Contributors to the Economic History of Thought
Smith Scholar
Edmund Phelps (by John Fritz)
Edmund Phelps is the recipient of the 2006 Nobel Prize in Economics.
Phelps’s early research focused on microeconomics and was published in Microeconomic Foundations of Employment and Inflation Theory in 1970. Over the course of his career, however, Phelps has made significant contributions in macroeconomics. Phelps has challenged some Keynesian theories about the long-term effects of monetary changes on employment and about the existence of a natural rate of unemployment.
Throughout the last two decades, Phelps has centered his research on the factors that allow economies to grow, to be successful, or in Phelps’s words, to flourish. In his 2013 work Mass Flourishing, Phelps analyzed these factors and provided ideas about how nations such as the United States can create a more flourishing economy for all people. In recent presentations, Phelps has pointed to meager rates of return on investment, slow growth rates in national income and wages, and an increasing number of working-age people not taking part in the workforce as results of the decrease in “indigenous innovation” that Phelps finds so troubling. He contends that the economy depends on domestic innovation in various industries. Phelps believes that greater indigenous innovation leads to not only economic growth but also greater job satisfaction for the people of that nation. However, the United States and many other countries across the world have suffered a decrease in the rate of innovation compared to the early and middle twentieth century.
Phelps points to several reasons why this decrease in innovation has occurred. Among those reasons is the common fear of uncertainty that prevents many people from taking risks in the short term despite possible great benefits in the long run. He also claims that many individuals and corporations have lost their desire for competition. One major way that Phelps believes can lead to this increase is through education.
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John Nash (by Dee Cocoran)
Nash always dazzled the people around him with his simple game of math which he played in the common room of Princeton, but he would dazzle even more than he realized when he came up with what is now known as the Nash Equilibrium.
The Nash Equilibrium is the basic model that economists use to predict the outcome of strategic interactions and decisions.
The equilibrium is a list of actions for each decision-maker that results in the best outcome, given the actions of others.
He published the Equilibrium Point Proof in 1950 when he was 21 years old. This work contained a 2-page proof for the Equilibrium Points in N-Person Games.
The correlation between Game Theory and Economics at the time was not established. His contributions to Game Theory would ultimately be his contributions to Economics. Game Theory is concerned with situations where there is human conflict which is affected by decisions that interact with each other.
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Vernon Smith (by Noelle Ullery)
Vernon Smith’s work on the farm-inspired him to learn about how things work, leading him to behavioral economics.
Smith has been an economics and law professor at George Mason University, as well as a board member at the Mercatus Center, Cato Institute, and AEA.
He was awarded the Nobel Prize in Experimental Economics in 2002 for his microeconomic theory contributions.· He created laboratory experiments in economics and furthered the understanding of economic behavior. His experiments would be useful in empirical analysis, specifically with the study of alternative market mechanisms.
He was a pioneer in property rights, experimental economics, and consumer behavior.
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Robert Solow (by Sophia Grimes)
Grew up during the Great Depression; this is where his interest in economics started.
Solow contributed the Neoclassical Growth Theory. A progressive model that incorporated the idea that technological progress can contribute to aggregate growth.
Solow argued that much of growth is intangible.
Along with Samuelson and Modigliani, he helped to create the MIT Economics department that is one of the most prestigious programs in the world.
Elinor Ostrom (by Gabby Salazar)
First woman to win a Nobel Prize in Economic Sciences (2009).
Her research showed that sharing of natural resources did not necessarily cause over-exploitation, which was unanimously agreed.
Over time, people form rules so everyone uses the joint resources in a manner that is sustainable, both economically and ecologically.
Different than mainstream economist methodology, her research was based on case studies and applied rational choice theory.
Opposed top-down government approach and advocated for dispersed decision centers, as well as some form of a property rights system for the organization.
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Esther Duflo (By Emma Falci)
Esther Duflo is the Editor of the American Economic Review and has earned numerous academic awards and prizes. She won the Nobel Prize in 2019 with her colleagues Banerjee and Kremer, and she is the second woman and the youngest ever winner to have the Nobel in her field.
With Banerjee, she wrote Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty and Good Economics for Hard Times in 2019.
Along with Abhijit Banerjee, Esther Duflo, and Michael Kremer, she introduced a new method of developing solutions to fight global poverty. This method consists of taking large issues and dividing it into smaller, more manageable questions.
She is a director and co-founder for J-PAL (Abdul Latif Jameel Poverty Action Lab), where she tries to understand the economic lives of the poor to design social policies. J-PAL has affected policy all over the globe; the organization has over 400 researchers, and she has determined that over 400 million people have been affected by their policies.
Overall, her methods focus on the small details rather than answering the “big questions” of economics. Duflo and her husband performed a field study where they determined that vaccination rates tripled in rural India when there was wide access to mobile clinics with reliable staff. However, this number was even greater where families received a kilo of lentils for each immunization.
Overall, they determined the power of “small non-financial incentives in changing behavior.” Duflo and Banerjee also determined that tutoring helps children better than cutting class sizes. They have also determined that microcredits are not as helpful as many economists believe, which is one of their most controversial statements.
Because of her many successful experiments, policymakers are more willing to run trials on her ideas on a larger scale.
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Paul Romer (Michael Kilcullen)
Won the 2018 Nobel Prize along with William Nordhaus, for his work on endogenous growth theory, which proposes that endogenous factors (like new ideas and innovation) are the driving forces behind economic progress.
Romer argued that knowledge and ideas are able to produce sustainable economic growth because they are infinite and long-lasting. He argued that investment in human capital does not have to be in research and development.
He believed that investment in knowledge will create a competitive environment and eventually lead to a societal gain.
Link: Paul Romer
Robert Fogel (by Nick Pracht)
An economic historian who believed that knowledge of the past was crucial in forecasting the future economy.
Utilized cliometrics in his work, applying statistical analysis to the study of history.
His work, Railroads and American Economic Growth, showed that railroads were not necessary for achieving economic growth.
Won the 1993 Nobel Prize in Economics for combining quantitative analysis and history to understand economics.
Thomas Sowell (by Jimmy Birch)
He is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University.
Sowell has held faculty positions at Cornell University and UCLA.
He has written more than thirty books.
He was awarded the National Humanities Medal recipient for an innovative scholarship that incorporated history, economics, and political science.
Proponent of the view that the free market is essential to American prosperity and that markets should be influenced by the consumers, not government interference.
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