Joseph Stiglitz

Gary, Indiana, was a steel town built by U.S. Steel, and it had already produced Paul Samuelson when Joseph Stiglitz was born there in 1943 to a schoolteacher and an insurance salesman. He went to Amherst on a National Merit scholarship, debated, and got himself elected president of the student government. He spent his senior year at MIT and stayed for the doctorate, taking it in 1967 under Robert Solow. He liked the house style there and said so: simple, concrete models aimed at questions that mattered. A summer at Chicago with Hirofumi Uzawa, a Fulbright to Cambridge in 1965 and then a research fellowship at Gonville and Caius shaped how he read Keynes. Yale, Stanford, Oxford and Princeton followed before Columbia, where he has taught since 2001.

The work is a sustained argument that markets do not clear the way the textbooks say, because the people in them do not know the same things. With Michael Rothschild he showed that competitive insurance markets cannot cover everyone equally, because someone will always undercut the pool for low-risk customers. With Andrew Weiss he showed that banks reading interest rates as signals about borrowers will ration credit below the efficient level even in full competition. With Sanford Grossman, that if information costs anything, prices cannot fully reflect it. With Carl Shapiro he explained unemployment as a discipline device — wages held above the clearing level so losing the job costs something. The Greenwald-Stiglitz theorem turns market failure from the exception into the ordinary case. The Clark Medal came in 1979, the Nobel in 2001 with George Akerlof and Michael Spence.

He lost the World Bank job for saying in public what the institution said behind closed doors. After three years of questioning whether the standard prescriptions actually helped poor countries, Stanley Fischer of the IMF told a special staff meeting that James Wolfensohn had agreed to fire him. The price was said to be Wolfensohn's own reappointment, with Lawrence Summers holding the veto — an exchange Wolfensohn denies. The Bank's press office said the post had been abolished rather than the man removed. He resigned in January 2000 and wrote in The New Republic that he had watched the IMF turn slowdowns into recessions and recessions into depressions. Two years later he and Peter Orszag published a paper concluding that on the historical record, the risk to the government from a Fannie Mae or Freddie Mac default was effectively zero.

The argument did not stay lost. After 2008, asymmetric information and mispriced risk sat at the center of every account of what had gone wrong, and the UN General Assembly asked him to chair the commission that reported on it. Nicolas Sarkozy had already put him in charge of a commission on whether GDP measures anything worth measuring, which reported in 2010 under the title Mismeasuring Our Lives. He is the fifth most assigned author on American economics syllabi. The books have kept coming — Globalization and Its Discontents, The Price of Inequality, The Euro, The Road to Freedom in 2024. At 83 he is still teaching at Columbia and still arguing with the people he calls free-market fundamentalists.

Joseph Stiglitz's life against the full span of the corpus — the fading end marks a life still in progress.

• On the Impossibility of Informationally Efficient Markets article
  With Sanford Grossman. If information costs anything, prices cannot carry all of it 1980
• Credit Rationing in Markets with Imperfect Information article
  With Andrew Weiss. Why competitive banks still lend too little 1981
• Equilibrium Unemployment as a Worker Discipline Device article
  With Carl Shapiro. Unemployment as the thing that makes the job worth keeping 1984
• Whither Socialism? book
  The Wicksell Lectures. A critique of the free market and of market socialism at once 1994
• Initiative for Policy Dialogue company
  The development think tank he founded at Columbia 2000
• The Price of Inequality book
  The distribution argument that carried him out of the seminar room 2012

• 1965 aged ~22 Goes to Cambridge as a Fulbright scholar The fellowship at Gonville and Caius shaped his reading of Keynes.
• 1967 aged ~24 Takes the MIT doctorate under Robert Solow
• 1979 aged ~36 Awarded the John Bates Clark Medal
• June 28, 1995 aged 52 Becomes chair of the Council of Economic Advisers Janet Yellen took the chair when he left for the World Bank.
• February 1997 aged 53 Becomes chief economist of the World Bank
• January 2000 aged 56 Leaves the World Bank a month before his term is up The Bank said the post had been abolished. He said he had been appalled by what he watched the IMF do.
• 2001 aged ~58 Shares the Nobel Memorial Prize with George Akerlof and Michael Spence For laying the foundations of the theory of markets with asymmetric information.
• 2009 aged ~66 Chairs the UN commission on reforming the international monetary system
• 2010 aged ~67 The Sarkozy commission reports that GDP does not add up

• Paul Samuelson 1915–2009
  First American to win the Nobel Prize in Economics, whose textbook defined the field for decades. the other Nobel economist from Gary, Indiana
• Bill Clinton b. 1946
  42nd president whose centrist politics, economic agenda, and impeachment shaped the post-Cold War era. appointed by
• Janet Yellen b. 1946
  First woman to chair the Federal Reserve and to serve as Treasury Secretary. succeeded him at the Council of Economic Advisers
• Henry George 1839–1897
  Argued for the single tax on land values in Progress and Poverty. took his public finance theory from him
• Milton Friedman 1912–2006
  Nobel Prize-winning economist whose free-market ideas profoundly influenced American economic policy. argued against
• Amartya Sen b. 1933
  Indian-American economist and Nobel laureate whose work on welfare economics and famine reshaped development. co-chaired the Sarkozy commission with him