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Frank Hyneman Knight (November 7, 1885 – April 15, 1972) was an American
economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
who spent most of his career at the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
, where he became one of the founders of the Chicago School. Nobel laureates
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
, George Stigler and
James M. Buchanan James McGill Buchanan Jr. (; October 3, 1919 – January 9, 2013) was an American economist known for his work on public choice theory originally outlined in his most famous work co-authored with Gordon Tullock in 1962, ''The Calculus of Consen ...
were all students of Knight at Chicago. Ronald Coase said that Knight, without teaching him, was a major influence on his thinking. F.A. Hayek considered Knight to be one of the major figures in preserving and promoting classical liberal thought in the twentieth century. Paul Samuelson named Knight (along with
Harry Gunnison Brown Harry Gunnison Brown (May 7, 1880– March 11, 1975) was a Georgist economist teaching at Yale in the early 20th century. Paul Samuelson named Brown in a list of "American saints in economics" that included only 6 other economists born after 1860 ...
,
Allyn Abbott Young Allyn Abbott Young (September 19, 1876 – March 7, 1929) was an American economist. He was born into a middle-class family in Kenton, Ohio. He died aged 52 in London, his life cut short by pneumonia during an influenza epidemic. He was then at t ...
,
Henry Ludwell Moore Henry Ludwell Moore (November 21, 1869 – April 28, 1958) was an American economist known for his pioneering work in econometrics. Paul Samuelson named Moore (along with Harry Gunnison Brown, Allyn Abbott Young, Wesley Clair Mitchell, Frank Knig ...
, Wesley Clair Mitchell, Jacob Viner, and
Henry Schultz Henry Schultz (September 4, 1893 – November 26, 1938) was an American economist, statistician, and one of the founders of econometrics. Paul Samuelson named Schultz (along with Harry Gunnison Brown, Allyn Abbott Young, Henry Ludwell Moore, Fran ...
) as one of the several "American saints in
economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...
" born after 1860.


Life and career

Knight ( BA, Milligan College, 1911; BS and AM, Tennessee, 1913;
PhD PHD or PhD may refer to: * Doctor of Philosophy (PhD), an academic qualification Entertainment * '' PhD: Phantasy Degree'', a Korean comic series * ''Piled Higher and Deeper'', a web comic * Ph.D. (band), a 1980s British group ** Ph.D. (Ph.D. albu ...
, Cornell, 1916) was born in 1885 in
McLean County, Illinois McLean County is the largest county by land area in the U.S. state of Illinois. According to the 2010 census, it had a population of 169,572. Its county seat is Bloomington. McLean County is included in the Bloomington–Normal, IL Metropolita ...
, the son of Julia Ann (Hyneman) and Winton Cyrus Knight. After his early study at the
University of Tennessee The University of Tennessee (officially The University of Tennessee, Knoxville; or UT Knoxville; UTK; or UT) is a public land-grant research university in Knoxville, Tennessee. Founded in 1794, two years before Tennessee became the 16th state, ...
, most of his academic career was spent at the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
, where he was the Morton D. Hall Distinguished Service Professor of Social Science and Philosophy. Knight was one of the world's leading economists, having made significant contributions to many problems of both economic theory and social philosophy. He is best known for his ''Risk, Uncertainty and Profit'', a study of the role of the entrepreneur in economic life. In 1950 he was president of the
American Economic Association The American Economic Association (AEA) is a learned society in the field of economics. It publishes several peer-reviewed journals acknowledged in business and academia. There are some 23,000 members. History and Constitution The AEA was esta ...
and in 1957 the recipient of its coveted Francis A. Walker Award, given "not more frequently than once every five years to the living (American) economist who in the judgment of the awarding body has during his career made the greatest contribution to economics." His ashes are interred in the crypt of First Unitarian Church of Chicago. Knight is best known as the author of the book ''Risk, Uncertainty and Profit'' (1921), based on his
PhD 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: ...
at
Cornell University Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...
. In that book, he carefully distinguished between economic risk and
uncertainty Uncertainty refers to epistemic situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable or ...
. Situations with risk were those where the outcomes were unknown but governed by
probability distribution In probability theory and statistics, a probability distribution is the mathematical function that gives the probabilities of occurrence of different possible outcomes for an experiment. It is a mathematical description of a random phenomenon i ...
s known at the outset. He argued that these situations, where decision making rules such as maximising expected utility can be applied, differ in a deep way from "uncertain" ones, in which not only the outcomes, but even the probability models that governed them, were unknown. Knight argued that uncertainty gave rise to economic profits that
perfect competition In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In Economic model, theoret ...
could not eliminate. While most economists now acknowledge Knight's distinction between risk and uncertainty, the distinction has not resulted in much theoretical modelling or empirical work. However, the Knightian concept of uncertainty has been recognized in a variety of works: John Maynard Keynes discussed it at length in his Treatise on Probability; Armen Alchian relied on it for discussing market behavior in his seminal paper Uncertainty, Evolution and Economic Theory; Paul Davidson incorporated it as an essential element in the Post Keynesian school of economics he co-founded; and G.L.S. Shackle explored the methodological consequences of Knight's and Keynes's fundamental uncertainty in his Epistemics and Economics. A more model-oriented contribution is the "Markets from Networks" model developed by sociologist
Harrison White Harrison Colyar White (born March 21, 1930) is the emeritus Giddings Professor of Sociology at Columbia University. White played an influential role in the “Harvard Revolution” in social networks and the New York School of relational sociol ...
from 2002. Knight also famously debated
A. C. Pigou Arthur Cecil Pigou (; 18 November 1877 – 7 March 1959) was an English economist. As a teacher and builder of the School of Economics at the University of Cambridge, he trained and influenced many Cambridge economists who went on to take chair ...
about
social cost Social cost in neoclassical economics is the sum of the private costs resulting from a transaction and the costs imposed on the consumers as a consequence of being exposed to the transaction for which they are not compensated or charged. In other w ...
s. He also contributed to the argument for
toll road A toll road, also known as a turnpike or tollway, is a public or private road (almost always a controlled-access highway in the present day) for which a fee (or ''toll'') is assessed for passage. It is a form of road pricing typically implemented ...
s. He said that rather than congestion justifying government tolling of roads, privately owned roads would set tolls to reduce congestion to its efficient level. In particular, he developed the argument that forms the basis of analysis of traffic equilibrium, which has since become known as
Wardrop's Principle John Glen Wardrop (1922–1989), born in Warwick, England, was an English mathematician and transport analyst who developed what became known as Wardrop's first and second principles of equilibrium in the field of Traffic assignment#Equilibrium ...
: Knight was a co-founder and vice president of the Mont Pelerin Society of like-minded economists. Knight was raised Christian, but later became an atheist.


Notable works

* "Risk, Uncertainty, and Profit", 1921, Boston: Houghton, Mifflin * ''The Economic Organization'', 1933. * ''The Ethics of Competition and Other Essays'', 1935. * ''The Economic Order and Religion'', with T.W. Merriam, 1945. * ''Freedom and Reform: Essays in economics and social philosophy'', 1947. Indianapolis, IN: Liberty Press * ''On the History and Methods of Economics: Selected essays'', 1956, . * ''Intelligence and Democratic Action'', 1960.


Awards

* 1957, Francis A. Walker Medal by the American Economic Association * 1961, Golden Plate Award of the American Academy of Achievement


References


Sources

* Burgin, Angus (November 2009). "The Radical Conservatism of Frank H. Knight," ''Modern Intellectual History,'' 6:513–538. * Emmett, Ross B. (1999). "Introduction", in ''Selected Essays by Frank H. Knight'', 2 vols., (ed. by Ross Emmett). * Emmett, Ross B. (2009). "Did the Chicago School Reject Frank Knight?", in ''Frank Knight and the Chicago School in American Economics'', . * * Kasper, Sherryl (2002). ''The Revival of Laissez-Faire in American Macroeconomic Theory: A Case Study of Its Pioneers''. ch. 2. * Stigler, G. (1985). "Frank Hyneman Knight", University of Chicago Press – Center for the Study of the Economy and the State, Working Papers Series, Working Paper No. 37. * White, Harrison C. (2002). ''Markets from Networks: Socioeconomic Models of Production'', Princeton, NJ: Princeton University Press.


External links


The Frank H. Knight Page
*
Guide to the Frank Hyneman Knight Papers 1908–1979
at th
University of Chicago Special Collections Research Center
* {{DEFAULTSORT:Knight, Frank 1885 births 1972 deaths American atheists Economists from Illinois Cornell University alumni American former Christians Historians of economic thought University of Chicago faculty University of Tennessee alumni Presidents of the American Economic Association 20th-century American economists Chicago School economists Member of the Mont Pelerin Society Journal of Political Economy editors