Joel Dean (1906–1979) was an American economist best known for his contributions to corporate finance theory in general, and particularly to the area of

capital budgeting Capital budgeting in corporate finance is the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development projects ...

.Foundations of Business Economics: The Contributions of Joel Dean
Walter J. Primeaux, Karen Fortin; University Presses of Florida, 1984 He is regarded as one of the founders of

business economics Business economics is a field in applied economics which uses economic theory and quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with ...

. His work on pricing remains influential in

marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...

Biography

Dean was born in

Vershire, Vermont Vershire is a town in Orange County, Vermont, United States, created under Vermont Charter of August 3, 1781. The population was 672 at the 2020 census. The name Vershire is a portmanteau of Vermont and New Hampshire. History The town and a v ...

and educated at

Pomona College Pomona College ( ) is a private liberal arts college in Claremont, California. It was established in 1887 by a group of Congregationalists who wanted to recreate a "college of the New England type" in Southern California. In 1925, it became t ...

(

A.B. Bachelor of arts (BA or AB; from the Latin ', ', or ') is a bachelor's degree awarded for an undergraduate program in the arts, or, in some cases, other disciplines. A Bachelor of Arts degree course is generally completed in three or four yea ...

1927), Harvard Business School (

MBA A Master of Business Administration (MBA; also Master's in Business Administration) is a postgraduate degree focused on business administration. The core courses in an MBA program cover various areas of business administration such as accounti ...

, 1928) and at the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private university, private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park, Chicago, Hyde Park neighborhood. The University of Chic ...

(

Ph.D A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is ...

, 1936). His

doctoral dissertation A thesis ( : theses), or dissertation (abbreviated diss.), is a document submitted in support of candidature for an academic degree or professional qualification presenting the author's research and findings.International Standard ISO 7144: ...

discussed "A Statistical Examination of the Behavior of Average and Marginal Cost". He was one of the founders of

with his ''Managerial Economics'' (1951) and ''Capital Budgeting'' (1951) His research covered

costs In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which ...

, pricing, demand analysis, profits and profit management, and also competition and government regulations. It was with the publication of his "Capital Budgeting" in 1951 that NPV became widely used in corporate finance. Discounted Cash Flow approach and Internal Rate of Return rule became popular by the ardent promotion of Joel Dean Associates. He taught at

Indiana University Indiana University (IU) is a system of public universities in the U.S. state of Indiana. Campuses Indiana University has two core campuses, five regional campuses, and two regional centers under the administration of IUPUI. *Indiana Universi ...

, the University of Chicago, and

Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...

. During World War II he was with the

Office of Price Administration The Office of Price Administration (OPA) was established within the Office for Emergency Management of the United States government by Executive Order 8875 on August 28, 1941. The functions of the OPA were originally to control money (price contr ...

, and was also a research associate of the Cowles Commission. In 1940 he founded Joel Dean Associates, a

management consulting Management consulting is the practice of providing consulting services to organizations to improve their performance or in any way to assist in achieving organizational objectives. Organizations may draw upon the services of management consultan ...

firm. He was on the editorial boards of the '' Journal of Industrial Economics'' and the '' Journal of Marketing'' for many years.

Cost functions

Dean discovered that cost functions of firms are often straight line as opposed to S-shaped functions a fact which disagreed with the classical assumption in microeconomics (which had not been based on observation). It is thought that Dean's observation was ignored by the mainstream economists, for it required a revolutionary change of the theory of microeconomics: if the cost function of a firm is linear, then the total variable cost is proportional to the production volume and the marginal cost is constant, in which case the usual formula "price = marginal cost" fails, and the common explanation as to why the supply curve is an increasing function of the

market price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...

also fails. Frederic S. Lee 1984 The Margianlist Controversy and the Demise of Full Cost Pricing, ''Journal of Economic Issues'' 18(4): 1107-1132.

Selected works

Joel Dean's best known work is ''Capital Budgeting'' (New York: Columbia University Press, 1951. ). His ''Statistical Cost Estimation'' (Indiana University Press, 1976), by contrast, is a forgotten book, perhaps for the reasons outlined above. Other publications include: * "Does Advertising Belong in the Capital Budget?" Journal of Marketing, Vol. 30, No. 4., October 1966. * "Pricing Policies for New Products".

Harvard Business Review ''Harvard Business Review'' (''HBR'') is a general management magazine published by Harvard Business Publishing, a wholly owned subsidiary of Harvard University. ''HBR'' is published six times a year and is headquartered in Brighton, Ma ...

, Nov 1976. * "An Approach to Internal Profit Measurement." National Accounting Association Bulletin, March 1958. * "Better Management of Capital Expenditures through Research." Journal of Finance, May 1953. * "Break-Even Analysis and the Measure of Capital Productivity." Advanced Management, April 1955. * "Cost Structures of Enterprises and Break-Even Charts", The American Economic Review, 38(2) pp. 153–164, 1948.

References

External links

Foundations of Business Economics: The Contributions of Joel Dean
Karen Fortin and Walter J. Primeaux,

University Press of Florida The University Press of Florida (UPF) is the scholarly publishing arm of the State University System of Florida, representing Florida's twelve state universities. It is located in Gainesville near the University of Florida, one of the state's majo ...

, 1984.
The Search For Intrinsic Value: Some Selected Moments in the History of DPV
Professor Eric Kirzner,

Rotman School of Management The Joseph L. Rotman School of Management (commonly known as the Rotman School of Management, the Rotman School or just Rotman) is the University of Toronto's graduate business school, located in Downtown Toronto. The University of Toronto has b ...

{{DEFAULTSORT:Dean, Joel Corporate finance theorists American economics writers American finance and investment writers American textbook writers University of Chicago alumni 1979 deaths 1906 births Harvard Business School alumni Pomona College alumni 20th-century American economists People from Vershire, Vermont 20th-century American male writers American male non-fiction writers