Joseph E. Stiglitz - Development is about transforming the lives of people, not just transforming economies

December 4, 2009Economistsby

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Professor Joseph E. Stiglitz is an eminent American economist whose contribution to economics has not only enriched the subject but has also helped improve the economy of various countries. His remarkable achievement in the field of globalization speaks volumes about the man’s dedication, intelligence and conviction towards his subject.

Joseph E. Stiglitz was born in 1943 in Gary, Indiana. A highly perceptive student, Stiglitz completed his graduation from Amherst College in 1963 and went ahead to receive his Doctorate degree from the Massachusetts Institute of Technology. In between, he also pursued his research work in Chicago University under Hirofumi Uzawa and was a Fulbright scholar at the University of Cambridge from 1965-66.

Stiglitz with his knowledge and analytical skills pioneered a new branch of economics known as the “Economics of Information”. In this study, he applied the concept of ‘information asymmetry’, ‘adverse selection’, ‘moral hazard’ and explored its market application. These form an integral part of the theory and also finds relevance in the analysis of polices. According to Stiglitz, there is no “invisible hand” but government intervention is required to achieve a state of welfare economy. The "Pareto Efficient" condition cannot be achieved in any economy since the information on which the market transactions take place is not always perfect.

Another concept championed by Stiglitz is known as the “Efficiency Wage" theorem. To explain the prevalence of unemployment, Stiglitz first hypothesised a situation where all the workers receive market wages and there is no unemployment. Hence there is no penalty involved in shirking the job on the part of the workers. The workers in the case of job loss would be immediately rehired. So in order to stop shirking of jobs, firms pay wages above the market wage. It is obvious that unemployment would prevail at this level. As one firm increases the wage level, the other firms would follow suit . So the workers do not have any motivation for not shirking but bears the penalty of being unemployed for shirking, a situation that was not prevalent in the full employment equilibrium.

Awards

John Bates Clark Medal in 1979
Nobel Prize for Economics in 2001

Major Publications by Joseph E Stiglitz

Making Globalization Work
Fair Trade for All
Towards a New Paradigm in Monetary Economics
The Rebel Within
Principal of Microeconomics
Principal of Macroeconomics

The revolutionary economist is presently associated with the Columbia Business School, the Graduate School of Arts and Sciences (economics department), the School of International and Public Affairs as a teaching faculty. He is also a co-founder and President of initiative for Policy Dialogue. He is presiding over Columbia University’s Committee on Global Thought and Chairman of the Management Board and Director of Graduate Summer Programs, Brooks World Poverty Institute in the Manchester University.

His previous appointments include professorships at various universities, including Yale University, Oxford University, Duke University, Princeton University and Stanford University. Stiglitz was a member of the Clinton President’s Council of Economic Advisors from 1995-97 and held the position of Senior Vice President and Chief Economist at the World Bank during 1997-2000.

Books by Joseph E Stiglitz

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