William Vickrey
William Vickrey | |
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Born | Victoria, British Columbia, Canada | 21 June 1914
Died | 11 October 1996 | (aged 82)
Nationality | Canadian |
Education | Yale University (BS) Columbia University (MA, PhD) |
Academic career | |
Field | Social choice theory and mechanism design |
Institution | Columbia University |
School or tradition | Georgist |
Doctoral advisor | Carl Shoup Robert M. Haig |
Doctoral students | David Colander Jacques Drèze |
Influences | Henry George Harold Hotelling John Maynard Keynes |
Contributions | Vickrey auction Revenue equivalence theorem Congestion pricing |
Awards |
|
Information at IDEAS / RePEc |
William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American professor of economics and Nobel Laureate. He was a lifelong faculty member at Columbia University . A theorist who worked on public economics and mechanism design, Vickrey primarily discussed public policy problems. He originated the Vickrey auction, introduced the concept of congestion pricing in networks, formalized arguments for marginal cost pricing, and contributed to optimal income taxation. James Tobin described him as "an applied economist’s theorist, as well as a theorist’s applied economist.”[1]
Vickrey was awarded the 1996 Nobel Memorial Prize in Economic Sciences with James Mirrlees for their research into the economic theory of incentives under asymmetric information. Vickrey never personally received the Prize; it was announced just three days prior to his death.
Early years
[edit]Vickrey was born in Victoria, British Columbia to Charles Vernon Vickrey, a Congregationalist minister, and Ada Eliza Spencer. The family moved to New York City in William's childhood, where his father was General Secretary of the American Committee for Armenian and Syrian Relief, one of the nation's first humanitarian assistance organizations.[2]
Vickrey attended high school at Phillips Academy in Andover, Massachusetts. After obtaining his B.S. in Mathematics at Yale University in 1935, he went on to complete his M.A. at Columbia University in 1937. He stayed at Columbia for a PhD, which he completed 1948 with a 500-page dissertation entitle "An Agenda for Progressive Taxation."[1] Vickrey's doctoral work was interrupted by World War II, when he was enlisted to work for the U.S. National Resources Planning Board and later the Treasury Department's Division of Tax Research.[2]
Career
[edit]Vickrey remained at Columbia for his entire career. His students included the economists Jacques Drèze, Harvey J. Levin,[3] and Lynn Turgeon.[4]
Contributions
[edit]Vickrey was the first to use the tools of game theory to explain the dynamics of auctions.[5] In his seminal paper, Vickrey derived several auction equilibria, and provided an early revenue-equivalence result. The revenue equivalence theorem remains the centrepiece of modern auction theory. The Vickrey auction is named after him.[5]
Vickrey worked on congestion pricing, the notion that roads and other services should be priced so that users see the costs that arise from the service being fully used when there is still demand.[6][7][8][9] Congestion pricing gives a signal to users to adjust their behavior or to investors to expand the service in order to remove the constraint. The theory was later partially put into action in London.
In public economics, Vickrey extended the marginal cost pricing approach of Harold Hotelling and showed how public goods should be provided at marginal cost.[10] He contended that efficient funding for public utilities and transportation systems required short-run marginal pricing, or pricing responsive to current demand.[1]
Alongside marginal cost pricing, Vickrey argued that the land value tax was necessary to efficiently fund city services. He wrote that replacing taxes on production and labor ("including property taxes on improvements") with fees for holding valuable land sites "would substantially improve the economic efficiency of the jurisdiction".[11] Vickrey further argued that land value tax had no adverse effects and that replacing existing taxes in this way would increase local productivity enough that land prices would rise instead of fall. He also made an ethical argument for Georgist value capture, noting that owners of valuable locations still take (exclude others from) local public goods, even if they choose not to use them, so without land value tax, land users have to pay twice for those public services (once in tax to government and once in rent to holders of land title).[12]
Vickrey's economic philosophy was influenced by John Maynard Keynes and Henry George.[13] He was sharply critical of the Chicago school of economics and was vocal in opposing the political focus on achieving balanced budgets and fighting inflation, especially in times of high unemployment. Working under General MacArthur, Vickrey helped accomplish radical land reform in Japan.[14]
Nobel Prize award and death
[edit]Vickrey's Nobel Prize in Economics was announced on October 8, 1996. He became the only Nobel laureate born in British Columbia.
Vickrey died three days later while traveling to a conference of Georgist academics that he helped found.[15][16] His Columbia University economics department colleague C. Lowell Harriss accepted the posthumous prize on his behalf. There are only three other cases where a Nobel Prize has been presented posthumously: Erik Axel Karlfeldt (Literature 1931), Dag Hammarskjöld (Peace 1961) and Ralph Steinman (Physiology or Medicine 2011).[17]
Personal life
[edit]Vickrey married Cecile Thompson in 1951. He was a Quaker and a member of Scarsdale Friends Meeting.[18] He died in Harrison, New York in 1996 from heart failure.
Selected works
[edit]Articles
[edit]- Vickrey, William (1961). "Counterspeculation, Auctions, and Competitive Sealed Tenders". Journal of Finance. The paper originated auction theory, a subfield of game theory.
- –– (1963). "Pricing in Urban and Suburban Transport". American Economic Review. 53 (2): 452–465.
- –– (1963). "General and Specific Financing of Urban Service". In Shaller, H.G. (ed.). Public Expenditure Decisions in the Urban Community. pp. 62–90.
- –– (1969). "Congestion Theory and Transport Investment". American Economic Review. 59 (2): 251–260.
- –– (1977). "The City as a Firm". In Feldstein, Martin; Inman, Robert P (eds.). The Economics of Public Services. Palgrave Macmillan. pp. 334–343.
- –– (1968). "Automobile Accidents, Tort Law, Externalities, and Insurance, an Economists's Critique". Law and Contemporary Problems. 33: 464–487.
- Vickrey, William; Solow, Robert (1971). "Land Use in a Long, Narrow City". Journal of Economic Theory. 3 (4): 430–447. doi:10.1016/0022-0531(71)90040-8.
Essays
[edit]- –– (1950). "Ethics and Economics: An Exchange of Questions between Economics and Philosophy". In Ward, A.D. (ed.). Goals of Economic Life. pp. 148–77.
- "Fifteen Fatal Fallacies of Financial Fundamentalism: A Disquisition on Demand Side Economics". October 5, 1996.
Textbooks
[edit]- –– (1964). Microstatics. Harcourt, Brace & World.
- –– (1964). Metastatics and Macroeconomics. Harcourt, Brace & World.
Collected works
[edit]- Arrow, Kenneth Joseph; Arnott, Richard J.; Atkinson, Anthony A.; Drèze, Jacques, eds. (1997). Public Economics: Selected Papers by William Vickrey. Cambridge, UK: Cambridge University Press. ISBN 978-0-521-59763-0.
See also
[edit]References
[edit]- ^ a b c Arnott, Richard (February 1998). "William Vickrey; Contributions to Public Policy" (PDF). International Tax and Public Finance. 5: 95–113.
- ^ a b Read, Colin (2016). The Public Financiers: Ricardo, George, Clark, Ramsey, Mirrlees, Vickrey, Wicksell, Musgrave, Buchanan, Tiebout, and Stiglitz. Springer.
- ^ "Harvey J. Levin".
- ^ "Lynn Turgeon". The New York Times. 16 March 1999.
- ^ a b Vickrey, William (1961). "Counterspeculation, Auctions, and Competitive Sealed Tenders". Journal of Finance.
- ^ "Nobelist William S. Vickrey: Practical Economic Solutions to Urban Problems". Columbia University. 1996-10-08. Retrieved 2009-03-27.
- ^ Daniel Gross (2007-02-17). "What's the Toll? It Depends on the Time of Day". The New York Times. Retrieved 2008-07-15.
- ^ Litman, Todd (1992). "Principles of Efficient Congestion Pricing – William Vickrey". Victoria Transport Policy Institute. Victoria Transport Policy Institute. Retrieved 2009-03-10.
- ^ Harford, Tim (13 November 2019). "Is surge pricing a fair way to manage demand?". BBC News.
- ^ Gaffney, Mason (14 May 1998). Red-Light Taxes and Green-Light Taxes. Sharing Our Common Heritage: Resource Taxes and Green Dividends. Mansfield College, Oxford.
Georgists need to introspect deeply over this case, and many like it, and master the theory and practice of marginal-cost pricing as developed so ably by closet Georgist economists like Harold Hotelling and William Vickrey
- ^ Vickrey, William. "The Corporate Income Tax in the U.S. Tax System, 73 TAX NOTES 597, 603 (1996). Quote: "Removing almost all business taxes, including property taxes on improvements, excepting only taxes reflecting the marginal social cost of public services rendered to specific activities, and replacing them with taxes on site values, would substantially improve the economic efficiency of the jurisdiction."
- ^ Vickrey, William. Remarks at The Henry George School of New York, 1993. http://www.cooperative-individualism.org/land-question_t-z.htm
- ^ Turgeon, Lynn. Bastard Keynesianism : the evolution of economic thinking and policymaking since World War II. Westport, Conn: Praeger, 1997
- ^ Gaffney, Mason. The corruption of economics. London: Shepheard-Walwyn in association with Centre for Incentive Taxation, 2006 http://masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf
- ^ Netzer, Dick (November 1996). "Remembering William Vickrey". Land Lines. Vol. 8, no. 6. Retrieved 2 September 2016.
- ^ Gaffney, Mason. "Warm Memories of Bill Vickrey". Land & Liberty. Retrieved 15 November 2016.
- ^ "Nobel Prize facts". The Nobel Prize. Retrieved 18 September 2023.
Section Posthumous Nobel Prizes
- ^ "William Vickrey - Biographical".
Further reading
[edit]- Arnott, Richard (February 1998). "William Vickrey; Contributions to Public Policy" (PDF). International Tax and Public Finance. 5: 95–113.
- Richard Arnott; Anthony B. Atkinson; Kenneth Arrow; Jacques H. Drèze, eds. (1994). Public Economics; Selected Papers by William Vickrey. Cambridge University Press. ISBN 9780521454391.
- Warsh, David (14 October 1996). "Laureate's untimely death a 'cosmic ripoff'". Chicago Tribune. Retrieved 18 September 2023.
External links
[edit]![](http://upload.wikimedia.org/wikipedia/commons/thumb/f/fa/Wikiquote-logo.svg/34px-Wikiquote-logo.svg.png)
- William Vickrey on Nobelprize.org
- IDEAS/RePEc
- "William S. Vickrey (1914–1996)". The Concise Encyclopedia of Economics. Library of Economics and Liberty (2nd ed.). Liberty Fund. 2008.
- "William Vickrey". JSTOR.
- Jacques H. Dreze, "William S. Vickrey", Biographical Memoirs of the National Academy of Sciences (1998)
- 1914 births
- 1996 deaths
- Economists from New York (state)
- Georgist economists
- American Quakers
- American Protestants
- Canadian economists
- Canadian emigrants to the United States
- Nobel laureates in Economics
- Columbia University faculty
- Columbia University alumni
- Yale College alumni
- People from Victoria, British Columbia
- Canadian Nobel laureates
- Posthumous Nobel laureates
- People from Hastings-on-Hudson, New York
- 20th-century American economists
- 20th-century Quakers
- Fellows of the Econometric Society
- Presidents of the American Economic Association
- Distinguished Fellows of the American Economic Association
- Members of the United States National Academy of Sciences