Kenneth Arrow
   HOME

TheInfoList



OR:

Kenneth Joseph Arrow (23 August 1921 – 21 February 2017) was an American economist, mathematician, writer, and political theorist. He was the joint winner of the
Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...
with John Hicks in 1972. In economics, he was a major figure in post-World War II neo-classical economic theory. Many of his former graduate students have gone on to win the Nobel Memorial Prize themselves. His most significant works are his contributions to
social choice theory Social choice theory or social choice is a theoretical framework for analysis of combining individual opinions, preferences, interests, or welfares to reach a ''collective decision'' or ''social welfare'' in some sense. Amartya Sen (2008). "So ...
, notably "
Arrow's impossibility theorem Arrow's impossibility theorem, the general possibility theorem or Arrow's paradox is an impossibility theorem in social choice theory that states that when voters have three or more distinct alternatives (options), no ranked voting electoral syst ...
", and his work on general equilibrium analysis. He has also provided foundational work in many other areas of economics, including endogenous growth theory and the economics of information.


Education and early career

Arrow was born on 23 August 1921, in
New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the U ...
. Arrow's mother, Lilian (Greenberg), was from Iași, Romania, and his father, Harry Arrow, was from nearby
Podu Iloaiei Podu Iloaiei is a town in Iași County, Western Moldavia, Romania. It has 9,573 inhabitants as of 2011, and was declared a town in 2005. Four villages are administered by the town: Budăi, Cosițeni, Holm and Scobâlțeni. Population Natives * ...
. The Arrow family were
Romania Romania ( ; ro, România ) is a country located at the crossroads of Central, Eastern, and Southeastern Europe. It borders Bulgaria to the south, Ukraine to the north, Hungary to the west, Serbia to the southwest, Moldova to the east, a ...
n
Jews Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""T ...
. His family was very supportive of his education. Growing up during the Great Depression, he embraced socialism in his youth. He would later move away from socialism, but his views retained a left-leaning philosophy. He graduated from Townsend Harris High School and then earned a
Bachelor's degree A bachelor's degree (from Middle Latin ''baccalaureus'') or baccalaureate (from Modern Latin ''baccalaureatus'') is an undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting three to six ...
from the
City College of New York The City College of the City University of New York (also known as the City College of New York, or simply City College or CCNY) is a public university within the City University of New York (CUNY) system in New York City. Founded in 1847, Cit ...
in 1940 in mathematics, where he was a member of
Sigma Phi Epsilon Sigma Phi Epsilon (), commonly known as SigEp, is a social college fraternity for male college students in the United States. It was founded on November 1, 1901, at Richmond College (now the University of Richmond), and its national headquarte ...
. He then attended
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 Manha ...
for graduate studies, obtaining a
Master's degree A master's degree (from Latin ) is an academic degree awarded by universities or colleges upon completion of a course of study demonstrating mastery or a high-order overview of a specific field of study or area of professional practice.
in mathematics in June 1941. While there, Arrow studied under Harold Hotelling, who influenced him to change fields to economics. He served as a weather officer in the
United States Army Air Forces The United States Army Air Forces (USAAF or AAF) was the major land-based aerial warfare service component of the United States Army and ''de facto'' aerial warfare service branch of the United States during and immediately after World War II ...
from 1942 to 1946.


Academic career

From 1946 to 1949 Arrow spent his time partly as a graduate student at Columbia and partly as a research associate at the Cowles Commission for Research in Economics 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 ...
. During that time he also held the rank of Assistant Professor in Economics at the University of Chicago and worked at the
RAND Corporation The RAND Corporation (from the phrase "research and development") is an American nonprofit global policy think tank created in 1948 by Douglas Aircraft Company to offer research and analysis to the United States Armed Forces. It is financ ...
in California. He left Chicago to take up the post of Acting Assistant Professor of Economics and Statistics at Stanford University. In 1951, he earned his
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 ...
from Columbia. He served in the government on the staff of the Council of Economic Advisers in the 1960s with Robert Solow. In 1968, he left Stanford for the position of Professor of Economics at
Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of high ...
. It was during his tenure there that he received the Nobel Prize in Economics. Arrow returned to Stanford in 1979 and became the Joan Kenney Professor of Economics and Professor of Operations Research. He retired in 1991. As a Fulbright Distinguished Chair, in 1995 he taught Economics at the University of Siena. He was also a founding member of the Pontifical Academy of Social Sciences and a member of the Science Board of Santa Fe Institute. At various stages in his career he was a Fellow of Churchill College, Cambridge. He was one of the founding editors of the '' Annual Review of Economics'', which was first published in 2009. Four of his former students have gone on to become Nobel Prize winners, namely John Harsanyi, Eric Maskin, Roger Myerson and Michael Spence. A collection of Arrow's papers is housed at the Rubenstein Library at Duke University.


Arrow's impossibility theorem

Arrow's monograph '' Social Choice and Individual Values'' derives from his 1951
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 ...
thesis. In what he named the General Impossibility Theorem, he theorized that, unless we accept to compare the levels of utility reached by different individuals, it is impossible to formulate a social preference ordering that satisfies all of the following conditions: # Nondictatorship: The preferences of an individual should not become the group ranking without considering the preferences of others. # Individual Sovereignty: each individual should be able to order the choices in any way and indicate ties # Unanimity: If every individual prefers one choice to another, then the group ranking should do the same # Freedom From Irrelevant Alternatives: If a choice is removed, then the others' order should not change # Uniqueness of Group Rank: The method should yield the same result whenever applied to a set of preferences. The group ranking should be transitive. The theorem has implications for welfare economics and theories of
justice Justice, in its broadest sense, is the principle that people receive that which they deserve, with the interpretation of what then constitutes "deserving" being impacted upon by numerous fields, with many differing viewpoints and perspective ...
, and for voting theory (it extends the Condorcet paradox). Following Arrow's logical framework, Amartya Sen formulated the liberal paradox which argued that given a status of "Minimal Liberty" there was no way to obtain Pareto optimality, nor to avoid the problem of social choice of neutral but unequal results.


General equilibrium theory

Work by Arrow and Gérard Debreu and simultaneous work by Lionel McKenzie offered the first rigorous proofs of the existence of a market clearing equilibrium. For this work and his other contributions, Debreu won the 1983 Nobel Prize in Economics. Arrow went on to extend the model and its analysis to include
uncertainty Uncertainty refers to Epistemology, 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 ...
, the stability. His contributions to the general equilibrium theory were strongly influenced by Adam Smith's '' Wealth of Nations''. Written in 1776, ''The Wealth of Nations'' is an examination of economic growth brought forward by the division of labor, by ensuring interdependence of individuals within society. In 1974, The American Economic Association published the paper written by Kenneth Arrow, ''General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice'', where he states:


Fundamental theorems of welfare economics

In 1951, Arrow presented the first and second fundamental theorems of welfare economics and their proofs without requiring differentiability of utility, consumption, or technology, and including corner solutions.


Endogenous-growth theory

Arrow was one of the precursors of endogenous growth theory, which seeks to explain the source of technical change, which is a key driver of economic growth. Until this theory came to prominence, technical change was assumed to occur exogenously — that is, it was assumed to occur outside economic activities, and was outside (exogenous) to common economic models. At the same time there was no economic explanation for ''why'' it occurred. Endogenous-growth theory provided standard economic reasons for why firms innovate, leading economists to think of innovation and technical change as determined by economic actors, that is endogenously to economic activities, and thus belong inside the model. Endogenous growth theory started with Paul Romer's 1986 paper, borrowing from Arrow's 1962 " learning-by-doing" model which introduced a mechanism to eliminate diminishing returns in aggregate output. A literature on this theory has developed subsequently to Arrow's work.


Information economics

In other pioneering research, Arrow investigated the problems caused by asymmetric information in markets. In many transactions, one party (usually the seller) has more information about the product being sold than the other party. Asymmetric information creates incentives for the party with more information to cheat the party with less information; as a result, a number of market structures have developed, including warranties and third party authentication, which enable markets with asymmetric information to function. Arrow analysed this issue for medical care (a 1963 paper entitled "Uncertainty and the Welfare Economics of Medical Care", in the American Economic Review); later researchers investigated many other markets, particularly second-hand assets, online auctions and insurance.


Awards and honors

Arrow was awarded the John Bates Clark Medal in 1957 and was elected a Fellow of the
American Academy of Arts and Sciences The American Academy of Arts and Sciences (abbreviation: AAA&S) is one of the oldest learned societies in the United States. It was founded in 1780 during the American Revolution by John Adams, John Hancock, James Bowdoin, Andrew Oliver, ...
in 1959. In 1968, he was elected to both the United States National Academy of Sciences and the
American Philosophical Society The American Philosophical Society (APS), founded in 1743 in Philadelphia, is a scholarly organization that promotes knowledge in the sciences and humanities through research, professional meetings, publications, library resources, and communi ...
. He was the joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972 and the 1986 recipient of the
von Neumann Theory Prize The John von Neumann Theory Prize of the Institute for Operations Research and the Management Sciences (INFORMS) is awarded annually to an individual (or sometimes a group) who has made fundamental and sustained contributions to theory in operati ...
. He was one of the recipients of the 2004 National Medal of Science, the nation's highest scientific honor, presented by President George W. Bush for his contributions to research on the problem of making decisions using imperfect information and his research on bearing risk. He has received honorary doctorates from the University of Chicago (1967), the University of Vienna (1971) the
City University of New York The City University of New York ( CUNY; , ) is the public university system of New York City. It is the largest urban university system in the United States, comprising 25 campuses: eleven senior colleges, seven community colleges and seven pr ...
(1972). On 2 June 1995 he received an honorary doctorate from the Faculty of Social Sciences at
Uppsala University Uppsala University ( sv, Uppsala universitet) is a public research university in Uppsala, Sweden. Founded in 1477, it is the oldest university in Sweden and the Nordic countries still in operation. The university rose to significance durin ...
, Sweden. He was elected a Foreign Member of the Royal Society (ForMemRS) in 2006. He was elected to the 2002 class of
Fellow A fellow is a concept whose exact meaning depends on context. In learned or professional societies, it refers to a privileged member who is specially elected in recognition of their work and achievements. Within the context of higher education ...
s of the Institute for Operations Research and the Management Sciences.


Personal life and death

Arrow was a brother to the economist Anita Summers, uncle to economist and former Treasury Secretary and Harvard President Larry Summers, and brother-in-law of the late economists Robert Summers and Paul Samuelson. In 1947, he married Selma Schweitzer, graduate in economics 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 ...
and psychotherapist, who died in 2015; they had two children, David Michael (b. 1962), an actor, and Andrew Seth (b. 1965), an actor/singer. Arrow was well known for being a polymath, possessing prodigious knowledge of subjects far removed from economics. On one occasion (recounted by Eric Maskin), in an attempt to artificially test Arrow's knowledge, the junior faculty agreed to closely study the breeding habits of gray whales — a suitably obscure topic — and discuss it in his presence. To their surprise, Arrow already was familiar with the work they had studied and, in addition, thought it had been refuted by other research. Arrow died in his
Palo Alto, California Palo Alto (; Spanish for "tall stick") is a charter city in the northwestern corner of Santa Clara County, California, United States, in the San Francisco Bay Area, named after a coastal redwood tree known as El Palo Alto. The city was ...
home on 21 February 2017 at the age of 95.


Publications

* * ::Reprinted as: * * ::Also available as: ::and as: * * * * * ::Including: Arrow, Kenneth J. ''Price-quantity adjustments in multiple markets with rising demands'', pp. 3–15. * * * * ::Reprinted as: ::Also reprinted as
pdf.
* * * * * ::Reprinted as: * * : :: :: :: :: :: :: * *

* * * ::Also available online as: * ::Also available online as: * * * *


Further reading


Eric S. Maskin. 2019. "The Economics of Kenneth J. Arrow: A Selective Review." Annual Review of Economics


See also

*
Arrow information paradox The Arrow information paradox (information paradox for short, or AIP), and occasionally referred to as Arrow's disclosure paradox, named after Kenneth Arrow, American economist and joint winner of the Nobel Memorial Prize in Economics with John Hick ...
* List of economists *
List of Jewish Nobel laureates Nobel Prizes have been awarded to over 900 individuals, of whom at least 20% were Jews. * * * * * * * * The number of Jews receiving Nobel prizes has been the subject of some attention.* * *"Jews rank high among winners of Nobel, but why ...
* List of think tanks


References


External links


Collected Papers of Kenneth J. Arrow

Biography of Kenneth J. Arrow
from the Institute for Operations Research and the Management Sciences *
Kenneth Arrow: An Oral History
Stanford Historical Society Oral History Program, 2011
Kenneth J. Arrow: An Oral History
Stanford Historical Society Oral History Program, 2016 {{DEFAULTSORT:Arrow, Kenneth 1921 births 2017 deaths Nobel laureates in Economics American Nobel laureates Jewish American writers Jewish American economists 20th-century American economists 21st-century American male writers 21st-century American economists American economics writers American people of Romanian-Jewish descent American political philosophers American political writers American social democrats City College of New York alumni Columbia Graduate School of Arts and Sciences alumni Writers from Queens, New York Military personnel from New York City United States Army Air Forces officers Fellows of the American Academy of Arts and Sciences Fellows of the American Statistical Association Fellows of the Econometric Society Foreign Members of the Royal Society Welfare economists Game theorists General equilibrium theorists Intergovernmental Panel on Climate Change lead authors Jewish American scientists John von Neumann Theory Prize winners Mathematical economists Members of the Pontifical Academy of Social Sciences Members of the United States National Academy of Sciences Foreign Members of the Russian Academy of Sciences National Medal of Science laureates Presidents of the Econometric Society RAND Corporation people Stanford University Department of Economics faculty Townsend Harris High School alumni University of Chicago faculty Voting theorists Presidents of the American Economic Association Santa Fe Institute people Distinguished Fellows of the American Economic Association Fellows of the Institute for Operations Research and the Management Sciences 21st-century American non-fiction writers American male non-fiction writers Mathematicians from New York (state) Economists from New York (state) Nancy L. Schwartz Memorial Lecture speakers United States Army Air Forces personnel of World War II Corresponding Fellows of the British Academy Annual Reviews (publisher) editors Members of the National Academy of Medicine Members of the American Philosophical Society