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 The Leonard N. Stern School of Business (also NYU Stern, Stern School of Business, or simply Stern) is the business schools, business school of New York University, a private university, private research university based in New York City. Founded ...

New York University New York University (NYU) is a private university, private research university in New York City, New York, United States. Chartered in 1831 by the New York State Legislature, NYU was founded in 1832 by Albert Gallatin as a Nondenominational ...

, and the Philip H. Knight Professor of Management, Emeritus, and Dean, Emeritus, at the

Stanford Graduate School of Business The Stanford Graduate School of Business is the Postgraduate education, graduate business school of Stanford University, a Private university, private research university in Stanford, California. For several years it has been the most selective ...

. Together with George A. Akerlof and

Joseph E. Stiglitz Joseph Eugene Stiglitz (; born February 9, 1943) is an American New Keynesian economist, a public policy analyst, political activist, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2 ...

, Spence is a co-recipient of the 2001

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 (), commonly referred to as the Nobel Prize in Economics(), is an award in the field of economic sciences adminis ...

, "for their analyses of markets with asymmetric information."

Career

Spence is noted for his job-market signaling model, which inspired research into this branch of

contract theory From a legal point of view, a contract is an institutional arrangement for the way in which resources flow, which defines the various relationships between the parties to a transaction or limits the rights and obligations of the parties. From an ...

. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less costly for them to acquire education than it is for employees with low abilities. For the model to work, it is not even necessary for education to have any intrinsic value if it can convey information about the sender (employee) to the recipient (employer) and if the signal is costly. Spence received his middle and high school education at the

University of Toronto Schools University of Toronto Schools (UTS) is an independent secondary day school affiliated with the University of Toronto in Toronto, Ontario, Canada. The school follows a specialized academic curriculum, and admission is determined by a written exam ...

of the

University of Toronto The University of Toronto (UToronto or U of T) is a public university, public research university whose main campus is located on the grounds that surround Queen's Park (Toronto), Queen's Park in Toronto, Ontario, Canada. It was founded by ...

. He later came back to Rotman School of Management at the

to serve as a member of the Rotman Dean’s Advisory Board. Spence attended

Princeton University Princeton University is a private university, private Ivy League research university in Princeton, New Jersey, United States. Founded in 1746 in Elizabeth, New Jersey, Elizabeth as the College of New Jersey, Princeton is the List of Colonial ...

as an undergraduate student and graduated summa cum laude with a B.A. in philosophy in 1966, completing a senior thesis titled "Freedom and Determinism". Spence then studied at

Magdalen College Magdalen College ( ) is a constituent college of the University of Oxford. It was founded in 1458 by Bishop of Winchester William of Waynflete. It is one of the wealthiest Oxford colleges, as of 2022, and one of the strongest academically, se ...

University of Oxford The University of Oxford is a collegiate university, collegiate research university in Oxford, England. There is evidence of teaching as early as 1096, making it the oldest university in the English-speaking world and the List of oldest un ...

as a

Rhodes Scholar The Rhodes Scholarship is an international Postgraduate education, postgraduate award for students to study at the University of Oxford in Oxford, United Kingdom. The scholarship is open to people from all backgrounds around the world. Esta ...

, and received a B.A./M.A. in mathematics in 1968. Spence then began graduate studies in economics at Harvard University with the support of a Danforth Graduate Fellowship in the fall of 1968. He received a Ph.D. in economics in 1972, completing a dissertation titled "Market signalling" under the supervision of

Kenneth Arrow Kenneth Joseph Arrow (August 23, 1921 – February 21, 2017) was an American economist, mathematician and political theorist. He received the John Bates Clark Medal in 1957, and the Nobel Memorial Prize in Economic Sciences in 1972, along with ...

and Thomas C. Schelling. Spence was awarded the David A. Wells Prize for outstanding doctoral dissertation in 1972. He stepped down as Dean of the Stanford Graduate School of Business in 1999 and joined

Oak Hill Capital Partners Oak Hill Capital Partners is a private equity firm headquartered in New York City, with more than $19 billion of committed capital from entrepreneurs, endowments, foundations, corporations, pension funds and global financial institutions. Ro ...

. He is the Chairman of the Commission on Growth and Development, and a distinguished visiting fellow at the

Council on Foreign Relations The Council on Foreign Relations (CFR) is an American think tank focused on Foreign policy of the United States, U.S. foreign policy and international relations. Founded in 1921, it is an independent and nonpartisan 501(c)(3) nonprofit organi ...

. Spence joined the faculty of

on September 1, 2010. He joined the faculty of

SDA Bocconi School of Management SDA Bocconi School of Management (SDA standing for Scuola di Direzione Aziendale) was founded in 1971 and is the graduate business school of Bocconi University in Milan and Rome, Italy. SDA Bocconi is Triple accreditation, triple accredited by t ...

in Italy in July 2011. He is a senior fellow at

Stanford University Leland Stanford Junior University, commonly referred to as Stanford University, is a Private university, private research university in Stanford, California, United States. It was founded in 1885 by railroad magnate Leland Stanford (the eighth ...

Hoover Institution The Hoover Institution (officially The Hoover Institution on War, Revolution, and Peace and formerly The Hoover Institute and Library on War, Revolution, and Peace) is an American public policy think tank which promotes personal and economic ...

and the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business. Spence is also a Commissioner for the Global Commission on Internet Governance. Additionally, Spence is also a member of the

Berggruen Institute The Berggruen Institute is a Los Angeles-based think tank founded by Nicolas Berggruen. History Berggruen Institute was formed in 2010 by founder Nicolas Berggruen and co-founder Nathan Gardels as a global network of "thinkers" dedicated to ...

's 21st Century Council. He is the author of three books and 50 articles, and has also been a consistent contributor to '' Project Syndicate'', an international newspaper syndicate, since 2008. Among his beliefs are that

high-frequency trading High-frequency trading (HFT) is a type of algorithmic trading in finance characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools.Lin, Tom C. W. " ...

should be banned. Spence had both

Bill Gates William Henry Gates III (born October 28, 1955) is an American businessman and philanthropist. A pioneer of the microcomputer revolution of the 1970s and 1980s, he co-founded the software company Microsoft in 1975 with his childhood friend ...

and

Steve Ballmer Steven Anthony Ballmer (; March 24, 1956) is an American businessman and investor who served as chief executive officer of Microsoft from 2000 to 2014. He is the owner of the Los Angeles Clippers of the National Basketball Association (NBA). He i ...

in a graduate-level economics class at Harvard. In a 1999 ''Fortune'' interview, however, Gates and Ballmer admitted not attending class and passing only after cramming for four days before the final.

Honors and awards

Spence is an Honorary Fellow of

Magdalen College, Oxford Magdalen College ( ) is a Colleges of the University of Oxford, constituent college of the University of Oxford. It was founded in 1458 by Bishop of Winchester William of Waynflete. It is one of the wealthiest Oxford colleges, as of 2022, and ...

, where he studied as a

. He was the recipient of the Nobel Memorial Prize in Economic Sciences in 2001, as well as 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 ...

from the American Economics Association in 1981. Spence was elected as a Fellow of the

Econometric Society The Econometric Society is an international society of academic economists interested in applying statistical tools in the practice of econometrics. It is an independent organization with no connections to societies of professional mathematicians o ...

in 1976 and a member of the

American Academy of Arts and Sciences The American Academy of Arts and Sciences (The Academy) 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, and other ...

in 1983.

Selected works

* * *

Personal life

Spence currently lives in

Milan Milan ( , , ; ) is a city in northern Italy, regional capital of Lombardy, the largest city in Italy by urban area and the List of cities in Italy, second-most-populous city proper in Italy after Rome. The city proper has a population of nea ...

Italy Italy, officially the Italian Republic, is a country in Southern Europe, Southern and Western Europe, Western Europe. It consists of Italian Peninsula, a peninsula that extends into the Mediterranean Sea, with the Alps on its northern land b ...

with his wife and children.

References

External links

Michael Spence
Senior Fellow at

* including the Prize Lecture December 8, 2001 ''Signaling in Retrospect and the Informational Structure of Markets'' *
Profile
an

at

Research Papers in Economics Research Papers in Economics (RePEc) is a collaborative effort of hundreds of volunteers in many countries to enhance the dissemination of research in economics. The heart of the project is a decentralized database of working papers, preprints, ...