18 March 2011

Lives of the Laureates -- Highlights

In this book, 18 winners of the "Nobel prize" in Economics* talk about their evolution as economists to lay audiences. I liked the talks because they were long enough to tell stories yet not as technical as Nobel acceptance speeches where the laureate needs to justify their award.

This post is not so much a review as a collection of highlights I marked while reading.

Milton Friedman (Nobel 1976; speech 1985):
I have spoken and written about issues of policy. in doing so, however, I have not been acting in my scientific capacity but in my capacity as a citizen, an informed one, I hope. I believe that what I know as an economist helps me form better judgmental about some issues than I could have without that knowledge.
Franco Modigliani (Nobel 1987; speech 1987):
An engineer, surgeon and economist each claim that their profession is the oldest. The surgeon says ``Remember at the beginning when God took a rib out of Adam and made Eve? Who do you think did that? Obviously a surgeon." The engineer says "Just a moment. You remember that God made the world before that. He separated the land from the sea. Who do you think did that except an engineer?" "Just a moment," protested the economist, "Before God made the world, what was there? Chaos. Who do you think was responsible for that?"
James Buchanan (Nobel 1986; speech 1987):
To the allocationist the market is efficient if it works... To the catallactist the market coordinates the separate activities of self-seeking persons without the necessity of detailed political direction. The test of the market is the comparison with its institutional alternative, politicized decision making.
Robert Solow (Nobel 1987; speech 1988):
Theoretical physicists nowadays think they are on the verge of what they call, only partially self-mockingly, "The Theory of Everything." There is no economic Theory of Everything, and attempts to construct one seem to merge toward a Theory of Nothing. If you think I am making a sly comment about some tendencies in contemporary macroeconomics, you are right... economics should try very hard to be scientific with a small s. By that I mean only that we should think logically and respect fact.
Ronald Coase (Nobel 1994; speech 1994):
My aim has always been to understand the working of the economic system, to get to the truth, rather than to support some position. And in criticizing others, I have always tried to understand what their position was and not to misrepresent it. I have never been interested in cheap victories.
Douglass North (Nobel 1993; speech 1994):
Learning is not just a product of the experiences of the individual in his or her lifetime, it also includes the cumulative experiences of past generations embodied in culture... there is no guarantee that the cumulative past experiences of a society will... necessarily solve new problems.
John Harsanyi (Nobel 1994; speech 1997):
You are "impartial" if you do not know in advance whether you will be in a more favorable position under capitalism or in a more favorable position under socialism... a utilitarian theory of ethics... means that you develop an ethical theory based on moral rules that best serve the interest of all individual members of society** and do it in an impartial way...
Bottom Line: I am lucky to be in the same profession as these folks.

* There's an ongoing debate about this award. Alfred Nobel did not create it; it was created by the Bank of Sweden "in memory of Alfred Nobel." There's also a HUGE debate over associating economics with "science." I tend to see more "social" than "science" in economics. See this post for more thoughts on research and this one on the Nobel Prize.

** I've associated these thoughts with Rawls and Harsanyi seemed to have written them later in the 1970s. No matter their provinance (probably Adam Smith!), I agree.

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