Kenneth Arrow

Kenneth Arrow was born August 23, 1921, in New York City to Romanian Jewish immigrant parents. His father worked as a banker whose income collapsed in the Great Depression, and the family moved often as a result. By the time he finished high school in 1936, the family was still poor enough that City College of New York, which charged no tuition, was his only realistic option. He earned a math degree there in 1940, then went to Columbia for graduate study under the statistician Harold Hotelling, who talked him out of pure mathematics and into economics. World War Two interrupted the switch: Arrow spent four years as an Army Air Forces weather officer before returning to finish the degree.

Arrow's 1951 book, Social Choice and Individual Values, proved something few economists had thought to ask: that no method of combining individual preferences into a single collective ranking can satisfy a short list of basic fairness conditions at once, unless one person is simply allowed to dictate the outcome. It became known as the impossibility theorem and reshaped how economists, political scientists and voting-system designers think about democracy itself. Three years later, with Gerard Debreu, he proved mathematically that a competitive market economy can reach a state where supply matches demand everywhere at once. He went on to found the economics of information and uncertainty, showing why markets for health insurance and used cars behave the way they do. In 1972, at 51, he became the youngest person ever to win the Nobel Memorial Prize in Economic Sciences.

The theorem attached to Arrow's name got put to uses he did not intend. Politicians and pundits invoke the impossibility theorem to argue that no voting system, and by extension no democratic outcome, can be called truly fair, a reading Arrow thought stretched a narrow result too far. The Arrow-Debreu proof had the opposite problem: it became the textbook justification for the claim that unregulated markets reach efficient outcomes on their own, cited without Arrow's own footnotes. His 1963 paper on medical care spelled out the footnotes: he argued health insurance markets break the assumptions his own equilibrium proof depended on, because patients and insurers know different things, and that gap justifies government intervention rather than ruling it out. The economist most cited for proving markets work also built much of the modern case for why healthcare markets do not.

Arrow died at his home in Palo Alto on February 21, 2017, at 95, with his son David at his side. Four of his doctoral students went on to win Nobel Prizes of their own, a number no other adviser in the prize's history has matched. Economics departments still open microeconomic theory courses with his impossibility theorem and his equilibrium proof with Debreu, treating both as foundational rather than historical. Political theorists continue to argue about how far the impossibility result actually reaches into real democracies, a debate Arrow spent decades trying, without full success, to keep narrower than his admirers wanted it to be.

Kenneth Arrow's life against the full span of the corpus.

• Social Choice and Individual Values book
  Introduced the impossibility theorem 1951
• Existence of an Equilibrium for a Competitive Economy article
  With Gerard Debreu, proved rigorously that competitive markets can clear 1954
• Uncertainty and the Welfare Economics of Medical Care article
  Founding paper of modern health economics 1963
• Essays in the Theory of Risk-Bearing book
  Collected his work on information and uncertainty 1971

• August 23, 1921 aged 0 Born in New York City
• 1936 aged ~15 Finishes high school, enrolls at tuition-free City College of New York
• 1940 aged ~19 Earns a BS in mathematics from CCNY
• 1942 aged ~21 Begins four years as an Army Air Forces weather officer
• 1947 aged ~26 Marries Selma Schweitzer
• 1951 aged ~30 Earns a PhD from Columbia and publishes Social Choice and Individual Values
• 1954 aged ~33 Publishes the Arrow-Debreu equilibrium proof
• 1972 aged ~51 Wins the Nobel Memorial Prize in Economic Sciences at 51, the youngest ever
• February 21, 2017 aged 95 Dies in Palo Alto, California

• Paul Samuelson 1915–2009
  First American to win the Nobel Prize in Economics, whose textbook defined the field for decades. contemporary rival
• Milton Friedman 1912–2006
  Nobel Prize-winning economist whose free-market ideas profoundly influenced American economic policy. rival
• John Forbes Nash Jr. 1928–2015
  Formulated the Nash equilibrium and proved major results in differential geometry. built on his math
• Gary Becker 1930–2014
  Extended economic analysis to family — crime and discrimination — winning the 1992 Nobel Prize. influenced
• Amartya Sen b. 1933
  Indian-American economist and Nobel laureate whose work on welfare economics and famine reshaped development. influenced