What do I think of the Cowles Commission?

by on May 4, 2008 at 3:03 pm in Economics | Permalink

Angry at the Margin asks in the comments:

I’m curious to know what you think of these authors, beyond the fact
that they achieved mainstream success, given that the Economics that
came out of the Cowles Comission is more or less the exact opposite of
the Economics coming out of GMU.

Here goes:

1. Tjalling Koopmans.  He is a father of operations research and certainly worthy of a Nobel Prize, although perhaps in mathematics (if they had one).  His work on optimal routing theory remains central to transportation management and he also laid some foundations for quantum chemistry.  True, he doesn’t really appeal to my inner Austrian but he was an awesome intellectual figure and he also helped us win WWII.  We should all bow down and pay homage to Tjalling Koopmans.

2. Kenneth J. Arrow.  His reputation now far surpasses that of Samuelson’s and he was more philosophical to boot.  Where to start?   He understood his own impossibility theorem better than did the commentators plus he is the father of modern health care economics and that is maybe 1/10th of his total contribution!  People who know him also claim he is the greatest polymath they ever met.

3. Gerard Debreu.  He is the father of general equilibrium theory and also, as a philosopher of time, the real successor to Proust, as he once explained in an interview.  His extremely minimalistic approach to economics is better when it comes from the star than from the second-tier imitators but of course a real star he was.  I think of him as the father of economic science fiction and no I don’t mean that as a snub.

4. James Tobin.  About fifteen years ago I realized he was in fact one of the deepest Keynesian thinkers.  He also proposed the Tobit model and laid the foundations for modern portfolio theory.  He lives in an intellectual world different from my own but he is clearly deserving of his Nobel Prize several times over.

5. Franco Modigliani.  He is one of the guys who could have won more than one Nobel Prize.  That’s one for the Modigliani-Miller theorem (the implications of being able to chop up and carve up assets), one for the lifecycle hypothesis, and perhaps even another for his 1944 article on liquidity preference, which showed the concept was probably not enough to drive the Keynesian model except for the unusual case where liquidity preference was infinitely strong.  Sadly this piece remains neglected by modern purveyors of the liquidity trap idea.

6. Herbert Simon.  Bounded rationality and behavioral economics have already taken the profession by storm; his insights on computation, neurology, and artificial intelligence have not yet been incorporated into the mainstream in an effective manner, so his long-run influence will only increase.

7. Lawrence Klein.  I can’t say I am a fan of his macro modelling approach, but I’ll admit I haven’t spent much time with his work.

8. Trygve Haavelmo.  He pioneered how to attack identification problems in econometrics; among other things without him there would be no Steve Levitt and no Freakonomics.  He didn’t just get the Nobel Prize because he was a Scandinavian.

9. Harry Markowitz.  The father of modern portfolio theory, enough said. 

Amazing, isn’t it?  I still think the profession as a whole overdoes theory (even today) and undervalues breadth and real world experience, but these are nonetheless thinkers to be revered.  Arrow and Simon are, by far, the two who have influenced me the most.  It’s also fair to say that GMU economics often extends in other directions, but except perhaps for Herbert Simon these are well-mined thinkers by the rest of the mainstream so not every economist need run in their direction.

1 Tim of Angle May 4, 2008 at 3:27 pm

I once had the misfortune to attend a lecture by James Tobin when I was an undergraduate economics major at Yale. He is possibly the single most boring speaker I have ever heard. He put most of an entire lecture hall of over a hundred people to sleep. And these were people who had voluntarily signed up for an economics course.

2 Barkley Rosser May 4, 2008 at 6:31 pm

Tyler,

Samuelson has claimed in print that Tom Schelling is the most knowledgeable person he has ever known. I am not sure if that
means he thinks Schelling knows more than Arrow, but then that would be a hard tossup in any case. Both are polymaths,
although Schelling would probably say that Arrow is better at math, which is probably true. Samuelson and Arrow are both
uncles of Larry Summers, just to provide a tidbit.

I shall tell an anecdote I have heard about Arrow from someone who will remain unnamed who was a grad student some time ago
at Stanford. The story is that at any party at the time, Arrow would simply dominate any room he was in, appearing to know
everything about anything. So, a group of grad students hatched a plot to catch him out. They studied up on an obscure topic
in geology and then they surrounded him at a party and began to go on and on about obscurities of this matter. Without missing
a beat, Arrow is reported to have responded by bringing up some even more recent articles published in relevant academic
journals on the topic that the grad students did not know of. They never did figure out whether somebody had tipped him off
to their plot, or if Arrow actually did keep up with such esoterica on a regular basis.

3 economist May 5, 2008 at 6:46 am

Marx also had some meaningful contributions, maybe while we are neglecting all methodological concerns, as well as validity of conclusions, we can get a comment his contributions to economics.

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