Summers on Arrow

Larry Summers reflects on Ken Arrow with a memory that captures well the academic life. I had similar experiences watching my father, a professor of mechanical engineering, interacting with his students in our home.

My mother’s brother, the Nobel economist Kenneth Arrow, died this week at the age of 95. He was a dear man and a hero to me and many others. No one else I have ever known so embodied the scholarly life well lived.

I remember like yesterday the moment when Kenneth won the Nobel Prize in 1972. Paul Samuelson—another Nobel economist and, as it happens, also my uncle—hosted a party in his honor, to which I, then a sophomore at MIT, was invited. It was a festive if slightly nerdy occasion.

As the night wore on, Paul and Kenneth were standing in a corner discussing various theorems in mathematical economics. People started leaving. Paul’s wife was looking impatient. Kenneth’s wife, my aunt Selma, put her coat on, buttoned it and started pacing at the door. Kenneth raised something known as the maximum principle and the writings of the Russian mathematician Pontryagin. Paul began a story about the great British mathematical economist and philosopher Frank Ramsey. My ride depended on this conversation ending, so I watched alertly without understanding a word.

But I did understand this: There were two people in the room who had won Nobel Prizes. They were the two people who, after everyone else was exhausted and heading home, talked on and on into the evening about the subject they loved. I learned that night about my uncles—about their passion for ideas and about the importance and excitement of what scholars do.


If in fact economics is nonlinear, as appears to be the case, then these two people were talking about predicting the motion of balls in a pachinko parlor. Still, I do that too, and am speculating right now which way another non-linear system, the stock market, will go.

I had a professor who had a standing offer to buy the beer at a local pub on Friday evening for any grad students in the department. He would ask us interesting Econ questions and debate us and usually destroy our arguments. It was actually quite fun. I've been away from the academic world for over 20 years now and find that it's rare to find anyone willing to discuss ideas freely for fun. They also don't often buy the beer!

That's inspiring. Maybe I'll start doing that at Nick's with my senior undergrads (we have too few PhD students at Kelley).

"They were the two people who, after everyone else was exhausted and heading home, talked on and on into the evening about the subject they loved." A wonderful sentence.

"A wonderful sentence." Agreed

I'm not sure why a couple of guys being disrespectful to their wives and rude to other guests is inspiring.

Actually there is no Nobel Prize in economics. The prize is actually the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” which is not awarded by the Norwegian Nobel Committee. The Sveriges Riksbank is the Swedish central bank.

Bullshit, prove it. I've never heard that nonsense before.

Wait, are you the same dude that always posts this? You used to call yourself something else.

"The Nobel Memorial Prize in Economic Sciences (officially Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne, or the Swedish National Bank's Prize in Economic Sciences in Memory of Alfred Nobel), commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field.

The prize was established in 1968 by a donation from Sweden's central bank, the Swedish National Bank, on the bank's 300th anniversary. Although it is not one of the prizes that Alfred Nobel established in his will in 1895, it is referred to along with the other Nobel Prizes by the Nobel Foundation. Laureates are announced with the other Nobel Prize laureates, and receive the award at the same ceremony."

This is the Godwin's law of economics blogs. So predictable. Please come back when you have something new to contribute.

Have we figured out whether Kenneth Arrow and Paul Samuelson were brothers-in-law or not yet?

According to this, yes. Your spouse's sibling's spouse is also your inlaw

I like to think I was drawn to economics, my major, because I am smart just like the very smart men and women who are drawn to economics. Alas, I am likely not. What is it about economics that draws so many very smart people? I suspect it's the search for big ideas, the meaning of life, the ism that will alter the path of humanity. In other words, zealots. Economics is theology without the spooks. And like theology, economics also draws the hucksters. I was reminded this morning while reading the obituary for Jerome Tuccille, who went from Catholicism to objectivism and writing books about Ayn Rand and Donald Trump. Naturally. Tuccille wasn't related to the Arrow clan.

It's not as hard as Mathematical Physics and is a good deal likelier to make you rich. By fair means or foul.

You're right. Summers' reflections are great tribute to a great thinker. Thanks for pointing it out.

But I do have one quibble/question. Summers writes “Arrow’s impossibility theorem regarding voting and combining preferences is the only theorem I know of that is named for an economist.”

I talk about the “Coase Theorem” all the time. Does the fact that Coase chose not to express the idea in mathematical language make it something other than a theorem?

I had a colleague, since retired, who always snarked at the Coase Theorem by saying that while most theorems are proved by mathematical logic, the Coase theorem is proved by Coase's students repeating their master's words. I always thought that an unfair criticism of Coase, since I believe that properly understood, the Coase theorem simply says that if transactions costs are zero, so that all gains from trade can be captured, then the outcome will be efficient even in the presence of externalities, is a correct deduction from the assumptions, which makes it a proper theorem. Since Coase also is responsible for the ``Coase Conjecture'' for a durable goods monopoly, which is one of the most powerful examples of subgame perfection in economics, and for pointing out how a two-part tariff solved the public goods provision problem that Samuelson claimed could not be solved (his lighthouse paper), I have no doubt that Coase was capable of writing his theories as mathematical propositions, but chose not to.

All that being said, Arrow, the topic of this post, was a giant.

Indeed, Coase's theorem can be expressed mathematically:

Sweet! Thanks, Alex.

"slightly nerdy"

Cool story but in my experience the behavior of Arrow and Samuelson at that party is pretty much the behavior of just about all economics professors (and grad students too).

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