William Vickrey | |
|---|---|
 | |
| Born | (1914-06-21)21 June 1914 Victoria, British Columbia, Canada |
| Died | 11 October 1996(1996-10-11) (aged 82) Harrison, New York, U.S. |
| Academic background | |
| Education | Yale University (BS) Columbia University (MA,PhD) |
| Doctoral advisor | Carl Shoup Robert M. Haig |
| Influences | Henry George Harold Hotelling John Maynard Keynes |
| Academic work | |
| Discipline | Social choice theory andmechanism design |
| School or tradition | Georgist |
| Institutions | Columbia University |
| Doctoral students | David Colander Jacques Drèze |
| Notable ideas | Vickrey auction Revenue equivalence theorem Congestion pricing |
| Awards |
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| Website | |
William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American professor of economics. He was a lifelong faculty member atColumbia University. A theorist who worked onpublic economics and mechanism design, Vickrey primarily discussed public policy problems. He originated theVickrey auction, introduced the concept ofcongestion pricing in networks, formalized arguments formarginal 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 1996Nobel Memorial Prize in Economic Sciences withJames Mirrlees for their research into the economic theory ofincentives underasymmetric information. Vickrey never personally received the Prize; it was announced just three days prior to his death.
Vickrey was born inVictoria, 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 theAmerican Committee for Armenian and Syrian Relief, one of the nation's first humanitarian assistance organizations.[2]
Vickrey attended high school atPhillips Academy inAndover, Massachusetts. After obtaining hisB.S. in Mathematics atYale University in 1935, he went on to complete his M.A. atColumbia University in 1937. He stayed at Columbia for aPhD, which he completed 1948 with a 500-page dissertation entitled "An Agenda for Progressive Taxation."[1] Vickrey's doctoral work was interrupted byWorld War II, when he was enlisted to work for the U.S.National Resources Planning Board and later theTreasury Department's Division of Tax Research.[2]
Vickrey remained at Columbia for his entire career. His students included the economistsJacques Drèze,Harvey J. Levin,[3] and Lynn Turgeon.[4]
Vickrey was the first to use the tools ofgame theory to explain thedynamics of auctions.[5] In his seminal paper, Vickrey derived several auction equilibria, and provided an early revenue-equivalence result. Therevenue equivalence theorem remains the centrepiece of modern auction theory. TheVickrey auction is named after him.[5]
Vickrey worked oncongestion 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 partiallyput into action in London.
Inpublic economics, Vickrey extended themarginal cost pricing approach ofHarold 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 theland 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 forGeorgistvalue 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'seconomic philosophy was influenced byJohn Maynard Keynes andHenry George.[13] He was sharply critical of theChicago school of economics and was vocal in opposing the political focus on achievingbalanced budgets and fightinginflation, especially in times of highunemployment. Working underGeneral MacArthur, Vickrey helped accomplish radical land reform in Japan.[14]
Vickrey's Nobel Prize in Economics was announced on October 8, 1996. He became the only Nobel laureate born inBritish Columbia.
Vickrey died three days later while traveling to a conference ofGeorgist academics that he helped found.[15][16] HisColumbia University economics department colleagueC. 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) andRalph Steinman (Physiology or Medicine 2011).[17]
Vickrey married Cecile Thompson in 1951. He was aQuaker and a member ofScarsdaleFriends Meeting.[18] He died inHarrison, New York in 1996 from heart failure.
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
Section Posthumous Nobel Prizes
| Awards | ||
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| Preceded by | Laureate of the Nobel Memorial Prize in Economics 1996 Served alongside:James A. Mirrlees | Succeeded by |
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