Francis Ysidro Edgeworth

Francis Ysidro Edgeworth

Born 8 February 1845(1845-02-08)
Died 13 February 1926(1926-02-13) (aged 81)
Fields Philosophy, political economist
Alma mater Trinity College, Dublin
Balliol College, Oxford
Influences Jeremy Bentham
Signature

Francis Ysidro Edgeworth FBA (8 February 1845, Edgeworthstown – 13 February 1926, Oxford) was an Irish philosopher and political economist who made significant contributions to the methods of statistics during the 1880s. From 1891 onward he was the editor of a leading academic journal in economics and his own writings in economics were influential.

Contents

Life

Edgeworth was born in Edgeworthstown, County Longford, Ireland. He did not attend school, but was educated by private tutors at the Edgeworthstown estate until he reached the age to enter university. Richard Lovell Edgeworth was his grandfather, and Maria Edgeworth his aunt. His father was Francis Beaufort Edgeworth who "was a restless philosophy student at Cambridge on his way to Germany when he decided to elope with a teenage Catalonian refugee he met on the steps of the British Museum. One of the outcomes of their marriage was Ysidro Francis Edgeworth (the name order was reversed later) ..."[1]

As a student at Trinity College, Dublin, and Balliol College, Oxford, Edgeworth studied ancient and modern languages. A voracious autodidact, he studied mathematics or economics only after he had completed university. He qualified as a barrister in London in 1877 but did not practice.

On the basis of his publications in economics and mathematical statistics in the 1880s, he was appointed to a chair in economics at King's College London in 1888, and in 1891 was appointed Drummond Professor of Political Economy at Oxford University. Also in 1891 he was appointed the founding editor of The Economic Journal. He continued to be the editor or joint-editor until his death 35 years later. The Economic Journal remains one of the leading scholarly publications in economics today.

Edgeworth was a highly influential figure in the development of neo-classical economics. He was the first to apply certain formal mathematical techniques to individual decision making in economics. He developed utility theory, introducing the indifference curve and the famous Edgeworth box, which is now familiar to undergraduate students of microeconomics. He is also known for the Edgeworth conjecture which states that the core of an economy shrinks to the set of competitive equilibria as the number of agents in the economy gets large. In statistics Edgeworth is most prominently remembered by having his name on the Edgeworth series.

His most original and creative book on economics was Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences, published in 1881 at the beginning of his long career in the subject. The book was notoriously difficult to read. He frequently referenced literary sources and interspersed the writing with passages in a number of languages, including Latin, French and Ancient Greek. The mathematics was similarly difficult, and a number of his creative applications of mathematics to economic or moral issues would be judged as incomprehensible. However, one of the most influential economists of the time, Alfred Marshall, commented in his review of Mathematical Psychics:[2]

This book shows clear signs of genius, and is a promise of great things to come... His readers may sometimes wish that he had kept his work by him a little longer till he had worked it out a little more fully, and obtained that simplicity which comes only through long labour. But taking it as what it claims to be, 'a tentative study', we can only admire its brilliancy, force, and originality.

Edgeworth's close friend William Stanley Jevons said of Mathematical Psychics:[3]

Whatever else readers of this book may think about it, they would probably all agree that it is a very remarkable one... There can be no doubt that in the style of his composition Mr. Edgeworth does not do justice to his matter. His style, if not obscure, is implicit, so that the reader is left to puzzle out every important sentence like an enigma.

The Royal Statistical Society awarded him the Guy Medal in 1907. Edgeworth served as the president of the Royal Statistical Society, 1912-14. In 1928 A.L. Bowley published a book entitled and devoted to F. Y. Edgeworth's Contributions to Mathematical Statistics.

Contributions to economics

In Mathematical Psychics (1881), his most famous and original book, he criticised Jevons's theory of barter exchange, showing that under a system of "recontracting" there will be, in fact, many solutions, an "indeterminacy of contract". Edgeworth's "range of final settlements" was later resurrected by Martin Shubik (1959) as the game-theoretic concept of "the core".[4]

As the number of agents in an economy increases, the degree of indeterminacy is reduced. In the limit case of an infinite number of agents (perfect competition), contract becomes fully determinate and identical to the 'equilibrium' of economists. The only way of resolving this indeterminacy of contract would be to appeal to the utilitarian principle of maximizing the sum of the utilities of traders over the range of final settlements. Incidentally, it was in this 1881 book that Edgeworth introduced into economics the generalized utility function, U (x, y, z, ...), and drew the first 'indifference curve'.[4]

He was the first one to use offer curves and community indifference curves to illustrate its main propositions, including the "optimal tariff".

Taxation of a good may actually result in a decrease in price.

He set the utilitarian foundations for highly progressive taxation, arguing that the optimal distribution of taxes should be such that 'the marginal disutility incurred by each taxpayer should be the same' (Edgeworth, 1897).

In 1897, in an article on monopoly pricing, Edgeworth criticized Cournot's exact solution to the duopoly problem with quantity adjustments as well as Bertrand's "instantly competitive" result in a duopoly model with price adjustment. At the same time, Edgeworth showed how price competition between two firms with capacity constraints and/or rising marginal cost curves resulted in indeterminacy.

Edgeworth criticized the marginal productivity theory in several articles (1904, 1911), and tried to refine the neo-classical theory of distribution on a more solid basis. Although his work in questions of war finance during World War I was original, they were a bit too theoretical and did not achieve the practical influence he had hoped.

Edgeworth's limit theorem relates to equilibrium of supply and demand in a free market. See Edgeworth's limit theorem.

Though Edgeworth's economic ideas were original and in depth, his contemporaries frequently complained of his manner of expression for lack of clarity. He was prone to verbosity and coining obscure words without providing definition for the reader.

Publications of Francis Ysidro Edgeworth

Collections/Selections

Individual works

Notes

  1. ^ Francis Ysidro Edgeworth at cepa.newschool.edu
  2. ^ "Alfred Marshall (1881) "Review of Edgeworth's Mathematical Psychics"". Cepa.newschool.edu. http://www.newschool.edu/nssr/het/texts/marshall/marshedgew81.htm. Retrieved 2010-06-20. 
  3. ^ W.S. Jevons's "Review of Mathematical Psychics", 1881 at cepa.newschool.edu
  4. ^ a b http://cepa.newschool.edu/het/profiles/edgew.htm

See also

References

External links

Academic offices
Preceded by
Lord George Hamilton		 President of the Royal Statistical Society
1912–1914		 Succeeded by
Reginald Welby
Pre-modern
Early modern
Modern
20th century
Related