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Who is William Vickrey?

William Spencer Vickrey (June 21, 1914 – October 11, 1996) was a Canadian-American academic, economics professor, and Nobel laureate. Along with James Mirrlees, Vickrey won the 1996 Nobel Memorial Prize in Economic Sciences for their research in economic theory under asymmetric information, making him the only Nobel laureate born in British Columbia. In 1951, Vickrey married Cecile Thompson, a Quaker and member of the Scarsdale Friends Meeting. He passed away in Harrison, New York, due to heart failure.

Vickrey’s Nobel Prize announcement was made just three days before his death. He died while traveling to a conference of Georgist academics, which he had not missed in 20 years. His colleague at Columbia University’s economics department, C. Lowell Harriss, accepted the award on his behalf. There have been only three other cases where a Nobel Prize was awarded posthumously. Born in Victoria, British Columbia, William Vickrey attended Andover Phillips Academy in Massachusetts for high school. He earned his bachelor’s degree in Mathematics from Yale University in 1935 and went on to complete his master’s degree in 1937 and doctorate in 1948 at Columbia University, where he remained for most of his career.

Career Life:

Vickrey was the first person to use game theory tools to explain the dynamics of auctions. In an important article, Vickrey derived several auction equilibria and provided an early income equivalence result. The income equivalence theorem is one of the central concepts of modern auction theory. The auction format that Vickrey discovered is now known as the “Vickrey auction.” Vickrey also worked on congestion pricing. This concept asserts that when demand continues to form even when the use of roads and other services is complete, users should see their costs. Congestion pricing allows users to adjust their behavior or signal to investors to lift restrictions by financing the service.

This theory was later partially implemented in London. In the field of public economics, Vickrey expanded Harold Hotelling’s Georgist marginal cost pricing approach and demonstrated that public goods must be provided at marginal cost and that capital investment expenditures must be financed by land value taxation. Vickrey wrote that replacing taxes on production and labor (including property taxes on improvements) with fees to hold valuable land sites would significantly increase the economic efficiency of regions. Vickrey argued that land value taxes have no negative effects and that replacing current taxes with this method would increase local efficiency and raise land prices instead of reducing them.

Moreover, Vickrey presented an ethical argument for Georgist value capture by stating that without land value taxation, land users would have to pay twice for these public services (once as taxes to the government and once as rent to the landowners) even if they did not use local public goods to benefit from valuable locations. William Spencer Vickrey’s economic philosophy was influenced by John Maynard Keynes and Henry George.

Vickrey sharply criticized the Chicago School of economics and openly opposed policy focused on budget balance and inflation during periods of high unemployment. He helped implement radical land reform in Japan under General MacArthur’s administration. Many graduate students, including economists Jacques Drèze, Harvey J. Levin, and Lynn Turgeon, worked alongside Vickrey at Columbia University.

Selected Works of William Vickrey:

• William Vickrey’s article published in the Journal of Finance, which led to the emergence of auction theory as a subfield of game theory in 1961:
• “William Vickrey: Auctions, Counterspeculation and Competitive Sealed Tenders.”
• His work from October 5, 1996, “William Spencer Vickrey, Fifteen Fatal Fallacies of Financial Fundamentalism: A Disquisition on Demand Side Economics.”
• Selected Papers by William Vickrey: Public Economics edited by Arrow, Kenneth Joseph; Arnott, Richard J.; Atkinson, Anthony A.; Drèze, Jacques in 1997. Cambridge, UK: Cambridge University Press.
• Commitment to Full Employment and Price Stability: William S. Vickrey’s Economics and Social Policy edited by Warner, Aaron W.; Forstater, Mathew; Rosen, Sumner M. in 2000.
• Full Employment and Price Stability: William S. Vickrey’s Macroeconomic Vision by Pavlina R. Tcherneva; Forstater, Mathew in 2004.