Robert C. Merton
BOSTON — Robert C. Merton, Harvard's John and Natty McArthur University Professor based at Harvard Business School and winner of the 1997 Alfred Nobel Memorial Prize in the Economic Sciences, recently received an Honorary Doctorate of Science from Claremont Graduate University in Los Angeles.
Merton was recognized with the degree Doctor of Science, honoris causa, for his important contributions to the fields of mathematics and financial options, including intertemporal portfolio choice, capital asset pricing, and risky corporate debt. Claremont Graduate University also commended him for his creation of the Merton Model, a structural credit risk model that treats equity as an option on the firm's assets; his development of SmartNest, a pension management platform that addresses deficiencies associated with traditional defined-benefit and defined-contribution plans; and his ability to translate financial science into practice.
The University also applauded Merton's groundbreaking work on a new method for valuing derivative securities, for which he won the Nobel Prize with Myron S. Scholes in 1997. In collaboration with the late Fischer Black, Merton and Scholes developed a pioneering formula for the valuation of stock options. This method also paved the way for economic valuations in many other areas, generated new types of financial instruments, and facilitated more efficient risk management.
Robert Merton was the 35th Harvard University faculty member to be awarded a Nobel Prize. To celebrate this honor, Harvard Business School opened an exhibition exploring the context in which Merton conducted his Nobel Prize research - from his early influences and investigations as a young doctoral student more than thirty-five years ago to the impact and growth of his groundbreaking work in the current academic and financial communities. Merton donated his gold Nobel Prize medal to Harvard Business School in 2005, along with the tooled leather box in which the medal was awarded and the accompanying diploma with original watercolor painting and citation. All these items are on permanent display in the de Gaspï¿½ï¿½ Beaubien Reading Room, located on the first floor of Harvard Business School's Baker Library | Bloomberg Center.
At HBS, Merton currently teaches the second-year elective Functional and Strategic Finance, a course organized around applying finance science and financial engineering in the design and management of global financial institutions, markets, and the financial system.
Merton earned a bachelor's degree in engineering mathematics from Columbia University, a master's degree in engineering mathematics from the California Institute of Technology, and a doctorate in economics from the Massachusetts Institute of Technology. He then served on the finance faculty of the MIT Sloan School of Management until 1988, when he moved to Harvard Business School. He is past president of the American Finance Association and a member of the National Academy of Sciences.