In this month’s Featured Article, Fred McChesney pays tribute to the work of Armen Alchian and makes the case that he deserves the Nobel prize in economics. I already knew most of what McChesney writes because, after all, I studied under Armen at UCLA. But one thing I hadn’t known until Fred wrote it was that Armen did an event study in the early 1950s, well before the financial economists started doing them, that led him to estimate, correctly, the key ingredients in the hydrogen bomb then being developed.
In my own unpublished tribute to Alchian, I lead with the following:
In 1975, I attended a week-long conference in Hartford,Connecticut at which the star attraction was economist Friedrich Hayek. Hayek had shared the 1974 Nobel prize in economics with Swedish economist Gunnar Myrdal, and he was doing a kind of victory tour of the United States. I told him that I thought Armen Alchian, one of my mentors when I earned my Ph.D. in UCLA’s economics program, also deserved the Nobel prize. I asked Hayek what he thought. Hayek gave his characteristic wince, paused, and said, “There are two economists who deserve the Nobel prize because their work is important but won’t get it because they didn’t do a lot of work: Ronald Coase and Armen Alchian.”
Sixteen years later, in 1991, Ronald Coase did win the Nobel prize. When I got the news, I called Armen and told him the story. He got a kick out of it and seemed to have a new hope that he would win. Of course, he didn’t.
READER COMMENTS
BlackSheep
Nov 4 2009 at 7:09pm
Btw, you guys need to put up his essay entitled The Economic and Social Consequences of Free Tuition over your econlog’s material on education. Prof Alchian manages to succinctly put a good chunk of the discussion over tuition finance in a few pages, and in a very approachable style.
David R. Henderson
Nov 4 2009 at 7:54pm
BlackSheep,
That’s my favorite of his articles. It’s powerful. I read it when I was 18 in college. That’s the first time I’d heard of Alchian. I put together a presentation based on it and sent it–I should have presented it in person but I was too intimidated–to a committee at my college on whether to raise tuition. My argument, of course, that it should raise tuition enough to be self-financing without tax money and I leaned heavily on Alchian’s analogy with the guy who has no income but owns land that is sitting on a pool of oil.
Best,
David
Eric H
Nov 4 2009 at 8:03pm
David–
I read somewhere that Alchian’s influence is pretty broad considering the relative size of his output. As a novice, I’d never heard of him until listening to Walter William’s Econtalk podcast a couple years ago.
Reading through Exchange and Production I can understand why he he is so influential. He and William Allen don’t mince words and include colorful examples throughout. Their use of onion-induced flatulence as part of the total cost of consuming a hot dog is priceless. I’m glad I found out about him when I did; I found an inexpensive copy of Exchange soon thereafter. I was lucky; it looks like they are disappearing fast!
I’m sure the list of prominent Alchian students is long. Can you share some of their names, and perhaps a few more Alchian anecdotes in a future post?
Jayson Virissimo
Nov 4 2009 at 8:50pm
Please, if it is at all possible, get Econlib to add Exchange and Production to its database of hosted works.
Eric H
Nov 4 2009 at 9:13pm
I was looking through my Alibris account. I forgot how little I paid for my copy of Exchange. $3.95! You can’t find it at that price any more, at least on Amazon or Alibris. Alchian’s stock has risen! That’s a great sign for economics and economists everywhere.
The Alchian Textbook Bubble!
David R. Henderson
Nov 4 2009 at 9:53pm
Eric H,
Make sure you check the further reading at the end of Fred McChesney’s article. I will post more on him in the future, including a list of his prominent students. His daughter, herself an economics Ph.D. from UCLA, is someone I’m in touch with occasionally and I will ask her for such a list. Also, I will post on his work occasionally.
Jayson,
Will look into your idea.
Best,
David
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