Joseph Stiglitz facts for kids

"Stiglitz" redirects here. For other uses, see Stiglitz (disambiguation).

Quick facts for kids Joseph Stiglitz
Stiglitz in 2019

Chief Economist of the World Bank
In office February 1997 – February 2000
President	James Wolfensohn
Preceded by	Michael Bruno
Succeeded by	Nicholas Stern
17th Chair of the Council of Economic Advisers
In office June 28, 1995 – February 10, 1997
President	Bill Clinton
Preceded by	Laura Tyson
Succeeded by	Janet Yellen

Personal details
Born	Joseph Eugene Stiglitz (1943-02-09) February 9, 1943 (age 82) Gary, Indiana, U.S.
Political party	Democratic
Spouses	Jane Hannaway (m. 1978, divorced) Anya Schiffrin (m. 2004)
Education	Amherst College (BA) Massachusetts Institute of Technology (MA, PhD)
Academic career

Field	Macroeconomics, public economics, information economics
School or tradition	Neo-Keynesian economics
Doctoral advisor	Robert Solow
Doctoral students	Katrin Eggenberger
Influences	John Maynard Keynes, Robert Solow, James Mirrlees, Henry George
Contributions	Screening Taxation Unemployment Market failure Information asymmetry Economic inequality
Information at IDEAS / RePEc



Scientific career
Thesis	Studies in the theory of growth and income distribution (1967)

Joseph Eugene Stiglitz (born February 9, 1943) is a famous American economist and professor at Columbia University. He won the Nobel Memorial Prize in Economic Sciences in 2001. He also received the John Bates Clark Medal in 1979, which is given to a top economist under 40.

Stiglitz used to be a senior leader and chief economist at the World Bank. He also served as a member and chairman of the US Council of Economic Advisers. He is known for believing that economic systems should be fair for everyone. He often shares his thoughts on how globalization and international groups like the International Monetary Fund (IMF) and the World Bank can work better.

In 2000, Stiglitz started the Initiative for Policy Dialogue (IPD). This group, based at Columbia University, works on ideas for international development. He has been a professor at Columbia since 2001. In 2009, he led a special United Nations (UN) group. This group looked at how the world's money systems could be improved. Time magazine named him one of the 100 most influential people in the world in 2011.

Joseph Stiglitz's Early Life and Career

Joseph Stiglitz was born in Gary, Indiana, into a Jewish family. His mother was a schoolteacher, and his father sold insurance. He went to Amherst College, where he was a top student. He was also active in the debate team and led the student government.

During his last year at Amherst, he also studied at the Massachusetts Institute of Technology (MIT). He later did his advanced studies there. Stiglitz found the economics style at MIT very helpful. He described it as using "simple and concrete models" to answer important questions.

From 1966 to 1970, he was a research fellow at the University of Cambridge. He also taught at other famous universities. These included Yale, Stanford, Oxford, and Princeton. Since 2001, Stiglitz has been a professor at Columbia University.

Stiglitz has also worked in government. He was part of the Clinton administration from 1993 to 1997. He led the President's Council of Economic Advisers. From 1997 to 2000, he was a senior leader and chief economist at the World Bank. He left the World Bank in January 2000.

In October 2008, the UN asked him to lead a group. This group wrote a report about the causes of the 2007–2008 financial crisis. This report became known as the Stiglitz Report.

Key Ideas and Economic Contributions

Stiglitz at a conference in Mexico in 2009

Stiglitz's work has greatly influenced how we understand economics. He focuses on how information affects markets. He also looks at why markets might not always work perfectly.

Understanding Risk in Economics

After getting his PhD in 1967, Stiglitz worked on ideas about risk aversion. This is about how people and businesses deal with uncertainty. He showed that different ways of defining "more variable" were actually similar. His work helped economists better understand how people make choices when facing risks.

The Henry George Theorem

Stiglitz also contributed to a theory about public money. He suggested that local public services, like parks, could be paid for. This could happen by collecting taxes on the increased value of land. This increase happens because of the public services nearby. He called this the 'Henry George theorem'. It was named after an economist who believed in taxing land value.

Information Asymmetry and Markets

Stiglitz's most famous work is on information asymmetry. This happens when one person in a deal has more or better information than the other. He studied "screening". This is a way for one person to get private information from another.

He shared the Nobel Memorial Prize in Economics for this work in 2001. His research showed that when information is not perfect, markets often don't work as well as they could. For example, banks might not lend enough money if they can't fully know how risky borrowers are.

Monopolistic Competition Model

Stiglitz, with Avinash Dixit, created a model for monopolistic competition. This is a market where many companies sell similar but slightly different products. Their model helped explain why there might not be enough new businesses starting up. It also showed how consumers wanting different products can affect the market.

Efficiency Wage Theory

In the Shapiro–Stiglitz model of efficiency wages, workers are paid at a level that dissuades shirking. This prevents wages from dropping to market clearing levels. Full employment cannot be achieved because workers would shirk if they were not threatened with the possibility of unemployment. Because of this, the curve for the no-shirking condition (labeled NSC) goes to infinity at full employment.

Stiglitz also researched efficiency wages. This is the idea that companies pay workers more than the lowest possible wage. They do this to encourage workers to work harder and avoid slacking off. This theory helps explain why there can be unemployment even when jobs are available. It suggests that wages don't always fall enough to ensure everyone who wants a job can find one. This is because companies want to keep workers motivated.

Stiglitz's Views on the Economy and Society

Stiglitz believes that markets alone don't always lead to the best results for society. He thinks that governments need to play a role. They can help make sure the economy is fair and efficient.

Market Efficiency and Government's Role

Stiglitz argues that the idea of an "invisible hand" (where free markets naturally lead to efficiency) is not always true. He says that when there are "externalities" (when one person's actions affect others without payment), markets don't work well. He believes that imperfect information and risk also stop markets from being perfect.

He states that the real challenge is finding the right balance between markets and government. Both are needed and can help each other. This balance might change over time and in different places.

Views on Taxation

Stiglitz believes that very rich people should pay higher taxes. He has suggested a tax rate of up to 70% for the highest earners. He thinks this would help reduce inequality and make society more fair. He also supports taxing wealth that has been passed down through generations. He believes that much of the wealth of billionaires comes from luck.

Views on Free Trade

Stiglitz has complex views on free trade. He has advised different countries based on their specific situations. For example, he has suggested that countries in the Eurozone should manage their trade with Germany. He believes that large trade surpluses can harm global demand.

He also notes that trade deficits can lead to fewer manufacturing jobs. However, he has also argued that stopping globalization might lead to more job losses than gains in the United States. He believes that the US should focus on advanced manufacturing, which needs higher skills.

Green Economy and Climate Change

Stiglitz strongly supports a move to a green economy. He has backed the Green New Deal. He believes that investing in renewable energy like wind and solar power will create many new jobs. He sees the climate crisis as a major challenge for humanity, comparing it to a "World War III."

Books by Joseph Stiglitz

Stiglitz has written many books. These books explain his economic ideas to a wider audience. They cover topics from international trade to economic inequality.

Globalization and Its Discontents (2002)

In this book, Stiglitz argues that globalization has not helped all developing countries. He places much of the blame on the IMF. He explains that when countries lack important information or have weak markets, standard economic ideas don't work well. He believes that governments can help improve outcomes with smart actions.

The Price of Inequality (2012)

This book focuses on the growing gap between the rich and the poor. Stiglitz argues that inequality is a choice. It comes from unfair policies and wrong priorities. He suggests ways to create a more dynamic economy and a fairer society. The book won an award for reflecting concerns about the poor and powerless.

Creating a Learning Society (2014)

Co-written with Bruce C. Greenwald, this book looks at how knowledge is created and shared. They explain why markets alone don't always produce and spread knowledge efficiently. They argue that closing knowledge gaps is key for growth and development.

The Euro: How a Common Currency Threatens the Future of Europe (2016)

In this book, Stiglitz challenges the common ideas about Europe's economic problems. He criticizes policies that focus only on cutting spending. He offers plans to help Europe and the world avoid further economic trouble.

Measuring What Counts (2019)

Stiglitz and his co-authors argue that using GDP as the main measure of economic health is not enough. They believe that current environmental and human problems show that something is wrong with how we measure progress. They suggest looking at well-being instead of just economic output.

Awards and Honors

Besides the Nobel Prize, Stiglitz has received many other awards. He has over 40 honorary doctorates and many honorary professorships. He was elected to the American Academy of Arts and Sciences in 1983. He also became a member of the National Academy of Sciences in 1988.

In 2009, he received the Golden Plate Award. In 2011, Foreign Policy magazine named him a top global thinker. He was also awarded the Legion of Honor by France in 2012. In 2018, he received the Sydney Peace Prize.

Images for kids

Néstor Kirchner (right) with Joseph Stiglitz
Stiglitz at the World Economic Forum annual meeting in Davos, 2009
Joseph Stiglitz
Joseph Stiglitz and Kamal Nath