George Akerlof Wins Nobel Prize in Economics
lecture video |
with fellow laureates video |
A. Akerlof, an economics professor at the University of California,
Berkeley, was named the 2001 co-winner of the Nobel Prize
in economic sciences today (10/10/01). It is the second consecutive
year in which the Nobel has gone to a UC Berkeley economist.
A. Akerlof, UC Berkeley Professor of Economics
described by a colleague as "a citizen of the profession,"
is the author of a landmark study on the role of asymmetric
information in the market for "lemon" used cars.
His research broke with established economic theory in illustrating
how markets malfunction when buyers and sellers as
seen in used car markets operate under different information.
The work has had far-reaching applications in such diverse
areas as health insurance, financial markets and employment
shares the prize with economists A. Michael Spence of Stanford
University and Joseph E. Stiglitz of Columbia University for
their contributions to the analyses of markets with asymmetric
61, is UC Berkeleys 18th Nobel Prize winner.
He is the universitys fourth economics professor and
the third in seven years at the university to be so honored.
Economics professor Daniel McFadden shared the prize last
year. The now-deceased John Harsanyi, a professor of economics
and business administration, won the Nobel Prize in 1994;
and Gerard Debreu, a professor emeritus of economics and mathematics,
won the prize in 1983.
UC Berkeleys economics department in the College of
Letters & Science as an assistant professor in 1966, Akerlof
has been recognized for his research that borrows from sociology,
psychology, anthropology and other fields to determine economic
influences and outcomes. His areas of expertise include macroeconomics,
poverty, family problems, crime, discrimination, monetary
policy and German unification.
is married to economist Janet L. Yellen, the Eugene and Catherine
M. Trefethen Professor at UC Berkeleys Haas School of
Business and professor of economics. Yellen served as chair
of the Presidents Council of Economic Advisers from
1997 to 1999 and was a member of the Board of Governors of
the Federal Reserve System. Akerlof and Yellen have worked
together on numerous research projects. Their son Robert,
20, is a junior at Yale University.
theorists, like French chefs in regard to food, have
developed stylized models whose ingredients are limited
by some unwritten rules. Just as traditional French
cooking does not use seaweed or raw fish, so neoclassical
models do not make assumptions derived from psychology,
anthropology, or sociology. I disagree with any rules
that limit the nature of the ingredients in economic
has real flashes of insight into human problems, into what
may explain social phenomena," Yellen said. "Its
wonderful to work with him; hes so original."
colleague and fellow Nobelist McFadden said Akerlofs
receipt of the Bank of Sweden Prize in Economic Sciences in
Memory of Alfred Nobel resulted from what amounted to a revolution
in the understanding of what makes markets work, a revolution
that was led by Akerlof. McFadden, who lives near Akerlof,
dropped by to congratulate him in person early this morning.
Akerlof's Nobel prize is richly deserved," said McFadden.
"He and his co-laureates led a revolution in our understanding
of how markets behave when different participants have different
information about the qualities of commodities being traded.
He showed that in the absence of adequate mechanisms to assure
quality and verify and enforce contract provisions regarding
quality, markets may fail to form or may do a poor job of
allocating resources. His work has profound implications for
the organization and regulation of important real markets
such as the labor market, the market for health insurance,
and markets for financial commodities."
award today came as no surprise to many of his fellow economists
at UC Berkeley and around the country.
than any other person in economics, George has worked to show
how the insight from sociology and psychology could broaden,
enrich and increase the power of economics. He is, in my opinion,
perhaps the most imaginative and creative applier of insights
from other disciplines," said Henry Aaron, senior fellow
at the Brookings Institution.
Akerlofs contributions to economics have been fundamental,
from his celebrated paper describing the role of asymmetric
information between buyers and sellers in the market for lemons
to his work that helped launch the burgeoning field of behavioral
economics," said Alan Auerbach, chairman of UC Berkeleys
economics department. "All the while, he has made crucial
contributions to macroeconomic theory, thereby demonstrating
the extraordinary breadth of his interests."
D. Romer, a colleague in the economics department at UC Berkeley,
wrote in a 1996 evaluation of Akerlofs work that he
was almost certainly destined to win a Nobel Prize. She praised
his path-breaking work that incorporates psychological insights
into models of economic behavior.
as an outstanding professor, Akerlof earns teaching evaluations
by his students that "are simply off the charts,"
Romer said. His commitment to the university, the economics
department and his students "is legendary," Auerbach
is a kind, generous, and enthusiastic person who loves economics,"
Romer said. "He contributes immeasurably to the department
by simply being the kind of person he is."
native of New Haven, Conn., developed a keen interest in economics
as a child growing up in the shadow of the Great Depression
of the 1930s, an era he called the "catastrophe that
took over the world."
always been interested in why people are poor," he said.
"What economics is about is trying to prevent poverty
insofar as that is possible."
earned a bachelors degree at Yale in 1962 and a PhD
at the Massachusetts Institute of Technology in 1966. He is
a Non-resident Senior Fellow at the Brookings Institution
and a research associate of the Canadian Institute for Advanced
Research. He also is one of five Richard and Rhoda Goldman
Distinguished Professors in the College of Letters & Science,
appointed in 1997 for five-year terms.
awards he has received include a Guggenheim Fellowship, Fulbright
Fellowship, Fellow of the Econometric Society and Fellow of
the American Academy of Arts and Sciences. He served as senior
staff economist with the Council of Economic Advisers from
1973-1974 and was visiting research economist in the special
studies section of the Federal Reserve System Board of Governors
is a former Cassel Professor of Economics with Respect to
Money and Banking at the London School of Economics, and visiting
professor at the Indian Statistical Institute in New Delhi.
"An Economic Theorists Book of Tales"
(Cambridge University Press, 1984), Akerlof discussed his
approach to his work.
theorists, like French chefs in regard to food, have developed
stylized models whose ingredients are limited by some unwritten
rules," he wrote. "Just as traditional French cooking
does not use seaweed or raw fish, so neoclassical models do
not make assumptions derived from psychology, anthropology,
or sociology. I disagree with any rules that limit the nature
of the ingredients in economic models."
of Downloadable Images
Show of George Akerlof's Day
Coverage: George Akerlof, Chancellor Robert Berdahl,
Economics Dept. Chair Alan Auerbach
of George Akerlof's prize lecture and interview
Akerlof's web site
Vitae (PDF file)
Press Conference Coverage
Calls and Visits Awaken Berkeley's Newest Nobelist
and Reaction from Fellow Economists
by UC President Richard Atkinson
Berkeley's 18 Nobel Prize Winners
on UC Berkeley's Four Nobel Economics Laureates
release, 10 Oct.)
& Awards Held by Faculty
Nobel Web Site
the media: Print-quality photos are available for download
through our Nobel
Image Downloads page.