Kenneth Arrow
American economist, mathematician and political theorist; Nobel laureate and pioneer of social choice theory and general equilibrium analysis.
Kenneth Joseph Arrow (August 23, 1921 – February 21, 2017) was an American economist, mathematician and political theorist. He received the John Bates Clark Medal in 1957, and the Nobel Memorial Prize in Economic Sciences in 1972, along with John Hicks. Arrow was a central figure in postwar neoclassical economic theory. His most famous contribution is the "impossibility theorem," which he developed in his 1951 PhD thesis and later published as *Social Choice and Individual Values*. The theorem demonstrates that, under certain reasonable conditions, it is impossible to construct a social preference ordering from individual preferences without comparing levels of utility between people. The conditions include nondictatorship, individual sovereignty, unanimity, freedom from irrelevant alternatives, and transitivity of group rank. This work has profound implications for welfare economics, theories of justice, and voting theory. Arrow also made foundational contributions to general equilibrium theory, providing, alongside Gérard Debreu and Lionel McKenzie, the first rigorous proofs that a market clearing equilibrium can exist. He extended this model to incorporate uncertainty and stability. In 1951, he presented the first and second fundamental theorems of welfare economics with proofs that did not require differentiability. Arrow was also a precursor of endogenous growth theory, which explains technical change as a driver of economic growth. His work in the economics of information was similarly foundational. Born in New York City to Romanian-Jewish parents, Arrow earned a bachelor's degree in mathematics from City College of New York and a master's from Columbia, where Harold Hotelling influenced his shift to economics. After serving as a weather officer in the Army Air Forces, he completed his PhD at Columbia in 1951. He held academic positions at the University of Chicago, Stanford University, and Harvard University, where he was when he won the Nobel. He later returned to Stanford, retiring in 1991. Four of his students—John Harsanyi, Eric Maskin, Roger Myerson, and Michael Spence—also became Nobel laureates.
- born
- August 23, 1921, New York City
- died
- February 21, 2017
- field
- Economics, mathematics, political theory
- nationality
- American
- known_for
- Arrow's impossibility theorem, general equilibrium theory, fundamental theorems of welfare economics, endogenous growth theory, information economics
Lore & Background
Arrow was born on August 23, 1921, in New York City. His mother, Lilian (Greenberg), was from Iași, Romania, and his father, Harry Arrow, was from nearby Podu Iloaiei. The family was of Romanian-Jewish descent. He graduated from Townsend Harris High School and earned a bachelor's degree in mathematics from the City College of New York in 1940. He then attended Columbia University, obtaining a master's degree in mathematics in June 1941. He served as a weather officer in the United States Army Air Forces from 1942 to 1946. From 1946 to 1949, he was a graduate student at Columbia University and worked as a research associate at the Cowles Commission, also serving as an assistant professor of economics at the University of Chicago and working at the RAND Corporation. 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 from Columbia University. He served 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. 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 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. A collection of Arrow's papers is housed at the Rubenstein Library at Duke University.
Reader's Guide
Arrow's contributions to social choice theory, notably his 'impossibility theorem', and his work on general equilibrium analysis are significant. His work in many other areas of economics, including endogenous growth theory and the economics of information, was also foundational. Four of his students (Roger Myerson, Eric Maskin, John Harsanyi, and Michael Spence) went on to become Nobel laureates themselves. Arrow's monograph Social Choice and Individual Values derives from his 1951 PhD thesis. In what he named the General Possibility 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, Individual Sovereignty, Unanimity, Freedom From Irrelevant Alternatives, and Uniqueness of Group Rank. 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. In 1951, Arrow presented the first and second fundamental theorems of welfare economics. Arrow was one of the precursors of endogenous growth theory, borrowing from his 1962 'learning-by-doing' model. In other pioneering research, Arrow investigated the problems caused by asymmetric information in markets, including a 1963 paper on medical care.
Did You Know?
- Arrow served as a weather officer in the United States Army Air Forces from 1942 to 1946.
- He was one of the founding editors of the Annual Review of Economics, first published in 2009.
- Arrow's impossibility theorem includes the condition of Individual Sovereignty: each individual should be able to order the choices in any way and indicate ties.
- Four of Arrow's students—Roger Myerson, Eric Maskin, John Harsanyi, and Michael Spence—became Nobel laureates.
Notable Quotes (Wikiquote)
"Perhaps as important is the relation between the existence of solutions to a competitive equilibrium and the problems of normative or welfare economics." — Kenneth Arrow "Government economic policy, like almost any realistic decision problem, has two fundamental characteristics: it is sequential and it is uncertain." — Kenneth Arrow "Kenneth J. Arrow (1951) Social Choice and Individual Values. 2nd ed. 1963. Wiley, New York." — Kenneth Arrow "The concept of rationality used throughout this study is at the heart of modern economic analysis, and it cannot be denied that it has great intuitive appeal; but closer analysis reveals difficulties." — Kenneth Arrow
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