George Akerlof

[Class note: Our first Nobel Laureate was Alfred G. Gilman, who won the award in 1994 in Physiology or Medicine, for the discovery of G-proteins and the role of these proteins in signal transduction in cells. Congratulations are extended to Dr. Gilman!]

GEORGE AKERLOF WINS NOBEL PRIZE IN ECONOMICS
courtesy of Haas NewsWire, October 15, 2001

George A. Akerlof, a professor in UC Berkeley's Department of Economics, was named the 2001 co-winner of the Nobel Prize in economic sciences on October 10, 2001. It is the second consecutive year in which the Nobel Prize has gone to a UC Berkeley economist. Akerlof is married to economist Janet L. Yellen, the Eugene and Catherine M. Trefethen Professor at the Haas School.

"He has real flashes of insight into human problems, into what may explain social phenomena," Yellen said. "It's wonderful to work with him; he's so original." Akerlof and Yellen have worked together on numerous research projects.

Akerlof is the author of a landmark study on the role of asymmetric information in the market for "lemon" used cars. His research broke with established economic theory in illustrating how markets malfunction when buyers and sellers - as seen in used car markets - operate under different information.

The work has had far-reaching applications in such diverse areas as health insurance, financial markets, and employment contracts.

"Economic theorists, like French chefs in regard to food, have developed stylized models whose ingredients are limited by some unwritten rules," says Akerlof. "Just as traditional French cooking does not use seaweed or raw fish, so neoclassical models do not make assumptions derived from psychology, anthropology, or sociology. I disagree with any rules that limit the nature of the ingredients in economic models."

Akerlof shares the prize with economists A. Michael Spence of Stanford University and Joseph E. Stiglitz of Columbia University for their contributions to the analyses of markets with asymmetric information. Stiglitz served as the chair of the President's Council of Economic Advisers from 1995 to 1997, between the terms of Yellen (1997 to 1999) and Dean Laura Tyson (1993 to 1995). Jay Stowsky, associate dean for school affairs and initiatives, was Stiglitz's chief of staff at that time.

Akerlof, 61, is UC Berkeley's 18th Nobel Prize winner. He is the university's fourth economics professor and the third in seven years at the university to be so honored. Economics professor Daniel McFadden shared the prize last year. The late Haas Professor John Harsanyi won the Nobel Prize in 1994. Gerard Debreu, a professor emeritus of economics and mathematics, won the prize in 1983.

Akerlof earned a bachelor's degree at Yale in 1962 and a Ph.D. at the Massachusetts Institute of Technology in 1966. He is a non-resident senior fellow at the Brookings Institution and a research associate of the Canadian Institute for Advanced Research. He also is one of five Richard and Rhoda Goldman Distinguished Professors in the College of Letters & Science, appointed in 1997 for five-year terms.

Additional awards he has received include a Guggenheim Fellowship, Fulbright Fellowship, Fellow of the Econometric Society, and Fellow of the American Academy of Arts and Sciences. He served as senior staff economist with the Council of Economic Advisers from 1973-1974 and was visiting research economist in the special studies section of the Federal Reserve System Board of Governors from 1977 to 1978.