Prof Huang Fali

Feature on Huang Fali, Associate Professor of Economics
School of Economics, Singapore Management University 

Designing good institutions for a more fulfilling life  

From the design of political institutions to the organisation of smaller social units like the family, Associate Professor of Economics Huang Fali’s research areas reflect similarities in intriguing ways. In this interview, she shares more about her passion for economics and how she hopes to contribute to the progress of humankind through her work.   

Globalisation has created generations of “global citizens” and for some of these people who have lived within more than one culture, the increasing polarisation of the world has brought conflicting emotions.  

One of the most salient issues in the world today is the relationship between the United States (US) and China. Huang Fali, Associate Professor of Economics, Singapore Management University, is someone for whom this issue is close to her heart. “I was born and raised in China but obtained my PhD in the US. Personally, I love both countries and cultures, so I feel like I’m a child caught between divorcing parents,” she says.  

Indeed, she has been compelled to address the current dynamic between the two countries in a systematic and rigorous way in her research. She explains, “I am motivated to facilitate a deeper understanding of what’s going on in the world and to carry out research that is relevant to society.”   

Coevolution and synergies of institutions and development  

Huang’s area of focus is on the design of political institutions for economic development. She also examines the impact of cultural traits like collective versus individualistic orientation within areas such as development, income inequality, and political regime.  

“A unifying theme of findings is that political, legal, and educational institutions must fit to local society, especially to its economic developmental stage,” she says. In a series of papers, she provides theories and evidence that the ongoing conflict between the US and China lies more in distinct developmental stages and cultural beliefs than rigid ideologies.  

“When an economy is still heavily reliant on agriculture or other forms of natural resources, then it is not easy to establish or sustain a well-functioning liberal democracy. Imposing a particular format of democracy on a country that is not ready yet, either in terms of economic development or cultural beliefs, does not improve economic growth,” she says, adding that her recent paper actually suggests that China is prepared for democratisation if you look at it in terms of economic development. “However, one must consider its large size and regional discrepancies for an overall assessment of such a political transition.” 

Seek to understand family as an institution 

Huang’s research spans a vast range of societal topics. While they may look widely distributed across various fields, she explains that their coherence comes from the fact that they seek to understand how humans organise societies. “I am interested in broad governance issues, and I find that you can often draw parallels between how a country is run, and how a family is managed,” she says.  

For example, parents with young children might be concerned about whether it is appropriate to spank them occasionally for disciplinary purpose. “My research has found that for young children who can’t yet tell right from wrong through reasoning and self-discipline, an authoritative parenting style may be more appropriate. This is similar to my findings discussed above on authoritative political regime being more compatible with a less developed economy, where the citizens are often less educated or skilled,” Assoc Prof Huang says.   

Love and matchmaking in family formation 

Sometimes, the unique application of well-known economic theories can bring unexpected and interesting insights. In a paper titled “Love and Money by Parental Matchmaking: Evidence from Urban Couples in China”, Assoc Prof Huang leverages the principal-agent theory to explain how parental involvement in marriage matchmaking may distort the optimal spouse choice – because parents are “relatively more willing to substitute love for money” than the child.  

She explains that when it comes to matchmaking, it would be assumed that altruistic parents want to find the best partner for their son or daughter. On the surface, it seems that a specific matching format should not matter. Yet, Huang says, “A hidden problem is that there are many dimensions in characterising the best spouse. For example, a handsome guy as a potential husband may not bring much happiness to the daughter’s parents compared to a rich guy. Similarly, a good-tempered and kind wife could offer more benefits to a the large family than simply being physically beautiful. The optimal trade-offs between these two types of characteristics thus differ for parents and children.”   

This implies that if parents are delegated to find a spouse for their daughter, they might place more emphasis on income than looks. “We indeed find strong support for this from empirical results based on a large survey in China,” Assoc Prof Huang confirms, adding that the result resonated with international conference audiences, often raising chuckles and nods when it was presented, and received media coverage from countries including China, India, and Israel.. Similar tradeoffs and distortions may prevail in the formation stage of other institutions. 

Questions beyond economics   

Huang’s heart work in economics comes from her passion for humankind and her desire to contribute to its progress. “As a society, we emphasise a lot on material stuff, such as the gross domestic product (GDP), and have been neglecting emotional wellbeing and social cohesion. It’s time for us to shift our thinking and focus on bigger questions that we are struggling to answer – such as how do we ensure that every individual is treated as a full human being rather than just human capital? How do we achieve freedom both at an individual and a societal level?”  

Through her research and teachings, Huang hopes to inspire her students and beyond to rethink what it means to have a meaningful life. “Even though I am an economist, I strongly believe that in order for society to move forward and become a kinder place, we need to focus on the bigger picture, and not just narrowly-defined economic outcomes,” she says.