Jacob Marschak

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Jacob Marschak

Born July 23, 1898(1898-07-23)
Kiev, Imperial Russia
Died July 27, 1977 (aged 79)
Los Angeles, U.S.
Residence U.S.
Nationality U.S.
Fields Economics
Institutions Cowles Commission
University of Chicago
Alma mater University of Heidelberg
Doctoral advisor Emil Lederer
Doctoral students Leonid Hurwicz‎
Harry Markowitz
Franco Modigliani
Known for Elasticity of demand
Early econometrics
Choice under uncertainty

Jacob Marschak (* 23 July 1898 Kiev, Imperial Russia, now capital of Ukraine; † 27 July 1977 Los Angeles, U.S.) was an American economist of Russian Jewish origin.

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[edit] Life and work

Jacob Marschak (until 1933 Jakob) was born in Kiev as a son of a jeweller. During his studies he joined the social democratic party. As a Menshevik activist he was imprisoned by the Czar's secret police. Immediately after the February Revolution he worked for the Ukrainian government. Later in 1918 he served as minister for labor in the short-lived Cossack-Menshevik Republic of Terek in the North Caucasus - before emigrating to Berlin in 1919. During his studies at the universities of Berlin and Heidelberg, Jacob Marschak came under the sway of the Marxian economists Bortkiewicz and Lederer. From 1922 until 1926 he was a journalist and in 1928 he joined the new Kiel Institut für Weltwirtschaft under Adolph Lowe.

Marschak's early work was certainly in the spirit of his masters: an anti-Austrian 1923 tract got him involved in the Socialist Calculation Debate - arguing that the monopolistic tendencies of capitalism made the socialist system inevitably more efficient at pricing. This was an early signal of a topic which would emerge time and time again: the economics of organization. His work on the "New Middle Class" - first a paper in 1926, then a book with Lederer with 1937 - which presented his thesis about the fall of white-collar workers from the bourgeois class (where they remained socially) to the working class (where they now were economically), became classics of interwar theory. Since he could not become a full professor in Kiel because of his Jewish origin, he emigrated again to England, where he went to Oxford to teach at the Oxford Institute of Statistics, which was funded by the Rockefeller Foundation. Because of that he could move again to the U.S. in 1940. Here he taught at New School for Social Research, where he was reunited with Lederer and Lowe.

A master of the structural growth economics of the Kiel strain, Marschak was impressed by the need for quantification of economics. His 1931 paper on the elasticity of demand was a landmark in econometric analysis. While at the New School, Marschak was instrumental in gathering together a mathematical and econometric seminar which brought together much of the fledgling quantitative community in the New York City area.

In 1943, Jacob Marschak was appointed head of the Cowles Commission during the crucial move to the University of Chicago (where he took an appointment, which he held until 1948). As a result, Jacob Marschak can be given credit for getting the ball rolling for the development of Neo-Walrasian economics and econometrics in the post-war era. His work with Andrews (1944) brought him to the fore of the econometric world, a theoretical explanation for employing the statistical techniques of causal analysis in the spirit of Trygve Haavelmo - what was to become the methodological groundwork of the Cowles approach.

His early contributions to economic theory were dominated by the concept of uncertainty. Already in his classic 1938 papers (one with Helen Makower) on monetary theory, Marschak set down the basic ideas for portfolio theory, in which risk was acknowledged to play a role. His encounter with the work of John von Neumann and Oskar Morgenstern (1944) led him to write his famous 1950 exposition of the axiomatization of choice under uncertainty, when he introduced the infamous "independence axiom". Maurice Allais's critique of the axiom led him to his famous "normative" defence of expected utility theory (1951).

It was specifically in the theory of information, the theory of "teams" and decentralized organizations where Marschak was to make his name (1954, 1968, 1971, 1972). He is renowned for having developed the theory of stochastic design as a way of statistically measuring demand. It was Marschak who helped introduce modern information theory into economics via Shannon's formalization of information via the mathematical theory of communication. His contributions on information were further developed by his colleagues and students at the Cowles Commission, such as Kenneth J. Arrow, Roy Radner, Franco Modigliani, Helen Makower and others.

In 1948 Tjalling C. Koopmans took over as director of the Cowles Commission, which gave Marschak more time for his own research. When in 1955 the Cowles Commission left Chicago for Yale, Marschak followed. He later became emeritus at University of California.

Shortly before he should have become president of the American Economic Association he died from a coronary artery spasm.

[edit] Major publications

  • "Wirtschaftsrechnung und Gemeinwirtschaft", 1923, Archiv für Sozialwissenschaft
  • "Der Neue Mittelstand" with E. Lederer, 1926, in Grundriss der Nationalökonomik (trans. "The New Middle Class", 1937, WPA)
  • "Das Kaufkraft-Argument in der Lohnpolitik", 1930, Magazin der Wirtschaft.
  • Die Lohndiskussion, 1930.
  • Elastizität der Nachfrage, 1931.
  • "Annual Survey of Statistical Information", 1933, Econometrica.
  • The New Middle Class, with Emil Lederer, 1937.
  • "Money and the Theory of Assets", 1938, Econometrica.
  • "Assets, Prices and Monetary Theory", with H. Makower, 1938, Economica.
  • "A Discussion on Methods in Economics", 1941, JPE.
  • "Random Simultaneous Equations and the Theory of Production", with W.H. Andrews, 1944-5, Econometrica.
  • "A Cross-Section of Business Cycle Discussion", 1945, AER.
  • "Von Neumann's and Morgenstern's New Approach to Static Economics", 1946, JPE.
  • "Mathematics for Economists", 1947, Econometrica.
  • "Statistical Inference from Non-Experimental Observation: An Economic Example", 1949, Proceedings of the International Statistical Conference
  • "The Role of Liquidity under Complete and Incomplete Information", 1949, AER.
  • "Rational Behavior, Uncertain Prospects and Measurable Utility", 1950, Econometrica.
  • "The Rationale of the Demand for Money and of `Money Illusion'", 1950, Metroeconomica
  • "Optimal Inventory Policy", with K.J. Arrow and T. Harris, 1951, Econometrica
  • "Why "Should" Statisticians and Businessmen Maximize Moral Expectation?", 1951, Proceedings of the Second Berkeley Symposium
  • "Three Lectures on Probability in the Social Sciences", 1954.
  • "Towards an Economic Theory of Organization and Information", 1954, in Thrall et al., editors, Decision Processes.
  • "Note on Some Proposed Decision Criteria", with Roy Radner, 1954, in Thrall et al., editors, Decision Processes.
  • "Elements for a Theory of Teams", 1955, Management Science
  • "Experimental Tests of a Stochastic Decision Theory" with D. Davidson, 1959, in Churchman and Ratoosh, editors, Measurement Definitions and Theories
  • "Efficient and Viable Organizational Forms", 1959, in Modern Organization Theory
  • "An Identity in Arithmetic", with H.D. Block, 1959, Bulletin of the AMS
  • "Random Orderings and Stochastic Theories of Responses" with H.D. Block, 1960, in Contributions to Probability and Statistics
  • "Remarks on the Economics of Information" 1960, in Contributions to Scientific Research in Management
  • "Theory of an Efficient Several-Person Firm" 1960, in General Systems
  • "Binary-Choice Constraints and Random Utility Indicators", 1960, in Arrow, Karlin and Suppes, editors, Mathematical Methods in the Social Sciences.
  • "Economics of Inquiring, Communicating, Deciding", 1968, AER.
  • "Economics and Information Systems", 1971, in Intriligator, editor, Frontiers of Quantitative Economics.
  • Economic Theory of Teams, with Roy Radner, 1972.
  • Economic Information, Decision and Prediction, 1974.

[edit] Honours

[edit] External links