Kenneth Joseph Arrow (23 August 1921 – 21 February 2017) was an American economist, mathematician, writer, and political theorist. He was the joint winner of the

Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...

with

John Hicks Sir John Richards Hicks (8 April 1904 – 20 May 1989) was a British economist. He is considered one of the most important and influential economists of the twentieth century. The most familiar of his many contributions in the field of economic ...

in 1972. In economics, he was a major figure in post-World War II

neo-classical economic theory Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...

. Many of his former graduate students have gone on to win the Nobel Memorial Prize themselves. His most significant works are his contributions to

social choice theory Social choice theory or social choice is a theoretical framework for analysis of combining individual opinions, preferences, interests, or welfares to reach a ''collective decision'' or ''social welfare'' in some sense.Amartya Sen (2008). "Soci ...

, notably "

Arrow's impossibility theorem Arrow's impossibility theorem, the general possibility theorem or Arrow's paradox is an impossibility theorem in social choice theory that states that when voters have three or more distinct alternatives (options), no ranked voting electoral syst ...

", and his work on

general equilibrium In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an o ...

analysis. He has also provided foundational work in many other areas of economics, including

endogenous growth theory Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces. Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economi ...

and the economics of information.

Education and early career

Arrow was born on 23 August 1921, in

New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...

. Arrow's mother, Lilian (Greenberg), was from

Iași Iași ( , , ; also known by other alternative names), also referred to mostly historically as Jassy ( , ), is the second largest city in Romania and the seat of Iași County. Located in the historical region of Moldavia, it has traditionally ...

, Romania, and his father, Harry Arrow, was from nearby Podu Iloaiei. The Arrow family were

Romania Romania ( ; ro, România ) is a country located at the crossroads of Central Europe, Central, Eastern Europe, Eastern, and Southeast Europe, Southeastern Europe. It borders Bulgaria to the south, Ukraine to the north, Hungary to the west, S ...

Jews Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...

. His family was very supportive of his education. Growing up during the Great Depression, he embraced socialism in his youth. He would later move away from socialism, but his views retained a left-leaning philosophy. He graduated from Townsend Harris High School and then earned a

Bachelor's degree A bachelor's degree (from Middle Latin ''baccalaureus'') or baccalaureate (from Modern Latin ''baccalaureatus'') is an undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting three to si ...

from the

City College of New York The City College of the City University of New York (also known as the City College of New York, or simply City College or CCNY) is a public university within the City University of New York (CUNY) system in New York City. Founded in 1847, Cit ...

in 1940 in mathematics, where he was a member of

Sigma Phi Epsilon Sigma Phi Epsilon (), commonly known as SigEp, is a social college fraternity for male college students in the United States. It was founded on November 1, 1901, at Richmond College (now the University of Richmond), and its national headquarte ...

. He then attended

Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...

for graduate studies, obtaining a

Master's degree A master's degree (from Latin ) is an academic degree awarded by universities or colleges upon completion of a course of study demonstrating mastery or a high-order overview of a specific field of study or area of professional practice.

in mathematics in June 1941. While there, Arrow studied under

Harold Hotelling Harold Hotelling (; September 29, 1895 – December 26, 1973) was an American mathematical statistician and an influential economic theorist, known for Hotelling's law, Hotelling's lemma, and Hotelling's rule in economics, as well as Hotelling's ...

, who influenced him to change fields to economics. He served as a weather officer in the

United States Army Air Forces The United States Army Air Forces (USAAF or AAF) was the major land-based aerial warfare service component of the United States Army and ''de facto'' aerial warfare service branch of the United States during and immediately after World War II ...

from 1942 to 1946.

Academic career

From 1946 to 1949 Arrow spent his time partly as a graduate student at Columbia and partly as a research associate at the

Cowles Commission for Research in Economics The Cowles Foundation for Research in Economics is an economic research institute at Yale University. It was created as the Cowles Commission for Research in Economics at Colorado Springs in 1932 by businessman and economist Alfred Cowles. In 193 ...

at the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...

. During that time he also held the rank of Assistant Professor in Economics at the University of Chicago and worked at the

RAND Corporation The RAND Corporation (from the phrase "research and development") is an American nonprofit global policy think tank created in 1948 by Douglas Aircraft Company to offer research and analysis to the United States Armed Forces. It is finance ...

in California. He left Chicago to take up the post of Acting Assistant Professor of Economics and Statistics at

Stanford University Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is conside ...

. In 1951, he earned his

PhD PHD or PhD may refer to: * Doctor of Philosophy (PhD), an academic qualification Entertainment * '' PhD: Phantasy Degree'', a Korean comic series * '' Piled Higher and Deeper'', a web comic * Ph.D. (band), a 1980s British group ** Ph.D. (Ph.D. al ...

from Columbia. He served in the government on the staff of the

Council of Economic Advisers The Council of Economic Advisers (CEA) is a United States agency within the Executive Office of the President established in 1946, which advises the President of the United States on economic policy. The CEA provides much of the empirical rese ...

in the 1960s with

Robert Solow Robert Merton Solow, GCIH (; born August 23, 1924) is an American economist whose work on the theory of economic growth culminated in the exogenous growth model named after him. He is currently Emeritus Institute Professor of Economics at th ...

. In 1968, he left Stanford for the position of Professor of Economics at

Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of highe ...

. It was during his tenure there that he received the Nobel Prize in Economics. Arrow returned to Stanford in 1979 and became the Joan Kenney Professor of Economics and Professor of Operations Research. He retired in 1991. As a Fulbright Distinguished Chair, in 1995 he taught Economics at the

University of Siena The University of Siena ( it, Università degli Studi di Siena, abbreviation: UNISI) in Siena, Tuscany, is one of the oldest and first publicly funded universities in Italy. Originally called ''Studium Senese'', the institution was founded in 12 ...

. He was also a founding member of the Pontifical Academy of Social Sciences and a member of the Science Board of

Santa Fe Institute The Santa Fe Institute (SFI) is an independent, nonprofit theoretical research institute located in Santa Fe, New Mexico, United States and dedicated to the multidisciplinary study of the fundamental principles of complex adaptive systems, inclu ...

. At various stages in his career he was a Fellow of

Churchill College, Cambridge Churchill College is a constituent college of the University of Cambridge, England. It has a primary focus on science, engineering and technology, but still retains a strong interest in the arts and humanities. In 1958, a trust was establis ...

. He was one of the founding editors of the ''

Annual Review of Economics The ''Annual Review of Economics'' is a peer-reviewed academic journal that publishes an annual volume of review articles relevant to economics. It was established in 2009 and is published by Annual Reviews. The co-editors are Philippe Aghion a ...

'', which was first published in 2009. Four of his former students have gone on to become Nobel Prize winners, namely John Harsanyi,

Eric Maskin Eric Stark Maskin (born December 12, 1950) is an American economist and mathematician. He was jointly awarded the 2007 Nobel Memorial Prize in Economic Sciences with Leonid Hurwicz and Roger Myerson "for having laid the foundations of mechanism ...

Roger Myerson Roger Bruce Myerson (born March 29, 1951) is an American economist and professor at the University of Chicago. He holds the title of the David L. Pearson Distinguished Service Professor of Global Conflict Studies at The Pearson Institute for the ...

and

Michael Spence Andrew Michael Spence (born November 7, 1943) is a Canadian-American economist and Nobel laureate. Spence is the William R. Berkley Professor in Economics and Business at the Stern School of Business at New York University, and the Philip H. Kni ...

. A collection of Arrow's papers is housed at the Rubenstein Library at

Duke University Duke University is a private research university in Durham, North Carolina. Founded by Methodists and Quakers in the present-day city of Trinity in 1838, the school moved to Durham in 1892. In 1924, tobacco and electric power industrialist Jam ...

Arrow's impossibility theorem

Arrow's monograph ''

Social Choice and Individual Values Kenneth Arrow's monograph ''Social Choice and Individual Values'' (1951, 2nd ed., 1963, 3rd ed., 2012) and a theorem within it created modern social choice theory, a rigorous melding of social ethics and voting theory with an economic flavor. ...

'' derives from his 1951

thesis. In what he named the General Impossibility Theorem, he theorized that, unless we accept to compare the levels of utility reached by different individuals, it is impossible to formulate a social preference ordering that satisfies all of the following conditions: # Nondictatorship: The preferences of an individual should not become the group ranking without considering the preferences of others. # Individual Sovereignty: each individual should be able to order the choices in any way and indicate ties # Unanimity: If every individual prefers one choice to another, then the group ranking should do the same # Freedom From Irrelevant Alternatives: If a choice is removed, then the others' order should not change # Uniqueness of Group Rank: The method should yield the same result whenever applied to a set of preferences. The group ranking should be transitive. The theorem has implications for

welfare economics Welfare economics is a branch of economics that uses microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. Attempting to apply the principles of welfare economics gives rise to the field of public ec ...

and theories of

justice Justice, in its broadest sense, is the principle that people receive that which they deserve, with the interpretation of what then constitutes "deserving" being impacted upon by numerous fields, with many differing viewpoints and perspective ...

, and for voting theory (it extends the Condorcet paradox). Following Arrow's logical framework,

Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher, who since 1972 has taught and worked in the United Kingdom and the United States. Sen has made contributions to welfare economics, social choice theory, economi ...

formulated the liberal paradox which argued that given a status of "Minimal Liberty" there was no way to obtain Pareto optimality, nor to avoid the problem of social choice of neutral but unequal results.

General equilibrium theory

Work by Arrow and

Gérard Debreu Gérard Debreu (; 4 July 1921 – 31 December 2004) was a French-born economist and mathematician. Best known as a professor of economics at the University of California, Berkeley, where he began work in 1962, he won the 1983 Nobel Memorial Prize ...

and simultaneous work by Lionel McKenzie offered the first rigorous proofs of the existence of a market clearing equilibrium. For this work and his other contributions, Debreu won the 1983 Nobel Prize in Economics. Arrow went on to extend the model and its analysis to include

uncertainty Uncertainty refers to epistemic situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable ...

, the stability. His contributions to the general equilibrium theory were strongly influenced by

Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——� ...

's '' Wealth of Nations''. Written in 1776, ''The Wealth of Nations'' is an examination of

economic growth Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate o ...

brought forward by the division of labor, by ensuring interdependence of individuals within society. In 1974, The American Economic Association published the paper written by Kenneth Arrow, ''General Economic Equilibrium: Purpose, Analytic Techniques, Collective Choice'', where he states:

Fundamental theorems of welfare economics

In 1951, Arrow presented the first and second

fundamental theorems of welfare economics There are two fundamental theorems of welfare economics. The first states that in economic equilibrium, a set of complete markets, with complete information, and in perfect competition, will be Pareto optimal (in the sense that no further exch ...

and their proofs without requiring differentiability of utility, consumption, or technology, and including corner solutions.

Endogenous-growth theory

Arrow was one of the precursors of

, which seeks to explain the source of technical change, which is a key driver of economic growth. Until this theory came to prominence, technical change was assumed to occur exogenously — that is, it was assumed to occur outside economic activities, and was outside (exogenous) to common economic models. At the same time there was no economic explanation for ''why'' it occurred. Endogenous-growth theory provided standard economic reasons for why firms innovate, leading economists to think of innovation and technical change as determined by economic actors, that is endogenously to economic activities, and thus belong inside the model. Endogenous growth theory started with

Paul Romer Paul Michael Romer (born November 6, 1955) is an American economist and policy entrepreneur who is a University Professor in Economics at New York University. Romer is best known as the former Chief Economist of the World Bank and for co-recei ...

's 1986 paper, borrowing from Arrow's 1962 "

learning-by-doing Learning by doing refers to a theory of education. This theory has been expounded by American philosopher John Dewey and Latinamerican pedagogue Paulo Freire. It's a hands-on approach to learning, meaning students must interact with their enviro ...

" model which introduced a mechanism to eliminate

diminishing returns In economics, diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal ( ceteris pari ...

in aggregate output. A literature on this theory has developed subsequently to Arrow's work.

Information economics

In other pioneering research, Arrow investigated the problems caused by

asymmetric information In contract theory and economics, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. Information asymmetry creates an imbalance of power in transactions, which can ...

in markets. In many transactions, one party (usually the seller) has more information about the product being sold than the other party. Asymmetric information creates incentives for the party with more information to cheat the party with less information; as a result, a number of market structures have developed, including

warranties In contract law, a warranty is a promise which is not a condition of the contract or an innominate term: (1) it is a term "not going to the root of the contract",Hogg M. (2011). ''Promises and Contract Law: Comparative Perspectives''p. 48 Cambrid ...

and third party

authentication Authentication (from ''authentikos'', "real, genuine", from αὐθέντης ''authentes'', "author") is the act of proving an assertion, such as the identity of a computer system user. In contrast with identification, the act of indicatin ...

, which enable markets with asymmetric information to function. Arrow analysed this issue for medical care (a 1963 paper entitled "Uncertainty and the Welfare Economics of Medical Care", in the American Economic Review); later researchers investigated many other markets, particularly second-hand assets, online auctions and insurance.

Awards and honors

Arrow was awarded the

John Bates Clark Medal The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge." The award is named after the ...

in 1957 and was elected a Fellow of the

American Academy of Arts and Sciences The American Academy of Arts and Sciences (abbreviation: AAA&S) is one of the oldest learned societies in the United States. It was founded in 1780 during the American Revolution by John Adams, John Hancock, James Bowdoin, Andrew Oliver, a ...

in 1959. In 1968, he was elected to both the United States

National Academy of Sciences The National Academy of Sciences (NAS) is a United States nonprofit, non-governmental organization. NAS is part of the National Academies of Sciences, Engineering, and Medicine, along with the National Academy of Engineering (NAE) and the Nat ...

and the

American Philosophical Society The American Philosophical Society (APS), founded in 1743 in Philadelphia, is a scholarly organization that promotes knowledge in the sciences and humanities through research, professional meetings, publications, library resources, and communit ...

. He was the joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972 and the 1986 recipient of the von Neumann Theory Prize. He was one of the recipients of the 2004

National Medal of Science The National Medal of Science is an honor bestowed by the President of the United States to individuals in science and engineering who have made important contributions to the advancement of knowledge in the fields of behavioral and social scienc ...

, the nation's highest scientific honor, presented by President George W. Bush for his contributions to research on the problem of making decisions using imperfect information and his research on bearing risk. He has received

honorary doctorates An honorary degree is an academic degree for which a university (or other degree-awarding institution) has waived all of the usual requirements. It is also known by the Latin phrases ''honoris causa'' ("for the sake of the honour") or '' ad hon ...

from the University of Chicago (1967), the

University of Vienna The University of Vienna (german: Universität Wien) is a public research university located in Vienna, Austria. It was founded by Duke Rudolph IV in 1365 and is the oldest university in the German-speaking world. With its long and rich hi ...

(1971) the

City University of New York The City University of New York ( CUNY; , ) is the public university system of New York City. It is the largest urban university system in the United States, comprising 25 campuses: eleven senior colleges, seven community colleges and seven pro ...

(1972). On 2 June 1995 he received an honorary doctorate from the Faculty of Social Sciences at

Uppsala University Uppsala University ( sv, Uppsala universitet) is a public research university in Uppsala, Sweden. Founded in 1477, it is the oldest university in Sweden and the Nordic countries still in operation. The university rose to significance during ...

Sweden Sweden, formally the Kingdom of Sweden,The United Nations Group of Experts on Geographical Names states that the country's formal name is the Kingdom of SwedenUNGEGN World Geographical Names, Sweden./ref> is a Nordic countries, Nordic c ...

. He was elected a Foreign Member of the Royal Society (ForMemRS) in 2006. He was elected to the 2002 class of

Fellow A fellow is a concept whose exact meaning depends on context. In learned or professional societies, it refers to a privileged member who is specially elected in recognition of their work and achievements. Within the context of higher education ...

s of the Institute for Operations Research and the Management Sciences.

Personal life and death

Arrow was a brother to the economist Anita Summers, uncle to economist and former Treasury Secretary and Harvard President Larry Summers, and brother-in-law of the late economists Robert Summers and

Paul Samuelson Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he " ...

. In 1947, he married Selma Schweitzer, graduate in economics at the

and psychotherapist, who died in 2015; they had two children, David Michael (b. 1962), an actor, and Andrew Seth (b. 1965), an actor/singer. Arrow was well known for being a polymath, possessing prodigious knowledge of subjects far removed from economics. On one occasion (recounted by

), in an attempt to artificially test Arrow's knowledge, the junior faculty agreed to closely study the breeding habits of

gray whale The gray whale (''Eschrichtius robustus''), also known as the grey whale,Britannica Micro.: v. IV, p. 693. gray back whale, Pacific gray whale, Korean gray whale, or California gray whale, is a baleen whale that migrates between feeding and bre ...

s — a suitably obscure topic — and discuss it in his presence. To their surprise, Arrow already was familiar with the work they had studied and, in addition, thought it had been refuted by other research. Arrow died in his

Palo Alto, California Palo Alto (; Spanish for "tall stick") is a charter city in the northwestern corner of Santa Clara County, California, United States, in the San Francisco Bay Area, named after a coastal redwood tree known as El Palo Alto. The city was es ...

home on 21 February 2017 at the age of 95.

Publications

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* * * ::Also available online as: * ::Also available online as: * * * *

References

External links

Collected Papers of Kenneth J. Arrow

Biography of Kenneth J. Arrow
from the Institute for Operations Research and the Management Sciences *
Kenneth Arrow: An Oral History
Stanford Historical Society Oral History Program, 2011
Kenneth J. Arrow: An Oral History
Stanford Historical Society Oral History Program, 2016 {{DEFAULTSORT:Arrow, Kenneth 1921 births 2017 deaths Nobel laureates in Economics American Nobel laureates Jewish American writers Jewish American economists 20th-century American economists 21st-century American male writers 21st-century American economists American economics writers American people of Romanian-Jewish descent American political philosophers American political writers American social democrats City College of New York alumni Columbia Graduate School of Arts and Sciences alumni Writers from Queens, New York Military personnel from New York City United States Army Air Forces officers Fellows of the American Academy of Arts and Sciences Fellows of the American Statistical Association Fellows of the Econometric Society Foreign Members of the Royal Society Welfare economists Game theorists General equilibrium theorists Intergovernmental Panel on Climate Change lead authors Jewish American scientists John von Neumann Theory Prize winners Mathematical economists Members of the Pontifical Academy of Social Sciences Members of the United States National Academy of Sciences Foreign Members of the Russian Academy of Sciences National Medal of Science laureates Presidents of the Econometric Society RAND Corporation people Stanford University Department of Economics faculty Townsend Harris High School alumni University of Chicago faculty Voting theorists Presidents of the American Economic Association Santa Fe Institute people Distinguished Fellows of the American Economic Association Fellows of the Institute for Operations Research and the Management Sciences 21st-century American non-fiction writers American male non-fiction writers Mathematicians from New York (state) Economists from New York (state) Nancy L. Schwartz Memorial Lecture speakers United States Army Air Forces personnel of World War II Corresponding Fellows of the British Academy Annual Reviews (publisher) editors Members of the National Academy of Medicine Members of the American Philosophical Society