Council of Economic Advisers
Agency overview
Formed	1946
Headquarters	Eisenhower Executive Office Building
Employees	About 27
Agency executives	Alan Krueger, Chairman Katharine Abraham, Member Carl Shapiro, Member
Parent agency	Executive Office of the President of the United States
Website
Council of Economic Advisers

The Council of Economic Advisers (CEA) is an agency within the Executive Office of the President that advises the President of the United States on economic policy.^[1] The CEA provides much of the objective empirical research for the White House and prepares the annual Economic Report of the President.

Organization[link]

The current Chairman of the CEA is Alan Krueger, who was appointed by President Obama on August 29, 2011 is a former professor at Princeton University.^[2] The two other current Members of the CEA are Katharine Abraham and Carl Shapiro, who were confirmed on April 14, 2011.^[3] The previous two Chairs, Austan Goolsbee and Christina Romer, resigned their posts in August 2011 and September 2010, respectively to return to positions in academia.^[4]

The council's three members are nominated by the president and approved by the United States Senate. The staff of the council includes about 20 academic economists, plus three permanent economic statisticians.

Current staff[link]

• Chair: Alan Krueger
• Members: Katharine Abraham, Carl Shapiro
• Chief Economist: Judy Hellerstein
• Director of Macroeconomic Forecasting: Steven N. Braun
• Senior Economists:^[5]
  • Gene Amromin: Housing, Tax, and Budget
  • Lee Branstetter: International Trade
  • Tom Buchmueller: Health
  • Lisa D. Cook: International Finance, Entrepreneurship, and Innovation
  • Benjamin Harris: Tax, Budget, and Retirement
  • Rob Johansson: Environment, Energy, and Agriculture
  • Craig Peters: Innovation, Regulation, and Industry
  • Chuck Pierret: Labor
  • Daniel Vine: Macroeconomics
• Staff Economists:
  • Jeff Borowitz
  • Colleen Carey
  • David Cho
  • Judd Cramer
  • Reid Stevens
• Research Economists:
  • Julia Yoo
  • Pedro Spivakovsky-Gonzalez
• Research Assistants
  • Matt Aks
  • Sandra Levy
  • Carter Mundell
  • Seth Werfel

• Statistical Office
  • Adrienne T. Pilot, Director
  • Statistical Office Analysts: Brian Amorosi & Lindsay Kuberka

History[link]

The council was established by the Employment Act of 1946 to provide presidents with objective economic analysis and advice on the development and implementation of a wide range of domestic and international economic policy issues. In its first seven years the CEA made five technical advances in policy making, including the replacement of a "cyclical model" of the economy by a "growth model," the setting of quantitative targets for the economy, use of the theories of fiscal drag and full-employment budget, recognition of the need for greater flexibility in taxation, and replacement of the notion of unemployment as a structural problem by a realization of a low aggregate demand.^[6]

In 1949 a dispute broke out between Chairman Edwin Nourse and member Leon Keyserling. Nourse believed a choice had to be made between "guns or butter" but Keyserling argued that an expanding economy permitted large defense expenditures without sacrificing an increased standard of living. In 1949 Keyserling gained support from powerful Truman advisors Dean Acheson and Clark Clifford. Nourse resigned as chairman, warning about the dangers of budget deficits and increased funding of "wasteful" defense costs. Keyserling succeeded to the chairmanship and influenced Truman's Fair Deal proposals and the economic sections of National Security Council Resolution 68 that, in April 1950, asserted that the larger armed forces America needed would not affect living standards or risk the "transformation of the free character of our economy."^[7]

During the 1953-54 recession, the CEA, headed by Arthur Burns deployed non-traditional neo-keynesian interventions, which provided results later called the "steady fifties" wherein many families stayed in the economic "middleclass" with just one family wage-earner. The Eisenhower Administration supported an activist contracyclical approach that helped to establish Keynesianism as a possible bipartisan economic policy for the nation. Especially important in formulating the CEA response to the recession—accelerating public works programs, easing credit, and reducing taxes—were Arthur F. Burns and Neil H. Jacoby.^[8]

The 1978 Humphrey-Hawkins Act required each administration to move toward full employment and reasonable price stability within a specific time period. It has had the effect of making the CEA's annual economic report highly political in nature, as well as highly unreliable and inaccurate over the standard two or five year projection periods.^[9]

Past chairs and members[link]

Past chairs include:

Other influential past staff members include:^{[list membership disputed]}

• Karl M. Arndt^[10]
• John D. Clark 1946-1953
• Otto Eckstein 1964-1966
• Hendrik S. Houthakker 1969-1971
• Robert Z. Lawrence 1999-2001
• Catherine L. Mann 1991-1992
• Michael Mussa 1986–1988
• William D. Nordhaus 1977-1979
• James Tobin 1961-1962
• Paul Krugman Early 1980s
• Cecilia Rouse (2009-2011)

References[link]

Sources[link]

External links[link]

• Council of Economic Advisers home page
• Records of the Office of the Council of Economic Advisors, 1953-61, Dwight D. Eisenhower Presidential Library
• Papers of Arthur F. Burns, Dwight D. Eisenhower Presidential Library
• Papers of Raymond J. Saulnier, Dwight D. Eisenhower Presidential Library

v t e Executive Office of the President of the United States Council of Economic Advisers Council on Environmental Quality National Security Council Homeland Security Council Office of Administration Office of Management and Budget Office of National Drug Control Policy Office of Science and Technology Policy Office of the United States Trade Representative President's Economic Recovery Advisory Board President's Intelligence Advisory Board White House Office Office of the Vice President

Alan Krueger
Chairman of the Council of Economic Advisers
Incumbent
Assumed office November 3, 2011
President	Barack Obama
Preceded by	Austan Goolsbee
Assistant Secretary of the Treasury for Economic Policy
In office May 7, 2009 – October 16, 2010
President	Barack Obama
Preceded by	Phillip Swagel
Succeeded by	John Bellows (Acting)
Personal details
Born	(1960-09-17) September 17, 1960 (age 51) Livingston, New Jersey, U.S.
Political party	Democratic Party
Alma mater	Cornell University Harvard University
Profession	Economist

Alan Bennett Krueger (born September 17, 1960) is an American economist, Bendheim Professor of Economics and Public Affairs at Princeton University and Research Associate at the National Bureau of Economic Research. On March 7, 2009, he was nominated by President Barack Obama to be United States Assistant Secretary of the Treasury for economic policy.^[1] In October 2010, he announced his resignation from the Treasury Department, to return to Princeton University.^[2] He is among the 50 highest ranked economists in the world according to IDEAS/RePEc. On August 29, 2011, he was nominated by Obama to be chairman of the White House Council of Economic Advisers,^[3][4] and on November 3, 2011, the Senate unanimously confirmed his nomination.^[5]

Early life[link]

Krueger grew up in Livingston, New Jersey, and graduated from Livingston High School in 1979.^[6]

Career[link]

Krueger developed and applied the method of natural experiments to study the effect of education on earnings, the minimum wage on employment, and other issues.

Krueger compared restaurant jobs in New Jersey, which raised its minimum wage, to restaurant jobs in Pennsylvania, which did not, and found that restaurant employment in New Jersey increased, while it decreased in Pennsylvania.^[7] The results were later disputed.^[8]

His books, Education Matters: Selected Essays by Alan B. Krueger and (with James Heckman) Inequality in America: What Role for Human Capital Policies? review the available research relating to positive externalities accruing to society from increased government investment in educating the children of the poor. His summary of the available research shows relatively high returns to society from educational investments that have been shown in numerous formal and natural experiments to reduce crime and recidivism. At one point, he concluded he does "not envision investment in human capital development as the sole component of a program to address the adverse consequences of income inequality. It is part of the solution, but not the whole solution. In principle, the optimal governmental policy regarding income inequality would employ multiple instruments, up to the point at which the social benefit per additional dollar of cost of each instrument is equal across all instruments."^[9]

In his book, What Makes a Terrorist: Economics and the Roots of Terrorism (2007), he wrote that in contrast to the assumption that terrorists come from impoverished, uneducated environments, terrorists often come from middle-class, college-educated backgrounds.^[10][11]

From 1994-95 he served as Chief Economist at the United States Department of Labor. He received the Kershaw Prize, Mahalanobis Prize, and IZA Prize (with David Card), and is a fellow of the American Academy of Arts and Sciences, Society of Labor Economists, Econometric Society and American Academy of Political and Social Science. He is a member of the Executive and Supervisory Committee (ESC) of CERGE-EI, an academic institution located in Prague, Czech Republic.^[12]

Krueger received his Bachelor's degree from Cornell University's School of Industrial & Labor Relations (with honors), and in 1987 he received his Ph.D. in Economics from Harvard University. He has also published many books on issues related to education, labor markets and income distribution. He is also known for his work on the Environmental Kuznets Curve. Between 2000 and 2006 he wrote for the New York Times Economic Scene column.^[13]

Books[link]

• Card, David; Krueger, Alan B. (1995), Myth and Measurement: The New Economics of the Minimum Wage, Princeton: Princeton University Press, ISBN 0-691-04823-1 .
• Krueger, Alan B. (2001), Education Matters: Selected Essays by Alan B. Krueger, Cheltenham, UK: Edward Elgar, ISBN 1-84064-106-1 .
• Heckman, James J.; Krueger, Alan B. (2003). Inequality in America: What Role for Human Capital Policies?. MIT Press. ISBN 0-262-08328-0. .
• Krueger, Alan B. (2007), What Makes a Terrorist: Economics and the Roots of Terrorism, Princeton: Princeton University Press, ISBN 0-691-13438-3 .

References[link]

External links[link]

• Home page
• New York Times Economic Scene Columns
• IDEAS/RePEc
• Alan B. Krueger to discuss the economics and roots of Terrorism at the Wayback Machine (archived March 11, 2007)

v t e Cabinet of President Barack Obama (since 2009)   Cabinet Secretary of State Hillary Clinton (2009–present) Secretary of the Treasury Timothy Geithner (2009–present) Secretary of Defense Robert Gates (2009–2011) Leon Panetta (2011–present) Attorney General Eric Holder (2009–present) Secretary of the Interior Ken Salazar (2009–present) Secretary of Agriculture Tom Vilsack (2009–present) Secretary of Commerce Gary Locke (2009–2011) John Bryson (2011–present) Secretary of Labor Hilda Solis (2009–present) Secretary of Health and Human Services Kathleen Sebelius (2009–present) Secretary of Education Arne Duncan (2009–present) Secretary of Housing and Urban Development Shaun Donovan (2009–present) Secretary of Transportation Ray LaHood (2009–present) Secretary of Energy Steven Chu (2009–present) Secretary of Veterans Affairs Eric Shinseki (2009–present) Secretary of Homeland Security Janet Napolitano (2009–present)   Cabinet-level Vice President Joe Biden (2009–present) White House Chief of Staff Rahm Emanuel (2009–2010) William Daley (2011–2012) Jacob Lew (2012–present) Administrator of the Environmental Protection Agency Lisa Jackson (2009–present) Director of the Office of Management and Budget Peter Orszag (2009–2010) Jacob Lew (2010–2012) Trade Representative Ron Kirk (2009–present) Ambassador to the United Nations Susan Rice (2009–present) Chair of the Council of Economic Advisers Christina Romer (2009–2010) Austan Goolsbee (2010–2011) Alan Krueger (2011–present) Director of the Central Intelligence Agency Leon Panetta (2009–2011) David Petraeus (2011–present) Administrator of the Small Business Administration Karen Mills (2012–present)* * took office in 2009, raised to cabinet-rank in 2012 See also: Confirmations of Barack Obama's Cabinet

v t e Current members of the Cabinet of the United States Obama Biden Bryson Chu Clinton Donovan Duncan Geithner Holder Jacksonc Kirkc Kruegerc LaHood Lewc Millsc Napolitano Panetta Ricec Salazar Sebelius Solis Shinseki Vilsack Zientsca c - cabinet-level; a - acting

Laura D’Andrea Tyson
16th Chair of the Council of Economic Advisors
In office 1993–1995
President	Bill Clinton
Preceded by	Michael Boskin
Succeeded by	Joseph Stiglitz
Personal details
Born	(1947-06-28) June 28, 1947 (age 64) New Jersey
Alma mater	Smith College Massachusetts Institute of Technology
Profession	Macroeconomics

Laura D'Andrea Tyson (born June 28, 1947) is an American economist and former Chair of the US President's Council of Economic Advisers during the Clinton Administration. She also served as Director of the National Economic Council. She is currently a professor at the Haas School of Business of the University of California, Berkeley.

Early life and education[link]

Tyson was born Laura D'Andrea in New Jersey.^[1] Her father was Italian American and her mother was of Swedish and Dutch descent.^[2] Tyson graduated summa cum laude with a B.A. in Economics from Smith College in 1969 and earned her Ph.D. in Economics from the Massachusetts Institute of Technology in 1974.^[3] She joined the faculty of the economics department at Princeton University in 1974 and remained in the position until 1977 when she became a professor of economics at the University of California, Berkeley. She was appointed a professor of business administration in 1990. She is married to writer Erik S. Tarloff and has one son, Elliot S. Tarloff. Her brother is Alan D'Andrea, an American cancer researcher and the Alvan T. and Viola D. Fuller American Cancer Society Professor of Radiation Oncology at Harvard Medical School.

Career[link]

From 2002 to 2006, Tyson was the first female Dean of London Business School. From 1998 to 2001, she was Dean of the Haas School of Business. She served in the Clinton Administration as Chairman of the President's Council of Economic Advisers from 1993 to 1995. She was a spokesperson in favour of GATT, arguing with Sir James Goldsmith on Charlie Rose that American jobs will be increased by the trade agreement. Tyson was Director of the National Economic Council from 1995 to 1996. Tyson has been a member of the Council on Foreign Relations since 1987, a board director of Morgan Stanley since 1997, a board director of AT&T Inc. since 1999, a board director of Eastman Kodak and is a member of the Committee on Capital Markets Regulation. In December, 2009 it was announced that Tyson will join CB Richard Ellis Board of Directors on March 4, 2010.^[4] Tyson also sits on the QFINANCE Strategic Advisory Board.

Tyson at the World Economic Forum in Davos, Switzerland, 2007

Tyson has published a number of books and articles on industrial competitiveness, trade, and also on the economies of Central Europe and their transitions to market systems.^[5][6]

An Economic Viewpoint columnist for BusinessWeek magazine, Tyson writes regularly about domestic and international economic policy matters in The Washington Post, The New York Times and other nationally and internationally syndicated newspapers and magazines.

In addition to her professorship at UC Berkeley, Tyson is also a member of the Board of Trustees at UC Berkeley's Blum Center for Developing Economies.^[7] The Center is focused on finding solutions to address the crisis of extreme poverty and disease in the developing world.^[8]

Tyson joined the Berkeley Research Group, an expert services advisory firm co-founded by David Teece, as a special advisor in 2010.^[9] Tyson had consulted for LECG, another expert advisory firm founded by Teece, from 1997 to 2001.^[10]

References[link]

External links[link]

• Haas School of Business Bio.
• "The First Lady of Business", The Observer
• Tyson testimony on H.R. 2652 (1997)
• Response to Tyson/Sherry Report
• Debate with Sir James Goldsmith over GATT in 1994
• Tyson's profile at LittleSis

Austan Goolsbee
Chairperson of the Council of Economic Advisers
In office September 9, 2010 – August 5, 2011
President	Barack Obama
Preceded by	Christina Romer
Succeeded by	Alan Krueger
Personal details
Born	(1969-08-18) August 18, 1969 (age 42) Waco, Texas, U.S.
Political party	Democratic Party
Alma mater	Yale University Massachusetts Institute of Technology

Austan Dean Goolsbee (born August 18, 1969) is an American economist and the Robert P. Gwinn Professor of Economics at The University of Chicago's Booth School of Business.^[1] Goolsbee formerly served as the Chairman of the Council of Economic Advisers and was the youngest member of the cabinet of President Barack Obama.^[2]

Goolsbee served on the three-member Council from the start of the Obama Administration. He advised President Obama during his 2004 U.S. Senate race and was senior economic policy adviser during the 2008 Obama Presidential Campaign. He took over in September 2010 as the Council's Chairman, replacing Christina Romer, who had left to return to a teaching position at the University of California at Berkeley.^[3] On June 6, 2011, he announced that he was departing the administration and returning to the University of Chicago.^[4]

Early life and education[link]

Goolsbee was born in Waco, Texas,^[5] the son of Linda Catherine (née Dean) and Arthur Leon Goolsbee. He was raised primarily in Whittier, California.^[6]

He graduated from Milton Academy and received both his B.A. summa cum laude and M.A. in economics from Yale University in 1991 and went on to receive his Ph.D. in economics at the Massachusetts Institute of Technology in 1995. He was an Alfred P. Sloan Fellow (2000–02) and Fulbright Scholar (2006–07).

At Yale, Goolsbee was a member of the Yale Political Union, the improv comedy troupe Just Add Water, Skull and Bones, and the Yale Debate Association. He and debate partner David Gray won the APDA National Debate Team of the Year competition in 1991. He and partner Dahlia Lithwick were runners up for the award in 1990. As a high school student, Goolsbee won the national championship in International Extemporaneous Speaking (IX) in 1987.

Academia[link]

Goolsbee has been a Research Fellow at the American Bar Foundation,^[7] Research Associate at the National Bureau of Economic Research in Cambridge, Massachusetts,^[8] and a member of the Panel of Economic Advisors to the Congressional Budget Office.^[9] He served as Senior Economist to the Progressive Policy Institute (PPI).^[10]

Goolsbee's academic research focuses on the Internet, the new economy, government policy, and taxes. He taught a class on economics and policy in the telecom, media and technology industries. He is known in political circles as a centrist and in academic circles as an empirical economist. He focuses on human activity in natural settings to find economic explanations for how people behave.^[11]

Goolsbee was an award winning journalist while serving as an academic. Goolsbee is the former host of the television show History's Business on the History Channel. In April 2006, Goolsbee began writing for the Economic Scene column in The New York Times. This column was later moved to Sundays and renamed the Economic View. Prior to this, he wrote the "Dismal Science" column for Slate.com, for which he won the 2006 Peter Lisagor Award for Exemplary Journalism. He has published scores of papers in various peer-reviewed journals and books.^[12]

Public service[link]

Support of Barack Obama's campaigns[link]

He has been Barack Obama's economic advisor since Obama's successful U.S. Senate campaign in Illinois. He advised Barack Obama in his 2004 Senate race and was the senior economic advisor to the 2008 Obama presidential campaign.^[13][14]

At one point during the primary of Obama's 2008 presidential campaign, Goolsbee was alleged to have told Canadian consular officials in Chicago that Obama's political position on the North American Free Trade Agreement was "more reflective of political maneuvering than policy."^[15][16] The allegation was refuted by Goolsbee, the Obama campaign, and the Canadian government and subsequent press examination called the claim into question.^[17] Goolsbee remained Obama's senior economic adviser through the rest of the primary and the general election including many television debates with John McCain's economic advisers.^{[citation needed]}

Service in Obama administration[link]

Goolsbee was nominated by Obama to serve on the Council of Economic Advisers on his first day in office. Goolsbee was confirmed by the Senate on March 10, 2009.^[18] He concurrently served as chief economist at the Economic Recovery Advisory Board. He was designated chair of the Council on September 10, 2010 succeeding Christina Romer.^[19]

In these capacities, Goolsbee has served as a media surrogate for the Obama Administration and his skill on television has been noted in the media.^[20][21]

Goolsbee was interviewed by Jon Stewart on August 11, 2009;^[22] February 1, 2010;^[23] October 25, 2010; February 24, 2011; August 3, 2011.

He also appeared in Daily Show segments on November 11, 2009,^[24] where he was interviewed by Josh Gad about whether the Cash for Clunkers program had ruined demolition derby and on March 17, 2009^[25] where he said that executives at AIG deserved the "Nobel prize for evil". Jon Stewart described him as "Eliot Ness meets Milton Friedman".

In 2009, he was voted the Funniest Celebrity in Washington. One practical joke was giving a dead fish to the departing White House chief of staff Rahm Emanuel, who has been known to give dead fish to political opponents.^[26]

On June 15, 2009, he appeared as a guest on The Colbert Report.

He made a second appearance on the Colbert Report on October 13, 2010, where he defended Obama's tax cut policies which would allow tax breaks to expire for Americans earning more than $250,000 per year. Goolsbee's main arguments were that 98% of Americans would still receive a tax break under the Obama proposal and that the country would have to borrow money to fund tax breaks for the wealthiest Americans if all tax breaks were extended. In November 2010, however, the House of Representatives swung to a Republican majority who threatened that they would not extend the expiring tax cuts on that 98% without extending the cuts for the wealthiest 2% as well, and in December Obama signed a compromise deal to extend the cuts for all.

In January 2011, Goolsbee expressed the administration's confidence that the U.S. debt limit would be raised, noting that rhetoric from some members of Congress, who suggested the routine increase should be opposed, "(appear) to reflect a deep misunderstanding of the consequences of default".^[27][28] Goolsbee agreed with Tim Geithner and numerous conservative commentators "that the debt ceiling must be allowed to rise", commenting that "playing chicken" with a default of government liabilities could have a catastrophic impact on the U.S. economy.^[29][30] He noted that the Obama administration sought to fuel economic growth during the continuing gradual recovery by "focusing on spurring investment and improving U.S. exports and innovation" but noted that "in the medium run, a series of tough choices" would need to be made and that the president's budget would indicate his willingness to make budget cuts a part of the long-term plan.^[31]

On June 6, 2011, Goolsbee announced that he would return to the University of Chicago, claiming that the economy was "a million miles from where it started". ^[4] He is expected to play an informal role from Chicago in Obama's 2012 campaign.^[32]

Recognition[link]

Over the years he has been named one of the 100 Global Leaders for Tomorrow by the World Economic Forum in Switzerland, one of the six "Gurus of the Future" by the Financial Times, one of the 40 Under 40 by Crain's Chicago Business, and one of the 30 Under 30 by the Chicago Sun-Times.^[12] He topped The New Yorker's list of the Ten Most Intriguing Political Personalities of 2010.^[33] Salon.com named him to its list of the 15 Sexiest Men of 2010.^[34] To this he remarked on NPR's quiz show 'Wait Wait...Don't Tell Me,' "I didn't even know Salon was printed in Braille."^[35] Additionally, the National Forensic League recognized Goolsbee, a former national champion in extemporaneous speaking, as the 2011 Communicator of the Year.^[36]

Press profiles of him include those done by the New York Times, NPR, George Will,^[37] the Financial Times,^[38] Reuters TV,^[39] the Chicago Tribune, Crain's Chicago Business,^[40] and Politico.^[41]

Personal life[link]

Goolsbee married Robin Winters on November 1, 1997. She was a management consultant with McKinsey & Company at the time and earlier the director of business development at MTV International.^[42] They have a daughter and two sons.

References[link]

External links[link]

Wikimedia Commons has media related to: Austan Goolsbee

• Staff Director and Chief Economist Austan Goolsbee at the President's Economic Recovery Advisory Board
• Austan Goolsbee profile at the University of Chicago Experts panel
• Austan Goolsbee at WhoRunsGov at The Washington Post
• Appearances on C-SPAN
• Austan Goolsbee on Charlie Rose
• Austan Goolsbee collected news and commentary at The New York Times
• Works by or about Austan Goolsbee in libraries (WorldCat catalog)
• Austan Goolsbee at the Internet Movie Database
• Austan Goolsbee, "Democratizing Capitalism", July 22, 2006, and "Why Deficits Still Matter", April 30, 2007 at the Democratic Leadership Committee

v t e Cabinet of President Barack Obama (since 2009)   Cabinet Secretary of State Hillary Clinton (2009–present) Secretary of the Treasury Timothy Geithner (2009–present) Secretary of Defense Robert Gates (2009–2011) Leon Panetta (2011–present) Attorney General Eric Holder (2009–present) Secretary of the Interior Ken Salazar (2009–present) Secretary of Agriculture Tom Vilsack (2009–present) Secretary of Commerce Gary Locke (2009–2011) John Bryson (2011–present) Secretary of Labor Hilda Solis (2009–present) Secretary of Health and Human Services Kathleen Sebelius (2009–present) Secretary of Education Arne Duncan (2009–present) Secretary of Housing and Urban Development Shaun Donovan (2009–present) Secretary of Transportation Ray LaHood (2009–present) Secretary of Energy Steven Chu (2009–present) Secretary of Veterans Affairs Eric Shinseki (2009–present) Secretary of Homeland Security Janet Napolitano (2009–present)   Cabinet-level Vice President Joe Biden (2009–present) White House Chief of Staff Rahm Emanuel (2009–2010) William Daley (2011–2012) Jacob Lew (2012–present) Administrator of the Environmental Protection Agency Lisa Jackson (2009–present) Director of the Office of Management and Budget Peter Orszag (2009–2010) Jacob Lew (2010–2012) Trade Representative Ron Kirk (2009–present) Ambassador to the United Nations Susan Rice (2009–present) Chair of the Council of Economic Advisers Christina Romer (2009–2010) Austan Goolsbee (2010–2011) Alan Krueger (2011–present) Director of the Central Intelligence Agency Leon Panetta (2009–2011) David Petraeus (2011–present) Administrator of the Small Business Administration Karen Mills (2012–present)* * took office in 2009, raised to cabinet-rank in 2012 See also: Confirmations of Barack Obama's Cabinet

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Joseph Stiglitz ForMemRS FBA
17th Chair of the Council of Economic Advisors
In office June 28, 1995 – February 13, 1997
President	Bill Clinton
Preceded by	Laura Tyson
Succeeded by	Janet Yellen
World Bank Chief Economist
In office 1997–2000
Preceded by	Michael Bruno
Succeeded by	Nicholas Stern
Personal details
Born	(1943-02-09) February 9, 1943 (age 69) Gary, Indiana
Political party	Democratic
Spouse(s)	Anya Schiffrin
Alma mater	Amherst College Massachusetts Institute of Technology
Profession	Economist

Joseph Eugene Stiglitz, ForMemRS, FBA, (born February 9, 1943) is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank.

In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001, he has been a member of the Columbia faculty, and has been a University Professor since 2003. He also chairs the University of Manchester's Brooks World Poverty Institute and is a member of the Pontifical Academy of Social Sciences. Stiglitz is an honorary doctor of Durham Business School,^[1] an honorary doctor at the Charles University, an honorary professor at Tsinghua University School of Public Policy and Management and a member of the Executive and Supervisory Committee (ESC)^[2] of CERGE-EI in Prague. Stiglitz is one of the most frequently cited economists in the world.^[3]

Biography[link]

Stiglitz was born in Gary, Indiana, to Jewish parents, Charlotte and Nathaniel Stiglitz. From 1960 to 1963, he studied at Amherst College, where he was a highly active member of the debate team and President of the Student Government. He went to the Massachusetts Institute of Technology (MIT) for his fourth year as an undergraduate, where he later pursued graduate work. His undergraduate degree was awarded from Amherst College. From 1965 to 1966, he moved to the University of Chicago to do research under Hirofumi Uzawa who had received an NSF grant. He studied for his PhD from MIT from 1966 to 1967, during which time he also held an MIT assistant professorship. Stiglitz stated that the particular style of MIT economics suited him well - simple and concrete models, directed at answering important and relevant questions.^[4] From 1966 to 1970 he was a research fellow at the University of Cambridge: he arrived at Fitzwilliam House as a Fulbright Scholar in 1965 and then won a Tapp Junior Research Fellowship at Gonville and Caius College.^[5] In subsequent years, he held academic positions at Yale, Stanford, Duke, Oxford, and Princeton.^[6] Stiglitz is now a Professor at Columbia University, with appointments at the Business School, the Department of Economics and the School of International and Public Affairs (SIPA), and is editor of The Economists' Voice journal with J. Bradford DeLong and Aaron Edlin. He also gives classes for a double-degree program between Sciences Po Paris and École Polytechnique in 'Economics and Public Policy'. As of 2005 he chairs The Brooks World Poverty Institute at the University of Manchester.^[7][8] Stiglitz is a New-Keynesian economist.^[9][10]

In addition to making numerous influential contributions to microeconomics, Stiglitz has played a number of policy roles. He served in the Clinton Administration as the chair of the President's Council of Economic Advisors (1995 – 1997). At the World Bank, he served as Senior Vice President and Chief Economist (1997 – 2000), in the time when unprecedented protest against international economic organizations started, most prominently with the Seattle WTO meeting of 1999. He was fired by the World Bank for expressing dissent with its policies.^[11] He was a lead author for the Intergovernmental Panel on Climate Change.

He is a member of Collegium International, an organization of leaders with political, scientific, and ethical expertise whose goal is to provide new approaches in overcoming the obstacles in the way of a peaceful, socially just and an economically sustainable world. He is also a member of the scientific committee of the Fundacion IDEAS, a Spanish think tank.^[12]

Stiglitz has advised American President Barack Obama, but has also been sharply critical of the Obama Administration's financial-industry rescue plan.^[13] Stiglitz said that whoever designed the Obama administration's bank rescue plan is "either in the pocket of the banks or they’re incompetent."^[14]

In October 2008 he was asked by the President of UN's General Assembly to chair a commission entrusted with drafting a report on the reasons for and solutions to the financial crisis.^[15] In response, the commission produced the Stiglitz Report.

On July 25, 2011, Stiglitz participated to the "I Foro Social del 15M" organized in Madrid (Spain) expressing his support to the 2011 Spanish protests.^[16]

In 2011, he was named by Foreign Policy magazine on its list of top global thinkers.^[17]

Contributions to economics[link]

Stiglitz at a conference in Mexico in 2009.

Information asymmetry[link]

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Stiglitz's most famous research was on screening, a technique used by one economic agent to extract otherwise private information from another. It was for this contribution to the theory of information asymmetry that he shared the Nobel Memorial Prize in Economics^[4] in 2001 "for laying the foundations for the theory of markets with asymmetric information" with George A. Akerlof and A. Michael Spence.

Before the advent of models of imperfect and asymmetric information, the traditional neoclassical economics literature had assumed that markets are efficient except for some limited and well defined market failures. More recent work by Stiglitz and others reversed that presumption, to assert that it is only under exceptional circumstances that markets are efficient. Stiglitz has shown (together with Bruce Greenwald) that "whenever markets are incomplete and/or information is imperfect (which are true in virtually all economies), even competitive market allocation is not constrained Pareto efficient". In other words, they addressed "the problem of determining when tax interventions are Pareto-improving. The approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained Pareto optima."^{[18]:229, abstract} Although these conclusions and the pervasiveness of market failures do not necessarily warrant the state intervening broadly in the economy, it makes clear that the "optimal" range of government recommendable interventions is definitely much larger than the traditional "market failure" school recognizes.^[19] For Stiglitz, there is no such thing as an invisible hand.^[20] According to Stiglitz:^[21]

Whenever there are "externalities"—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well. But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always. The real debate today is about finding the right balance between the market and government. Both are needed. They can each complement each other. This balance will differ from time to time and place to place.

In the opening remarks for his prize acceptance "Aula Magna",^[22] Stiglitz said:^[23]

I hope to show that Information Economics represents a fundamental change in the prevailing paradigm within economics. Problems of information are central to understanding not only market economics but also political economy, and in the last section of this lecture, I explore some of the implications of information imperfections for political processes.

In an interview in 2007, Stiglitz explained further:^[24]

The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith's invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency.

Efficiency wages: the Shapiro-Stiglitz model[link]

In the Shapiro-Stiglitz model of efficiency wages, workers are paid at a level that dissuades shirking. This prevents wages from dropping to market clearing levels. Full employment cannot be achieved because workers would shirk if they were not threatened with the possibility of unemployment. Because of this, the curve for the no-shirking condition (labeled NSC) goes to infinity at full employment.

Stiglitz also did research on efficiency wages, and helped create what became known as the "Shapiro-Stiglitz model" to explain why there is unemployment even in equilibrium, why wages are not bid down sufficiently by job seekers (in the absence of minimum wages) so that everyone who wants a job finds one, and to question whether the neoclassical paradigm could explain involuntary unemployment.^[25] The answer to these puzzles was proposed by Shapiro and Stiglitz in 1984: "Unemployment is driven by the information structure of employment".^[25] Two basic observations undergird their analysis:

1. Unlike other forms of capital, humans can choose their level of effort.
2. It is costly for firms to determine how much effort workers are exerting.

A full description of this model can be found at the links provided.^[26] Some key implications of this model are:

1. Wages do not fall enough during recessions to prevent unemployment from rising. If the demand for labour falls, this lowers wages. But because wages have fallen, the probability of 'shirking' (workers not exerting effort) has risen. If employment levels are to be maintained, through a sufficient lowering of wages, workers will be less productive than before through the shirking effect. As a consequence, in the model wages do not fall enough to maintain employment levels at the previous state, because firms want to avoid excessive shirking by their workers. So, unemployment must rise during recessions, because wages are kept 'too high'.
2. Possible corollary: Wage sluggishness. Moving from one private cost of hiring <w∗> to another private cost of hiring <w∗∗> will require each firm to repeatedly re-optimize wages in response to shifting unemployment rate. Firms cannot cut wages until unemployment rises sufficiently (a coordination problem).

The outcome is never Pareto efficient.

1. Each firm employs too few workers because it faces private cost of hiring rather than the social cost — which is equal to and in all cases. This means that firms do not "internalize" the "external" cost of unemployment - they do not factor how large-scale unemployment harms society when assessing their own costs. This leads to a negative externality as marginal social cost exceeds the firm's marginal cost (MSC = Firm's Private Marginal Cost + Marginal External Cost of increased social unemployment)^{[clarification needed]}
2. There are also negative externalities. Each firm increases the asset value of unemployment <Vu> for all other firms by hiring.^{[clarification needed]} But the first problem clearly dominates since the 'natural rate of unemployment' is always too high.

Some possible practical implications of Stiglitz theorems[link]

While the mathematical validity of Stiglitz et al. theorems are not in question, their practical implications in political economy and their application in real life economic policies have been subject to considerable disagreement and debate.^[27] Stiglitz himself seems to be continuously adapting his own political-economic discourse,^[28] as we can see from the evolution in his positions as initially stated in Whither Socialism? (1994) to his own new positions held on his most recent publications.

Once incomplete and imperfect information are introduced, Chicago-school defenders of the market system cannot sustain descriptive claims of the Pareto efficiency of the real world. Thus, Stiglitz's use of rational-expectations equilibrium assumptions to achieve a more realistic understanding of capitalism than is usual among rational-expectations theorists leads, paradoxically, to the conclusion that capitalism deviates from the model in a way that justifies state action—socialism—as a remedy.^[29]