Table Of ContentMD DALIM 997386 12/24/08 CYAN MAG YEL BLACK
Lives of the Laureates
Lives of the Laureates
Twenty-t hree Nobel Economists
Fifth Edition
Edited by William Breit and Barry T. Hirsch
The MIT Press
Cambridge, Massachusetts
London, England
© 1986, 1990, 1995, 2004, 2009 Massachusetts Institute of Technology
All rights reserved. No part of this book may be reproduced in any form by any
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Contents
Introduction to the Fifth Edition vii
Acknowledgments xiii
W. Arthur Lewis 1
Lawrence R. Klein 17
Kenneth J. Arrow 35
Paul A. Samuelson 49
Milton Friedman 65
George J. Stigler 79
James Tobin 95
Franco Modigliani 115
James M. Buchanan 137
Robert M. Solow 153
William F. Sharpe 171
Ronald H. Coase 189
Douglass C. North 209
John C. Harsanyi 223
Myron S. Scholes 235
Gary S. Becker 251
Robert E. Lucas, Jr. 273
James J. Heckman 299
vi Contents
Vernon L. Smith 335
Clive W. J. Granger 357
Edward C. Prescott 369
Thomas C. Schelling 393
Edmund S. Phelps 421
Lessons from the Laureates: An Afterword 437
Notes 455
Introduction to the Fifth Edition
This book consists of autobiographical accounts of the careers of
t wenty-t hree people who have three qualities in common. First, they are
all economists. Second, each of them has been awarded the Alfred Nobel
Memorial Prize in Economic Science. Third, each traveled to San Anto-
nio, Texas, to deliver his story in person at Trinity University.
The Nobel Prize in Economics was not created by Alfred Nobel him-
self. In 1901 his will established prizes in physics, chemistry, medicine or
physiology, literature, and peace. He wished to reward specifi c achieve-
ments rather than outstanding persons. In the case of the natural sci-
ences, the awards were to be given for “discoveries,” “inventions,” and
“improvements.” In 1968 the Central Bank of Sweden, in connection
with its tercentenary celebration, initiated a new award, the Central Bank
of Sweden Prize in Economic Science in Memory of Alfred Nobel. This
prize was to be granted in conformity with the standards that governed
the awarding of the original Nobel prizes. According to the rules estab-
lished by the Central Bank of Sweden, the “prize shall be awarded annu-
ally to a person who has carried out a work in economic science of the
1
eminent signifi cance expressed in the will of Alfred Nobel.”
The idea for a series of autobiographical lectures by Nobel laureates in
economics was that of the senior editor, who has spent a good part of his
academic career studying, teaching, and writing about the lives and ideas
2
of leading contemporary U.S. economists. This abiding interest in the
relationship between biography and the creative process led naturally to
the thought of providing a forum in which outstanding economists would
express in their own words, in any way that seemed congenial, a per-
sonal memoir under the general rubric “My Evolution as an Economist.”
viii Introduction to the Fifth Edition
At the very least, such a forum would preserve part of the rich record
of accomplishment that helped to shape the direction and character
of economic science in the post–World War II era. But the larger pur-
pose was to provide important source material for a theory of scientifi c
discovery.
Little is known about the process by which original ideas are germi-
nated and eventually accepted by one’s peers. To what extent is the sub-
stance of scientifi c work in social science a refl ection of the lives of those
who produced it? What is the role of infl uential teachers and colleagues?
To what degree are the problems to which these thinkers addressed them-
selves a result of their own backgrounds as well as the economic and
social problems of their times? What forces were most responsible for
leading them to their insights? In short, what is it that enables an indi-
vidual to discover something that seizes and holds the attention of a large
segment of a scientifi c community? To help answer such questions was
the major rationale behind the series.
But who should we invite? It was clear that budgetary and time con-
straints would limit the number of invitations, and so the roster was
restricted in the following ways: only economists who served on the fac-
ulties of U.S. universities at the time that the Nobel Prize was awarded
would be included; and the roster would represent as many different fac-
ets of economics in terms of types of contributions, specifi c areas, meth-
ods of analysis, and ideological differences as possible. This meant that
only one member of a team of co-r ecipients of the prize would be invited.
In 1983, when the program was being planned, there were twelve win-
ners of the Nobel Prize who met the fi rst criterion, although one was too
ill to travel. A diffi cult winnowing process in accordance with the second
criterion narrowed the fi nal list to eight. To our pleasant surprise, only
one invitee declined to participate.
The autobiographical lectures that made up the fi rst edition of this
volume were presented at Trinity University during the 1984–85 year.
The success of the project encouraged us to ask then-P resident Ronald
Calgaard to allow the series to continue. An economist himself, Calgaard
quickly agreed. Each October after the Nobel Prize in Economics was
awarded in Stockholm, an invitation was to be sent to a newly minted
U.S. economics laureate to present an autobiographical lecture.
Introduction to the Fifth Edition ix
During the three years immediately following the end of the original
series, a trio of Americans was honored with the Alfred Nobel Memorial
Prize in Economic Science: Franco Modigliani of MIT in 1985, James M.
Buchanan of George Mason University in 1986, and Robert M. Solow
of MIT in 1987. Each of them accepted the request to present a lecture
in which he would chart the route that led him to the highest accolade a
scholar can receive. These lectures were included in the second edition of
Lives of the Laureates, published in 1990.
Economists at U.S. universities continued to receive the Nobel Prize.
The third edition, published in 1995, included Trinity University lectures
by William F. Sharpe (co- recipient in 1990), Ronald H. Coase (1991),
and Douglass C. North (co- recipient in 1993). The fourth edition was
published in 2004 with eighteen lectures, including new essays by John C.
Harsanyi (co-r ecipient in 1994), Myron S. Scholes (co-r ecipient in 1997),
Gary S. Becker (1992), Robert E. Lucas, Jr. (1995), and James J. Heck-
man (co-r ecipient in 2000).
This fi fth edition of Lives of the Laureates includes fi ve new Trin-
ity University lectures: Vernon L. Smith (co-r ecipient in 2002), Clive
W. J. Granger (co-r ecipient in 2003), Edward C. Prescott (co- recipient
in 2004), Thomas C. Schelling (co- recipient in 2005), and Edmund S.
Phelps (2006).
For many of the laureates, the assignment has been a diffi cult one.
There is an understandable reluctance to give a public talk about one’s
own intellectual contributions. As one of the invitees put it, “I do not
know that I could keep it between the Scylla of false modesty and the
Charybdis of boastfulness, and I am afraid I would fi nd the whole busi-
ness rather stressful.” Moreover, most of their work in its professional
formulation was technical in nature, closed off to those not trained as
economists. Yet each was being asked to make his contribution accessible
to a lay audience at a public lecture open to the whole community. This
provided greater diffi culties for some than for others. Paul A. Samuelson’s
and Kenneth J. Arrow’s scientifi c contributions are largely in the domain
of mathematical economics. Lawrence R. Klein, Heckman, and Granger,
among others, make heavy use of statistical techniques and econometrics.
All the Nobel economists express themselves in the technical vocabulary
of their discipline.
