William Vickrey
Canadian-American economist and Nobel laureate known for auction theory, congestion pricing, and marginal cost pricing.
William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American economist who spent his entire academic career at Columbia University. He focused on public economics and mechanism design, often tackling real-world policy problems. Vickrey is known for creating the Vickrey auction, pioneering the idea of congestion pricing for networks, refining arguments for marginal cost pricing, and advancing theories on optimal income taxation. Fellow economist James Tobin called him "an applied economist's theorist, as well as a theorist's applied economist." In 1996, Vickrey shared the Nobel Memorial Prize in Economic Sciences with James Mirrlees for their work on incentives under asymmetric information. However, he never received the prize in person—it was announced just three days before his death.
Born in Victoria, British Columbia, to Charles Vernon Vickrey, a Congregationalist minister, and Ada Eliza Spencer, Vickrey moved to New York City as a child when his father became General Secretary of the American Committee for Armenian and Syrian Relief, an early humanitarian organization. He attended Phillips Academy in Andover, Massachusetts, earned a B.S. in Mathematics from Yale in 1935, and completed an M.A. at Columbia in 1937. His PhD from Columbia, finished in 1948, was a 500-page dissertation titled "An Agenda for Progressive Taxation." World War II interrupted his doctoral work, during which he served with the U.S. National Resources Planning Board and later the Treasury Department's Division of Tax Research.
Vickrey stayed at Columbia for his entire career, teaching students including Jacques Drèze, Harvey J. Levin, and Lynn Turgeon. He was the first to apply game theory to auction dynamics, deriving several auction equilibria and establishing an early revenue-equivalence result—a concept that remains central to modern auction theory. The Vickrey auction bears his name. He also developed congestion pricing, arguing that roads and other services should be priced so users see the costs of full demand, signaling them to adjust behavior or prompting expansion. This theory was later partially implemented in London.
In public economics, Vickrey expanded Harold Hotelling's marginal cost pricing approach, showing that public goods should be provided at marginal cost and that efficient funding for utilities and transport required short-run pricing responsive to demand. He also argued that a land value tax was essential for funding city services efficiently, suggesting that replacing taxes on production and labor—including property taxes on improvements—with fees for holding valuable land sites would boost economic efficiency. Vickrey claimed such a tax had no negative effects and would raise local productivity enough to increase land prices. He made an ethical case for Georgist value capture, noting that owners of valuable locations exclude others from public goods even if unused, so without a land value tax, users pay twice—once in taxes and once in rent.
Vickrey's economic thinking was shaped by John Maynard Keynes and Henry George. He was critical of the Chicago school and opposed political efforts to balance budgets and fight inflation during high unemployment. While working under General MacArthur, he helped implement radical land reform in Japan.
His Nobel Prize was announced on October 8, 1996, making him the only Nobel laureate born in British Columbia. He died three days later of heart failure while traveling to a conference of Georgist academics he had helped found. Columbia colleague C. Lowell Harriss accepted the prize posthumously. Only three other Nobel Prizes have been awarded posthumously: Erik Axel Karlfeldt (Literature, 1931), Dag Hammarskjöld (Peace, 1961), and Ralph Steinman (Physiology or Medicine, 2011).
Vickrey married Cecile Thompson in 1951. He was a Quaker and member of the Scarsdale Friends Meeting. He died in Harrison, New York, in 1996.
- born
- 21 June 1914, Victoria, British Columbia
- died
- 11 October 1996, Harrison, New York
- field
- Economics
- nationality
- Canadian-American
- known_for
- Vickrey auction, congestion pricing, marginal cost pricing, optimal income taxation
Lore & Background
Vickrey was born in Victoria, British Columbia to Charles Vernon Vickrey, a Congregationalist minister, and Ada Eliza Spencer. The family moved to New York City in William's childhood, where his father was General Secretary of the American Committee for Armenian and Syrian Relief. Vickrey attended high school at Phillips Academy in Andover, Massachusetts. After obtaining his B.S. in Mathematics at Yale University in 1935, he went on to complete his M.A. at Columbia University in 1937. He stayed at Columbia for a PhD, which he completed in 1948 with a 500-page dissertation entitled "An Agenda for Progressive Taxation." Vickrey's doctoral work was interrupted by World War II, when he was enlisted to work for the U.S. National Resources Planning Board and later the Treasury Department's Division of Tax Research. Vickrey remained at Columbia for his entire career. His students included the economists Jacques Drèze, Harvey J. Levin, and Lynn Turgeon. Vickrey married Cecile Thompson in 1951. He was a Quaker and a member of Scarsdale Friends Meeting. He died in Harrison, New York in 1996 from heart failure.
Reader's Guide
Vickrey was the first to use the tools of game theory to explain the dynamics of auctions. In his seminal paper, Vickrey derived several auction equilibria, and provided an early revenue-equivalence result. The revenue equivalence theorem remains the centrepiece of modern auction theory. The Vickrey auction is named after him. Vickrey worked on congestion pricing, the notion that roads and other services should be priced so that users see the costs that arise from the service being fully used when there is still demand. Congestion pricing gives a signal to users to adjust their behavior or to investors to expand the service in order to remove the constraint. The theory was later partially put into action in London. In public economics, Vickrey extended the marginal cost pricing approach of Harold Hotelling and showed how public goods should be provided at marginal cost. He contended that efficient funding for public utilities and transportation systems required short-run marginal pricing, or pricing responsive to current demand. Alongside marginal cost pricing, Vickrey argued that the land value tax was necessary to efficiently fund city services. He wrote that replacing taxes on production and labor with fees for holding valuable land sites "would substantially improve the economic efficiency of the jurisdiction." Vickrey further argued that land value tax had no adverse effects and that replacing existing taxes in this way would increase local productivity enough that land prices would rise instead of fall. He also made an ethical argument for Georgist value capture, noting that owners of valuable locations still take (exclude others from) local public goods, even if they choose not to use them, so without land value tax, land users have to pay twice for those public services. Vickrey's economic philosophy was influenced by John Maynard Keynes and Henry George. He was sharply critical of the Chicago school of economics and was vocal in opposing the political focus on achieving balanced budgets and fighting inflation, especially in times of high unemployment.
Did You Know?
- Vickrey's Nobel Prize in Economics was announced on October 8, 1996, and he died three days later on October 11, 1996.
- Vickrey became the only Nobel laureate born in British Columbia.
- His Columbia University economics department colleague C. Lowell Harriss accepted the posthumous prize on his behalf.
- There are only three other cases where a Nobel Prize has been presented posthumously: Erik Axel Karlfeldt (Literature 1931), Dag Hammarskjöld (Peace 1961) and Ralph Steinman (Physiology or Medicine 2011).
Notable Quotes (Wikiquote)
"William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-born professor of economics and with James Mirrlees the winner of the 1996 Nobel Memorial Prize in Economic Sciences." — William Vickrey "Market Anti-Inflation PlansIn such a context, it should be clear that balancing a nominal budget will solve nothing, and attempting to achieve such a spurious balance will produce much mischief." — William Vickrey "Jacques Drèze "WILLIAM S. VICKREY June 21, 1914–October 11, 1996 BY JACQUES H. DRÈZE," at nasonline.org." — William Vickrey
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