Joseph E. Stiglitz is an American economist and a professor at Columbia University. He is known for his critical view of the management of globalization, free market economics and some international institutions like the International Monetary Fund and the World Bank. He was an inquisitive youngster who was deeply affected by poverty, discrimination and episodic unemployment. He wondered why they existed and what he could do about them. Stiglitz had been involved in a number of researches and had been a part of renowned organizations and universities. He had been associated with most of the Ivy League institutions. From chairing the council of economic advisors to the World Bank Chief economist, Stiglitz is one of the most frequently cited economists. He is a New-Keynesian economist, which is school of contemporary macroeconomics based on the ideas of 20th century English economist John Keynes. From having John Maynard Keynes and Robert Solow as major influences to his economic career, Stiglitz has influenced Paul Krugman and Jason Furman, two well-known economists in today's time.
Joseph E. Stiglitz Childhood
Joseph E. Stiglitz was born in Gary, Indiana, to Jewish parents, Charlotte and Nathaniel Stiglitz. He grew up in a family in which political issues were discussed and debated intensely. His mother’s families were New Deal Democrats — they worshipped the FDR. Although Joseph’s uncle was a highly successful lawyer and a real estate entrepreneur, he was staunchly pro-labor. On the other hand, Stiglitz father was a Jeffersonian democrat, a small businessman working as an insurance agent who spoke about the virtues of self-employment and being one’s own boss. Though his father was conservative by nature initially, by the mid seventies, he had become a strong advocate of civil rights. He insisted on paying social security contributions and this attitude served Joseph Stilgitz a good example.
Joseph went to public schools in Gary. While Gary, like most American cities, was racially segregated, it was at least socially integrated. There were children from all walks of life and the school system was designed to integrate the immigrants. The students had to learn a particular trade and Joseph had to learn printing and the basics of being an electrician. He had the good fortune of having dedicated teachers who provided high level of attention and hence guided and motivated him.
His approach to learning was reinforced by the experiences at Amherst College. Stiglitz spent three years (from 1960 to 1963) at Amherst College, a small New England College that was a men’s college at that time comprising of 1000 students. It was a liberal arts college providing students with a broader education. Amherst was a distinguished institution because of the style of teaching and it helped Joseph build strong relationships with the professors. Stiglitz had taken courses in mathematics, history, English, philosophy, and introductory chemistry and biology. This knowledge in various fields shaped Josephs thinking, especially his ideas about globalization.
Although Joseph loved all the courses he had taken, he had an irresistible attraction towards economics. Three of his teachers showed him the range of the subject. Arnold Collery, who was the Dean of Columbia College later, was a thoughtful and learned scholar from whom Stiglitz studied both microeconomics and macroeconomics. James Nelson, who taught introductory economics, was an energetic policy economist. Finally, Ralph Beals was a young graduate from MIT trained in mathematical techniques. These three professors greatly inspired Stiglitz to take the decision of majoring in economics.
As what he would be doing in the final year at Amherst would largely be repeated. At the first year of graduate school, he was given a full scholarship by Amherst to go to MIT without even given a degree from the college yet. So he continued as a final year undergraduate student in MIT from 1964 to 1965. However, later, he was given his undergraduate degree from Amherst too.
While at Amherst, Joseph Stiglitz was an active member of all the Student Council team. He was elected as the president in his final year. He began a campaign to abolish fraternities because they were socially divisive. This was one of the campaigns Joseph Stiglitz raised his voice against. He organized an exchange program with a small African-American southern school.
MIT aided Stiglitz in developing him as a professional economist. He was taught by first rate professors, many Nobel prize winners including Samuelson (Nobel Laureate in 1970), Solow (Nobel Laureate in 1987), Modigliani (Nobel Laureate in 1985), and Arrow (Nobel Laureate in 1972).
After his first year at MIT, Stiglitz had the opportunity to edit Paul Samuelson’s papers. After his first year as a graduate student at MIT, from 1965 to 1966, he moved to University of Chicago to do a research under Hirofumi Uzawa, who had received a grant from the National Science Foundation. A dozen students from around the country accompanied him to work on a particular theory. He then studied for his Ph. D. from MIT from 1966 to 1967 during which he also held an MIT assistant professorship. The style of MIT economics suited him well. The simple and concrete models were directed at answering important and relevant questions. From 1966 to 1970, he worked as a research fellow at the University of Cambridge. He arrived at Fitzwilliam House as a Fulbright Scholar in 1965 and then won a Tapp Junior Research Fellowship at Gonville & Caius College.
After returning from Cambridge, Stiglitz took a one-year appointment as an assistant professor at MIT, after which he went to Yale. In his subsequent years, he held academic positions at Yale, Stanford, Duke, Oxford, and Princeton. He was the professor of Economics at Yale university from 1970-1974. Then he went on to teach economics at Stanford University for another two years. Stiglitz was the Drummond professor of political economy at Oxford University for another three years. He served at Princeton University from 1979 to 1988.
Currently Stiglitz is a Professor at Columbia University, with appointments at the Business School, the Department of Economics and the School of International and Public Affairs (SIPA). He is the editor of The Economists' Voice journal with J. Bradford De Long and Aaron Edlin. From 2005, he chaired The Brooks World Poverty Institute at the University of Manchester. Moreover, he also co-chairs the Columbia University Committee on Global thought.
In addition to contributing to microeconomics, Stiglitz has played a number of policy and government roles. He served in the Clinton Administration as the chair of the President's Council of Economic Advisors (1995 – 1997). At the World Bank, he served as the Senior Vice President and Chief Economist (1997 – 2000), in the time when protests against international economic organizations started, most significantly after the Seattle WTO meeting of 1999. He was fired by the World Bank for expressing dissent with the policies.He was a lead author for the Intergovernmental Panel on Climate Change.
In July 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), with support of the Ford, Rockefeller, McArthur, and Mott Foundations and the Canadian and Swedish governments, to enhance democratic processes for decision-making in developing countries and to ensure that a broader range of alternatives and stakeholders are at the table.
Stiglitz is a member of Collegium International, an organization of leaders with political, scientific, and ethical expertise. Their goal is to provide new approaches in overcoming the obstacles, keeping in mind the peaceful, socially just and an economically sustainable world. He is also a member of the scientific committee of the Fundacion IDEAS, a Spanish think tank.
Stiglitz has advised American President Barack Obama, but has also been sharply critical of the Obama Administration's financial-industry rescue plan.
In October 2008, he was asked by the President of UN's General Assembly to chair a commission entrusted with drafting a report on the reasons for and solutions to the financial crisis. In response, the commission produced the Stiglitz Report.
On July 25, 2011, Stiglitz participated to the "I Foro Social del 15M" organized in Madrid, Spain to express his support to the 2011 Spanish protests.
Contribution to Economics
Joseph Stiglitz has had many vital contributions to economics. His researches and techniques gained him recognition and earned him the many prizes.
Information Asymmetry-A technique called screening was one of Stiglitz’s most famous researches. It was a method used by one economic agent to extract private information from another. This research was carried on with George A. Akerlof and A. Michael Spence and Stiglitz went on to share the Nobel Memorial Prize in Economics in 2001 with them.
Efficiency wages: the Shapiro-Stiglitz model-Stiglitz also did research on Efficiency wages, which helped explain why there was unemployment even in equilibrium, why wages are not bid down by job seekers, etc. This was known as the ‘Shapiro-Stiglitz model’ as the answers to these puzzles were proposed Shapiro and Stiglitz together in 1984.
Books and Publications
Along with the technical economic publications and many articles (over 3000), Stiglitz has authored and edited many books. He has written books related to patent law and abuses in international trade. He founded one of the leading economics journals — “The Journal of Economic Perspectives”. His write-ups have been translated into more than a dozen languages.
Some of his famous and most recent books include
- “Freefall: America, Free Markets, and the Sinking of the World Economy” (2010)
- “The Three Trillion Dollar War: The True Cost of the Iraq Conflict” (2008)
- “Stability with Growth: Macroeconomics, Liberalization and Development” (2006)
- “Making Globalization Work” (2006)
- “Fair Trade for All” (2005)
- “New Paradigm for Monetary Economics” (2004)
- The Roaring Nineties: A New History of the World's Most Prosperous Decade” (2003)
- “Globalization and Its Discontents” (2002)
- “Whither Socialism?”