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A doctoral seminar in economics is not a class for dabblers. It is, however, the surest path to understanding the intense complexity of economic and political forces that play out in daily life. “A lot of economics is about prices, and quantities, and things that take place once you take the market system as given,” says Daron Acemoglu, who taught economics class 14.773 (Political Economy: Institutions and Development) with Jacob Moscona this spring. “But which market system? What laws? Where do these come from? There’s nothing preordained about the way we organize the economy. So how did we end up here?”

“This is a PhD-level course, so we’re going to move fast­,” Acemoglu says on the first day of class in early February. There are about two dozen students in a seminar room overlooking the Charles River. Some are sharply dressed business-school types in skirts or slacks and carefully coiffed hair; others are in jeans, T-shirts, and hoodies, and don’t seem to own combs. Acemoglu, with a salt-and-pepper goatee, small glasses on a round face, rumpled pants, and a tan blazer over a black turtleneck, lands somewhere in between.

The classroom is designed with the lecturer as the focal point of three concentric half-circles of white tables, with seating bolted to the floor at each tier. It feels intimate, utilitarian, a little cramped; the white walls and tabletops pick up the glare from the frozen river and snow-covered ground to fill the room with brilliant light. “We’re going to start with a broad overview to give you a sense of what I’m going to take for granted later. But I want you to ask questions,” he says, and turns to his slides.

First up is a map of the world showing countries color-coded according to per-capita incomes. “Why the variations?” Acemoglu asks. “There are geographical, cultural, historical, and institutional explanations. Let’s start with the institutions — a term we could spend the rest of the semester defining,” he adds drily. He offers a slightly modified definition from American economist Douglass North: “institutions are humanly devised constraints that shape human interaction and enable incentives.”

A hand shoots up: “What are markets in this context?”

Acemoglu pauses and puts his finger to his chin. “That’s a great question … I don’t know.” He leaves his finger on his chin. “But how they’re structured is a question of institutions. Hold on to that thought. We’ll come back to it.” Another hand shoots up as he turns back to his slides. “Yes!” he steps quickly to stand in front of the student who has her hand up.

“Are social norms the institutions of a society?” she asks.

“The relationships between norms and institutions are extremely complex. We’ll get there. Bear with me,” he says. There is a crackle in the air that wasn’t there before. Acemoglu has barely started his lecture, and he seems as energized by the questions as he is eager to move forward. He dives back into his slides: “Colonialism has shaped two thirds of the world’s economy—”

He moves on to “inclusive” and “extractive” economies (“If you don’t like these terms,” he says, “you can come up with your own, but proliferation of terms can become its own problem”), de facto and de jure political power (“Elon Musk and I both have one vote, but we do not have the same amount of power”), the relative population densities in colonized territories, settler mortality and disease, the Boer War, Franklin Delano Roosevelt’s battle with the U.S. Supreme Court, Argentinian political history, and more.

Acemoglu’s lecture pace feels roughly equivalent to sitting in the Millennium Falcon as it jumps to hyperspeed. Working with more than 50 slides, he often skips forward or backward several at a time to illustrate a point. And the questions keep coming (“What about countries like India that had strong pre-contact institutions?”). With each one, he walks toward the student asking and comes to a complete, fully attentive stop. Often, he will connect a new question with one posed earlier and flip back through his slides for an illustration. Then, without a pause, he picks up exactly where he left off and resumes the journey — at speed.

“In most economics classes, you study a specific incident or a narrow set of questions,” says Netanel Ben-Porath, an Israeli doctoral student from Northwestern University who is sitting in on 14.773. “In this class, we take on big questions, and Professor Acemoglu uses different examples from different places and periods of history. I am amazed at how he organizes this into a coherent class,” he adds. “It gives you access to incredibly deep theoretical thinking and truly vast knowledge at the same time.”

It starts with history

The students in Acemoglu’s classes, and plenty of other people, have encountered many of his ideas already. He has published, with co-authors James A. Robinson and Simon Johnson PhD ’89 of MIT Sloan School of Management, some of the most influential books of this century, including “Why Nations Fail,” “The Narrow Corridor,” and “Power and Progress.” Devoted to the intersections of politics, economics, history, and technology, the work has been translated into more than 30 languages and been wildly popular worldwide. (The books, and others, along with the trio’s hundreds of scholarly articles, led to a Nobel Prize in economic sciences last fall.)

Acemoglu’s books also offer a glimpse into what the students in 14.773 are learning — and how they’re learning it. For example, in the opening chapter of “Why Nations Fail,” Acemoglu and coauthor James A. Robinson observe that people living on either side of the Arizona-Sonora border town of Nogales experience deeply contrasting economic circumstances, even though they are separated by little more than a fence. By way of explanation, the book launches into briskly paced histories of North and South America — from the conquistadors and the Puritans to the maquiladores and NAFTA. (Later on, the book does similar rundowns on North and South Korea and the two halves of the Kuba Kingdom in the Democratic Republic of Congo to illustrate related concepts.) The depth and variety of historical detail in Acemoglu’s books can be breathtaking, but the delivery is steady and engaging. In print, he has time to develop nuanced arguments with carefully chosen details and nimbly orchestrated asides.

For the students in his PhD seminar, however, time is short and the demands are much steeper. Each meeting of 14.773 is one leg in a 14-week race through the broad domain of political economy. Individual classes are built around a particular issue or dynamic — labor coercion, slavery and colonialism, voting and constitutions, conflict and regime change, elite networks and corruption, the environment, and others. Class sessions typically start off with a standard lecture, but things get more complicated after the first 15 or 20 minutes.

Acemoglu makes them do the math.

Making models 

By the end of February, enrollment in 14.773 had thinned out a bit, but the pace of the class did not slacken as the semester went on. On another bright, frigid day, Acemoglu walks in, sets down his paper cup of coffee, plugs in an iPad for his slides, and launches into the topic of weak states and state-building. “By weak states, we mean those that lack capacity,” he says. “And by capacity, we mean their ability to do what they are meant to do — what people intend for the public good. Also,” he adds, “you can define state capacity as the ability of the state to impose its will on the people who live in it.”

Working with examples from postcolonial sub-Saharan Africa and some concepts borrowed from the German sociologist Max Weber, Acemoglu defines the four main elements of state capacity: a “monopoly on legitimized violence,” the ability to levy taxes and regulate the economy, providing reliable infrastructure, and the autonomy of their bureaucracies (the last, he notes, “is related because of the need for state institutions to be somewhat autonomous from political power”). He rounds out his introduction with a question: “Why do weak states remain weak when their weakness is not economically productive?”

Then he changes gears. Starting with the examples he has just presented, Acemoglu begins to spell out a mathematical model that puts the forces of state capacity and other variables into calculable relationships with each other. The content on his slides changes from bullets, tables, and line charts to equations, regressions, and specialized mathematical functions and notations. Many of the variables come directly from the lectures (“G_t denotes government spending on public goods,” he points out), that are then combined with other social dynamics, economic principles, and mathematical functions.

Acemoglu’s speaking pace actually seems to pick up as he presents the model and describes the assumptions driving its different elements. “To make this easy,” he notes early on, “we’ll assume a finite set of states, and each individual uses a discount factor to determine relative payoffs.” As he rolls on, Acemoglu sometimes pauses to explain how he is simplifying a phenomena, or he sidetracks to shorthand a principle: “As you can see,” he says, pointing to one variable in a formula that stretches all the way across a slide, “that’s a relatively innocuous simplification. You could put any constant here you want; it doesn’t mean anything.”

The students are quiet as he walks through the model. Some take notes, others follow along with his slides on their laptops. When Acemoglu pauses to sip of his coffee, a few lean in with questions. They are much more interested in the interpretations and assumptions driving the model than they are in the calculations, which are as obvious to them as they are to Acemoglu.

“In this model, the tax rates are set once, after the state has decided its investment levels,” one asks. “Won’t people adjust their output?”

“The state should always assume citizens hide a portion of their output from taxation, but this concealment has costs,” Acemoglu says. “This should be a part of the state’s model. But you’re right about the sequence,” he adds. “Reality is a little bit more complicated.”

“The models are like metaphors for helping you see the world,” says Charlotte Siegmann, a second-year doctoral student in economics, after class. “I enjoy finding the boundaries and conditions for the metaphor. The models can sometimes help us see more patterns — like how things fit together.”

“It’s very difficult to interpret data,” says Santiago Torres, a first-year student pursuing a double-PhD in economics and statistics. “You can always get the computer to spit out a number. But making sense of that number, knowing what else to expect, trying to design policies — all of this requires models.”

A mix of the technical and the frontiers

Students enroll in 14.773 for lots of reasons. Initially, some show up simply because of Acemoglu’s star power (a visiting student from a nearby university asked him to autograph her copy of “Power and Progress” after the first class). Others, mostly postdocs, are visiting from nearby organizations like the National Bureau of Economic Research. By the time spring break has come and gone, however, it’s really down to the economists.

Torres, the first-year student, hasn’t settled on a research direction yet. He is taking the class to sharpen his technical acumen and to get a bird’s-eye view of his discipline. Originally from Bogota, Colombia, he worked for two years in a predoctoral role for James R. Robinson (Acemoglu’s co-Nobelist at the University of Chicago) before coming to MIT. “I already know most of James’ questions,” he says. “I want to go back to the questions that got me into economics. This is a very nice class to take early on because of the scope,” he adds. “Once you make your choices, it can get very narrow.”

Natanel Ben-Porath, the visitor from Northwestern, points specifically to Acemoglu’s models as a motivator for his own learning. “We make arguments in economics by formalizing models,” he says. “And there is always a trade-off between how realistic you can make the model and how complicated it is. I am really learning from this class how to do work that people can follow, but that remains realistic.”

Even though he hasn’t started a PhD program yet, Christian Vogt is clearer on his goal: “I want to go into this field.” Currently a predoctoral researcher in the economics department with Acemoglu and David Autor, Vogt sees political economy as “taking a step back — instead of studying transactions that solve political problems, it looks at problems before the transaction is agreed on. I am very interested in understanding problems like how organized labor can leverage its power,” he adds. “These kinds of problems don’t get solved by just putting more information out there.”

For Acemoglu, all of these outcomes make sense. “A PhD course should be egging you on to become a researcher,” he says. “I’m trying to mix some of the technical materials and some of the vision and ideas about where the frontiers are. For some, this class will never translate into anything,” he adds. “Some will be motivated to do empirical work. Some will be triggered to do more theory. They’re learning and they're experimenting and they’re generating their own ideas. That’s what we’re here for.”