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In my own unpublished tribute to Alchian, I lead with the following: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.