I got scholarships to a number of places to do graduate work. I had the best deal at Chicago, so I went there. Around meals, we were talking about all sorts of intellectual things in different fields. So, that was really a pretty exciting place. There were a number of professors on the faculty there who were just brilliant and very inspiring in terms of thinking about economics and applying economics to lots of different aspects of human behavior. Although Milton Friedman was there only for my first year, others such as Gary Becker, Bob Lucas, Arnold Harberger, George Stiegler, Jacob Frankel, and Lester Telser had a strong impact on me. A lot of professors there were really very inspiring. Gary Becker was just incredible; I took every course I could with him. Every time you would go to a lecture there would be something that was eye-opening or very interesting—he had a great talent to use economics to understand human behavior and that was very inspiring.
In response to a question about how he got involved in environmental and energy economics, Peter Hartley said the following: I was interested in geography, and I grew up in Australia and spent a lot of time bird watching as a kid. My wife jokes that if you grew up where I grew up, you’d probably be a bird watcher too, since the bird life is the most interesting thing there. One reason I went into economics was that I had an interest in environmental issues especially conservation of Australian wildlife and natural environments. I was also quite interested in geology; I used to spend hours going around and poking around different quarries and rock places. If I hadn’t gotten the scholarship to go to the Australian National University, I was thinking of doing geology. I had an interest in natural environments and so on. There was no energy economics at Chicago. In fact, there wasn’t really much natural resource economics at all. When I came out Chicago to do a PhD, I kept my job with the government of Australia. But when I graduated, I got offered a job at Princeton University as an Assistant Professor. So I decided that was too good an offer to turn down, and it was like continuing in graduate education. So I went to Princeton, and I was glad I did do that, and it did give me a different perspective on economics in a different place.
I resigned my job with the Australian government. I had the idea I was not going to stay at Princeton in the long term, so I went down to Australia in the summers to maintain my contacts there. The very first thing they were doing was a report commissioned by the state government on energy issues in the state of Victoria. I found that incredibly interesting, given my interest in applied economics, and the idea that you could apply it to these energy and environmental issues, so I threw myself into it, even though it wasn’t really what I had done in graduate school, and it wasn’t what I was really doing as an assistant professor, so it was kind of like what I did in Australia. I developed a model of the Victorian electricity system and did a lot of research in natural gas and coal. So I had this kind of dual existence where I was doing this energy-related work, and I got a reputation in Australia for doing energy economics—applied microeconomics, more generally. In the US, I was doing monetary economics—monetary theory. So when I got a job from Rice, I kept on going back to Australia and kept on doing energy and environment research.
Eventually, how I got into energy here was when the Baker Institute started. The Baker Institute started in Texas, and they wanted to get into public policy. And they decided that, quite sensibly, given the location, that if they were going to be competitive in public policy, there were two policy areas where they could compete—well, three: health, space, and energy. So given that I’d done energy work in Australia, I guess it was natural that I had an interest in contributing to the energy research here. So I basically decided that I would transition, full time to energy.