Which works better, the carrot or the stick? This age-old question on economic models of enforcement was the focus of NUS Business and NUS Economics Distinguished Professor Ivan Png’s doctoral dissertation at Stanford University’s Graduate School of Business, from which he graduated in 1985.
Efficiency in public policy has always piqued Prof Png’s interest. In a highly regarded piece of research done in collaboration with Professor Dilip Mookherjee and published in the Quarterly Journal of Economics, he disproved a conjecture of well-known scholar Robert Townsend on the design of auditing schemes. Together they showed that in auditing, it is optimal to audit at random with probability between zero and one. So long as the regulated person is risk-averse, random auditing yields higher welfare than schemes in which the regulator either audits reports with certainty or not at all. The research remains today Prof Png’s most highly cited paper.
More recently, Prof Png has investigated how intellectual property affects innovation. While most scholars focus on patent law, Prof Png chose to study trade secrecy, which is much more widely used in the innovation landscape compared to patents — think Coca-Cola’s formula, Google's algorithms, and your bank's list of private banking clients. The challenge, however, was how to study something that is secret. Prof Png’s solution was to instead study the effect of changes in trade secrets laws on easily observable outcomes, such as research and development expenditure, patents and professional mobility.
“Hopefully, this research will help businesses and society better plan innovation. I hesitate to say that I would like my research to lead to ‘more innovation’, because, like everything else, there can be too much innovation, just as there can be too little. From a societal point of view, we need to balance the benefits and costs,” said Prof Png.
Prof Png’s journey with NUS has been a long one. After graduating with First Class Honours in economics from the University of Cambridge in 1978 and obtaining his PhD from Stanford University, he joined the teaching faculty of the University of California, Los Angeles. In the early 1990s, he and his wife decided to start a family and headed back to Asia to be closer to their parents, spending a few years in Hong Kong before returning to Singapore, where Prof Png joined the then Department of Information Systems and Computer Science at NUS in 1996.
“Student interest in IT was huge. Many of us felt that the Department was so substantial that it should be a separate faculty. We struggled with the name and eventually decided on the School of Computing,” he shared.
Professor Chua Tat Seng kicked off the School as Acting Dean and a year later in 2000, Prof Png was appointed Dean of NUS Computing, a position he held until becoming the first incumbent in the post of Vice Provost for Graduate and Undergraduate Education the following year. It was during his term as Vice Provost that he worked with University Professor Chong Chi Tat to help initiate many of the things we take for granted today — a University-wide module bidding system to address issues of access to in-demand courses; on-campus examinations; and commencement ceremonies in July when they used to be held in September. Ever wondered why the University’s administrative centre is known as “University Hall”? Prof Png might have had something to do with that. “I just could not accept that a world-class institution would be led from an ‘Administration Block’!” he said candidly. He also had a hand in drafting the University Statutes and Regulations, which today form the legal framework for NUS.
“I am glad to have made some contribution to the administration of the University, and looking back, particularly glad to see how many of the changes have passed the test of time,” said Prof Png.
In 2005, Prof Png was sworn in as a Nominated Member of Parliament, and immediately set to work asking hard-hitting questions related to education, income tax, competition and the environment.
“A great thing about the government of Singapore is that it is clean and keen to improve. It may take some nudging and persistence, but our government has a vision and commitment to advancing society. Going through my files for this interview, I came across a suggestion that I made in the late 1990s to do away with the requirement that private companies be audited annually. At the time, the Ministry of Trade and Industry replied, cheekily I feel, that my suggestion would undermine corporate governance and that weak governance had contributed to the Asian Financial Crisis. Well, some years later, the government indeed repealed the requirement for private companies with fewer than 20 shareholders and annual revenue of less than $5 million.”
In addition to being a regular feature in the media, contributing his expertise on microeconomic issues in newspapers such as The Business Times, South China Morning Post, and The Straits Times, he is also the author of Managerial Economics, a popular book offering simple and practical tools and concepts for business students and managers, which is now in its fifth edition.
When he isn’t busy with all of this, Prof Png unwinds by travelling with his wife — taking pride in being able to plan amazing experiences on the cheap — and playing tennis and violin, both badly he added. “I have nice colleagues and friends who tolerate my lousy tennis.”
So what does the future hold for the energetic academic? And what advice can he offer to younglings looking ahead to the future world of business?
“I hesitate to offer advice as I am no better at charting the future than anyone else. And I consider advising people to ‘pursue their passions’ as quite one-dimensional, and almost reckless. The only advice that I can sensibly give is to know yourself and choose a career accordingly. I started life in the government Administrative Service and quickly realised that it wasn’t for me. So, I switched to an academic career, which has worked out perfectly. In the future, I look forward to refining an Honours-level seminar in Innovation and Productivity that I launched some years ago. And to keep working on my violin and tennis.”