March 5, 1918|
Champaign, Illinois, USA
|Died||March 11, 2002
New Haven, Connecticut, USA
|Alma mater||Harvard University|
|Influences||Keynes · Schumpeter · Hansen · Haberler · Slichter · Chamberlin · Baumol · Leontief|
|Influenced||Samuelson · Metzler · Galbraith · Bergson · Musgrave · Goodwin · Krugman · Griffith-Jones · Kaul|
|Awards||John Bates Clark Medal (1955)
Nobel Prize in Economics (1981)
|Information at IDEAS/RePEc|
James Tobin (March 5, 1918 – March 11, 2002) was an American economist who, in his lifetime, served on the Council of Economic Advisors and the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to stabilize output and avoid recessions. His academic work included pioneering contributions to the study of investment, monetary and fiscal policy and financial markets. He also proposed an econometric model for censored endogenous variables, the well-known "Tobit model". Tobin received the Nobel Memorial Prize in Economic Sciences in 1981.
Outside of academia, Tobin was widely known for his suggestion of a tax on foreign exchange transactions, now known as the "Tobin tax". This was designed to reduce speculation in the international currency markets, which he saw as dangerous and unproductive.
Life and career
Tobin was born on March 5, 1918 in Champaign, Illinois. His father was Louis Michael Tobin, (b. 1899) a journalist working at the University of Illinois at Urbana-Champaign. His father had fought in World War I, was a member of the first Greek Organization at Illinois (Delta Tau Delta fraternity Beta Upsilon chapter), and was credited as the inventor of 'Homecoming'. His mother, Margaret Edgerton Tobin (b. 1893), was a social worker. Tobin followed primary school at the University Laboratory High School of Urbana, Illinois, a laboratory school in the university's campus.
In 1935, on his father's advice, Tobin took the entrance exams for Harvard University. Despite no special preparation for the exams, he passed and was admitted with a national scholarship from the university. Here among the faculty he would meet Joseph Schumpeter, Alvin Hansen, Gottfried Haberler, Sumner Slichter, Seymour Harris, Edward Mason[disambiguation needed], Edward Chamberlin, John Kenneth Galbraith and Wassily Leontief. During his studies he first read Keynes' The General Theory of Employment, Interest and Money, published in 1936. Tobin graduated summa cum laude in 1939 with a thesis centered on a critical analysis of Keynes' mechanism for introducing equilibrium "involuntary" unemployment. His first published article, in 1941, was based on this senior's thesis.
Tobin immediately started graduate studies, also at Harvard, earning his M.A. degree in 1940. His fellow graduate students included Paul Samuelson, Lloyd Metzler, Abram Bergson, Richard Musgrave and Richard M. Goodwin. In 1941, he interrupted graduate studies to work for the Office of Price Administration and Civilian Supply and the War Production Board in Washington, D.C.. The next year, after the United States entered World War II, he enrolled in the US Navy, spending the war as an officer on a destroyer. At the end of the war he returned to Harvard and resumed studies, receiving his Ph.D. in 1947 with a thesis on the consumption function written under the supervision of Joseph Schumpeter. In 1947 Tobin was elected a Junior Fellow of Harvard's Society of Fellows, which allowed him the freedom and funding to spend the next three years studying and doing research.
Academic activity and consultancy
In 1950 Tobin moved to Yale University, where he remained for the rest of his career. He joined the Cowles Foundation, which moved to Yale in 1955, also serving as its president between 1955–1961 and 1964-1965. His main research interest was to provide microfoundations to Keynesian economics, with a special focus on monetary economics. In 1957 he was appointed Sterling Professor at Yale.
Besides teaching and research, Tobin was also strongly involved in the public life, writing on current economic issues and serving as an economic expert and policy consultant. During 1961-62, he served as a member of John F. Kennedy's Council of Economic Advisors, under the chairman Walter Heller, then acted as a consultant between 1962-68. Here, in close collaboration with Arthur Okun, Robert Solow and Kenneth Arrow, he helped design the Keynesian economic policy implemented by the Kennedy administration. Tobin also served for several terms as a member of the Board of Governors of Federal Reserve System Academic Consultants and as a consultant of the US Treasury Department.
Tobin was awarded the John Bates Clark Medal in 1955 and, in 1981, the Nobel Memorial Prize in Economics. He was a fellow of several professional associations, holding the position of president of the American Economic Association in 1971.
In 1972 Tobin, along with fellow Yale economics professor William Nordhaus, published Is Growth Obsolete?, an article that introduced the Measure of Economic Welfare as the first model for economic sustainability assessment, and economic sustainability measurement.
James Tobin married Elizabeth Fay Ringo, a former M.I.T. student of Paul Samuelson, on September 14, 1946. They had four children: Margaret Ringo (born in 1948), Louis Michael (born in 1951), Hugh Ringo (born in 1953) and Roger Gill (born in 1956). In late June, 2009, the family announced via a private email that Tobin's wife had died at the age of 90.
In August 2009 in a roundtable interview in Prospect magazine, Adair Turner supported the idea of new global taxes on financial transactions, warning that the “swollen” financial sector paying excessive salaries had grown too big for society. Lord Turner’s suggestion that a “Tobin tax” – named after James Tobin – should be considered for financial transactions made headlines around the world.
Tobin's Tobit model of regression with censored endogenous variables (Tobin 1958a) is a standard econometric technique. His "q" theory of investment (Tobin 1969), the Baumol-Tobin model of the transactions demand for money (Tobin 1956), and his model of liquidity preference as behavior toward risk (the asset demand for money) (Tobin 1958b) are all staples of economics textbooks.
- Tobin, James (1941). "A note on the money wage problem". Quarterly Journal of Economics 55 (3): 508–516. doi:10.2307/1885642. JSTOR 1885642.
- Tobin, James (1955). "A Dynamic Aggregative Model". Journal of Political Economy 63.2 (2): 103–15. doi:10.1086/257652.
- Tobin, James (1956). "The Interest-Elasticity of Transactions Demand for Cash," Review of Economics and Statistics, 38(3), pp 241-247.
- Tobin, James (1958a). "Estimation of relationships for limited dependent variables". Econometrica (The Econometric Society) 26 (1): 24–36. doi:10.2307/1907382. JSTOR 1907382
- Tobin, James (1958b). "Liquidity Preference as Behavior Towards Risk". Review of Economic Studies 25.1: 65–86.
- Tobin, James (1961). "Money, Capital, and Other Stores of Value," American Economic Review, 51(2), pp. 26-37. Reprinted in Tobin, 1987, Essays in Economics, v. 1, pp. 217-27. MIT Press.
- Tobin, James (1969). "A General Equilibrium Approach to Monetary Theory". Journal of Money, Credit, and Banking 1.1 (1): 15–29.
- Tobin, James (1970). "Money and Income: Post Hoc Ergo Propter Hoc?" Quarterly Journal of Economics, 84(2), pp. 301-317.
- Tobin, James and William C. Brainard (1977a). "Asset Markets and the Cost of Capital". In Richard Nelson and Bela Balassa, eds., Economic Progress: Private Values and Public Policy (Essays in Honor of William Fellner), Amsterdam: North-Holland, 235-62.
- Tobin, James (1977b). "How Dead is Keynes?". Economic Inquiry XV (4): 459–468.
- Tobin, James (1992). “money,” The New Palgrave Dictionary of Finance and Money, v. 2, pp. 770–79 & in The New Palgrave Dictionary of Economics. 2008, 2nd Edition. Table of Contents and Abstract. Reprinted in Tobin (1996), Essays in Economics, v. 4, pp. 139-63. MIT Press.
- Tobin, James, Essays in Economics, MIT Press:
v. 1 (1987), Macroeconomics. Scroll to chapter-preview links.
v. 2 Consumption and Economics. Description.
v. 3 (1987). Theory and Policy (in 1989 paperback as Policies for Prosperity: Essays in a Keynesian Mode). Description and links.
v. 4 (1996). National and International. Links.
- Tobin, James, with Stephen S. Golub (1998). Money, Credit, and Capital. Irwin/McGraw-Hill. TOC.
- Tobin, James (2008). "Monetary Policy". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.
- Basic income
- Guaranteed minimum income
- Q Ratio (Tobin's Q ratio)
- Tobit model (Tobin's model for censored endogenous variables)
- Tobin tax
- Tobin, James. "Autobiography", published in Nobel Lectures. Economics 1981-1990, Editor Karl-Göran Mäler, World Scientific Publishing Co., Singapore, 1992
- Solow, Robert. (2004). "James Tobin", Proceedings of the American Philosophical Society vol. 148, no. 3
- James Tobin, "James Tobin" in Lives of the Laureates, Seven Nobel Economists, Edited by William Breit and Roger W. Spencer, The MIT Press, Cambridge, Massachusetts, London, England, 1986
- James Tobin's CV at the Cowles Foundation's website
- Nordhaus, W. and J. Tobin, 1972. Is growth obsolete?. Columbia University Press, New York.
- Economists for Peace and Security History: James Tobin among founding Nobel laureates
- James Tobin at the Cowles Foundation site
- Short biography at nobel-winners.com
- John Mihaljevic's Equities and Tobin's Q Report
- The Q Ratio Sends a Modestly Bearish Long-Term Signal (July 2009)
- Tobin's Q Moderately Bullish on U.S. Equities (as of March 2009)
- The Manual of Ideas Launches Tobin's Q Research Service Based on James Tobin's Q Indicator
- Robert Huebscher on "The Market Valuation Q-uestion"
- "James Tobin (1918–2002)". The Concise Encyclopedia of Economics. Library of Economics and Liberty (2nd ed.) (Liberty Fund). 2008.