Kenneth Joseph Arrow (August 23, 1921 – February 21, 2017) was an American economist, mathematician and

political theorist A political theorist is someone who engages in constructing or evaluating political theory, including political philosophy. Theorists may be academics or independent scholars. Ancient * Aristotle * Chanakya * Cicero * Confucius * Mencius * ...

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

in 1972, along with

John Hicks Sir John Richard 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 economics ...

. In economics, Arrow was a major figure in postwar neoclassical economic theory. Four of his students (

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 ...

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 d ...

John Harsanyi John Charles Harsanyi (; May 29, 1920 and August 9, 2000) was a Hungarian-American economist who spent most of his career at the University of California, Berkeley. He was the recipient of the Nobel Memorial Prize in Economic Sciences in 1994. ...

, 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. Kn ...

) went on to become Nobel laureates themselves. His contributions to

social choice theory Social choice theory is a branch of welfare economics that extends the Decision theory, theory of rational choice to collective decision-making. Social choice studies the behavior of different mathematical procedures (social welfare function, soc ...

, notably his " impossibility theorem", 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 ov ...

analysis are significant. His 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 economic ...

and the economics of information, was also foundational.

Education and early career

Arrow was born on August 23, 1921, in New York City. Arrow's mother, Lilian (Greenberg), was from

Iași Iași ( , , ; also known by other #Etymology and names, alternative names), also referred to mostly historically as Jassy ( , ), is the Cities in Romania, third largest city in Romania and the seat of Iași County. Located in the historical ...

, Romania, and his father, Harry Arrow, was from nearby Podu Iloaiei. The family was of Romanian-Jewish descent, and very supportive of Kenneth's education. Growing up during the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

, 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 Townsend Harris High School (THHS; often also shortened to Townsend Harris or simply Townsend) is a public high school for the humanities in the New York City borough of Queens. It is located on the campus of Queens College, a public college p ...

and then earned a bachelor's degree in mathematics 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, public research university within the City University of New York (CUNY) system in New York ...

in 1940, where he was a member of

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

. He then attended

Columbia University Columbia University in the City of New York, commonly referred to as Columbia University, is a Private university, private Ivy League research university in New York City. Established in 1754 as King's College on the grounds of Trinity Churc ...

for graduate studies, obtaining a master's degree in mathematics in June 1941. At Columbia, 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 ...

, who influenced him to switch 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 was a graduate student at Columbia, and also worked as a research associate at the Cowles Commission. During that time he also was an

assistant professor Assistant professor is an academic rank just below the rank of an associate professor used in universities or colleges, mainly in the United States, Canada, Japan, and South Korea. Overview This position is generally taken after earning a doct ...

of economics at the

University of Chicago The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...

and worked at the

RAND Corporation The RAND Corporation, doing business as RAND, is an American nonprofit global policy think tank, research institute, and public sector consulting firm. RAND engages in research and development (R&D) in several fields and industries. Since the ...

in California. He left Chicago to become an acting assistant professor of economics and statistics 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 ...

. In 1951, he earned his PhD 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 resea ...

in the 1960s with

Robert Solow Robert Merton Solow, GCIH (; August 23, 1924 – December 21, 2023) was an American economist who received the 1987 Nobel Memorial Prize in Economic Sciences, and whose work on the theory of economic growth culminated in the exogenous growth ...

. In 1968, he left Stanford for

Harvard University Harvard University is a Private university, private Ivy League research university in Cambridge, Massachusetts, United States. Founded in 1636 and named for its first benefactor, the History of the Puritans in North America, Puritan clergyma ...

, where he was appointed Professor of Economics; 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 (, abbreviation: UNISI), located in Siena, Tuscany, holds the distinction of being Italy's first publicly funded university as well as one of the oldest, originally established as ''Studium Senese'' in 1240. As of 2022, it ...

. He was also a founding member of the Pontifical Academy of Social Sciences and a member of the board at the

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, inc ...

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

Churchill College, Cambridge Churchill College is a Colleges of the University of Cambridge, constituent college of the University of Cambridge in Cambridge, England. It has a primary focus on science, engineering and technology, but retains a strong interest in the arts ...

. 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 an ...

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

, and

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

Duke University Duke University is a Private university, private research university in Durham, North Carolina, United States. Founded by Methodists and Quakers in the present-day city of Trinity, North Carolina, Trinity in 1838, the school moved to Durham in 1 ...

Arrow's impossibility theorem

Arrow's monograph ''

Social Choice and Individual Values Kenneth Arrow's monograph ''Social Choice and Individual Values'' (1951; revised in 1963 and 2012) and a theorem within it created modern social choice theory, a rigorous melding of social ethics and voting theory with an economic flavor. Somew ...

'' derives from his 1951

PhD A Doctor of Philosophy (PhD, DPhil; or ) is a terminal degree that usually denotes the highest level of academic achievement in a given discipline and is awarded following a course of graduate study and original research. The name of the deg ...

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 field of economics that applies microeconomic techniques to evaluate the overall well-being (welfare) of a society. The principles of welfare economics are often used to inform public economics, which focuses on the ...

and theories of

justice In its broadest sense, justice is the idea that individuals should be treated fairly. According to the ''Stanford Encyclopedia of Philosophy'', the most plausible candidate for a core definition comes from the ''Institutes (Justinian), Inst ...

, and for voting theory (it extends the

Condorcet paradox In social choice theory, Condorcet's voting paradox is a fundamental discovery by the Marquis de Condorcet that majority rule is inherently self-contradictory. The result implies that it is logically impossible for any voting system to guarante ...

). Following Arrow's logical framework,

Amartya Sen Amartya Kumar Sen (; born 3 November 1933) is an Indian economist and philosopher. Sen has taught and worked in England and the United States since 1972. In 1998, Sen received the Nobel Memorial Prize in Economic Sciences for his contributions ...

formulated the liberal paradox which argued that given a status of "Minimal Liberty" there was no way to obtain

Pareto optimality In welfare economics, a Pareto improvement formalizes the idea of an outcome being "better in every possible way". A change is called a Pareto improvement if it leaves at least one person in society better off without leaving anyone else worse ...

, 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 Lionel Wilfred McKenzie (January 26, 1919 – October 12, 2010) was an American economist. He was the Wilson Professor Emeritus of Economics at the University of Rochester. He was born in Montezuma, Georgia. He completed undergraduate studies at ...

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 or incertitude refers to situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown, and is particularly relevant for decision ...

, the

stability Stability may refer to: Mathematics *Stability theory, the study of the stability of solutions to differential equations and dynamical systems ** Asymptotic stability ** Exponential stability ** Linear stability **Lyapunov stability ** Marginal s ...

. His contributions to the general equilibrium theory were influenced by

Adam Smith Adam Smith (baptised 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the field of political economy and key figure during the Scottish Enlightenment. Seen by some as the "father of economics"——— or ...

's ''

Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', usually referred to by its shortened title ''The Wealth of Nations'', is a book by the Scottish people, Scottish economist and moral philosophy, moral philosopher Adam Smith; ...

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

economic growth In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...

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 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 Seidner University Professor in Finance at Boston College. Romer is best known as the former Chief Economist of the World Bank and for co- ...

's 1986 paper, borrowing from Arrow's 1962 " learning-by-doing" model which introduced a mechanism to eliminate

diminishing returns In economics, diminishing returns means 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 ('' ceter ...

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, mechanism design, and economics, an information asymmetry is a situation where one party has more or better information than the other. Information asymmetry creates an imbalance of power in transactions, which can sometimes c ...

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 law, a warranty is an expressed or implied promise or assurance of some kind. The term's meaning varies across legal subjects. In property law, it refers to a covenant by the grantor of a deed. In insurance law, it refers to a promise by the ...

and third party

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

, 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

in 1957 and was elected a Fellow 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 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, NGO, 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 ...

and the

American Philosophical Society The American Philosophical Society (APS) is an American scholarly organization and learned society founded in 1743 in Philadelphia that promotes knowledge in the humanities and natural sciences through research, professional meetings, publicat ...

. 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 science, behavior ...

, 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 from the University of Chicago (1967), the

University of Vienna The University of Vienna (, ) is a public university, public research university in Vienna, Austria. Founded by Rudolf IV, Duke of Austria, Duke Rudolph IV in 1365, it is the oldest university in the German-speaking world and among the largest ...

(1971) the

City University of New York The City University of New York (CUNY, pronounced , ) is the Public university, public university system of Education in New York City, New York City. It is the largest urban university system in the United States, comprising 25 campuses: eleven ...

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

Uppsala University Uppsala University (UU) () is a public university, public research university in Uppsala, Sweden. Founded in 1477, it is the List of universities in Sweden, oldest university in Sweden and the Nordic countries still in operation. Initially fou ...

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

Institute for Operations Research and the Management Sciences The Institute for Operations Research and the Management Sciences (INFORMS) is an international society for practitioners in the fields of operations research Operations research () (U.S. Air Force Specialty Code: Operations Analysis), often s ...

. In 2007 he was the first Witten Lecturer at the Witten/Herdecke University as the awardee of the Witten Lectures in Economics and Philosophy.

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 Lawrence Henry Summers (born November 30, 1954) is an American economist who served as United States Secretary of the Treasury from 1999 to 2001 and as the director of the National Economic Council from 2009 to 2010. He also served as presiden ...

, 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 "h ...

. 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 died in his

Palo Alto, California Palo Alto ( ; Spanish language, Spanish for ) is a charter city in northwestern Santa Clara County, California, United States, in the San Francisco Bay Area, named after a Sequoia sempervirens, coastal redwood tree known as El Palo Alto. Th ...

, home on February 21, 2017, at the age of 95.

Publications

* * ::Reprinted as: * * ::Also available as: ::and as: * * * * * ::Including: Arrow, Kenneth J. ''Price-quantity adjustments in multiple markets with rising demands'', pp. 3–15. * * * * Arrow also published an article, along with

Hollis B. Chenery Hollis Burnley Chenery (January 6, 1918 – September 1, 1994) was an American economist well known for his pioneering contribution in the field of development economics. Early life Chenery was born in Richmond, son of Christopher Chenery, a b ...

, Bagicha S. Minhas, and Robert M. Solow, pseudonymously under the name Archen Minsol, who it was claimed was at the (fictional) University of Lower Slobbovia. The publication produced was: .See page 236 in Düppe, T., & Weintraub, E. R. (2014). Finding equilibrium: Arrow, Debreu, McKenzie and the problem of scientific credit. Princeton University Press. * ::Reprinted as: ::Also reprinted as
pdf.
* * * * * ::Reprinted as: * * : :: :: :: :: :: :: * *
Book details.
* * * ::Also available online as: * ::Also available online as: * * * *

References

External links

Kenneth J. Arrow papers, 1921-2017

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 non-fiction 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 American 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 City Social scientists from New York City 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