Peter Diamond | |
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.jpg) Diamond in 2010 | |
| Born | Peter Arthur Diamond (1940-04-29)April 29, 1940 (age 85) New York City,New York, U.S. |
| Spouse | Kate Myrick |
| Academic background | |
| Education | Yale University (BA) Massachusetts Institute of Technology (MA,PhD) |
| Thesis | Essays on optimal economic growth (1963) |
| Doctoral advisor | Robert Solow[1] |
| Academic work | |
| Discipline | Political economics Welfare economics Behavioral economics |
| Institutions | Massachusetts Institute of Technology University of California, Berkeley University of Cambridge |
| Doctoral students | Martin Hellwig[2] David K. Levine[3] Andrei Shleifer[4] Emmanuel Saez[5] Botond Kőszegi[6] |
| Awards | Nemmers Prize in Economics (1994) Nobel Memorial Prize in Economic Sciences (2010) |
| Website | |
| Notes | |
Peter Arthur Diamond (bornApril 29, 1940) is an Americaneconomist known for his analysis ofU.S. Social Security policy and his work as an advisor to the Advisory Council on Social Security in the late 1980s and 1990s. He was awarded theNobel Memorial Prize in Economic Sciences in 2010, along withDale T. Mortensen andChristopher A. Pissarides. He is anInstitute Professor at theMassachusetts Institute of Technology. On June 6, 2011, he withdrew his nomination to serve on theFederal Reserve's board of governors, citing intractableRepublican opposition for 14 months.[8][9]
Diamond was born to aJewish family inNew York City.[10][11][12] His grandparents immigrated to the U.S. at the turn of the 20th century. His mother's parents and six older siblings came from Poland. His father's parents met in New York, she came from Russia and he came from Romania. His parents, both born in 1908, grew up inNew York City and never lived outside the metropolitan area. Both finished high school and went to work, his father studying atBrooklyn Law School at night while selling shoes during the day. They married in 1929. He has one brother, Richard, born in 1934.[13]
He started public school in the Bronx, and switched to suburban public schools in the second grade when the family moved toWoodmere, onLong Island. He eventually graduated fromLawrence High School.[14] He earned abachelor's degreesumma cum laude inmathematics fromYale University (1960), and aPh.D. at theMassachusetts Institute of Technology (1963).[15]
He was anassistant professor at theUniversity of California, Berkeley, from 1963 to 1965 and an actingassociate professor there before joining theMIT faculty as an associate professor in 1966.[15] Diamond was promoted tofull professor in 1970, served as head of the Department of Economics in 1985–86 and was named anInstitute Professor in 1997.[15]
In 1968, Diamond was elected a fellow and served as president of theEconometric Society.[15] In 2003, he served as president of theAmerican Economic Association.[15] He is a Fellow of theAmerican Academy of Arts and Sciences (1978), a member of theNational Academy of Sciences (1984), and is a founding member of the National Academy of Social Insurance (1988).[15] Diamond was the 2008 recipient of the Robert M. Ball Award for Outstanding Achievements in Social Insurance, awarded by NASI.[15][16] As aFulbright Distinguished Chair, in 2000 he taught economics at theUniversity of Siena.
Diamond wrote a book on Social Security withPeter R. Orszag, President Obama's former director of theOffice of Management and Budget,[17] titledSaving Social security: a balanced approach (2004,-5,Brookings Institution Press).[18] An earlier paper fromBrookings Institution introduced their ideas.[19]
In April 2010, Diamond, along withJanet Yellen andSarah Bloom Raskin, was nominated byPresidentBarack Obama to fill the vacancies on theFederal Reserve Board.[20] In August 2010, the Senate returned Diamond's nomination to the White House, effectively rejecting his nomination.[21] President Obama renominated him in September.[22] In June 2011, following a third round of consideration for the Fed seat, Diamond wrote in aNew York Timesop-ed column that he planned to withdraw his name. In the column, he strongly criticized the nomination process and "partisan polarization" inWashington, saying he was effectively blocked by Republicans on theSenate Banking Committee. He also detailed the consideration process, saying that in the first and second rounds, three Republicans had favored his confirmation. In the third, when his name was resubmitted in January 2011, the Republicans all followed ranking minority member Shelby (R,Alabama) in voting against it. Diamond continued, quoting Shelby:
"Does Dr. Diamond have any experience in conducting monetary policy? No," [Shelby] said in March. "His academic work has been on pensions and labor market theory." But [Diamond began his reply, in the column] understanding the labor market—and the process by which workers and jobs come together and separate—is critical to devising an effective monetary policy.
Diamond went on to discuss how his expertise would, he felt, have benefited the central bank and his opinion that "[s]killed analytical thinking should not be drowned out by mistaken, ideologically driven views."[23] In a statement, Shelby "wouldn't be drawn into a public spat with the nominee," saying simply "I have said many times that I commend Dr. Diamond's talent and career. I wish him the best in the future."[24]
Ben Bernanke (Nobel Prize winner and formerchairman of the Fed) was once a student of Diamond.[25]
In October 2010, Diamond was awarded theNobel Prize in Economic Sciences, along withDale T. Mortensen fromNorthwestern University andChristopher A. Pissarides from theLondon School of Economics "for their analysis of markets with search frictions".[26]
In 2011 he received The John R. Commons Award fromOmicron Delta Epsilon, the economics honor society.[27]
Andrei Shleifer andEmmanuel Saez are two of his doctoral supervisees who won the John Bates Clark Medal for the best American economist under the age of 40.
Diamond has been married to Kate (Priscilla Myrick) since 1966.[28] They have two sons.
Diamond has made fundamental contributions to a variety of areas, includinggovernment debt andcapital accumulation,capital markets and risk sharing,optimal taxation, search and matching inlabor markets, andsocial insurance.[citation needed]
Diamond (1965) extended theRamsey–Cass–Koopmans model, from a representative infinitely-livedagent to a setup where new individuals are continually being born and old individuals are continually dying. He built on a framework developed byPaul Samuelson, who had termed it "an exact consumption-loan model."[29]
Since individuals born at different times attain different utility levels, it is not clear how to evaluatesocial welfare. One of the main results of this paper is that the decentralized equilibrium might not be dynamicallyPareto efficient, even though markets are competitive and externalities are absent. In particular, depending on the preferences and technology, the economy might find itself saving too much, pushing the capital stock above what Edmund Phelps called theGolden Rule level. In this situation, government debt can crowd out capital and, in doing so, increase welfare.
TheDiamond–Mirrlees production efficiency result[30] follows from a set of assumptions which characterise what can be called a 'DM world'.
It is characterised by 7 assumptions:i) perfect competitionii) constant returns to scale to productioniii) lump sum taxation is not possibleiv) there is a revenue requirement i.e. the government has to raise revenue to fund its expenditures v) full instrument set: the government has the flexibility to levy taxes on all commodities and all factors of production in the economyvi) non-satiation in at least one goodvii) individualistic social welfare function.
Under these assumptions, it can be shown that the second best allocation requiresproduction efficiency to be preserved throughout the economy. This result arises from the assumptions that characterise the DM world:
The key idea is that when the government can control all consumer prices, the producer prices are independent from the consumer prices and the consumption decision part of the optimal taxation problem becomes independent of the production decision.[31] The implication of the result is that there should be no taxes on intermediate goods and imports. Another implication is that public and private sector production should be based on the same relative prices. In practice, one needs to consider if the assumptions of the DM world are likely to apply; nevertheless, the efficiency result is a useful benchmark against which to judge whether any policy violation of production efficiency is justified.
Diamond (1982) is one of the first papers which explicitly models thesearch process involved in making trades and hiring workers, which results in equilibrium unemployment.
Diamond has focused much of his professional career on the analysis of U.S.Social Security policy as well as its analogs in other countries, such as China. In numerous journal articles and books, he has presented analyses of social welfare programs in general and the American Social Security Administration in particular. He has frequently proposed policy adjustments, such as incremental but small increases in social security contributions usingactuarial tables to adjust for changes inlife expectancy and an increase in the proportion of earnings that are subject to taxation.
Media related toPeter Diamond at Wikimedia Commons
including the Nobel Prize lecture 8 December 2010Unemployment, Vacancies, Wages| Academic offices | ||
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| Preceded by | President of theAmerican Economic Association 2003–2004 | Succeeded by |
| Awards | ||
| Preceded by | Laureate of the Nobel Memorial Prize in Economics 2010 Served alongside:Dale T. Mortensen,Christopher A. Pissarides | Succeeded by |
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