Vernon Lomax Smith (born January 1, 1927) is an American
economist
An economist is a professional and practitioner in the social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...
and professor of business economics and law at
Chapman University
Chapman University is a private research university in Orange, California. It encompasses ten schools and colleges, including Fowler School of Engineering, Dodge College of Film and Media Arts, Fowler School of Law, and Schmid College of Scien ...
. He was formerly a professor of economics at the
University of Arizona, professor of economics and law at
George Mason University, and a board member of the
Mercatus Center
The Mercatus Center is an American libertarian, free-market-oriented non-profit think tank. Located at George Mason University and directed by the American economist Tyler Cowen, the Mercatus Center works with policy experts, lobbyists, and gove ...
. Along with
Daniel Kahneman
Daniel Kahneman (; he, דניאל כהנמן; born March 5, 1934) is an Israeli-American psychologist and economist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was award ...
, Smith shared the 2002
Nobel Memorial Prize in Economic Sciences for his contributions to
behavioral economics
Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the decisions of individuals or institutions, such as how those decisions vary from those implied by classical economic theory. ...
and his work in the field of experimental economics. He worked to establish 'laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms'.
Smith is the founder and president of the International Foundation for Research in Experimental Economics, a Member of the Board of Advisors for
The Independent Institute, a Senior Fellow at the
Cato Institute
The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of Koch Industries.Koch Indus ...
in
Washington D.C.
)
, image_skyline =
, image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, N ...
In 2004 Smith was honored with an honorary doctoral degree at
Universidad Francisco Marroquín, the institution that named the Vernon Smith Center for Experimental Economics Research after him. He was also a founding board member of the Center for Growth and Opportunity at Utah State University.
Early life and education
Smith was born in
Wichita, Kansas, where he attended
Wichita North High School and
Friends University
Friends University is a private nondenominational Christian university in Wichita, Kansas. It was founded in 1898. The main building was originally built in 1886 for Garfield University but was donated in 1898 to the Religious Society of Fri ...
. Grover Bougher, Vernon's mother's first husband, who worked as a fireman on the Santa Fe railroad, died in a tragic accident which proved to be pivotal. The life insurance money provided by the Santa Fe railroad was invested in a farm which became the sole means of survival for Vernon's family during the tough years of the
Great Depression. While the farm brought hard work and hard times for Vernon's parents, Vernon liked the adventurous experiences. His life-long interest in learning how things work was kindled by his childhood at the farm.
Smith received his bachelor's degree in
electrical engineering from
Caltech
The California Institute of Technology (branded as Caltech or CIT)The university itself only spells its short form as "Caltech"; the institution considers other spellings such a"Cal Tech" and "CalTech" incorrect. The institute is also occasional ...
in 1949, an
M.A.
A Master of Arts ( la, Magister Artium or ''Artium Magister''; abbreviated MA, M.A., AM, or A.M.) is the holder of a master's degree awarded by universities in many countries. The degree is usually contrasted with that of Master of Science. ...
in economics from the
University of Kansas in 1952, and his
Ph.D.
A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is ...
in economics from
Harvard University in 1955.
Academic career
Smith's first teaching post was at the
Krannert School of Management
The Krannert School of Management is the school of management at Purdue University, a public research university in West Lafayette, Indiana. It offers instruction at the undergraduate, master's, and doctoral levels.
History
The School of I ...
,
Purdue University
Purdue University is a public land-grant research university in West Lafayette, Indiana, and the flagship campus of the Purdue University system. The university was founded in 1869 after Lafayette businessman John Purdue donated land and mon ...
, which he held from 1955 until 1967, attaining the rank of full professor.
Smith also taught as a visiting associate professor at
Stanford University (1961–1962) and there made contact with
Sidney Siegel
Sidney Siegel (4 January 1916 in New York City – 29 November 1961) was an American psychologist who became especially well known for his work in popularising non-parametric statistics for use in the behavioural sciences. He was a co-developer of ...
, who was also doing work in
experimental economics. Smith moved with his family to
Massachusetts and got a position first at
Brown University
Brown University is a private research university in Providence, Rhode Island. Brown is the seventh-oldest institution of higher education in the United States, founded in 1764 as the College in the English Colony of Rhode Island and Provide ...
(1967–1968) and then at the
University of Massachusetts (1968–1972). Smith also received appointments at the
Center for Advanced Study in the Behavioral Sciences
The Center for Advanced Study in the Behavioral Sciences (CASBS) is an interdisciplinary research lab at Stanford University that offers a residential postdoctoral fellowship program for scientists and scholars studying "the five core social and ...
(1972–1973) and
Caltech
The California Institute of Technology (branded as Caltech or CIT)The university itself only spells its short form as "Caltech"; the institution considers other spellings such a"Cal Tech" and "CalTech" incorrect. The institute is also occasional ...
(1973–1975).
Much of the research that earned Smith the
Nobel Memorial Prize in Economic Sciences was conducted at the
University of Arizona between 1976 and 2001. In 2001, Smith left Arizona for
George Mason University. From 2003 to 2006, he held the Rasmuson Chair of Economics at the
University of Alaska Anchorage. In 2008, Smith founded the Economic Science Institute at
Chapman University
Chapman University is a private research university in Orange, California. It encompasses ten schools and colleges, including Fowler School of Engineering, Dodge College of Film and Media Arts, Fowler School of Law, and Schmid College of Scien ...
in
Orange, California
Orange is a city located in North Orange County, California. It is approximately north of the county seat, Santa Ana. Orange is unusual in this region because many of the homes in its Old Town District were built before 1920. While many oth ...
.
Smith has served on the board of editors of the ''
American Economic Review
The ''American Economic Review'' is a monthly peer-reviewed academic journal published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of eco ...
'', the ''
Cato Journal
The ''Cato Journal'' is a triannual peer-reviewed academic journal which covers public policy from an Austro-libertarian point of view. It was established in 1981 and is published by the Cato Institute. It publishes articles discussing politics a ...
'', ''
Journal of Economic Behavior and Organization
The ''Journal of Economic Behavior and Organization'' is an academic journal published by Elsevier. It was started in 1980 by North-Holland, later merged into Elsevier. It publishes research on economic decision and behaviour influence organizati ...
'', ''Science'', ''
Economic Theory
Economics () is the social science that studies the production, distribution, and consumption of goods and services.
Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyze ...
'', ''Economic Design'', and the ''
Journal of Economic Methodology
The ''Journal of Economic Methodology'' is a peer-reviewed academic journal in the field of economic methodology
Economic methodology is the study of methods, especially the scientific method, in relation to economics, including principles u ...
''.
He also served as an expert for the
Copenhagen Consensus
Copenhagen Consensus is a project that seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics, using cost–benefit analysis. It was conceived and organized around 2004 by Bjørn Lom ...
.
Academic work
It was at Purdue that Smith's work in
experimental economics began. As Smith describes it:
In framing the experiment, Smith varied certain institutional parameters seen in the first classroom economics experiments as conducted by
Edward Chamberlin: in particular, he ran the experiments for several trading periods, to give the student subjects time to train.
At Caltech,
Charles Plott
Charles Raymond Plott (born July 8, 1938) is an American economist. He currently is Edward S. Harkness Professor of Economics and Political Science at the California Institute of Technology, Director, Laboratory for Experimental Economics and Polit ...
encouraged Smith to formalize the methodology of experimental economics, which he did in two articles. In 1976, "Experimental Economics: Induced Value Theory" was published in the ''American Economic Review'' (AER). It was the first articulation of the principle behind economic experiments. Six years later, these principles were expanded in "Microeconomic Systems as an Experimental Science," also in the AER. This paper adapts the principles of
mechanism design
Mechanism design is a field in economics and game theory that takes an objectives-first approach to designing economic mechanisms or incentives, toward desired objectives, in strategic settings, where players act rationally. Because it starts a ...
, a microeconomic system developed by
Leonid Hurwicz, to the development of economic experiments. In Hurwicz's formulation, a microeconomic system consists of an economic environment, an economic institution (or economic mechanism), and an economic outcome. The economic environment is simply the preferences of the people in the economy and the production capabilities of the firms in the economy. The key insight in this formulation is that the economic outcome can be affected by the economic institution. The mechanism design provides a formal means for tests of the performance of an economic institution, and
experimental economics, as developed by Smith, provided a means for formal empirical assessment of the performance of economic institutions. The second main contribution of the paper is to the technique of induced values, the method used in controlled laboratory experiments in economics, political science, and psychology, which allows experimental economists to create a replica of a market in a laboratory. Subjects in an experiment are told that they can produce a "commodity" at a cost and then sell it to buyers. The seller earns the difference between the price received and its cost. Buyers are told that the commodity has a value to them when they consume it, and they earn the difference between the value of the commodity to them and its price. Using the technique, Smith and his coauthors have examined the performance of alternative trading mechanisms in resource allocation.
In February 2011, Smith participated in the "Visiting Scholars Series" at the Nicholas Academic Centers in
Santa Ana, California, conducted in collaboration with Chapman University. Smith and his colleague
Bart Wilson conducted experiments designed to expose high school students from underserved neighborhoods to market dynamics and how concepts such as altruism influence economic behavior.
Smith has authored or coauthored articles and books on capital theory,
finance,
natural resource economics and
experimental economics. He was also one of the first to propose the
combinatorial auction
A combinatorial auction is a type of smart market in which participants can place bids on combinations of discrete heterogeneous items, or “packages”, rather than individual items or continuous quantities. These packages can be also called lo ...
design, with Stephen J. Rassenti and Robert L. Bulfin in 1982.
In January 2009, Smith signed a public petition opposing the passage of the
American Recovery and Reinvestment Act
American(s) may refer to:
* American, something of, from, or related to the United States of America, commonly known as the "United States" or "America"
** Americans, citizens and nationals of the United States of America
** American ancestry, pe ...
. In a 2010 Econ Journal Watch study, Smith was found to be one of the most active petition-signers among US economists.
The Vernon Smith Prize for the Advancement of
Austrian Economics
The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian schoo ...
is named after him and is sponsored by the European Center of Austrian Economics.
Personal life
In February 2005, Smith publicly attributed features of his personality to
Asperger's syndrome
Asperger syndrome (AS), also known as Asperger's, is a former neurodevelopmental disorder characterized by significant difficulties in social interaction and nonverbal communication, along with restricted and repetitive patterns of behavi ...
after a process of
self-diagnosis.
Works
*
*
*
*
Plott, Charles R., and Vernon L. Smith, ed. (2008). ''Handbook of Experimental Economics Results'', v. 1, Elsevier
Descriptionan
preview
*
*
* _____ (1976).
*
* _____ (1982).
* _____ (1991). ''Papers in Experimental Economics''
962–88 Cambridge
Descriptionand chapter-previe
links
* _____ (2000). ''Bargaining and Market Behavior: Essays in Experimental Economics''
990–98 Cambridge
Descriptionand chapter-previe
links.* _____ (2003).
* _____ (
987
Year 987 ( CMLXXXVII) was a common year starting on Saturday (link will display the full calendar) of the Julian calendar.
Events
By place
Byzantine Empire
* February 7 – Bardas Phokas (the Younger) and Bardas Skleros, two memb ...
2008a). "experimental methods in economics." ''
The New Palgrave Dictionary of Economics
''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is a twenty-volume reference work on economics published by Palgrave Macmillan. It contains around 3,000 entries, including many classic essays from the original Inglis Palgrave Dictio ...
'', 2nd Edition
Abstract.* _____ (2008b). "experimental economics," ''The New Palgrave Dictionary of Economics'', 2nd Edition
Abstract.* Reprinted in Timothy N. Cason and Charles Noussair, ed. (2001), ''Advances in Experimental Markets'', pp
15–32.
See also
*
List of economists
This is an incomplete alphabetical list by surname of notable economists, experts in the social science of economics, past and present. For a history of economics, see the article History of economic thought. Only economists with biographical arti ...
Notes
External links
Dr. Vernon L Smithat
Chapman University School of Law
Chapman University's Dale E. Fowler School of Law, commonly referred to as Chapman University School of Law or Chapman Law School, is a private, non-profit law school located in Orange, California. The school offers the Juris Doctor degree (JD), ...
Member of the Board of Advisorsat
The Independent Institute
Senior Fellowat
Cato Institute
The Cato Institute is an American libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Ed Crane, Murray Rothbard, and Charles Koch, chairman of the board and chief executive officer of Koch Industries.Koch Indus ...
*
*
*
*
*
Articles
"Default is not the end of the world"Interview with Vernon Smith by Luis Martin (Winter 2011)
Reflections On ''Human Action'' After 50 Yearsby Vernon L. Smith, ''
Cato Journal
The ''Cato Journal'' is a triannual peer-reviewed academic journal which covers public policy from an Austro-libertarian point of view. It was established in 1981 and is published by the Cato Institute. It publishes articles discussing politics a ...
'', Fall 1999
"Using Experiments to Inform the Privatization/Deregulation Movement in Electricity,"by Stephen J.Rassenti, Vernon L. Smith, and Bart J.Wilson, ''Cato Journal'', Winter 2002
The Clinton Housing Bubble Vernon L. Smith, ''
The Wall Street Journal'', December 18, 2007
From Bubble to Depression? Steven Gjerstad and Vernon L. Smith, ''
The Wall Street Journal'', April 6, 2009
{{DEFAULTSORT:Smith, Vernon L.
1927 births
American libertarians
American Nobel laureates
Brown University faculty
California Institute of Technology alumni
California Institute of Technology faculty
Cato Institute people
Earhart Foundation Fellows
Chapman University faculty
Environmental economists
Experimental economists
Fellows of the Econometric Society
Financial economists
Friends University alumni
George Mason University faculty
Harvard University alumni
Libertarian economists
Members of the United States National Academy of Sciences
Nobel laureates in Economics
People from Wichita, Kansas
Krannert School of Management faculty
Stanford University faculty
University of Arizona people
University of Kansas alumni
University of Massachusetts Amherst faculty
Center for Advanced Study in the Behavioral Sciences fellows
Living people
Distinguished Fellows of the American Economic Association
Mercatus Center
Economists from Arizona
Economists from Kansas
Nancy L. Schwartz Memorial Lecture speakers
Member of the Mont Pelerin Society