Kenneth J. Arrow (born August 23, 1921) is an American economist and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972. To date, he is the youngest person to have received this award, at 51. In economics, he is considered an important figure in post-World War II neo-classical economic theory. Many of his former graduate students have gone on to win the Nobel Memorial Prize themselves. Ken Arrow’s impact on the economics profession has been tremendous. For more than fifty years he has been one of the most influential of all practicing economists.
He is currently the Joan Kenney Professor of Economics and Professor of Operations Research, Emeritus at Stanford University. He is also a founding member of the Pontifical Academy of Social Sciences. He is a trustee of Economists for Peace and Security. was a convening lead author for the
Intergovernmental Panel on Climate Change. He is also Editor of the Annual Review of Economics. His most significant works are his contributions to social choice theory, notably “Arrow’s impossibility theorem”, and his work on general equilibrium analysis. He has also provided foundational work in many other areas of economics, including endogenous growth theory and the economics of information.
He graduated from Townsend Harris High School in 1936 and then earned a Bachelor’s degree from the City College of New York in 1940 in mathematics. At Columbia University, he received a Master’s degree in 1941. From 1946 to 1949 he spent his time partly as a graduate student at Columbia and partly as a research associate at the Cowles Commission for Research in Economics at the University of Chicago. During that time he also held the rank of Assistant Professor in Economics at the University of Chicago. In 1951 he earned his Ph.D. from Columbia.
In other pioneering research, Arrow investigated the problems caused by asymmetric information 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 and third party authentication, 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.
He was one of the recipients of the 2004 National Medal of Science, 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.
Arrow is brother to the economist Anita Summers, uncle to economist (and former U.S. Treasury Secretary) Larry Summers, and brother-in-law of the economist Robert Summers.