The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2001
George A. Akerlof, A. Michael Spence, Joseph E. Stiglitz
I was born during the second World War in Montclair New Jersey. This was more or less an accident (the location that is). My father was based in Ottawa as a member of the War Time Prices and Trades Board, the Canadian version of wartime price controls. That work entailed frequent trips to Washington to coordinate with their American counterparts. New Jersey is more or less half way between the two capitals and my mother was visiting friends. So although I grew up in Canada during and after the war until leaving for college in the United States, I managed to also be an American by birth.
My father once said about being a parent that it is the only thing you do that requires a very long period of learning and at about the time that you are becoming competent, you don't need the skills anymore. Notwithstanding this modest assessment of their parenting skills, they were wonderful parents. My father was the son of the registrar of the University of Manitoba. He was an intellectual by instinct (he had a PhD from Northwestern University in Commerce and Finance) and in another time, might very well have chosen a career in academic life. I learned from him to love precision in thought, the power of abstraction and the use of symbols to capture structures and relationships. He was also a very good athlete and we spent a lot of time playing basketball, football, hockey, just about anything.
My mother was the only child of my grandparents, who lived in Minnesota at the time of her birth and later moved to Winnipeg. My grandfather was an engineer with the Canadian Pacific Railway. [For the younger generation, an engineer in those days was the person who drove the train.] My mother was strong-willed, demanding and very supportive all at the same time. I think I inherited from her a kind of tenacity (sometimes referred to as stubbornness) that served me well. It partially filled gaps when sheer intellectual horsepower (of which others had much more than I) proved insufficient.
The overall effect of my parents upbringing was to provide a great sense of security, being surrounded by love and affection, a great (perhaps too great) sense of self-confidence (there really weren't any challenges that were deemed beyond reach for any reason), and an equally great sense of intellectual adventure, a world populated by opportunities and challenges rather than obstacles and roadblocks. I don't have the professional expertise to know whether and how important these general frames of reference that one's parents impart, are. An amateur's guess based on my own experience is that they are important and I believe the sense of freedom and the confidence to try to use it were among our parents' greatest gifts to us.
I have included a time line that places events in my life and in my family's life generally in the right place and the right order. I hope that this has the advantage from the reader's point of view, that it is fairly easy to skim without using up much time, and also easy just to skip.
Next to my family, it seems clear to me that the educational institutions and the teachers from whom I had the privilege of learning, were especially important. They were (i) excellent and (ii) a liberating force. In looking back, what is surprising is how uniformly true this was. My middle and high school in Canada, UTS, attached to the College of Education at the University of Toronto, was for my American friends, not dissimilar to the Lab School at the University of Chicago. It was then and it still is excellent in two respects. The teaching achieved a very high average quality and topped out in the superlative range, and the students were without question in the same league. This combination that I have now seen (and even presided over in academic administration) several times strikes me as particularly potent.
I would also add that all of the schools and universities I attended seemed to me to be excellent at the time and in measurable ways they are even better now. This is really very encouraging. The combination of a workable basic formula and the capacity to improve over time is what one hopes for in any aspect of society: business, government, the non-profit sector. Thus the pattern of excellence was repeated at Princeton, Oxford and Harvard. There are probably many reasons for the high standards and the continuous improvement. One is the healthy synergy between teaching and research - the excitement of the research is transmitted to the learning process, and the energy and curiosity of the students produces new ideas in research. A second is competition. All of these institutions have very successful competitors who, with the help of vigilant alumnae and alumni, keep them constantly on their toes.
Teachers, colleagues and
Education is in the end about individual interactions and about learning. As someone who aspired to become a teacher and a scholar, it is hard for me now to imagine a better group of teachers and mentors and colleagues than those with whom I worked and learned.
The research side of academic life is often viewed from the outside as a solo and at times lonely activity. In fact it is quite the opposite, a communal activity in significant part where interaction and interchange generate ideas and critiques of them. The research for which we were recognized this year was part of an exciting time in which many helped build the applied microeconomic foundations of several applied fields. I personally owe a great debt to my colleagues and former students who were part of that effort. While it is not possible to acknowledge all those debts, there are many whose help was both generous and invaluable. Jim Rosse and Bruce Owen at Stanford in the 1970's helped me make the link between theory and industrial organization. Many of the problems that I had the opportunity to work on were the result of teaching and working side by side with them.
My thesis advisors are very different and very gifted. Kenneth Arrow taught me (and many others) mathematical economics and general equilibrium theory. When I took his course in general equilibrium theory, the take-home exam that I produced was lost. After a frightening phone call and a successful search for a copy, I rushed it in and waited while Ken read it, which he did (all twelve pages) at a rate of about 2 seconds a page. Now I have to say that there was a lot of mathematics on those pages. I just assumed that he wasn't really reading it, until he finished and then started asking me some detailed questions about the assumptions and analysis on page five. Describing Ken Arrow's contributions to economics in the second half of the 20th century would come quite close to just describing the evolution of economics during that period.
Tom Schelling, as all who studied with him knew, had an extraordinarily original mind. Unique in our experience was his capacity to analyze using carefully constructed analogies, with just the right number of similarities and differences. Many of my younger colleagues were motivated in the best possible way by normative and policy questions. I think I tended more to being just fascinated by how markets and mechanisms like them worked. A great deal of that interest and motivation came from hours spent with Tom Schelling. It could be tipping points, focal points, sorting out congestion on a beach with surfers and swimmers, deterrence. Schelling's curiosity seemed endless and his capacity to shed light remarkable.
Richard Zeckhauser saved me from exiting from academia prematurely, after perhaps too many years in classes and libraries. He started me teaching and tolerated with grace the first few embarrassing outings. I wrote my first paper with him on insurance markets, moral hazard and adverse selection. Richard's lightning quick mind was and is matched by the tremendous breadth of his interests and his intuitive grasp of complex phenomena. More than once I had the experience of having him tell me the answer to some complex market problem, my not completely understanding the answer, going away for a couple of weeks to try to capture it in a model, and deciding after that effort that he was right in the first place.
It is not uncommon for graduate students to be encouraged to pick something relatively safe or at least manageable as a thesis topic. Honestly, it is not bad advice. But I have to say that I never received advice like that, or if I did, I didn't hear it. In addition to their time and insight, I owe to my advisors their encouragement and support for grappling with the informational structure of markets, however risky that might have been.
I should like to acknowledge and thank Gilbert Harmon, Richard Ludwig and Robert Kuenne at Princeton University. They are largely responsible for my interest in philosophy and economics and for the interest I developed in trying scholarship and teaching as a career.
At UTS, Don Fawcett taught several generations of us about hard work, competing, winning and losing gracefully, and about the importance of trying to do something that makes a difference.
As one can tell from a glance at the autobiographical timeline, I have had two careers (first as teacher and scholar and then in academic administration) and with luck I am embarking on a third, though the last will in part be a return to the first. My colleagues and friends, Edward Lazear and Mark Wolfson have shared the excitement and the challenges in all three, and enriched the whole experience in ways that are hard to describe accurately.
As an administrator, I had the privilege of working with two associate deans, Phyllis Keller at Harvard and Paul Johnson at Stanford. These two served with and trained several deans, and had a lot to do with the sustained excellence in their respective faculties and schools.
Derek Bok, the President of Harvard for over 20 years, gave me the chance to be a dean and then used his legendary skills as a leader and educator to help me become competent at my job. Whether he succeeded in this is for others to judge, but with his patience and wisdom, he taught me much that I value greatly.
It has always struck me as ironic and wonderful that the most important parts of life, one's family, the unconditional love for one's spouse and children and the joy of seeing children learn and grow to wonderful human beings, are exactly those things that one shares with all the rest of humanity. Monica and I have had a wonderful ten years together. Our children (Monica's step children) Graham, Catherine and Marya have thrived with the continued support of their mother, Ann Bennett Spence. We all hope that as they enter adulthood, that the world that they will live and work in has as much freedom and opportunity as the one we enjoyed.
The Nobel Prize
It is a wonderful and unexpected honor to receive the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. Receiving this prize with Joseph Stiglitz and George Akerlof, whose work I have learned from and admired makes it even more gratifying. It was also very nice to see that Michael Rothschild's important contributions were recognized during Nobel week in December. And perhaps most importantly, it is a source of great satisfaction that the work on the informational structure of markets seems to have taken hold in microeconomics and that it has had some influence in other disciplines. The three of us, and many others, contributed to the development of this sub-field and all share in the recognition that goes with this extraordinary prize.
|Michael Spence brief autobiography|
|1943||Born Montclair New Jersey|
|1944||Brother Randy born in Ottawa|
|1946||Family moved to Winnipeg|
|1950||Moved to farm outside of Toronto - attended school in two room school house|
|1952||Moved to Toronto - attended John in Ross Robertson elementary school||Flunked first test in grammar grade 4|
|1953||Brother Allan born|
|1954||Built houses on our island in Georgian Bay (north of Toronto) in summers with Father and brothers|
|1955||Attended University of Toronto Schools (part of U of Toronto) in grade 7|
|1956||Played Pee Wee hockey for Ted's Pal's - 96 games - school suffered - chose school over hockey - never looked back|
|1961||Went to Europe for the first time - later took young people to Europe in the summers|
|1962||School Captain in last year in High School - Graduated from High School (UTS): went to Princeton University as a freshman - liberal arts not prevalent in Canada at the time||Met Cook family - roommate Steve, father Peter (portrait painter and freshman hockey coach) and mother Joan - became family friends|
|1963||Randy comes to Princeton - family dog David (a female springer spaniel - don't ask) dies|
|1964||Played ice hockey for Princeton for 4 years|
|1965||Brother Allan goes to UTS|
|1966||Graduated from Princeton||Majored in philosophy - met Ann Bennett in last year - received Canadian Rhodes Scholarship - went to Magdalen College Oxford - decided to try an academic career with encouragement from parents|
|1967||Majored in Mathematics at Oxford||Randy graduated from Princeton - went on to a PhD at University of Toronto focussing on Economic Development|
|1968||Graduated from Oxford - entered PhD program in Economica at Harvard in the fall - supported by Danforth Fellowship||Married Ann Bennett - recovered from mononucleosis - spend summer in Georgian Bay|
|1969||The Vietnam War dominated the environment for all of the time I spent in the PhD|
|1970||Rapporteur in Faculty Seminar in Kennedy School - included my thesis advisors, Thomas Schelling, Richard Zeckhauser and Kenneth Arrow||Wonderful teachers and mentors - owe a particular debt also to Martin Feldstein for his mentorship at that time|
|1971||Began teaching analytic methods at the Kennedy School of Government at Havard - it was one year old at the time||Summer spent at Berkeley in mathematical economics seminar - realized Andreu MasCollel knew more math than I|
|1972||Received PhD - received David A Wells prize for doctoral thesis||Wrote thesis call "Market Signaling" - seemed quite well received|
|1973||Moved to Stanford in the Economics Dept as Associate Professor - taught and did research in applied microeconomic theory and Industrial Organization||Ann enrolled in MBA at Stanford Business School - exciting group of young people in Economics - wonderful support from Bruce Owen and Jim Rosse getting into Industrial Organization - visited Brother Randy in East Africa in the summer|
|1975||Returned to Harvard Economics as Professor - began to teach graduate economic theory and undergraduate industrial organization using Michael Porter strategy cases -||Met Mike Porter|
|1976||Had two undergraduates in graduate theory course - Bill Gates and Steve Ballmer - both got A's|
|1979||Became a joint appointment in Economics and the Harvard Business School at Harvard - received Galbraith prize for teaching at Harvard||Son Graham born in the spring|
|1982||Received the John Bate's Clark medal from American Economic Association (given every two years to an economist under age 40)||Daughter Catherine born in January|
|1983||Became chairman of the Department of Economics at Harvard|
|1984||President Derek Bok asked me to succeed Henry Rosovsky as Dean of the Faculty of Arts and Sciences - accepted - learned a lot from President Bok||Phyllis Keller as associate dean taught me how to be a dean - wonderful colleague and friend|
|1985||Daughter Marya born in March - I am learning how to be a dean in my first year|
|1986||Joined board of directors of Polaroid Corporation - Harvard celebrated its 350th anniversary -||My father died in the summer after a difficult struggle with dementia - I missed him a lot|
|1990||Stepped down as dean of FAS - Became Dean of the Graduate School of Business at Stanford University - succeeded Bob Jaedicke -||Family moved to California - joined by Mark Wolfson in dean's office - became very good friends|
|1991||Separated from Ann and later divorced in 1995|
|1992||Stanford gets into altercation with Government over Overhead cost recovery||Paul Johnson as associate dean for many years in the business school - wonderful colleague and later good friend - Took up windsurfing with good friend Ed Lazear who was nice enough to watch out for me|
|1993||Met Monica Cappuccini - later married in 1997|
|1994||Graham takes up golf - achieves handicap of 4 after 18 months|
|1995||Met Tom Siebel and joined board of Siebel Systems - his new company|
|1997||Monica and I are married in the summer - Graham graduates from Menlo School and heads for Princeton as a freshman - Monica and I take trip to Himalaya's in the fall|
|1999||Stepped down as dean of the business school at Stanford after 9 years - rejoined Mark Wolfson and his colleagues at Oak Hill Capital Partners -||Catherine graduated from Menlo School and headed for Columbia University as a freshman - visited Singapore as Lee Kwan Yew distinguished visitor|
|2000||Our mother made it to the new millennium and passed away peacefully on January 5. - developed and taught a new course in electronic commerce with colleague Garth Saloner - acquired a small condo on Maui in Hawaii|
|2001||Received word of receipt of Nobel Prize in October - family together for the award in December - a wonderful shared moment||Graham graduated from Princeton and I had my 35th reunion in June - almost a definition of aging. - brief bout with melanoma - successfully caught early thanks to a very alert dermatologist - Recia Blumenkranz|
From Les Prix Nobel. The Nobel Prizes 2001, Editor Tore Frängsmyr, [Nobel Foundation], Stockholm, 2002
This autobiography/biography was written at the time of the award and later published in the book series Les Prix Nobel/Nobel Lectures. The information is sometimes updated with an addendum submitted by the Laureate.
Copyright © The Nobel Foundation 2001