William Vickrey

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William Vickrey
William Vickrey.gif
Born(1914-06-21)21 June 1914
Died11 October 1996(1996-10-11) (aged 82)
Nationality Canada
Institution Columbia University
Field Public economics
School or
tradition
Post Keynesian economics
Alma mater Columbia University
Yale University
Doctoral
advisor
Carl Shoup
Robert M. Haig
Doctoral
students
David Colander
Jacques Drèze
Influences Henry George
Harold Hotelling
John Maynard Keynes
Contributions Vickrey auction
Revenue equivalence theorem
Congestion pricing
Awards
Information at IDEAS / RePEc

William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-born professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize in Economic Sciences with James Mirrlees for their research into the economic theory of incentives under asymmetric information, becoming the only Nobel laureate born in British Columbia.

Contents

The announcement of his Nobel Prize was made just three days prior to his death. Vickrey died while traveling to a conference of Georgist academics that he helped found and never missed once in 20 years. [1] [2] His Columbia University economics department colleague C. Lowell Harriss accepted the posthumous prize on his behalf. There are only three other cases where a Nobel Prize has been presented posthumously.

Early years

Vickrey was born in Victoria, British Columbia and attended high school at Phillips Academy in Andover, Massachusetts. After obtaining his B.S. in Mathematics at Yale University in 1935, he went on to complete his M.A. in 1937 and Ph.D. in 1948 at Columbia University, where he remained for most of his career.

Career

Vickrey was the first to use the tools of game theory to explain the dynamics of auctions. [3] In his seminal paper, Vickrey derived several auction equilibria, and provided an early revenue-equivalence result. The revenue equivalence theorem remains the centrepiece of modern auction theory. The Vickrey auction is named after him. [3]

Vickrey worked on congestion 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. [4] [5] [6] [7] 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 partially put into action in London.

In public economics, Vickrey extended the Georgist marginal cost pricing approach of Harold Hotelling [8] and showed how public goods should be provided at marginal cost and capital investment outlays financed with land value tax. Vickrey 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". [9] 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 for Georgist value 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). [10]

Vickrey's economic philosophy was influenced by John Maynard Keynes and Henry George. [11] He was sharply critical of the Chicago school of economics and was vocal in opposing the political focus on achieving balanced budgets and fighting inflation, especially in times of high unemployment. Working under General MacArthur, Vickrey helped accomplish radical land reform in Japan. [12]

Vickrey had many graduate students and protegés at Columbia University, including the economists Jacques Drèze, Harvey J. Levin, [13] and Lynn Turgeon. [14]

Personal life

Vickrey married Cecile Thompson in 1951. He was a Quaker and a member of Scarsdale Friends Meeting. [15] He died in Harrison, New York in 1996 from heart failure.

Selected works

See also

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References

  1. Netzer, Dick (November 1996). "Remembering William Vickrey". Land Lines. 8 (6). Retrieved 2 September 2016.
  2. Gaffney, Mason. "Warm Memories of Bill Vickrey". Land & Liberty. Retrieved 15 November 2016.
  3. 1 2 Vickrey, 1961
  4. "Nobelist William S. Vickrey: Practical Economic Solutions to Urban Problems". Columbia University. 1996-10-08. Retrieved 2009-03-27.
  5. Daniel Gross (2007-02-17). "What's the Toll? It Depends on the Time of Day". The New York Times. Retrieved 2008-07-15.
  6. Victoria Transport Policy Institute (1992). "Principles of Efficient Congestion Pricing – William Vickrey". Victoria Transport Policy Institute. Retrieved 2009-03-10.
  7. Harford, Tim (13 November 2019). "Is surge pricing a fair way to manage demand?". BBC News.
  8. Red-Light Taxes and Green-Light Taxes Mason Gaffney For the Conference, "Sharing Our Common Heritage: Resource Taxes and Green Dividends" Mansfield College, Oxford, 14 May 1998 http://www.wealthandwant.com/docs/Gaffney_RLT&GLT.html Quote: "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."
  9. Vickrey, William. "The Corporate Income Tax in the U.S. Tax System, 73 TAX NOTES 597, 603 (1996). Quote: "Removing almost all business taxes, including property taxes on improvements, excepting only taxes reflecting the marginal social cost of public services rendered to specific activities, and replacing them with taxes on site values, would substantially improve the economic efficiency of the jurisdiction."
  10. Vickrey, William. Remarks at The Henry George School of New York, 1993. http://www.cooperative-individualism.org/land-question_t-z.htm
  11. Turgeon, Lynn. Bastard Keynesianism : the evolution of economic thinking and policymaking since World War II. Westport, Conn: Praeger, 1997
  12. Gaffney, Mason. The corruption of economics. London: Shepheard-Walwyn in association with Centre for Incentive Taxation, 2006 http://masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf
  13. Harvey J. Levin
  14. Lynn Turgeon
  15. William Vickrey - Biographical

Further reading

Awards
Preceded by
Robert E. Lucas Jr.
Laureate of the Nobel Memorial Prize in Economics
1996
Served alongside: James A. Mirrlees
Succeeded by
Robert C. Merton
Myron S. Scholes