Kenneth Arrow: Economics

“Decision theory, as it has grown up in recent years, is a formalization of the problems involved in making optimal choices. In a certain sense — a very abstract sense, to be sure — it incorporates among others operations research, theoretical economics, and wide areas of statistics, among others.”

Kenneth Arrow

Source: 1970s-1980s, The Economics of Information (1984), p. 55

Optimism , Problem , Decision , Sense

“Certainly, there is no general principle that prevents the creation of an economic theory based on other hypotheses than that of rationality.”

Kenneth Arrow

1970s-1980s, "Rationality of Self and Others in an Economic System", 1986

“Perhaps as important is the relation between the existence of solutions to a competitive equilibrium and the problems of normative or welfare economics.”

Kenneth Arrow

Source: 1950s-1960s, "Existence of an equilibrium for a competitive economy." 1954, p. 265

Problem

“L. Walras first formulated the state of the economic system at any point of time as the solution of a system of simultaneous equations representing the demand for goods by consumers, the supply of goods by producers and the equilibrium condition that supply equal demand on every market.”

Kenneth Arrow

Source: 1950s-1960s, "Existence of an equilibrium for a competitive economy." 1954, p. 265

Time

“While economic theory in general may be defined as the theory of how an economic condition or an economic development is determined within an institutional framework, the welfare theory deals with how to judge whether one condition can be said to be better in some way than another and whether it is possible, by altering the institutional framework, to achieve a better condition than the present one.”

Kenneth Arrow

Arrow and Hicks (1972) From Nobel Lectures, Economics 1969-1980, Editor Assar Lindbeck, World Scientific Publishing Co., Singapore, 1992 ( online http://www.nobelprize.org/nobel_prizes/economics/laureates/1972/presentation-speech.html)
1970s-1980s

Way

“I then follow up with four major aspects of economic research in the last 60 years, the period of my scholarly activity. One, econometric methodology and practice, is of such fundamental importance that it cannotgo unnoticed, although I played no role in it. With the other three, general equilibrium, dynamic processes, and uncertainty and information, I was more intimately involved.”

Kenneth Arrow

Kenneth Arrow, "Some Developments in Economic Theory Since 1940: An Eyewitness Account" Annu. Rev. Econ. 2009
New millennium

“In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political’ decisions, and the market mechanism, typically used to make ‘economic’ decisions. In the emerging democracies with mixed economic systems Great Britain, France, and Scandinavia, the same two modes of making social choices prevail, though more scope is given to the method of voting and to decisions based directly or indirectly on it and less to the rule of the price mechanism. Elsewhere in the world, and even in smaller social units within the democracies, the social decisions are sometimes made by single individuals or small groups and sometimes (more and more rarely in this modern world) by a widely encompassing set of traditional rules for making the social choice in any given situation, for example, a religious code.”

Kenneth Arrow

Source: 1950s-1960s, Social Choice and Individual Values (1951), p. 1: Opening pharagraph

World , Democracy , Decision