Joseph E. Stiglitz

Stiglitz’s Early Life and Education

Joseph Eugene Stiglitz (b. 1943) was born in the then-thriving industrial city of Gary, Indiana, on the southern shore of Lake Michigan.

Stiglitz’s parents were second-generation Jewish immigrants to the US. His father was an insurance salesman, while his mother was a schoolteacher.

For his primary and secondary education, Stiglitz attended the public schools in Gary.

For his higher education, Stiglitz attended Amherst College in Massachusetts, where he obtained his bachelor’s degree in 1964.

During 1965, Stiglitz received a National Science Foundation (NSF) grant to do research at the University of Chicago under the supervision of Hirofumi Uzawa and a Fulbright Fellowship to work at the University of Cambridge in the UK, where he was a research fellow at Fitzwilliam College.

Stiglitz has stated that his year at Cambridge helped him to appreciate the importance of the work of John Maynard Keynes and of macroeconomic theory, more generally.

In 1966, Stiglitz began his doctoral studies at the Massachusetts Institute of Technology (MIT), in Cambridge, Massachusetts.

Stiglitz received his PhD in economics from MIT in 1967.

Stiglitz’s Career

During his doctoral work at MIT, Stiglitz also held an assistant professorship at the university.

After graduating, Stiglitz returned to Cambridge, this time at Gonville and Caius College, where he continued to pursue his research interests until 1970.

After a brief stint as a visiting professor at University College in Nairobi, Kenya, Stiglitz returned to the US. He received an appointment as a Professor of Economics at Yale University in New Haven, Connecticut, where he taught for the next two years.

During the 1973–1974 academic year, Stiglitz was back in the UK, this time at Oxford University’s St. Catherine’s College.

From 1974 until 1976, Stiglitz was a Professor of Economics as Stanford University in California.

After two more years at Oxford from 1976 until 1978, during the 1978–1979 academic year, Stiglitz held the position of Oskar Morgenstern Distinguished Fellow and Visiting Professor in the School of Mathematics at the Institute for Advanced Study in Princeton, New Jersey.

In 1979, Stiglitz settled into a professorship at Princeton University, where he taught for the next nine years.

That same year, 1979, Stiglitz was awarded the John Bates Clark Medal for the best American economist under the age of 40.

From 1988 until 2001, Stiglitz was a Professor of Economics and Senior Fellow with Stanford University’s Hoover Institution. In 2001, he was accorded emeritus status at the Hoover Institution.

During the 1990s and 2000s, Stiglitz also held a wide variety of institutional memberships and visiting professorships—too many to enumerate here.

Since 2001, Stiglitz’s primary affiliation has been with Columbia University in New York City, where he is today a University Professor at Columbia University, where he has joint appointments in the Columbia Business School, in the Department of Economics of the Graduate School of Arts and Sciences, and in the School of International and Public Affairs.

In 2001, Stiglitz shared the Nobel Memorial Prize in Economic Sciences with George A. Akerlof and Michael Spence.

Stiglitz’s Nobel Lecture, “Information and the Change in the Paradigm in Economics,” was published the following year in the American Economic Review (see “Selected Works Authored or Co-authored by Stiglitz” below).

Stiglitz’s Ideas

Joseph Stiglitz is associated with the New Keynesian movement in economics—an effort to bring Keynesian theory up to date by bringing to bear a variety of factors uncovered by more recent research.

Among the many factors that may have a bearing on modifying the basic Keynesian framework, the three which Stiglitz explored most thoroughly are risk aversion, the impact of monopolies and oligopolies on competition, and information asymmetry. For present purposes, we shall focus on his work on the latter phenomenon, for which he was recognized by the Nobel Prize committee.

Asymmetric information arises when an actor on one side of a market transaction has access to more information than the actor on the other side. For example, borrowers know more than lenders about their ability to repay a loan; members of boards of directors know more than shareholders about a corporation’s financial situation; and customers know more than insurers about their health condition and hence their likelihood of submitting a claim.

Stiglitz, together with Akerlof and Spence, developed a theoretical foundation for the analysis of markets with asymmetric information. Their work has had many practical applications to everything from traditional agricultural markets to modern financial markets.

Stiglitz, in particular, focused on the question of the various means by which market adjustments may be made to compensate for information asymmetry. For instance, in the insurance example mentioned above, the insurer might require the customer to submit to a physical examination to reduce the information asymmetry between them.

In summary, Stiglitz’s greatest contribution in his technical work has lain in demonstrating how many otherwise puzzling empirical market phenomena may be explained as resulting from market adjustments to information asymmetry.

In addition to his technical work in economics, Stiglitz has been a highly active public intellectual, through both his voluminous popular writings and his innumerable public lectures, op-ed columns, and interviews.

The main thrust of Stiglitz’s public interventions has consistently been to lend support to the Keynesian vision of replacing the “invisible hand” of the marketplace with the “visible hand” of centralized planning by government economic experts like himself.

Selected Works by Stiglitz

1. Selected Worked Authored or Co-authored by Stiglitz

Lectures on Public Economics, with Anthony B. Atkinson (1980).

The Theory of Commodity Price Stabilization: A Study in the Economics of Risk, with David M.G. Newbery (1981).

Economics of the Public Sector (1986); fourth edition, with Jay K. Rosengard (2015).

The Economic Role of the State (1989).

 Peasants versus City-Dwellers: Taxation and the Burden of Economic Development, with Raaj K. Sah (1992).

 “New and Old Keynesians,” with Bruce Greenwald, Journal of Economic Perspectives, 7: 23–44 (1993).

Market Socialism and Neoclassical Economics,” in Pranab Bardhan and John E. Roemer, eds., Market Socialism: The Current Debate. New York: Oxford University Press; pp. 21–41 (1993).

Whither socialism? (1994).

Economics (1994); fourth edition, with Carl E. Walsh (2011).

Joseph Stiglitz and the World Bank: The Rebel Within, edited by Ha-Joon Chang (2001).

Globalization and Its Discontents (2002).

Information and the Change in the Paradigm in Economics,” American Economic Review, 92: 460–501 (2002).

 Towards a New Paradigm in Monetary Economics, with Bruce Greenwald (2003).

Fair Trade for All: How Trade Can Promote Development, with Andrew Charlton (2005).

Stability with Growth: Macroeconomics, Liberalization and Development, with José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar (2006).

Making Globalization Work (2006).

“Simple Formulae for Optional Income Taxation and the Measurement of Inequality,” in Kaushik Basu and Ravi Kanbur, eds., Arguments for a Better World: Essays in Honor of Amartya Sen, Volume I: Ethics, Welfare, and Measurement. Oxford: Oxford University Press; pp. 535–66 (2009).

Selected Works of Joseph E. Stiglitz (three volumes) (2009–2019).

The Stiglitz Report: Reforming the International Monetary and Financial Systems in the Wake of the Global Crisis (2010).

Mismeasuring Our Lives: Why GDP Doesn’t Add Up, with Amartya Sen and Jean-Paul Fitoussi (2010).

Freefall: America, Free Markets, and the Sinking of the World Economy (2010).

“Rethinking Macroeconomics: What Failed, and How to Repair It,” Journal of the European Economic Association, 9: 591–645 (2011).

The Price of Inequality: How Today’s Divided Society Endangers Our Future (2012).

Creating a Learning Society: A New Approach to Growth, Development, and Social Progress, with Bruce C. Greenwald (2014).

The Great Divide: Unequal Societies and What We Can Do About Them (2015).

Where Modern Macroeconomics Went Wrong,” Oxford Review of Economic Policy, 34: 70106 (2018).

People, Power and Profits: Progressive Capitalism for an Age of Discontent (2019).

Measuring What Counts; The Global Movement for Well-Being, with Jean-Paul Fitoussi and Martine Durand (2019).

2. Selected Books Co-edited by Stiglitz

Readings in the Modern Theory of Economic Growth, with Hirofumi Uzawa (out of print) (1969).

Frontiers of Development Economics: The Future in Perspective, with Gerald M. Meier (2001).

New Ideas about Old Age Security: Toward Sustainable Pension Systems in the 21st Century, with Robert Holzmann (2001).

Rethinking the East Asia Miracle, with Shahid Yusuf (2001).

Time for a Visible Hand: Lessons from the 2008 World Financial Crisis, with Stephany Griffith-Jones and José Antonio Ocampo (2010).

Selected Works About Stiglitz and New Keynesian Economics

Arnott, Richard, Bruce Greenwald, Ravi Kanbur, and Barry Nalebuff, eds., Economics for an Imperfect World: Essays in Honor of Joseph E. Stiglitz. Cambridge, MA: MIT Press (2003).

Benassi, Corrado, Alessandra Chirco, and Caterina Colombo, eds., The New Keynesian Macroeconomics (1994).

Frank, Jeff, The New Keynesian Economics: Unemployment, Search and Contracting (1986).

Galí, Jordi, Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications, second edition (2015).

Guzman, Martin, ed., Toward a Just Society: Joseph Stiglitz and Twenty-First Century Economics. New York: Columbia University Press (2018).

Houseman, Gerald, “Joseph Stiglitz and the Critique of Free Market Analysis,” Challenge, 49: 52–62 (2006).

Houseman, Gerald L., Economics in a Changed Universe: Joseph E. Stiglitz, Globalization, and the Death of “Free Enterprise.” Lanham, MD: Roman & Littlefield (2008).

Lavoie, Marc, Post-Keynesian Economics: New Foundations, second edition (2022).

Mankiw, N. Gregory and David Romer, eds., New Keynesian Economics (two volumes) (1991).

Rotheim, Roy J., ed., New Keynesian Economics/Post Keynesian Alternatives (1998).