|Born on||21 June 1914|
|Born in||Victoria, British Columbia|
|Died on||11 October 1996|
|Works & Achievements||Nobel Memorial Prize in Economics in 1996, “Vickrey Auction” Theory,|
Renowned post Keynesian economist and Nobel Laureate William Spencer Vickrey has is a name to reckon with in the field of economics. A professor by profession, Vickrey had a strong concern for social problems and this was often reflected in his work. He indulged into extensive research in the domains of public utilities, transportation, congestion pricing, urban problems. Being a Quaker, he chose to be a conscientious objector during World War II, and volunteered to restyle the tax systems for Puerto Rico and Japan. His Ph.D. thesis “Agenda for Progressive Taxation” serves as a sort of classic for economics even today. William Vickrey studied “asymmetric information”, where the buyer and seller have unequal information about a transaction. This theory is now popularly known as the “Vickrey Auction”. Vickrey was far from being the stifling academician. He was more practical and insightful, he roller-skated between buildings on the Columbia University and he would pretend to fall asleep during college lectures and interrupt to ask the most intelligent questions. A detailed sketch of William Vickreys personal and professional life is outlined below.
William Vickrey’s Childhood and Early Life
William S. Vickrey was born in Victoria, British Columbia, in 1914. His family moved from Canada to New York when he was three months old. He finished high school from Phillips Andover Academy in Andover, Massachusetts in the year 1931. He then obtained a B.S. in mathematics from Yale in 1935. This was followed by a degree in economics at Columbia University as well as an M.A. degree from 1935 to 1937. William Vickrey remained at Columbia University where he taught for much of his career. He received his Ph.D. degree in 1947 after completion of his 496-page “Agenda for Progressive Taxation” dissertation.
After graduating from Columbia University with an M.A. in 1937, Vickrey worked for the National Resources Planning Board in Washington and the Division of Tax Research in the U.S. Treasury Department. For the intervening ten years, including the World War II, he worked on taxation and public utility pricing and held various research and advisory positions related to taxation.
In 1946, he joined Columbia University as a lecturer of economics. He never left Columbia University for much of his life, and there, most of his career was devoted to teaching and research. In 1947, he was awarded the Ph.D. and in 1948, he became an assistant professor. In 1950, Vickrey was promoted to associate professor, professor in 1958 and McVickar professor of political economy in 1971. From 1964 to 1967, he served as the chairman of the Department of Economics. Since 1982, he served as the Emeritus professor and continued to teach occasional courses and interact with students and colleagues at seminars and conferences.
In 1949, William Vickrey and his Columbia colleague laid the foundations of the postwar tax structure for Japan. This was followed by a number of tax missions, markedly to Puerto Rico, Venezuela, and Liberia. He also served as a consultant on fiscal matters for the United Nations for almost a year, working in Singapore, Zambia, Iran, Malaysia, Libya, Ivory Coast, and Surinam. The study on public utilities started with the electric power industry in 1939. In 1951, it gained momentum because of the studies of the transit and subway fares for the Mayor’s Committee for Management Survey of the City of New York. In 1959, William Vickrey went to Washington to make a detailed study of traffic congestion. He also undertook various studies on urban planning and transportation that drove him to India, Argentina, and Venezuela. He also formulated theories for efficient pricing of electricity, municipal services, urban transportation, telephone services, street and road use, and airlines. He also kept up with every possible technological development in the areas by visiting experimental designs on-site and attending conferences.
Vickrey was elected the “Fellow of the Econometric Society” in 1967 and was awarded with an honorary degree by the University of Chicago in 1979. In 1978, he was elected as the “Distinguished Fellow of the American Economic Association” and in 1992, he was chosen as its president. He was a past president of the Metropolitan Economic Association and the Atlantic Economic Association. In 1996, he was elected to the National Academy of Sciences in April and it was in the same year that he was conferred the Nobel Prize in Economic Science. William shared this award with James Mirrlees “for the fundamental contributions to the economic theory of incentives under asymmetric information.”
With a career spanning over sixty years, William Vickrey’s professional life was quite eventful. His work included original contributions over a broad spectrum. His publications included eight books and around 139 articles, 27 reviews and 61 published articles and notes in the 1994 volume published by the Cambridge University Press, titled ‘Public Economies’.
Vickrey Auction – A Vickrey auction is a sealed bid second price auction in which the participants simultaneously submit bids. The auctioneer discloses the identity of the highest bidder who is declared the winner. The price paid, however, is the second-highest bid placed. William Vickrey pointed out that bidders have a dominant strategy to bid their true values and the good should be allocated to the person who values it the most. This auction format is often strategically identical to an English auction.
Congestion Pricing – William Vickrey was considered the father of Congestion Pricing. He proposed it in 1952, for the New York City subway system. He recommended that the fares be increased in peak times and in high-traffic sections and be lowered in others. The elected officials considered it risky, and the appropriate technology was not available. Later, he made a similar proposal for road pricing.
Vickrey considered time-of-day pricing as an application of market forces to balance supply and demand. Those who are able can shift their schedules to cheaper hours, reducing congestion, air pollution and energy use – and increasing use of roads or other utilities. “You’re not reducing traffic flow; you’re increasing it, because traffic is spread more evenly over time,” as William Vickrey said. “Even some proponents of congestion pricing don’t understand that.”
His ideas were not well received by those who set public policy as mentioned by Vickrey himself, “People see it as a tax increase, which I think is a gut reaction. When motorists’ time is considered, it’s really a savings.”
He suggested, “One possible detection and billing method would use electronic identifier units carried in each vehicle, which would activate recording devices in or on the road. Computers would sort the information and determine charges; motorists would be billed monthly.” This is exactly how modern Road Pricing systems function.
Income Taxation – William spent his career studying this issue. A strong believer in using the tax system to take money from the rich and give to the poor, William saw that such forced transfers would reduce people’s incentive to work. He highlighted on this issue seriously in his book on ‘Microstatics’.
“There still remains the fact that money income from gainful work is subject to an income tax while imputed income from leisure is not taxed. Accordingly, an income tax tends to make individuals choose leisure in preference to gainful work to an uneconomical extent.”
For that reason, Vickrey favored fairly low marginal tax rates on high-income people.
Marriage and Personal life
William was a Quaker and a member of the Scarsdale Friends Meeting. He married to Cecile Thompson in 1951 and they lived in Hastings-on-Hudson in New York City.
Vickrey passed away in Harrison, New York, USA because of heart failure; just three days after being announced the 1996 Nobel Prize Winner. His Columbia University Economics Department colleague C. Lowell Harris accepted the prize on his posthumous behalf. He told the New York Times on collecting the award: “I have known almost all of the persons who have gotten the Nobel Prize in Economics, and there’s none who has the range of content or subject matter that my friend had.”
Major Works Of William Vickrey
William Vickrey Timeline:
1914: Born in Victoria, British Columbia, Canada
1931: Completed high school from Phillips Andover Academy
1935: Obtained B.S. in mathematics from Yale in 1935
1937: Obtained M.A. in economics from Columbia University in 1937
1947: Received his Ph. D. degree from Columbia University
1948: Became the assistant professor at Columbia University
1950: Became associate professor at Columbia University
1958: Was appointed as the professor
1964 -1967: Chairman of the Department of Economics
1967: Elected Fellow of the Econometric Society
1971: Made the McVickar professor of political economy
1978: Became distinguished Fellow of the American Economic Association
1979: Conferred honorary degree from University of Chicago
1982: Emeritus professor
1992: President of American Economic Association
1994: An amalgam of the books, articles and notes published by the Cambridge university press under the title “Public Economies”
1996: Died in Harrison, New York, USA because of a heart attack; was conferred Nobel Memorial Prize in Economics
Source: The Famous People.Com