that was at least partly shaped, well, by hockey.

He started with hockey "probably about age four or five. Canadians start early," according to Spence. He continued to play, but when it came time to think about college he wanted a school that emphasized liberal arts. According to Spence a liberal arts education was unavailable in Canada in the early 1960s. But "I knew Princeton from hockey - high school hockey tournaments," and Princeton, of course, offers a liberal arts education.

So he went to Princeton. He played a lot of hockey but  "I was a student first. I guess at times we were kind of tired from studying but hockey came next." That seems to be an understatement. He was a good hockey player, a three-year letter winner. But he was a brilliant student, a Rhodes Scholar, graduating summa cum laude before heading to Oxford's Magdalen College in 1966.

After taking two degrees in Mathematics at Oxford in 1968 Spence went to Harvard for a PhD in economics, receiving it in 1972. His doctoral thesis, "Market Signaling: Informational Transfer in Hiring and Related Processes," presaged the work for which he would win his Nobel. To Spence, signaling is the process by which a potential party in a transaction transmits information to interest another party. His work showed that sometimes knowledgeable participants can improve market position by "signaling" private information to less knowledgeable participants.

Spence's classic example is the labor market. There, applicants advertise job skill acquisition ability by completing college degrees. Employers believe that those more capable of acquiring job skills are also more likely to complete degrees, Spence theorized.

Which leads to an interesting question. Is participation in college sports such a signal?

"It seems to me that employers do view high level athletic commitments as a signal," says Spence,  "and it is my impression that the signal has the characteristics that enable it to survive in the market.  Of course it is only one signal among many."

Spence feels that participation in athletics has helped him in his academic career. In athletics "you have goals, practice, master things so they become second nature and that allows you to be creative in competition.  I think the process of expanding ones athletic abilities (physical and mental) are similar to the process of exercising and disciplining the mind."

It certainly worked for him. After receiving his Ph.D. Spence taught briefly at Stanford, then returned to Harvard (where two of his students, incidentally, were Microsoft founders Bill Gates and Harvard football manager Steve Ballmer - he gave them both A's), eventually becoming Dean of the Faculty of Arts and Sciences.

He left Harvard in 1990 to become Dean of the Graduate School of Business at Stanford. Spence stepped down as Dean in 1999, becoming a fellow at Stanford's Hoover Institution.

Spence is unequivocal about his time at Princeton: "It was a gift to be admitted and to spend four years there, learning, playing hockey, making friends and understanding the greatness of the country."

— Stephen Eschenbach

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