Introduction to John R. Hicks
Let me tell you about John Richard Hicks, a British neo-Keynesian economist born in 1904 in the United Kingdom. He studied at Oxford University and later lectured there, building a career that spanned key areas like labor economics, utility and price theory, macroeconomics, and welfare economics. In 1972, he shared the Nobel Memorial Prize in Economics with Kenneth Arrow for their work on general equilibrium theory and welfare theory.
Key Takeaways from Hicks' Work
You should know that John R. Hicks was a neo-Keynesian economist noted for his broad contributions to both microeconomic and macroeconomic theory. His major works include advances in microeconomic price and utility theory, the Hicks compensation test in welfare economics, and the IS-LM model in macroeconomics. He received the Nobel Prize in 1972 specifically for his advancements in general equilibrium and welfare economics. Hicks lived from 1904 to 1989, passing away at age 85.
Early Life and Education
John R. Hicks was born on April 8, 1904, in Warwick, United Kingdom. He attended Clifton College and then Oxford University from 1917 to 1926, focusing on economics, math, philosophy, and politics. After graduating, he lectured at the London School of Economics from 1926 to 1935, and also taught at Cambridge University and the University of Manchester before returning to Oxford in 1946. He married economist Ursula Webb in 1935; they had no children. Hicks was knighted in 1964 for his economic contributions and won the Nobel Prize in 1972. He died on May 20, 1989.
Notable Accomplishments and Honors
Throughout his career, Hicks contributed to economic theory from neoclassical price theory to macroeconomic modeling. He shared the 1972 Nobel Prize with Kenneth J. Arrow for their work on general equilibrium analysis and welfare economics. Prior to that, he was knighted in 1964 and received honorary doctorates from several U.K. universities.
Published Works
In his first book, Theory of Wages, Hicks developed the microeconomics of wage determination in competitive and regulated markets, introducing the elasticity of substitution between capital and labor to argue against Karl Marx's theory that labor-saving progress reduces labor's income share. This became a standard text in labor economics. His early papers and second book, Value and Capital, advanced utility and price theory with the Hicksian compensated demand curve, concepts of composite goods, and income and substitution effects. He also formalized comparative statics and introduced Walrasian general equilibrium theory to English-speaking audiences, showing how markets interact to reach overall equilibrium.
Legacy and Major Contributions
Hicks is remembered for four key contributions. First, the elasticity of substitution, which shows labor-saving processes don't necessarily reduce labor's share of national income. Second, the IS-LM model, which formalizes Keynesian theory to depict equilibrium with less-than-full employment through interactions of financial and real goods markets; it's a standard tool for assessing policies and fluctuations. Third, his 1939 book Value and Capital, where Hicksian models demonstrate how preferences, prices, and income shape demand, forming foundations of microeconomic price theory. Fourth, in welfare economics, the Hicks compensation principle judges economic changes by comparing losers' losses to winners' gains.
What John R. Hicks Is Known For
You might wonder what makes John R. Hicks stand out—he's considered one of the most influential economists of the 20th century for his work in labor economics, utility and price theory, macroeconomics, and welfare economics. He won the Nobel with Arrow for general equilibrium and welfare theories. His IS-LM model illustrates the relationship between goods markets (IS) and money markets (LM), showing how they intersect to determine short-run equilibrium in interest rates and output, often used to analyze market preference impacts on GDP and rates.
The Bottom Line
In summary, John R. Hicks ranks among the 20th century's top economists for his contributions to labor and welfare economics, among others. His collaborative work with Kenneth Arrow on general equilibrium and welfare theory earned them the 1972 Nobel Prize.
Important Notes
- Hicks' wife, Ursula Webb, co-founded the Review of Economic Studies in 1933 for young economists.
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