There’s two things one should know about Donald Wilson: He believes markets solve problems and he has a track record of making visionary bets.
“I think markets are vital, essential things for allocating scarce resources and they make the world a better place,” said Wilson. But sometimes markets don’t naturally solve problems and so they need some help.”
That’s why Wilson was an early supporter of a new initiative out of the University of Chicago about a decade ago. The Energy Policy Institute at UChicago, or EPIC, aimed to produce policy ideas that would help markets account for the societal costs of our energy choices. Wilson’s initial $5 million gift to EPIC in 2016 jumpstarted the effectiveness of the Institute. He followed that initial gift with a 2019 renewal that continues to support EPIC today.
Over that time, EPIC has grown into a national leader. It has done so through a laser focus on producing research that has a direct impact on energy and climate policy debates in the United States and around the world. EPIC most recently pioneered the scale-up of a historic pollution trading market in Gujarat, India. The market cut deadly air pollution at a lower cost than existing regulations and is now expanding to new regions. EPIC’s Air Quality Life Index has been hailed as the “gold standard on global air quality research,” and its Climate Impact Lab is a world leader in producing highly-localized data on the economic and social impacts of climate change—an area of work that is now growing rapidly.
“Don is the ideal philanthropist,” said Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics at the University of Chicago and director of EPIC. “He believes that universities are places where researchers follow the data wherever it leads in pursuit of better understanding of a complicated world. And that approach is the best way to solve society’s greatest problems.”
Philanthropic supporters with that approach are meaningful partners in advancing solutions. So, when the University of Chicago recently decided to make an even bigger bet on energy and climate change, one that would expand beyond economics and policy to also include technology, climate engineering, and education, Wilson would again be an early supporter.
His latest visionary bet on the University of Chicago: a $26 million gift to the newly unveiled Institute for Climate and Sustainable Growth. Wilson’s support funds the creation of six new professorships and provides resources for groundbreaking research, setting the Institute on course to achieve significant impact.
“We are grateful to Don Wilson for his visionary gift, which will expand the Institute for Climate and Sustainable Growth by funding new professorships that bring exceptional scholars to the University and advancing our understanding of global climate and economic challenges and the study of potential solutions,” said President Paul Alivisatos. “Don’s gift exemplifies his own curiosity, foresight, and steadfast commitment to the University of Chicago’s enduring spirit of inquiry and discovery.”
Of the gift, Greenstone, now also the founding director of the Institute for Climate and Sustainable Growth, noted:
“Don’s founding gift allowed EPIC to conduct 10 years of research that has significantly improved society’s understanding of a whole range of energy, environment, and climate issues. And that research has been matched with successful efforts to ensure that the findings improve people’s lives. It additionally has unlocked investments from other philanthropists that have built on his foundational support,” he said. “This has really been the story of Don’s career. He makes big bets in causes that matter, others follow him, and institutional changes result. I am humbled and flattered by Don’s cornerstone philanthropy for the new Institute and what it portends for our future.”
Philanthropy that Reflects a Career
Wilson has devoted his life’s work to—as the mission of his company, DRW, says—using “the power of free markets to solve challenging problems, capture opportunities, and pursue positive change.”
This work began when he was just a teenage sailor trading currency for fun in Switzerland. It should come as little surprise that what was a game led him to the University of Chicago, where the Chicago School of free market economics aligned well with his world view. After completing his education in two-and-a-quarter years, he started his career as a pit trader in the Chicago Mercantile Exchange and rose quickly with a scrappy DIY approach to evaluating risk that involved building models and following statistics rather than following the crowd.
“I’m a big believer in economic incentives and in thinking rationally about probability, distributions of outcomes, and making decisions accordingly,” said Wilson. “That’s how I approach most problems.”
In 1992, Wilson established DRW Trading. Under his leadership, the firm’s focus on innovation and building expertise in electronic trading quickly started shaping the industry. Three decades later, the principal trading firm employs over 2,000 employees globally and utilizes diverse trading strategies to take risk and support liquidity in markets including fixed income, FX, commodities and equities. It’s also a major player in digital assets, supporting both trading in cryptocurrencies and significantly investing in the development of game changing blockchain technologies like the Canton Network starting over a decade ago.
As Bernard Dan, former CEO of the Chicago Board of Trade, said of Wilson in 2007, “A lot of guys in the industry just think about the next trade…Don thinks 10,15 years ahead.”
As Wilson’s firm was growing, he also joined the Board of Trustees at the University of Chicago in 2013, seeking out opportunities where he believed the University could achieve significant impact. That’s when he met Michael Greenstone—who joined the University as director of EPIC in 2014—and began to set his sights on climate change.
Turning to Climate Change
Wilson, frustrated by the lack of economic thinking being applied to the energy and climate sectors, quickly aligned with Greenstone’s approach.
“A lot of the approaches—we shouldn’t take oil out of the ground, or climate change is fake—those discussions are just very unsatisfying to me and counterproductive,” said Wilson. “Obviously, climate change is real, and if you agree that climate change is real, you can then react to that in different ways. And some of the ways that you could potentially react are just really harmful in one way or another.”
Wilson believes the approach to confronting climate change and other environmental problems can be improved through economic thinking. He saw supporting EPIC as, “an opportunity to support something that’s solving this really, really important problem.”
He pointed to EPIC’s work in India to set up pollution markets as a perfect example of how, “aligning economic incentives to something that has a negative externality can be so effective.”
“Don has always been exceptional in understanding various angles fully before landing on a fresh perspective that takes these angles into account in a unique way, across his businesses in cutting edge areas like blockchain solutions for financial markets as well as his support of our Institute,” said Bala Srinivasan, Principal Strategic Advisor at the Institute for Climate and Sustainable Growth and former Deputy Provost and Executive Vice President at the University of Chicago, who has worked for Wilson at DRW and Cumberland Labs.
Early in EPIC’s formation, Greenstone saw an opportunity to change the way the world was approaching climate change. He argued that the problem was much more complicated than simply reducing carbon emissions at all costs and that most efforts were overly focused on the United States and Europe. Instead, Greenstone aimed for EPIC to pioneer an approach to reducing emissions through a ruthless focus on cost effectiveness. It was an approach based, at least in part, on driving climate progress in the developing world—countries where economic growth would continue to take priority over emissions reductions if the only path was through more expensive energy.
The approach convinced Wilson.
“We can’t just stick our heads in the sand. There are a lot of people who put on these blinders and they’re like ‘oh well if we solve this problem in California, then we’re all good,’” said Wilson. “That completely misses the boat because it doesn’t matter where you emit the CO2. You can spend crazy amounts of money or produce zero CO2, but it’s actually not going to have made a bit of difference if the rest of the world just keeps on going. And so, thinking about this problem from a macro perspective is important.”
Shaping a New Institute
When Greenstone approached Wilson about supporting a new Institute, Wilson saw it as an opportunity.
“EPIC has always embraced a multidisciplinary approach to tackling these challenges,” said Wilson. “It’s built a structure that brings together experts from across the University—and across disciplines—to examine the problem from a variety of perspectives and collaborate effectively. That really resonates with me.”
“There are lots of universities with climate initiatives,” Wilson continued, “and if you look at the results, they are totally ineffective, if not counterproductive. The work at the University of Chicago goes much further and stands out for its broad, cross-disciplinary model. It plays to the University of Chicago’s strengths—particularly its focus on economics and markets, which are often overlooked at other institutions. If you’re serious about solving climate change at scale, you need market drivers to inform the science, and tools to measure its real-world effectiveness.”
“And if the science holds up,” he added, “how do you translate that into effective policy? That’s the kind of thinking this initiative enables.”
The faculty chairs supported by Wilson’s gift will sit in departments throughout the University and be known as the Donald R. Wilson Jr. Professors. In addition, four of these faculty will be members of the Wallman Society of Fellows, which recognizes faculty who, through their research and teaching, drive the University of Chicago’s distinctive contributions to society.
“I think success is impacting policy, being involved in developing solutions that eventually get commercialized at scale, and impacting the broader dialogue,” Wilson said. “We need a very realist approach that then drives thoughtful solutions, policy, and more. If that happens, I would say it’s a win.”