My mother’s brother, the
Nobel economist Kenneth Arrow, died this week at the age of 95. He was a dear man and a hero to me and
many others. No one else I have ever known so embodied the scholarly
life well lived.
I remember like
yesterday the moment when Kenneth won the Nobel Prize in 1972. Paul
Samuelson—another Nobel economist and, as it happens, also my uncle—hosted a
party in his honor, to which I, then a sophomore at MIT, was invited. It was a
festive if slightly nerdy occasion.
As the night
wore on, Paul and Kenneth were standing in a corner discussing various theorems
in mathematical economics. People started leaving. Paul’s wife was looking
impatient. Kenneth’s wife, my aunt Selma, put her coat on, buttoned it and
started pacing at the door. Kenneth raised something known as the maximum
principle and the writings of the Russian mathematician Pontryagin. Paul began
a story about the great British mathematical economist and philosopher Frank
Ramsey. My ride depended on this
conversation ending, so I watched alertly without understanding a word.
But I did understand this: There were two people
in the room who had won Nobel Prizes. They were the two people who, after
everyone else was exhausted and heading home, talked on and on into the evening
about the subject they loved. I learned that night about my uncles—about
their passion for ideas and about the importance and excitement of what
scholars do.
Kenneth’s
writings resolved age-old questions and opened up vast new areas for others to
explore. He likely was the most important economic theorist of the second half
of the 20th century.
Is there a
voting system that can be relied on to distill the will of a group of people?
Many mathematicians have theorems named after them. Arrow’s impossibility
theorem regarding voting and combining preferences is the only theorem I know
of that is named for an economist.
Drawing upon
mathematical logic, it shows that there is no possible voting scheme that can
consistently and sensibly reflect the preferences of a set of individuals with
diverse views. Any scheme that could ever be invented will be at risk of
perverse outcomes, where, for example, the choice between options A and B is
affected by the presence or absence of option C; or where a vote switch by one
person toward option A makes it less likely to prevail. Mathematical and
abstruse it was. But it also explained why committees have so much trouble
coming to consistent conclusions and why, with an increasingly polarized
electorate, democracy can become increasingly dysfunctional.
Economists have been drawn to Adam Smith’s idea of
the “invisible hand” for hundreds of years. But until Kenneth drew on the
techniques of topology (that is, the study of geometric properties and spatial
relations), no one had ever been able to establish precise conditions under
which there would be prices that would clear all markets, or under which one
could assume that the market outcome was optimal. Writing in the early 1950s,
he clarified the very specific conditions under which market outcomes were for
the best and, of equal importance, the far more general conditions under which
public interventions in markets had the potential to make things better.
For the rest of
his life, Kenneth explored these conditions, writing articles on topics ranging
from health insurance to public investment policy to economic growth to the
limits of organizations. It is hard to imagine what economics would be like
today without his contributions.
I saw him every
Thanksgiving for the past 49 years with the extended family that he loved. In a
family of professors, the conversation ranged widely. Save for the NFL, there
was no topic—from politics to music, from classics to physics—on which Kenneth
was not infinitely curious and apparently omniscient.
Kenneth knew
more about everything than most know about anything, but he never flaunted his
intelligence. It was another lesson for me when, many years ago, a paper was
published correcting a famous analysis published by one of Kenneth’s teachers.
At the time, it created a stir. I asked him what he thought. He said quietly
that he had known of the error for decades, but such was his respect for his
teacher that he did not publish his insight.
Rest in peace, gentle genius.
