Kenneth J. Arrow (1921–2017) | Nature
One of the most influential thinkers in economic theory.
Kenneth Arrow was the dean of economic theory during the second half of the twentieth century. His fundamental and diverse contributions – to areas such as welfare economics, which seeks to assess social well-being on the basis of individual choice or preferences – were based on abstract reasoning and remarkably few mathematical concepts. elementary.
Credit: Chuck Painter / Stanford News Service
The tools and concepts he presented helped shape important aspects of US President Barack Obama’s Affordable Care Act. They are also pillars of research and teaching in economics at the undergraduate and graduate levels.
Arrow was born to Romanian Jewish immigrants on August 23, 1921 in New York City – the same day as another Nobel Prize winner, American economist Robert Solow. (Both men served on the staff of President John F. Kennedy’s Council of Economic Advisers in the early 1960s.) Arrow stayed in New York for his studies. After attending Townsend Harris High School, he received a BA from City College, New York, and an MA and PhD (1951) from Columbia University in New York. Between 1942 and 1946, he worked as a meteorological officer in the United States Army. His first publication, a 1943 article titled “ On Optimal Use of Winds for Flight Planning, ” indicated a concern for optimality – the sine qua non for his subsequent intellectual vision.
Mathematical economics involves the use of mathematical principles and methods to create theories and analyze problems in economics. Mathematical politics is about using mathematics to try to understand how governance affects society. Arrow played a pivotal role in the most significant achievements of these two subjects in the second half of the twentieth century.
He was responsible for the modern mathematical version of the two fundamental theorems of welfare economics. Together with the French-born American economist and mathematician Gérard Debreu, he also provided mathematical proof of the existence of a general economic equilibrium in a private property economy: he identified that there are certain scenarios (even in conditions of uncertainty) in which supply and demand will be in equilibrium.
The jewel of mathematical politics is Arrow’s Impossibility Theorem – the demonstration that collective decision-making based on the choices of individuals cannot produce results that reflect the preferences of society as a whole. This is akin to Heisenberg’s uncertainty principle in quantum mechanics, which states that there is a limit to the accuracy with which certain pairs of a particle’s physical properties (position and momentum) can be known.
In 1972, at the age of 51, Arrow received (jointly with John Hicks) the Nobel Prize in Economics for his contributions to the general theory of economic equilibrium and the theory of welfare. He was the youngest economist to ever receive the award.
Arrow spent most of his career at Stanford University in California, but briefly worked at the Cowles Foundation for Research in Economics (then in Chicago, Illinois) and the University of Chicago, and taught and taught research in various renowned universities abroad. He also helped shape research at the Santa Fe Institute in New Mexico, where he helped organize a 1987 meeting of physicists and economists titled “The Economy as a Complex Evolving System.”
Arrow remained professionally active for almost 75 years. Indeed, the latest book on his work on the ethics of mathematical politics – On ethics and economics: conversations with Kenneth J. Arrow (Routledge, 2016) – was only published last year. His most fertile period seems to have been the years between his first work on the Impossibility Theorem in the early 1950s and his pioneering contribution, in 1962, to what became the theory of endogenous growth. (He demonstrated that factors inside a system, such as workers learning to use machines better, as well as exogenous factors, such as providing more machines, can affect system performance.)
Ken was a cultivated genius of enviable modesty. In his recollections, he described his debt to statistician and theorist Harold Hotelling, who introduced him to economics and the economist’s way of thinking during his years at Columbia University. He also recognized the role of mathematician and mathematical philosopher Alfred Tarski in teaching him the fundamentals of set theory, a branch of mathematics that deals with the properties of collections of objects and provides the foundations of standard mathematics.
Although Arrow remained a theorist of depth and purity, he was well aware of the limits of the theory and observed in an interview in 1995 that “one thing I learned from meteorology is that to be real science was not a guarantee of correctness “and that” economic theory, being abstract, obviously cannot assert that public expenditure should represent 31.732% of gross national product. “This healthy attitude towards The theory was reinforced by his extensive knowledge of the history of economic theory – in particular the work of the Scottish founding father of economics, Adam Smith, and his followers.
In a speech at a conference at the University of California, Irvine in 2001, I quoted the last sentence of his 1986 article “Rationality of Self and Others.” Ken, sitting in the front row, didn’t know he had written the lines. The problem, however, was not with his memory. He immediately recognized that Thomasina’s thoughts on bluebells and mathematical equations, which I also cited, came from Tom Stoppard. Arcadia.
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Velupillai, K. Kenneth J. Arrow (1921–2017).
Nature 543, 624 (2017). https://doi.org/10.1038/543624a
KJ Arrow (April 23, 1921 – February 21, 2017): A personal tribute
Review of economic and labor relations
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