Kenneth J. Arrow ruled the world of economics during the twentieth century. He is one of the most distinguished economists of that period who had made significant contributions in the field of economics. He is considered to be one of the primary architects of the Theory of Neo-Walrasian General Equilibrium. He is the receiver of the Nobel Prize in 1972 along with John Hicks and happens to be the youngest person to receive the award.
Life, Education and Career
Kenneth J. Arrow graduated from the Townsend Harris School and obtained his Bachelor’s degree from the City College in New York in 1940. He is considered to be a product of the USA society as he acquired all his education from within the country. He completed his Master’s degree in 1941 from Columbia University and his PhD degree from the University of Chicago in 1951. At that time he was also holding the post of Assistant Professor in Economics.
Presently he is holding the designation of Joan Kenney professor of Economics and also the professor of Operations Research, Emeritus at the Stanford University. He is the founder of the Pontifical Academy of Social Sciences. He has been ruling the economic kingdom for the last 50 years. He happens to be a trustee of the Economists For Peace and Security.
Contribution to Economics
His most significant contribution in the field of economics includes his contribution to Social Choice Theory, Arrow’s Impossibility Theorem, and General Equilibrium. He had also done research on Endogenous Growth Theory and Economics of Information. His main theories are:
Arrow’s Impossibility Theorem- the theorem has serious implications on welfare economics and theories of justice. This was extensively worked over by Amartya Sen to the liberal paradox, which lay down that in a status of ‘Minimal Liberty’ Pareto optimality couldn’t be achieved.
General Equilibrium Theory- the theory proves that a market clearing equilibrium exists. Bu this can be achieved only when there are certain restrictive assumptions made. He also dealt with the other issues relating to this theory like the factor of uncertainty, stability of the equilibrium, and the efficiency of the competitive equilibrium.
Endogenous Growth Theory- the theory explains the source of technical change, that is a key driver of economic growth. The formulation of this theory triggered a comprehensive research into the endogenous growth theory. Before the theory was been propounded there was no explanation available as to why technical change. Endogenous Growth Theory offered reasons to why the firms innovate.
He had also developed a paper on the medical aspect of market transaction. He addressed the issue for medical care in the market since there is asymmetry of information in the markets. The sellers usually have more information on the product than the buyers. Therefore they can cheat the buyers. Arrow had analyzed the medical issue pertaining this market asymmetry of information.
Awards Received by Arrow
Kenneth J. Arrow had received many awards as a token of recognition of his work. They are:
National Medal of Science in 2004
Von Neumann Theory Prize in 1986
John Bates Clark Medal in 1957
Nobel Prize in Economics in 1972
Major Works of Arrow
He has written a number of books on economic theories. Some of them are:
Bayes and Minimax Solutions of Sequential decision Problems
Optimal Inventory Policy
Existence of an Equilibrium for a Competitive Economy
Reduction of Constrained Maxima to Saddle Point Problems