PhD Student

Nadia Kotova

PhD ’21
Nadia Kotova, PhD ’21 | Photo by Elena Zhukova
Nadia Kotova, PhD ’21 | Photo by Elena Zhukova
At Stanford, a lot of work is done in teams. That didn’t come naturally to me.
October 30, 2020

Russian educators spotted Nadia Kotova’s potential when she was in 11th grade, awarding her the “Russian President’s Prize for Most Talented Youth” in 2012. That award guaranteed her admission to the joint program of the country’s two premier schools of economics, which led to a semester at Harvard in 2014 and her later admission to Stanford GSB, where she expects to receive a PhD in economics next year.

“I was raised by a single mother, and we were poor even by Russian standards,” she says. “But higher education in Russia is free, and your performance is the only factor that affects admission to even the best universities the country has to offer. My undergrad program turned out to have a profound impact on my life and career.”

Her upbringing shaped her interest in fairness. As an undergrad at Moscow’s New Economic School and Higher School of Economics, she studied ways to set wages that are as fair as possible. Since coming to Stanford, she has focused on inequities in housing markets that seem to systematically put women, minorities, and the poor at a disadvantage.

While she says the Russian education system gave her a solid foundation in hard sciences, at Stanford she has learned to value skills such as communication and teamwork. “Our schooling system emphasizes hard skills like math and physics and being able to solve equations and do algebra,” Kotova says. “But in hindsight we missed a lot in terms of writing, speaking skills, and presentations. And in Russia there were no group projects. At Stanford, a lot of work is done in teams. That didn’t come naturally to me.”

What sparked your interest in economics at such a young age?

In Russia you have to choose your specialization before you enter college because the undergrad programs are specialized. You have to decide pretty early. I went to a very good school that specialized in math and physics — a lot of rigorous proofs and math. But math seemed a bit dry to me. I always wanted to study big questions about society. Economics sounded like a perfect combination of math and social sciences, which allowed me to study people, firms, or even whole countries.

You’ve said that a course you took at Harvard in 2014, on decision theory, was transformative for you. What appealed to you about that?

Sometimes when you attend classes with particularly inspiring people, you want to do what they’re doing or you start thinking about the subject as being super-interesting. That’s what happened to me. I was lucky to take a class taught by the decision theorist Tomasz Strzalecki. Then I went back to Russia and I contacted my undergrad advisor, Andrei Savochkin, who is also a decision theorist. I ended up writing an applied micro theory paper about fairness in wages. I’m very thankful to Andrei for not pushing me to do what he thought was the most interesting, but rather trying to find the topic that I was obviously excited about.

So what’s your best definition of a fair salary?

How you evaluate your salary depends on the salaries that your peers get. If you work in a group where everyone has similar skills and works the same amount of hours, everybody should be getting the same. But unfortunately that’s not always true in real life. Especially in big organizations, the discrepancy between salaries is significant. And a lot of the deviation from the fair level is explained by just pure luck.


The main thing Stanford gave me is the people — my advisors and my peers — and the ability to interact with the best economists on the planet.
Nadia Kotova

In my undergrad presentation, I used the example of a car dealership. You can have two very good salesmen, but their bonus size depends on the total price of the cars they sell. Maybe the other person was lucky to deal with a customer buying a Mercedes C class, while you managed to sell a Hyundai Sonata. Your colleague will get a much bigger bonus because of pure luck, not because he was a better salesman. So the fair wage is the one that is a response to your effort and skill, rather than your output, which depends on effort, skill, and luck.

That issue seems pretty relevant right now.

At the time I was writing my undergrad thesis, there was a scandal with one of the big tech companies because somebody leaked a spreadsheet showing the salaries for its workers. Many people realized their wages were much lower than that of their peers. If you think you’re working hard but your effort is under-appreciated compared to your colleagues’ labor, then you might get upset and lose your motivation. Fundamentally, wages should take into account workers’ preferences for fairness.

What might be a good first step toward solving the chronic inequity in the housing market?

The key is to better understand why different people experience such different outcomes in the housing market, and to document and quantify the impact of these differences. For example, I’m currently researching the differences between summer and winter housing markets. What we find is that more expensive houses are more likely to be traded in summer, when market conditions are better. We think that’s because rich people, who own expensive houses, have the luxury of waiting until market conditions are just right in summer before they sell. People who are less financially well off might have to sell their house quickly and can’t wait for market conditions to be good. If housing markets were liquid, it would be better for everyone. Sellers would not have to spend months trying to sell their houses, and market timing would not matter as much. But I don’t have a good answer about how to achieve that yet.

So even though we know these problems exist, there’s no easy solution?

The broader purpose of my research is to try to understand how good of an investment a house is for different people, including women, minorities, poor people, and others. The truth is that individual houses are a risky investment. Owners are exposed to average price fluctuations in the country and in their neighborhood, and on top of that they’re also exposed to risk that is very specific to their house. One of the determinants of this house-specific risk is, again, market illiquidity. My research tries to speak to whether home ownership is right for everybody, and whether government should subsidize homeownership as much as it is doing now. I know the American Dream is to have your own house, and the government tries to support that with tax credits and the $250,000 deduction for capital gains if you sell your house. But very few people can buy a house right away and have to take mortgages. Sometimes a mortgage is double their current net worth, and they’re in big debt most of their lives. People are pushed to acquire this asset that is not only volatile and risky, but also constitutes a large share of their portfolio.

What kind of policies might reduce the market inefficiencies that systematically make the poor poorer?

There are policies that can help reduce these inefficiencies, but they might be unpopular in the U.S. For example, here’s one way people could hedge against local and individual risk: Instead of buying an individual home, they could just buy a share of the U.S. housing portfolio so that capital gains are tied to how the overall economy is doing. That would be a much less risky investment for people. But right now this instrument is not available.

Have other countries tried other methods to address housing market inequities?

In some developed countries, such as Germany and Switzerland, renting is more common, and homeownership rates are low. In Norway, most houses are sold through auctions. You decide to sell your house, then you host an open house, then the auction happens two days later. All of the property inspections and other logistical details that delay buying a house in the U.S. are done pre-auction. Because it’s an auction rather than individual bargaining with the buyer, the highest bid wins and the seller then gets to decide whether to sell to that bidder. That means a seller can sell quickly and a buyer can buy quickly. It seems to function in a better way.

After four years in the U.S., what do you miss most about Russia?

I miss home-cooked meals. I try cooking for myself but I never make it as well as my grandma. That, and also public transport. Everything in the U.S. is car-based, and you have to have a car to go anywhere. In Moscow I didn’t need a car; the Metro is very efficient and clean, and trains come along during rush hour every 30 seconds. This allows you to cover big distances for a small fee in a short period of time.

Do you intend to return to Russia to pursue your career?

I want to continue my path as an academic researcher, so I’m looking for a tenure-track position. There are a few good programs in Europe, but the majority of the best positions are in the U.S. in terms of economics research. That said, both of my undergrad alma maters in Russia are amazing, and I really enjoyed my time there. If I were to become a professor there, that would be a very good outcome for me.

Any particular professors, books, experiences, or lessons you learned at Stanford that have been especially influential?

The main thing Stanford gave me is the people — my advisors and my peers — and the ability to interact with the best economists on the planet. Growing up, I could never have imagined myself coming to Stanford and being able to tackle complicated problems together with these amazing people.

Photos by Elena Zhukova

Nadia Kotova, PhD ’21 | Photo by Elena Zhukova
Nadia Kotova
PhD ’21
Tambov, Russia
PhD, Economics, Stanford Graduate School of Business, ’21
BA, Economics, New Economic School, Higher School of Economics, Russia, ’16
Visiting undergraduate student, Harvard University, ’14
Current Profile