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Michael Spence of Stanford is sharing this year’s Nobel
for economics with George A. Akerlof of the University of
California at Berkeley and Joseph E. Stiglitz, a former Stanford
economics professor who now teaches at Columbia University. In
the early 1990s, Stiglitz went on leave from the Economics
Department to work in Washington, D.C. He first served as a member
of President Bill Clinton’s Council of Economic Advisers in
1993 and became the group’s chairman in 1995. From 1997 until
late 1999, Stiglitz was chief economist at the World Bank. He
taught at Stanford in Washington before moving to Columbia
University, where he is now professor of economics, business and
international affairs. Outside the world of politics, Stiglitz is best known for his
work as a founder of the “economics of information” in
the 1970s. In awarding the prize, the Royal Swedish Academy of
Sciences cited Stiglitz’s concept of “screening.”
“Stiglitz showed that an uninformed agent can sometimes
capture the information of a better-informed agent through
screening, for example by providing choices from a menu of
contracts for a particular transaction. Insurance companies are
thus able to divide their clients into risk classes by offering
different policies, where lower premiums can be exchanged for a
higher deductible,” the academy said in a
statement. Earlier in their careers, both Spence and Stiglitz were consecutive recipients of the prestigious John Bates Clark Medal, awarded by the American Economic Association every two years to an outstanding economist under 40. (Stiglitz was given the medal in 1979, Spence in 1981.)
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Stanford Report, October 10, 2001
