The Becker Friedman Institute mourns the passing of Kenneth Arrow, the Joan Kenney Professor Emeritus of Economics and Professor of Operations Research at Stanford University, on Feb. 21, 2017.
Arrow shared the Nobel Prize in Economics with John Hicks for their contributions to general equilibrium theory. He also is credited with virtually creating the field of social choice theory, which examines how individual preferences are aggregated into public decisions through voting and other means.
“Ken Arrow was a true giant in the field of economics and clearly one of the top few scholars in his generation,” said Lars Peter Hansen, director of the Becker Friedman Institute and 2013 Nobel laureate. “His contributions to economic science remain fundamental and will continue to be influential for many years to come.”
Originally trained as a mathematician, Arrow illuminated the mathematical underpinnings of many other areas of economics. Between 1946 to 1949, he was a research associate at the Cowles Commission at the University of Chicago and an assistant professor in the Department of Economics. The Cowles Commission worked to link mathematics and statistics to economic theory; along with Gerard Debreu and many others at the Cowles Commission, Arrow helped lay the foundations for the fields of econometrics and general equilibrium theory.
His work on general equilibrium proved that prices exist that bring all markets into simultaneous equilibrium (whereby every item produced at the equilibrium price would be voluntarily purchased). He also made significant contributions to welfare theory, which analyzes the optimal allocation of goods and services in an economy
With his influential early work on social choice, he outlined his famed “impossibility theory,” proving that no system of majority rule voting would meet all defined criteria of fairness or suitability.
Arrow also made seminal contributions to the economics of health care, particularly in the role of asymmetric information; innovation and its role in economic growth; the impact of risk and uncertainty on general equilibrium; and the environment.
“Ken Arrow was a fountain of ideas in dozens of areas of economics and operations research,” remembered Robert E. Lucas Jr., the 1995 Nobel laureate in economics. “His curiosity seemed unbounded. He stimulated everyone around him.”
James J. Heckman noted, "Kenneth Arrow was one of the greatest minds in the history of economics. He belongs to a pantheon including Adam Smith David Ricardo, Alfred Marshall, and a very small handful of his 20th-century peers.His insights were fundamental and they spanned disciplines.
"His sharp incisive comments will be deeply missed," continued Heckman, the 2000 Nobel laureate. "His work will continue to constitute a fundamental core of economics for generations to come."
Remembrances from other UChicago Economists
"Kenneth Arrow was a great leader of our field. Nobody in the history of economics made more major fundamental contributions to economic theory than he did in his long career. And he was a truly fine person. It was a privilege to have been his student and his friend.
— Roger Myerson, Glen A. Lloyd Distinguished Service Professor of Economics, 2007 Nobel laureate, and Arrow's student
"Ken Arrow was one of the truly great scientists of the twentieth century, and every branch of modern economics draws on his contributions. He was at the same time completely unpretentious: willing to listen to ideas from everyone and to take their ideas seriously."
— Nancy Stokey, Frederick Henry Prince Distinguished Service Professor of Economics, who studied with Arrow at Harvard
"Kenneth Arrow was quite simply a giant of economics. We first met at a seminar in 1964 when I presented my thesis work. Kenneth was modest and kind. He was the most brilliant of us, but he was also a man for all seasons and extraordinarily generous. He knew about everything and he was forever curious. Although I was not at Chicago during his years with the Cowles Foundation and when he served here as an assistant professor, his product during that time included some of his best work. We will miss him."
— Hugo Sonnenschein, Charles L. Hutchinson Distinguished Service Professor Emeritus.