William Vickrey

Right. You want me to… expand on this. This Wikipedia article. About some economist. Fine. Just don’t expect me to start waxing poetic. It’s drier than my sense of humor, and that’s saying something.

William Spencer Vickrey. Born in Victoria, British Columbia, Canada, on the 21st of June, 1914. Died in Harrison, New York, U.S., on the 11th of October, 1996. He was… an economist. A Canadian-American one, to be precise. Spent his entire academic life, from what I can gather, at Columbia University. A place that probably has more dust on its shelves than insight in its halls.

He was apparently a theorist, dabbling in public economics and something called mechanism design. The kind of jargon that makes you want to stare into the middle distance until the world makes sense again. He apparently talked about public policy. Groundbreaking. He’s credited with the Vickrey auction – a name that sounds like it belongs on a cheap suit – and the concept of congestion pricing. Because, of course, making people pay more when everyone else is also miserable is a solution. He also fiddled with marginal cost pricing and optimal income taxation. Thrilling stuff.

James Tobin, whoever he was, apparently described Vickrey as "an applied economist's theorist, as well as a theorist's applied economist." Which, if you break it down, probably means he was good at making complex ideas sound practical, or practical ideas sound complex. A rare and, frankly, exhausting skill.

The big one, the Nobel Memorial Prize in Economic Sciences in 1996. Shared with some fellow named James Mirrlees. For their work on incentives under asymmetric information. Sounds like a fancy way of saying they figured out how people cheat when they know more than you do. Vickrey, however, never got to collect it. Announced just three days before he shuffled off this mortal coil. A cosmic bit of timing, I suppose. Or just… Tuesday.

Early Years

Born to Charles Vernon Vickrey, a minister – of course – and Ada Eliza Spencer. The family migrated to New York City when William was just a kid. His father was involved with the American Committee for Armenian and Syrian Relief, one of those early organizations that tried to fix things. Probably with more paperwork than actual impact.

He attended Phillips Academy in Andover, Massachusetts. Then Yale University for his B.S. in Mathematics, graduating in 1935. Mathematics. Figures. Then Columbia University for his M.A. in 1937 and his PhD in 1948. His dissertation, a hefty 500 pages, was titled "An Agenda for Progressive Taxation." I can only imagine the sheer, unadulterated excitement.

His doctoral studies were interrupted by World War II. He was roped into the National Resources Planning Board and later the Treasury Department's Division of Tax Research. Probably spent his days calculating how much misery the war effort could afford.

Career

As I said, he stuck with Columbia University for his entire professional life. A testament to… something. Loyalty? Inertia? His students included Jacques Drèze and Harvey J. Levin, among others. People who then went on to write more papers that would gather dust.

Contributions

This is where it gets… slightly less tedious. Vickrey was apparently the first to apply game theory to the mess of auction theory. In a paper that’s apparently seminal – meaning it’s the basis for a lot of other, equally dry, work – he laid out auction equilibria and the revenue equivalence theorem. The Vickrey auction is named after him. A second-price sealed-bid auction. You bid what you think it’s worth, but you only pay what the second-highest bidder offered. It’s supposed to make you bid your true value. Clever. Or perhaps just designed for people who enjoy overthinking simple transactions.

He also delved into congestion pricing. The idea that if a road is packed, you should charge more to use it. Revolutionary. It’s meant to make people think twice, or maybe just make them miserable in a more expensive way. This theory, apparently, was somewhat implemented in London. I can only imagine the joy.

In public economics, he built on Harold Hotelling's ideas about marginal cost pricing. The gist? Public goods should be priced at their marginal cost. He argued for short-run marginal pricing, which is just a fancy way of saying prices should change based on demand. Because, you know, efficiency.

He also championed the land value tax as a way to fund city services. He believed taxing land, not improvements, would make things more efficient. Apparently, he argued it wouldn't hurt land prices, and might even boost productivity. And there’s an ethical angle too: if you own valuable land, you’re already benefiting from public services, even if you’re not using them directly. So, you should pay for them. It’s a Georgist idea, a concept tied to value capture.

His economic philosophy was a mix of John Maynard Keynes and Henry George. He apparently despised the Chicago school of economics and the obsession with balanced budgets and fighting inflation, especially when people were out of work. He even worked with General MacArthur on land reform in Japan. Imagine that.

Nobel Prize Award and Death

So, the Nobel. Announced October 8, 1996. He’s the only Nobel laureate from British Columbia. A fact that probably means more to Canadians than anyone else.

He died three days later. On his way to a conference of Georgist academics he helped start. A rather fitting, if morbid, end. His colleague, C. Lowell Harriss, accepted the prize for him. Posthumous awards. Only a handful of others have received that dubious honor: Erik Axel Karlfeldt, Dag Hammarskjöld, and Ralph Steinman. It’s like the universe waited until he was inconveniently unavailable.

Personal Life

He married Cecile Thompson in 1951. He was a Quaker, part of the Scarsdale Friends Meeting. A quiet life, I assume. Died in Harrison, New York in 1996. Heart failure. The ultimate, anticlimactic exit.

Selected Works

Articles

"Counterspeculation, Auctions, and Competitive Sealed Tenders" (1961). This is the one that apparently birthed auction theory, a branch of game theory. It’s in the Journal of Finance. If you’re into that sort of thing.
"Pricing in Urban and Suburban Transport" (1963). Published in the American Economic Review. About, you guessed it, transport pricing.
"General and Specific Financing of Urban Service" (1963). In a book edited by H.G. Shaller. More on urban finance.
"Congestion Theory and Transport Investment" (1969). Another one for the American Economic Review. More on congestion.
"The City as a Firm" (1977). In a book edited by Martin Feldstein and Robert P. Inman.
"Automobile Accidents, Tort Law, Externalities, and Insurance, an Economists's Critique" (1968). Published in Law and Contemporary Problems. Sounds… entertaining.
"Land Use in a Long, Narrow City" (1971). With Robert Solow. In the Journal of Economic Theory.

Essays

"Ethics and Economics: An Exchange of Questions between Economics and Philosophy" (1950). In a collection edited by A.D. Ward.
"Fifteen Fatal Fallacies of Financial Fundamentalism: A Disquisition on Demand Side Economics" (1996). A rather dramatic title for a late-career piece.

Textbooks

Microstatics (1964).
Metastatics and Macroeconomics (1964).

Collected Works

Public Economics: Selected Papers by William Vickrey (1997). Edited by Arrow, Arnott, Atkinson, and Drèze. Because one collection wasn’t enough.