Kenneth Arrow

Education and early career

Arrow was born on August 23, 1921, in New York City. Arrow's mother, Lilian (Greenberg), was from Iași, Romania, and his father, Harry Arrow, was from nearby Podu Iloaiei. The family was of Romanian-Jewish descent, and very supportive of Kenneth's 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 in mathematics from the City College of New York in 1940, where he was a member of Sigma Phi Epsilon. He then attended Columbia University for graduate studies, obtaining a master's degree in mathematics in June 1941.

Academic career

From 1946 to 1949, Arrow was a graduate student at Columbia University, and also worked as a research associate at the Cowles Commission. During that time he also was an assistant professor of economics at the University of Chicago and worked at the RAND Corporation in California. He left the University of Chicago to become an acting assistant professor of economics and statistics at Stanford University. In 1951, he received a PhD degree from Columbia University. 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 Harvard University, where he was appointed Professor of Economics; it was during his tenure there that he received the Nobel Prize in Economics.

Arrow returned to Stanford University 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 board at the 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

Main article: Arrow's impossibility theorem

Arrow's monograph Social Choice and Individual Values derives from his 1951 PhD 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:

1. Nondictatorship: The preferences of an individual should not become the group ranking without considering the preferences of others.
2. Individual Sovereignty: each individual should be able to order the choices in any way and indicate ties
3. Unanimity: If every individual prefers one choice to another, then the group ranking should do the same
4. Freedom From Irrelevant Alternatives: If a choice is removed, then the others' order should not change
5. 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, 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

Main article: General equilibrium theory, Arrow–Debreu model

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, the stability. His contributions to the general equilibrium theory were 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 in 1959. In 1968, he was elected to both the United States National Academy of Sciences and the American Philosophical Society. 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.

He has received honorary doctorates from the University of Chicago (1967), the University of Vienna (1971) the City University of New York (1972). He was elected a Foreign Member of the Royal Society (ForMemRS) in 2006. He was elected to the 2002 class of Fellows of the Institute for Operations Research and the Management Sciences. In 2007 he was the first Witten Lecturer at the Witten/Herdecke University as the awardee of the Witten Lectures in Economics and Philosophy.

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. 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 died in his Palo Alto, California, home on February 21, 2017, at the age of 95.

Publications

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• Arrow also published an article, along with Hollis B. Chenery, Bagicha S. Minhas, and Robert M. Solow, pseudonymously under the name Archen Minsol, who it was claimed was at the (fictional) University of Lower Slobbovia. The publication produced was: .

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• Book details.

References

References

1. (2017). "Essentials of Health Economics". Jones & Bartlett Publishers.
2. (2017). "On Ethics and Economics: Conversations with Kenneth J. Arrow". Routledge.
3. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1972".
4. "John Bates Clark Medal".
5. (December 2019). "Kenneth Joseph Arrow. 23 August 1921—21 February 2017". Biographical Memoirs of Fellows of the Royal Society.
6. (2016). "Arrow and the Foundations of the Theory of Economic Policy". Springer.
7. Wahid, Abu N.M.. (2002). "Frontiers of Economics: Nobel Laureates of the Twentieth Century". Greenwood Publishing.
8. Pressman, Steven. (1999). "Fifty major economists: Business & Economics". [[Routledge.
9. (2013). "Kenneth J. Arrow [Ideological Profiles of the Economics Laureates]". Econ Journal Watch.
10. "Kenneth J. Arrow, MA, PhD". Stanford University.
11. {{Nobelprize
12. (Feb 25, 2010). "The best since the 1960s?". The Economist.
13. (2009). "Preface". Annual Review of Economics.
14. (July 2021). "Review of J. Maesse et al. (2022) "Power and Influence of Economists: Contributions to the Social Studies of Economics" {{!}} World Economics Association". WEA Commentaries.
15. "Kenneth J. Arrow Papers, 1939–2009.". Rubenstein Library, Duke University.
16. (1950). "A Difficulty in the Concept of Social Welfare". Journal of Political Economy.
17. (1 January 2016). "Arrow's Theorem". Metaphysics Research Lab, Stanford University.
18. (1995). "Microeconomic Theory". Oxford University Press.
19. "Gerard Debreu – Biographical". nobelprize.org.
20. (2 August 2019). "The Economics of Kenneth J. Arrow: A Selective Review". Annual Review of Economics.
21. Smith, Adam, and Andrew S. Skinner. ''The Wealth of Nations''. London: Penguin Books, 1999. Print.
22. Arrow, Kenneth. (1974). "General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice". [[American Economic Review]].
23. (2008). "Kenneth Arrow (1921– )". [[Liberty Fund]].
24. Romer, Paul M.. (1986). "Increasing Returns and Long-Run Growth". [[Journal of Political Economy]].
25. Arrow, Kenneth J.. (1962). "The Economic Implications of Learning by Doing". [[The Review of Economic Studies]].
26. (2004). "Economic Growth". MIT Press.
27. (February 2004). "Kenneth Arrow and the birth of health economics". Bulletin of the World Health Organization.
28. "John Bates Clark Medal". American Economic Association.
29. "Kenneth Joseph Arrow". American Academy of Arts and Sciences.
30. "Kenneth J. Arrow".
31. "Dr. Kenneth J. Arrow".
32. (February 2020). "Central Secretariat and Library and Information Services List of Fellows of the Royal Society 1660 – 201".
33. "INFORMS Fellows: Class of 2002".
34. (2007). "Witten Lectures in Economics and Philosophy".
35. (1986). "Social Choice and Public Decision Making: Essays in Honor of Kenneth J. Arrow, Volume I". Cambridge University Press.
36. {{IMDb name. 0037392. David Arrow
37. (21 February 2017). "Kenneth Arrow, Nobel-Winning Economist Whose Influence Spanned Decades, Dies at 95". [[The New York Times]].
38. See page 236 in Düppe, T., & Weintraub, E.R. (2014). ''Finding equilibrium: Arrow, Debreu, McKenzie and the problem of scientific credit''. Princeton University Press.