George Akerlof

Name	George Akerlof
School tradition	Keynesian economics
Color	orange
Birth date	June 17, 1940
Birth place	New Haven, Connecticut
Nationality	United States
Institution	University of California, Berkeley
Alma mater	MIT (Ph.D.)Yale University (B.A.)
Influences	Robert Solow
Influenced	Robert Shiller
Contributions	Information asymmetryEfficiency wages
Awards	Nobel Prize in Economics (2001)
Repec prefix	e | repec_id = pak7

George Arthur Akerlof (born June 17, 1940) is an American economist and Koshland Professor of Economics at the University of California, Berkeley. He won the 2001 Nobel Prize in Economics (shared with Michael Spence and Joseph E. Stiglitz).

The Market for Lemons and Asymmetric Information

Akerlof is perhaps best known for his article, "The Market for Lemons: Quality Uncertainty and the Market Mechanism", published in Quarterly Journal of Economics in 1970, in which he identified certain severe problems that afflict markets characterized by asymmetrical information, the paper for which he was awarded the Nobel Prize. }} In Efficiency Wage Models of the Labor Market, Akerlof and coauthor Janet Yellen (his wife) propose rationales for the efficiency wage hypothesis in which employers pay above the market-clearing wage, in contradiction to the conclusions of neoclassical economics.

Identity Economics

In his latest work, Akerlof and collaborator Rachel Kranton of Duke University introduce social identity into formal economic analysis, creating the field of Identity Economics. Drawing on social psychology and many fields outside of economics, Akerlof and Kranton argue that individuals do not have preferences only over different goods and services. They also adhere to social norms for how different people should behave. The norms are linked to a person's social identities. These ideas first appeared in their article "Economics and Identity", published in Quarterly Journal of Economics in 2000.

Reproductive technology shock

In the late 1990s Akerlof's ideas attracted the attention of some on both sides of the debate over legal abortion. In articles appearing in The Quarterly Journal of Economics, The Economic Journal, and other forums Akerlof described a phenomenon that he labeled "reproductive technology shock." He contended that the new technologies that had helped to spawn the late twentieth century sexual revolution, modern contraceptives and legal abortion had not only failed to suppress the incidence of out-of-wedlock childbearing but also had actually worked to increase it. According to Akerlof, for women who did not use them, these technologies had largely transformed the old paradigm of socio-sexual assumptions, expectations, and behaviors in ways that were especially disadvantageous. For example, the availability of legal abortion now allowed men to view their offspring as the deliberate product of female choice rather than as the chance product of sexual intercourse. Thus it encouraged biological fathers to reject not only any supposed obligation to marry the mother but also the very idea of paternal obligation.

While Akerlof did not recommend legal restrictions on either abortion or the availability of contraceptives, his analysis seemed to lend support to those who did. Thus, a scholar strongly associated with liberal and Democratic-leaning policy positions, has been approvingly cited by conservative and Republican-leaning analysts and commentators.

Looting

In 1993 Akerlof and Paul Romer brought forth , describing how under certain conditions, owners of corporations will decide it is more profitable for them personally to 'loot' the company and 'extract value' from it instead of trying to make it grow and prosper. IE:

"Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Bankruptcy for profit occurs most commonly when a government guarantees a firm's debt obligations."

Yves Smith argues in her book "Econned" that Akerlof and Romer's "Looting" theory applies to the subprime mortgage crisis and the Financial crisis of 2007-2010. She argues that the 'Looted' companies in this case are banks and others who were 'looted' by certain traders and executives within those companies.

Address to American Economic Association

In his 2007 presidential Address to the American Economic Association, Akerlof proposed natural norms that decision makers have for how they should behave. In this lecture Akerlof proposed a new agenda for macroeconomics with inclusion of those norms.

He is a trustee of the Economists for Peace and Security, and co-director of the Social Interactions, Identity and Well-Being program at the Canadian Institute for Advanced Research (CIFAR). He is in the advisory board of the Institute for New Economic Thinking. He was elected a Fellow of the American Academy of Arts and Sciences in 1985.

Personal

His father was Swedish and his mother a Jewish German-American. Akerlof graduated from the Lawrenceville School from which he received the School's highest award (the Lawrenceville Medal) in 2002, and received his B.A. degree from Yale University in 1962, and his Ph.D. degree from MIT in 1966, and has taught at the London School of Economics. His wife Janet Yellen is the current Vice Chairman of the Board of Governors of the Federal Reserve System and a professor of economics at UC Berkeley, and was the former President and CEO of the Federal Reserve Bank of San Francisco and former Chair of President Bill Clinton's Council of Economic Advisors. His son Robert Akerlof is currently a postdoctoral associate in Applied Economics at the MIT Sloan School of Management.

Bibliography

Akerlof, George A., and Rachel E. Kranton. 2010. Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being, Princeton, New Jersey: Princeton University Press. ISBN 978-0-691-14648-5. Description & TOC, "Introduction," pp. 3-8, and preview.

:* _____, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, 19(1), pp. 9–32. :* _____, 2000. "Economics and Identity," Quarterly Journal of Economics, 115(3), pp. 715–53.

Akerlof, George A. and Robert J. Shiller. 2009. . Princeton, New Jersey: Princeton University Press. ISBN 978-0-691-14233-6.

Akerlof, George. "Thoughts on global warming." chinadialogue (2006). 14 July 2008.

Akerlof, George A. 2005. Explorations in Pragmatic Economics, Oxford University Press. ISBN 978-0-19-925390-6.

Akerlof, George A., and Janet Yellen. 1986. Efficiency Wage Models of the Labor Market. Orlando, Fla.: Academic Press.

Akerlof, George A. 1984. An Economic Theorist's Book of Tales, Cambridge University Press.

Akerlof, George A., Romer, Paul M.,Hall, Robert E., Mankiw N. Gregory Brookings Papers on Economic Activity, "Looting: The Economic Underworld of Bankruptcy for Profit" Vol. 1993, No. 2 (1993), pp. 1–73

References

External links

George A. Akerlof at University of California, Berkeley

Identity Economics

Biography at Encyclopedia Britannica

Behavioral Macroeconomics and Macroeconomic Behavior 2001 lecture at NobelPrize.org

Profile and Papers at Research Papers in Economics/RePEc

;Articles

Akerlof's criticism of Bush, February 12, 2003

Akerlof slams Bush government, July 29, 2003

Category:1940 births Category:Living people Category:Academics of the London School of Economics Category:American economists Category:American Nobel laureates Category:American people of German-Jewish descent Category:American people of Swedish descent Category:Fellows of the Econometric Society Category:Guggenheim Fellows Category:Information economists Category:Lawrenceville School alumni Category:Members of the United States National Academy of Sciences Category:Nobel laureates in Economics Category:Massachusetts Institute of Technology alumni Category:People from New Haven, Connecticut Category:People from Princeton, New Jersey Category:University of California, Berkeley faculty Category:Yale University alumni Category:Fellows of the American Academy of Arts and Sciences