Raaj Sah

Raaj Sah is Professor at the University of Chicago, Harris School of Public Policy.

He has previously held faculty positions at the Massachusetts Institute of Technology, Princeton University, University of Pennsylvania, and Yale University. He has received three honors for his teaching at the University of Chicago.

Sah has received the Order of the Rising Sun, Gold Rays with Neck Ribbon. The Government of Japan conferred this honor on him, on behalf of His Majesty the Emperor of Japan, for his engagements with the Japanese government’s economic policies.

Sah holds a PhD in economics from the University of Pennsylvania. He has an MBA from the Indian Institute of Management Ahmedabad. His earlier education is from Birla Institute of Technology and Science Pilani, and from St. Xavier’s College Ranchi. Born in India, he is a US citizen.

Three of his research interests are briefly summarized below:

1. A hardwired human characteristic is fallibility. This fallibility resides deeper than what can be removed by vastly larger models, big and bigger data, immensely greater computational power, artificial and other logic, etc. Jointly with Joseph Stiglitz, Sah has examined how, within various kinds of organizations, individuals’ fallibilities combine together to produce different overall consequences of fallibility. This work has found application in many contexts. Among them are finance, several branches of management sciences, comparisons of alternative societal systems (e.g., polyarchies versus hierarchies), the architectures of organizations and, as described below, the issue of decentralization versus centralization.

The decentralization versus centralization of authority and leadership is an ever-present and a foundational issue in social sciences. It arises in all forms and at  all scales of organizations; for example, from families to mega corporations. This issue is also central to politics; its variations are at least as old as Plato, and as contemporary as the unification versus autonomy within the European Union. A fallibility-based framework leads to some specific perspectives on this topic, including that a greater decentralization of authority reduces the volatility of outcomes.

2. Some societies and geographical regions can display markedly different levels of crime, corruption, and other social phenomena, even though they have similar economic fundamentals. Analogously, economically comparable business organizations often have quite different internal work ethos and ecologies. Abstracting from the fundamentals, Sah has examined how perceptions and realities of such phenomena influence each other dynamically across time. People's current perceptions are influenced by the present and past realities. These perceptions affect the individuals' current choices and actions. Such choices, in turn, shape future realities, which then influence future perceptions. Thus, economically similar societies and other entities can evolve differently with regard to such phenomena.

3. Sah has done research on public finance and taxation. For example, an idea that has been popular for centuries is that inequalities of well-being across people can be reduced by subsidizing the necessities of life, and by paying for these subsidies by taxing the luxuries. Variations of this idea continue to have strong appeal, especially in those countries where taxes on goods and services are a primary foundation of the governments’ finances. Sah asked the question: How much redistribution is actually possible through such policies? This is because without examining what is feasible, design of such redistributive policies will likely not be meaningful.

The following is a quotation (from Tresch) on one of his results on the topic outlined in the previous paragraph: “Raaj Sah developed a simple and ingenious method for determining the limits of redistribution under commodity taxation that relies only on the government’s budget constraint. His method led him to conclude that commodity taxes and subsidies are unlikely to have much equalizing effect on the distribution of income.”