American economist (1918?2002)
James Tobin
(March 5, 1918 ? March 11, 2002) was an American
economist
who served on the
Council of Economic Advisers
and consulted with the
Board of Governors
of the
Federal Reserve System
, and taught at
Harvard
and
Yale
Universities. He contributed to the development of key ideas in the
Keynesian economics
of his generation and advocated
government intervention
in particular to stabilize output and avoid
recessions
. His academic work included pioneering contributions to the study of
investment
, monetary and
fiscal policy
and financial markets. He also proposed an
econometric model
for
censored
dependent variables, the well-known
tobit model
.
Along with fellow
neo-Keynesian
economist
James Meade
in 1977,
[7]
[8]
Tobin proposed
nominal GDP targeting
as a
monetary policy rule
in 1980.
[9]
[10]
Tobin received the
Nobel Memorial Prize in Economic Sciences
in 1981 for "creative and extensive work on the analysis of financial markets and their relations to expenditure decisions, employment, production and prices."
Outside academia, Tobin was widely known for his suggestion of a
tax
on
foreign exchange
transactions, now known as the "
Tobin tax
." This was designed to reduce
speculation
in the international
currency markets
, which he saw as dangerous and unproductive.
Life and career
[
edit
]
Early life
[
edit
]
Tobin
[11]
was born on March 5, 1918, in
Champaign, Illinois
. His father was Louis Michael Tobin (b. 1879), a journalist working at the
University of Illinois at Urbana?Champaign
. His father had fought in
World War I
, was a member of the first
Greek
organization at Illinois (
Delta Tau Delta
fraternity Beta Upsilon chapter), and was credited as the inventor of "Homecoming." His mother, Margaret Edgerton Tobin (b. 1893), was a social worker. Tobin attended the
University Laboratory High School of Urbana, Illinois
, a
laboratory school
in the University's campus.
In 1935, on his father's advice, Tobin took the entrance exams for
Harvard University
. Despite no special preparation for the exams, he passed and was admitted with a national scholarship from the university. During his studies he first read
Keynes
'
The General Theory of Employment, Interest and Money
, published in 1936. Tobin graduated
summa cum laude
in 1939 with a thesis centered on a critical analysis of Keynes' mechanism for introducing equilibrium
involuntary unemployment
. His first published article, in 1941, was based on this senior thesis.
[12]
Tobin immediately started graduate studies, also at Harvard, earning his
AM
degree in 1940. In 1941, he interrupted graduate studies to work for the
Office of Price Administration and Civilian Supply
and the
War Production Board
in
Washington, D.C.
The next year, after the United States entered
World War II
, he enlisted in the
US Navy
, spending the war as an officer on
destroyers
including (among possibly others) the
USS
Kearny
(DD-432)
.
[13]
At the end of the war he returned to Harvard and resumed studies, receiving his Ph.D. in 1947 with a thesis on the
consumption function
written under the supervision of
Joseph Schumpeter
.
[14]
In 1947 Tobin was elected a Junior Fellow of Harvard's
Society of Fellows
, which allowed him the freedom and funding to spend the next three years studying and doing research.
Academic activity and consultancy
[
edit
]
In 1950 Tobin moved to
Yale University
, where he remained for the rest of his career. He joined the
Cowles Foundation
, which moved to Yale in 1955, also serving as its president between 1955?1961 and 1964?1965. His main research interest was to provide
microfoundations
to
Keynesian economics
, with a special focus on
monetary economics
. One of his frequent collaborators was his Yale colleague
William Brainard
. In 1957 Tobin was appointed
Sterling Professor of Economics
at Yale.
[15]
Besides teaching and research, Tobin was also strongly involved in the public life, writing on current economic issues and serving as an economic expert and policy consultant. During 1961?62, he served as a member of
John F. Kennedy
's
Council of Economic Advisers
, under the chairman
Walter Heller
, then acted as a consultant between 1962 and 1968. Here, in close collaboration with
Arthur Okun
,
Robert Solow
and
Kenneth Arrow
, he helped design the Keynesian economic policy implemented by the Kennedy administration. Tobin also served for several terms as a member of the Board of Governors of
Federal Reserve System
Academic Consultants and as a consultant of the
US Treasury Department
.
[16]
Tobin was awarded the
John Bates Clark Medal
in 1955 and, in 1981, the
Nobel Memorial Prize in Economics
. He was a fellow of several professional associations, holding the position of president of the
American Economic Association
in 1971. He was an elected member of the
American Academy of Arts and Sciences
, the
American Philosophical Society
, and the United States
National Academy of Sciences
.
[17]
[18]
[19]
In 1972 Tobin, along with fellow Yale economics professor
William Nordhaus
, published
Is Growth Obsolete?
,
[20]
an article that introduced the
Measure of Economic Welfare
as the first model for economic
sustainability
assessment, and economic
sustainability measurement
.
In 1982?1983, Tobin was Ford Visiting Research Professor of Economics at the
University of California, Berkeley
.
[21]
In 1988 he formally retired from Yale, but continued to deliver some lectures as
Professor Emeritus
and continued to write. He died on March 11, 2002, in
New Haven, Connecticut
.
Tobin was a trustee of
Economists for Peace and Security
.
[22]
Personal life
[
edit
]
James Tobin married Elizabeth Fay Ringo, a former
M.I.T.
student of Paul Samuelson, on September 14, 1946. They had four children: Margaret Ringo (born in 1948), Louis Michael (born in 1951), Hugh Ringo (born in 1953) and Roger Gill (born in 1956). In late June, 2009, the family announced via a private email that Tobin's wife had died at the age of 90.
[
citation needed
]
Legacy
[
edit
]
In August 2009 in a
roundtable
interview in
Prospect
magazine
,
Adair Turner
supported the idea of new global taxes on financial transactions, warning that the "swollen" financial sector paying excessive salaries had grown too big for society. Lord Turner's suggestion that a "
Tobin tax
" ? named after James Tobin ? should be considered for financial transactions made headlines around the world.
Tobin's
Tobit model of regression
with
censored endogenous variables
(Tobin 1958a) is a standard econometric technique. His
"q" theory
of investment (Tobin 1969), the
Baumol?Tobin model
of the transactions demand for money (Tobin 1956), and his model of liquidity preference as behavior toward risk (the asset demand for money) (Tobin 1958b) are all staples of economics textbooks.
In his 1958 article Tobin also led the way in showing how to deal with utility maximization under uncertainty with an infinite number of possible states. As Palda explains "One way to get out of the mess of figuring out asset prices using a model of maximizing the expected utility of investing in stocks is to make assumptions about either preferences or the probabilities of the different possible states of the world. Nobellist James Tobin (1958) took this line and discovered that in some cases you do not need to worry about the utility of income in thousands of states, and the attached probabilities, to solve the consumer's choice on how to spread income among states. When preferences contain only a linear and a squared term (a case of diminishing returns) or the probabilities of different stock returns follow a normal distribution (an equation that contains a linear and squared terms as parameters), a simple formulation of a person's investment choices becomes possible. Under Tobin's assumptions we can reformulate the person's decision problem as being one of trading off risk and expected return. Risk, or more precisely the variance of your investment portfolio creates spread in the returns you expect. People are willing to assume more risk only if compensated by a higher level of expected return. One can thus think of a tradeoff people are willing to make between risk and expected return. They invest in risky assets to the point at which their willingness to trade off risk and return is equal to the rate at which they able to trade them off. It is difficult to exaggerate how brilliant is the simplification of the investment problem that flows from these assumptions. Instead of worrying about the investor's optimization problem in potentially millions of possible states of the world, one need only worry about how the investor can trade off risk and return in the stock market."
[23]
Publications
[
edit
]
- Tobin, James (1941). "A note on the money wage problem".
Quarterly Journal of Economics
.
55
(3): 508?16.
doi
:
10.2307/1885642
.
JSTOR
1885642
.
- Tobin, James (1955). "A Dynamic Aggregative Model".
Journal of Political Economy
.
63
(2): 103?15.
doi
:
10.1086/257652
.
S2CID
155030858
.
- Tobin, James (1956). "The Interest-Elasticity of Transactions Demand For Cash".
The Review of Economics and Statistics
.
38
(3): 241?47.
doi
:
10.2307/1925776
.
JSTOR
1925776
.
also:
Google Scholar
- Tobin, James (1958a).
"Estimation of relationships for limited dependent variables"
(PDF)
.
Econometrica
.
26
(1): 24?36.
doi
:
10.2307/1907382
.
JSTOR
1907382
.
- Tobin, James (1958b).
"Liquidity Preference as Behavior Towards Risk"
(PDF)
.
Review of Economic Studies
.
25.1
(2):
65?86
.
doi
:
10.2307/2296205
.
JSTOR
2296205
.
- Tobin, James (1961). "Money, Capital, and Other Stores of Value,"
American Economic Review
, 51(2), pp.
26
?37. Reprinted in Tobin, 1987,
Essays in Economics
, v. 1, pp.
217
?
27.
MIT Press.
- Tobin, James (1969). "A General Equilibrium Approach to Monetary Theory".
Journal of Money, Credit, and Banking
.
1
(1):
15?29
.
doi
:
10.2307/1991374
.
JSTOR
1991374
.
S2CID
154058316
.
- Tobin, James (1970). "Money and Income: Post Hoc Ergo Propter Hoc?"
Quarterly Journal of Economics
, 84(2), pp.
301?17.
- Tobin, James and William C. Brainard (1977a). "Asset Markets and the Cost of Capital". In Richard Nelson and Bela Balassa, eds.,
Economic Progress: Private Values and Public Policy (Essays in Honor of William Fellner)
, Amsterdam: North-Holland, 235?62.
- Tobin, James (1977b). "How Dead is Keynes?".
Economic Inquiry
.
XV
(4): 459?468.
doi
:
10.1111/j.1465-7295.1977.tb01111.x
.
- Tobin, James (1992). "money",
The New Palgrave Dictionary of Finance and Money
, v. 2, pp. 770?79 & in
The New Palgrave Dictionary of Economics
. 2008, 2nd Edition.
doi
:
10.1057/978-1-349-95121-5_2742-1
Reprinted in Tobin (1996),
Essays in Economics
, v. 4, pp.
139
?
163.
MIT Press.
- Tobin, James,
Essays in Economics
, MIT Press:
v. 1 (1987),
Macroeconomics
. Scroll to chapter-preview
links.
v. 2
Consumption and Economics
.
Description.
v. 3 (1987).
Theory and Policy
(in 1989 paperback as
Policies for Prosperity: Essays in a Keynesian Mode
).
Description
and
links.
v. 4 (1996).
National and International
.
Links.
- Tobin, James, with Stephen S. Golub (1998).
Money, Credit, and Capital
. Irwin/McGraw-Hill.
TOC.
- Tobin, James (2008).
"Monetary Policy"
. In
David R. Henderson
(ed.).
Concise Encyclopedia of Economics
(2nd ed.). Indianapolis:
Library of Economics and Liberty
.
ISBN
978-0865976658
.
OCLC
237794267
.
See also
[
edit
]
References
[
edit
]
- ^
Brainard, William.
"Economic Growth and Long-term International Capital Movement"
. Retrieved
January 23,
2023
– via ProQuest.
- ^
Buiter, Willem H. (1979).
Temporary Equilibrium and Long-Run Equilibrium
. Routledge Revivals. London:
Routledge
(published 2014).
ISBN
9781315780726
.
- ^
Foley, Duncan.
"Resource Allocation and the Public Sector"
. Retrieved
January 23,
2023
– via ProQuest.
- ^
Hamada, Koichi.
"Economic Growth and Long-term International Capital Movement"
. Retrieved
January 23,
2023
– via ProQuest.
- ^
Yellen, Janet.
"Employment, Output and Capital Accumulation in an Open Economy: A Disequilibrium Approach"
.
ProQuest
288017476
. Retrieved
January 23,
2023
– via ProQuest.
- ^
Aoki, Masanao
; Yoshikawa, Hiroshi (2006).
Reconstructing macroeconomics: a perspective from statistical physics and combinatorial stochastic processes
. Japan-U.S. Center Sanwa monographs on international financial markets. Cambridge; New York:
Cambridge University Press
. p. xvii.
ISBN
9780521831062
.
- ^
Meade, James
(September 1978), "The Meaning of "Internal Balance"
",
The Economic Journal
,
88
(351),
Wiley-Blackwell
: 423?435,
doi
:
10.2307/2232044
,
JSTOR
2232044
- ^
Meade, James
(December 1993), "The Meaning of "Internal Balance"
",
The American Economic Review
,
83
(6),
American Economic Association
: 1?9,
JSTOR
2118018
- ^
Tobin, James
(1980),
"Stabilization policy ten years after"
(PDF)
,
Brookings Papers on Economic Activity
,
11
(1),
Brookings Institution
: 19?90,
doi
:
10.2307/2534285
,
JSTOR
2534285
- ^
Tobin, James
(1980).
"Stabilization Policy Ten Years After"
(PDF)
.
Brookings Papers on Economic Activity
.
1980
(1).
Brookings Institution
: 19?89.
doi
:
10.2307/2534285
.
JSTOR
2534285
.
- ^
Tobin, James. "Autobiography"
, published in
Nobel Lectures. Economics 1981?1990
, Editor
Karl-Goran Maler
, World Scientific Publishing Co., Singapore, 1992
- ^
Solow Robert
(2004). "James Tobin".
Proceedings of the American Philosophical Society
.
148
(3).
- ^
Reference to USS
Kearny
in c. 1965 letter to fellow shipmate Clitus H. Marvin
- ^
Tobin, James (1986).
"James Tobin"
. In Breit, William; Spencer, Roger W. (eds.).
Lives of the Laureates, Seven Nobel Economists
. Cambridge, Massachusetts, London, England: The MIT Press. Archived from
the original
on August 26, 2003.
- ^
"Nobel Prize-winning economist James Tobin dies at 84"
.
Yale Bulletin & Calendar
. Vol. 30, no. 22. Yale Office of Public Affairs & Communications. 15 March 2002. Archived from
the original
on 2 April 2015
. Retrieved
4 March
2015
.
- ^
James Tobin's
CV at the Cowles Foundation's website
- ^
"James Tobin"
.
American Academy of Arts & Sciences
. Retrieved
2022-12-08
.
- ^
"APS Member History"
.
search.amphilsoc.org
. Retrieved
2022-12-08
.
- ^
"James Tobin"
.
www.nasonline.org
. Retrieved
2022-12-08
.
- ^
Nordhaus, W. and J. Tobin, 1972. Is growth obsolete?. Columbia University Press, New York.
- ^
Vane, Howard R.; Mulhearn, Chris (2005).
The Nobel Memorial Laureates in Economics: An Introduction to Their Careers and Main Published Works
. Edward Elgar Publishing. p. 121.
- ^
Economists for Peace and Security History
Archived
2009-04-14 at the
Wayback Machine
: James Tobin among founding Nobel laureates
- ^
Palda, Filip (2013).
The Apprentice Economist: Seven Steps to Mastery
. Ottawa: Cooper-Wolfling Press.
ISBN
978-0987788047
External links
[
edit
]
|
---|
1969?1975
| |
---|
1976?2000
| |
---|
2001?present
| |
---|
|
---|
1931?1950
| |
---|
1951?1975
| |
---|
1976?2000
| |
---|
2001?present
| |
---|
|
---|
1886?1900
| |
---|
1901?1925
| |
---|
1926?1950
| |
---|
1951?1975
| |
---|
1976?2000
| |
---|
2001?present
| |
---|
|
---|
International
| |
---|
National
| |
---|
Academics
| |
---|
People
| |
---|
Other
| |
---|