U.S. Army Air Corps during World War II and held various
research jobs while searching for a dissertation topic. His
dissertation, which earned him his Ph.D. from Columbia in
1951, subsequently became a classic in economics, Social
Choice and Individual Values (1951). Kenneth Arrow taught for
most of his career at Harvard and Stanford Universities.
In his 1951 book, Arrow presented his “Impossibility Theorem,”
in which he shows that it is not possible to construct a set of
voting rules for making public choices that is simultaneously
democratic and efficient. This theorem led to decades of work
by economists, philosophers, and political scientists in the field
of social choice theory.
Arrow also made significant contributions in other areas of
economics. In 1954 (with Gerard Debreu) he constructed a
mathematical model of an economy with many individual,
interrelated markets and proved the existence of a theoretical
general market-clearing equilibrium. Arrow’s work in the
economics of uncertainty was also a major contribution. In
Essays in the Theory of Risk-Bearing (1971), he introduced the
concepts of moral hazard and adverse selection (among other
ideas about risk), which we encounter in Chapter 16 of this
book. Arrow was one of the first economists to develop the
idea of “learning by doing,” which has played an important role
in modern theories of economic growth.