Shaping the Future: Chancellor Rich Lyons on Leadership, Innovation, and Behavioral Economics at UC Berkeley

In this interview, Rich Lyons, the newly appointed chancellor of UC Berkeley, reflects on the interplay of intentionality and serendipity in his academic journey, shaped by pivotal mentorships that redirected his career from business to economics. Lyons underscores his deep connection to Berkeley and his commitment to leadership that challenges the status quo. He talks about the importance of innovation and using behavioral economics to unlock new opportunities for the university, stressing that real progress often comes from looking at things differently. As Lyons puts it, “It’s about painting a picture of the future.” He envisions a bold future for the university, driven by fresh perspectives, interdisciplinary collaboration, and visionary leadership that will both advance UC Berkeley and redefine the field of behavioral economics.

Ulrike Malmendier: Alright, yes, exactly. Okay, so just three out of those questions. So we are all very thrilled by the news. Congratulations again for being appointed the next chancellor of UC Berkeley. And so as a fellow economics PhD, I got to ask you how you got there, because I presume that when you started the PhD, you envisioned maybe a lifelong regular professor role with teaching, research, some administration, but not this enormous challenge of being a chancellor and that leadership role. As you know, my recent work focuses on how our lifelong experiences shape us and influence us, change our behavior as a result. So I would be remiss not to ask you how your own lifetime experiences got you on that path, that career choice and the desire to embrace that new adventure.

Rich Lyons: Thank you. Thank you for the question. I appreciate the congratulations as well. You know, like all of our lives, there’s so much serendipity, right? There’s intentionality, you know, mashed up with serendipity and magic is often the result. So I sometimes I start back…so neither of my parents had a four-year degree. I got to come to Berkeley. I was a business major. I have two older brothers, seven and eight years older than I am. They’re like business guys. And I wanted to go to business school as an undergrad and go to business school as a graduate student. And I wanted to do business. And, you know, people say you can’t be what you can’t see. It’s sort of like what I ended up becoming. And I’m so glad it played out this way. There’s no way I could see that trajectory when I got to Berkeley. So a faculty member pulled me off and pulled me aside. Professor Fran Van Loo was her name. I’d written a macroeconomics midterm. I guess I’d done pretty well. I never talked to her. She said, “Come talk to me in my office.” I’m oversimplifying, but she essentially said, “Have you ever thought about maybe getting a PhD in economics?” It was like the craziest question anybody had ever had. It was like it was still crazy when I left her office. But not only did she ask me that question, but she mentored and sponsored me. She introduced me to George Akerlof. I was a business major, right? I’ve never taken a course in the Econ department. George had no reason to talk to me. He hadn’t won his Nobel Prize yet. But he sat down with me and talked to me about what I’d need to get into MIT or any good graduate program. She set that up. She helped get a letter from the dean of the business school for graduate school. Anyway, long story short, you know, I’m just so happy to have had that opportunity. But that’s what got me going in the life of a scholar. But then you start realizing, you know, does Berkeley owe me or do I still owe Berkeley? I literally after all those years still feel like I owe Berkeley. And part of it is because of that. And I get choked up just talking about it. So all of a sudden you start to realize, look, I think I have a point of view. I think I can kind of add more than the next paper, right? I’m proud that I had a referee journal publication only a year ago. I’ve slowed down a lot. But you know, the life of a scholar still thrills us. But that’s kind of, I think, as I started getting more involved in administration, it’s sort of like, look, this institution, I’m biased, I’m biased, I’ll just say it. But this institution is one of society’s most important assets. I really believe that. It’s got an incomparability that so few institutions have. And so that’s part of what motivates me.

Ulrike Malmendier: That’s amazing. When I talked about my own experience effects research, I have to admit that often empirically, I look at crises and traumatic experiences like the Great Depression, financial crisis. But there is the flip side, there are the positive experiences. And that’s this interaction with a macro professor here, with George Akerlof, that generosity really had an influence on your path. That’s beautiful. Now, here at Haas, for us, your colleagues here, you stand for values and for culture, I would say. In particular, you’ve embodied the challenging the status quo principle in my mind. And I also, if I think about you, I think about your commitment to research, innovation and discovery. And so my question now is, well, as you start on your first day in office, how will innovation, creativity and this challenging the status quo shape your priorities? And if it were the case, are there any insights from behavioral economics, from psychology and economics that might be something you might be inspired by or lean into, if anything comes to mind?

Rich Lyons: Well, thank you for that. You know, part of it is, can you paint a picture of what the future might look like? There’s an alum of ours who ran Electronic Arts for a number of years, started a company called Unity Technologies. Anyways, we have lots of great alums, but John Riccatello, who’s become a friend, and he’s that person. And I remember, he never used the word vision. We teach in a business school, people did some…vision statement, mission statement, people just get confused, right? It’s sort of like a vision statement is a description of a future state. That’s what it is. Okay. And so he said, “Don’t even use the word. It’s like, just paint the picture, paint the picture of what this might look like, and paint it clear, paint it again and again. And you don’t have to map out every step from here to there, but if people can see that picture and think maybe, they’re going to get excited, right?” And so when I think of questioning the status quo and some of the other elements that are so culturally important to us, it’s like, look, imagine this thought experiment. I’ll use Harvard University, no disrespect for Harvard, as you know, it’s the oldest university in this country. And there are a lot of people who are questioning the status quo at Harvard. But imagine the president of Harvard University standing up and saying, “Harvard University, we’re all about questioning the status quo.” It’s like never going to happen, never going to happen. It can’t happen. We can kind of understand why. So it’s not just like, we’ve got these unobjectionable values, but we really mean them. It’s like, no, this place stands for different stuff. Okay. So that kind of envisioning, there’s got to be a better way to do this. If somebody said, “Give me a phrase that kind of maps questioning the status quo into the way you think about leadership and what we might do next.” And I think there’s got to be a better way to do this. So to take one concrete example, if you say, “Well, what’s the revenue model of the university?” It’s like, well, we’ve got philanthropy and it’s like a billion dollars a year. We’ve got research, that’s about a billion dollars a year. We’ve got the state of California, that’s four or five hundred million dollars a year. And we’ve got tuition, including executive and educational services, right? But what I’ve been doing is innovation and entrepreneurship. And it’s sort of, I’m seeing revenue streams that are like very, they’re coded in those four pillars, but you would never see them if you didn’t take a different lens out and say, “Holy smokes, we can participate more in the economic value that we’re creating, but we need to look at it in fresh ways and so forth.” And so, what kind of vision or a picture painted of a different, more productive revenue model for the university where it’s kind of equitizing some of that participation is something that I’m super, super excited about. So getting back to your question about kind of behavioral economics and the way we think about that, it’s sort of like, people don’t kind of rationally see the whole space. It’s just, it’s kind of, you could say, “Well, this is good old fashioned information economics. You’re just conditioning on a richer information set than other people.” And it’s like, “No, I just don’t, it just doesn’t feel like that.” It’s sort of like things are clicking and getting articulated and, you know, people aren’t going to buy it unless they feel like they want to play and you got to win the hearts and minds. And that is not a purely rational process, right? In fact, when I think about some of the stuff we did at Haas, it’s sort of like, “Resistance was rational. It was perfectly rational.” We had had five team transitions in the prior seven years. So we come out with those four defining principles, leadership principles. It’s like, “Yeah, any rational person would expect them to not stick.” I mean, right? But, and so I think that, you know, it’s like, we have so many needs, cognitive and otherwise, as human beings, it’s like, we got to serve multiple needs if we’re going to take this place to that picture that’s painted.

Ulrike Malmendier: Yeah, no, that is actually quite amazing, that example of envisioning or painting the picture, because that very much links to my third question and what the new O’Donnell Center or behavioral economics is about, which actually, you know, thanks to you connecting me with Bob O’Donnell, has come into existence. And as you know, what we are really trying to do there is actually challenge the status quo, push the needle on what the field is about, not just, you know, behavioral economics has had these amazing advancements in making economics more human, taking the psychology into account, but has been somewhat restricted to just social psychology biases, heuristics and biases, which was a great advancement. But I think there’s more, there is the insights from neuroscience, from new psychiatry, from medicine, for epidemiology, about what’s happening in our body, what’s happening in our brain, how we are rewired as we are moving through life and what we can do with those insights to affect our decision making. Literally right now, researchers in London, Oxford, and I’m also in a collaboration here are thinking about how vision envisioning exercises or helping people with films to have a vision of their future can affect their lives. So this is very much kind of the next step, the step forward behavioral economics is trying to do. And so my last question to you is about advice you would give me and the center as we are trying to push the needle and move the field and, you know, chart a path towards challenging the status quo we are in, which is, you know, successful, there are Nobel Prizes for behavioral economics, but we think we have to be broader and here at Berkeley, exploit the wonderful richness of people doing research on resilience, on trauma, on stress, which want to talk to economists, and I think we can learn from them. But it’s an uncharted path. Do you have advice for us?

Rich Lyons: Such a wonderful question. Yeah, I should be giving you that question. I love the way you pose the question. I’m intellectually interested in the question. You know, there’s a faculty member I’ve come to know, his name is Ron Dahl, D-A-H-L, but he does adolescent development.

Ulrike Malmendier: Yeah.

Rich Lyons: Right? And he’s doing all this, he took just got back from sabbatical, I had lunch with him, he had a year to think about how do I pull fields together that even I haven’t thought very much. So, childhood and adolescent development. And he’s talking about the needs to be valued among your peers and how, you know, we’re reading about, you know, Jonathan Haidt, rather, and the stuff on depression and anxiety and so forth. And he’s talking about how does validation happen? And he, as somebody with all the training that he has and the research that he’s done, he’s realizing, I need to connect with these three or four other fields for me to advance in the stuff that I’m doing. Right? And he’s really realizing that he’s not at the end of his career, but he’s really, so that idea of this rich interpenetration, even among people who’ve been working in these areas for a long time, he’s not an economist, right? He’s like an M.D. He’s coming at it, right? But the more he’s talking about how young people find psychological health, or at least a vector in that direction, I hear behavioral economics. That’s kind of the only lens I have to listen to somebody like that. And I’m thinking, so I don’t know that this is a very great, it’s just kind of a single case, an answer to your question. But as we think about where do human wellness and change come from? So like, you know, there’s this management literature on leading change, you know, how do you make change happen among human beings, right? So like, I look at that now, and I see behavioral economics in a lot of that stuff, right?It’s sort of like, so it’s almost as though the largest questions that are facing humanity today, and the boundaries, not just of behavioral economics, but the combination of behavioral economics with other fields, is what we need to address those giant questions. I mean, how are we going to address depression and anxiety? It’s like, and how are we going to do that without our field, among others in combination? And I find that super exciting. Yeah.

Ulrike Malmendier: Yeah. So very excited to hear that. One of the first initiatives of the new center is, we have an unorthodox reading group where we take literature, which is outside economics and is still it, often have guest speakers, including I’ve interviewed Ron Dahl, and once with Danila Kaufau, who does research on stress and resilience in neuropsychiatry. Today, we had reviews and articles related to Jonathan Haidt’s book. It has been a little bit critically reviewed from the science side, but we all believe he’s right. So what can we do to strengthen the evidence? That’s our currency in economics and then find interventions. And so literally, I’m just coming from a lunch where we took that. So I love the example. And yeah, reaching out to people outside the field doing intensive, you know, two, three day workshops together is what we’re hoping to use as our leverage. Let’s see how it goes.

Rich Lyons: Yeah. Well, how do we evolve as human beings? No, these are the big questions. And who would have thought that we would need them and they would need us to get after them?

Ulrike Malmendier: Yeah. Fantastic. Thank you so much.