Michael Spence

Andrew Michael Spence (born November 7, 1943,[3] Montclair, New Jersey) is a Canadian American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, along with George Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development.

Michael Spence
A Michael Spence
Spence in 2008
BornNovember 7, 1943 (age 75) [1]
NationalityUnited States
InstitutionHarvard University
Stanford University
SDA Bocconi School of Management
New York University
FieldMicroeconomics, labor economics
Alma materHarvard University, (Ph.D.)
University of Oxford, (B.A.)
Princeton University, (B.A.)
Doctoral
advisor
Kenneth Arrow[2]
Thomas Schelling[2]
InfluencesRichard Zeckhauser
ContributionsSignaling theory
AwardsJohn Bates Clark Medal (1981)
Nobel Memorial Prize in Economics (2001)
Information at IDEAS / RePEc

Career

Spence is probably most famous for his job-market signaling model, which essentially triggered the enormous volume of literature in this branch of contract theory. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less costly for them to acquire education than it is for employees with low abilities. For the model to work, it is not even necessary for education to have any intrinsic value if it can convey information about the sender (employee) to the recipient (employer) and if the signal is costly.

Spence did his middle and high school education at the University of Toronto Schools of the University of Toronto. In 1966, he was awarded a Rhodes Scholarship at Oxford University upon graduation from Princeton University with a degree in philosophy. He studied mathematics at Oxford.[4] He obtained a PhD in Economics from Harvard. Spence is a Philip H. Knight Professor Emeritus and former Dean of the Stanford Graduate School of Business;[5] he is the Chairman of the Commission on Growth and Development.

Spence joined the faculty of New York University's Stern School of Business on September 1, 2010.[6] He joined the faculty of SDA Bocconi School of Management in Italy in July 2011.[7]

He is a senior fellow at Stanford University's Hoover Institution and the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business.[8] Spence is also a Commissioner for the Global Commission on Internet Governance.[9] Additionally, Spence is also a member of the Berggruen Institute's 21st Century Council.[10][11]

He is the author of three books and 50 articles, and has also been a consistent contributor to Project Syndicate, an international newspaper syndicate, since 2008. Among his beliefs are that high-frequency trading should be banned.[12]

Spence had both Bill Gates and Steve Ballmer in a graduate-level economics class at Harvard. In a 1999 Fortune interview, however, Gates and Ballmer admitted not attending class and passing only after cramming for four days before the final.[13]

Honors and awards

Spence is an Honorary Fellow of Magdalen College, Oxford, where he studied as a Rhodes Scholar.[14] He was the recipient of the Nobel Memorial Prize in Economic Sciences in 2001, as well as the John Bates Clark Medal from the American Economics Association in 1981. [15]

Selected works

  • Spence, Michael (1973). "Job Market Signaling". Quarterly Journal of Economics. 87 (3): 355–374. doi:10.2307/1882010. JSTOR 1882010.
  • Market Signaling: Informational Transfer in Hiring and Related Screening Processes. Cambridge, MA: Harvard University Press. 1974. ISBN 978-0674549906.
  • The Next Convergence: The Future of Economic Growth in a Multispeed World. New York: Farrar, Straus and Giroux. May 2011. ISBN 9781429968713.

Personal life

Spence currently lives in Milan, Italy with his wife and children.

See also

References

  1. ^ "A. Michael Spence – Facts". NobelPrize.org.
  2. ^ a b Signaling in Retrospect and the Informational Structure of Markets Nobel Lecture Retrieved September 12, 2016.
  3. ^ "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2001". NobelPrize.org. Retrieved 2018-11-07.
  4. ^ "A. Michael Spence - Biographical". www.nobelprize.org. Retrieved June 14, 2016.
  5. ^ "Nobel Laureates - Harvard University". Harvard University. Retrieved June 11, 2016.
  6. ^ "NYU Stern | News | A. Michael Spence, Nobel Economist, to Join NYU Stern". www.stern.nyu.edu. February 22, 2010. Retrieved June 14, 2016.
  7. ^ "Nobel Economist Michael Spence Joins SDA Bocconi Faculty". BusinessBecause. July 25, 2011. Retrieved June 18, 2016.
  8. ^ {{Cite web|url=https://www.stern.nyu.edu/faculty/bio/a-michael-spence%7Ctitle=A. Michael Spence - Biography|
  9. ^ "OurInternet". www.ourinternet.org. Retrieved June 14, 2016.
  10. ^ "Berggruen Institute".
  11. ^ Forbes, Miguel. "Charles Taylor Wins $1M First Inaugural Berggruen Nobel Prize", Forbes, January 3, 2017.
  12. ^ Philips, Matthew (March 28, 2011). "Should High-Frequency Trading Be Banned? One Nobel Winner Thinks So". Freakanomics blog.
  13. ^ "The $100 Billion Friendship In a frank chat with FORTUNE's Brent Schlender, Bill Gates and Steve Ballmer talk about their partnership and how it will shape Microsoft in the 21st century". archive.fortune.com. October 25, 1999. Retrieved June 14, 2016.
  14. ^ "People at Magdalen - Magdalen College Oxford (Search by last name)". www.magd.ox.ac.uk. Retrieved June 14, 2016.
  15. ^ "A. Michael Spence - Biography". https://www.stern.nyu.edu. Retrieved April 7, 2019. External link in |website= (help)

External links

Awards
Preceded by
James J. Heckman
Daniel L. McFadden
Laureate of the Nobel Memorial Prize in Economics
2001
Served alongside: George A. Akerlof, Joseph E. Stiglitz
Succeeded by
Daniel Kahneman
Vernon L. Smith
Edge of Honor

Edge Of Honor is a 1991 drama / thriller movie directed by Michael Spence who also directed The Dread (2007). The film stars Corey Feldman, Don Swayze, Scott Reeves and Ken Jenkins.

Elisabeth Waters

Elisabeth Waters (born 1952 in Providence, Rhode Island) is an American fantasy author.

She won the Gryphon award in 1989 for her first novel Changing Fate. Since then, she has published a large number of short stories, some in the anthology series Sword and Sorceress, which she now edits.

George Akerlof

George Arthur Akerlof (born June 17, 1940) is an American economist who is a University Professor at the McCourt School of Public Policy at Georgetown University and Koshland Professor of Economics Emeritus at the University of California, Berkeley. He won the 2001 Nobel Memorial Prize in Economic Sciences (shared with Michael Spence and Joseph E. Stiglitz).

Growth Commission

The Commission on Growth and Development (informally known as the Growth Commission) was an independent body chaired by American economist Michael Spence that brought together 22 policy-makers, academics, and business leaders to examine various aspects of economic growth and development.Launched in 2006, the Commission set out to take stock of the state of theoretical and empirical knowledge on economic growth with a view to drawing implications for policy for the current and future policymakers. Its work culminated in two publications – The Growth Report: Strategies for Sustained growth and Inclusive Development in May 2008 – and a Special Report on Post Crisis Growth in Developing Countries in October 2009. Five thematic volumes and nearly 70 working papers were also published by the Commission.

The Growth Commission’s work was sponsored by the governments of Australia, the Netherlands, the United Kingdom, and Sweden, the William and Flora Hewlett Foundation, and the World Bank Group. The group's activities formally ended in June 2010.

Hari Dhillon

Hari Dhillon (Punjabi: ਹਰੀ ਢਿੱਲੋਂ (Gurmukhi)), also rendered Hari Dillon or Harry Dillon, is an American television, film and stage actor, best known for playing Michael Spence in British television medical drama series Holby City.

Holby City (series 17)

The seventeenth series of the British medical drama television series Holby City commenced airing in the United Kingdom on BBC One on 14 October 2014 and ran for 52 episodes, ending on 6 October 2015. The series saw the returns of Oliver Valentine (James Anderson), Henrik Hanssen (Guy Henry), and Essie Harrison (Kaye Wragg). Former series regular Hari Dhillon returned as Michael Spence for a six-episode guest arc. Former cast member Olga Fedori reprised her role as Frieda Petrenko for a guest appearance.

The series also saw several actors leave. Louise Delamere (Colette Sheward) made her exit in the fourth episode, later followed by Jules Knight (Harry Tressler) and Niamh McGrady (Mary-Claire Carter). Michael Thomson (Jonny Maconie) departed in episode 27, along with Rosie Marcel (Jac Naylor), who made a temporary departure to have her first child. Towards the end of September, the series saw the departure of one of the longest serving characters Elliot Hope (Paul Bradley).

Information asymmetry

In contract theory and economics, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This asymmetry creates an imbalance of power in transactions, which can sometimes cause the transactions to go awry, a kind of market failure in the worst case. Examples of this problem are adverse selection, moral hazard, and monopolies of knowledge.Information asymmetry extends to non-economic behavior. As private firms have better information than regulators about the actions that they would take in the absence of a regulation, the effectiveness of a regulation may be undermined. International relations theory has recognized that wars may be caused by asymmetric information and that "Most of the great wars of the modern era resulted from leaders miscalculating their prospects for victory". There is asymmetric information between national leaders, wrote Jackson and Morelli, when there are differences "in what they know [i.e. believe] about each other's armaments, quality of military personnel and tactics, determination, geography, political climate, or even just about the relative probability of different outcomes" or where they have "incomplete information about the motivations of other agents".Information asymmetries are studied in the context of principal–agent problems where they are a major cause of misinforming and is essential in every communication process. Information asymmetry is in contrast to perfect information, which is a key assumption in neo-classical economics. In 2001 the Nobel Memorial Prize in Economics was awarded to George Akerlof, Michael Spence, and Joseph E. Stiglitz for their "analyses of markets with asymmetric information".

Information economics

Information economics or the economics of information

is a branch of microeconomic theory that studies how information and information systems affect an economy and economic decisions. Information has special characteristics: It is easy to create but hard to trust. It is easy to spread but hard to control. It influences many decisions. These special characteristics (as compared with other types of goods) complicate many standard economic theories.The subject of "information economics" is treated under Journal of Economic Literature classification code JEL D8 – Information, Knowledge, and Uncertainty. The present article reflects topics included in that code. There are several subfields of information economics. Information as signal has been described as a kind of negative measure of uncertainty. It includes complete and scientific knowledge as special cases. The first insights in information economics related to the economics of information goods.

In recent decades, there have been influential advances in the study of information asymmetries and their implications for contract theory, including market failure as a possibility.Information economics is formally related to game theory as two different types of games that may apply, including games with perfect information, complete information, and incomplete information. Experimental and game-theory methods have been developed to model and test theories of information economics, including potential public-policy applications such as mechanism design to elicit information-sharing and otherwise welfare-enhancing behavior.

Institute for New Economic Thinking

The Institute for New Economic Thinking (INET) is a New York City–based nonprofit think tank. It was founded in October 2009 as a result of the 2007–2012 global financial crisis, and runs a variety of affiliated programs at major universities such as the Cambridge-INET Institute at the University of Cambridge.

Michael Spence (Holby City)

Michael Spence is a fictional character from the BBC medical drama Holby City, portrayed by actor Hari Dhillon. The character first appeared on 20 November 2007, in the episode "Unfinished Symphony" - episode six of the show's tenth series. Dhillon had formerly appeared in the show on a recurring basis in a more minor role, as Dr. Sunil Gupta, between 2001 and 2003. In the episode dated 17 December 2013, Michael was forced to take a break from the hospital by the new CEO, Guy Self (John Michie) and it was announced when the episode ended that Dhillon had taken an extended break from the show.

On 19 June 2014, it was announced that Dhillion would be returning to Holby City for a short stint. He returned on 14 October and appeared in an episode of Casualty on 1 November.

Michael Spence (academic)

Michael James Spence (born 10 January 1962) is an Australian academic and Anglican priest. Spence began serving as the 25th vice-chancellor and principal of the University of Sydney on 11 July 2008.

Michael Spence (disambiguation)

Michael Spence is an American-born economist and winner of the 2001 Nobel Memorial Prize in Economic Sciences

Michael Spence may also refer to:

Michael Spence (academic) (born 1962), Australian-born academic and current Vice Chancellor of the University of Sydney

Michael Spence (Holby City), a character in the BBC medical drama Holby City

Michael Spence (born 1978), American steeplechase runner, participated in Athletics at the 2007 Pan American Games

Michael Spence (rugby league) (born 1988), rugby league player for the Brisbane Broncos

Mike Spence (1936–1968), British racing driver

Michael Spence (rugby league)

Michael Spence was a professional rugby league footballer for the Brisbane Broncos in the Telstra Premiership. Spence was by preference a lock, but he could comfortably take up the second-row role. Spence signed for Brisbane first grade from feeder club Redcliffe Dolphins after playing his junior football for Coffs Harbour Comets.

Quarterly Journal of Economics

The Quarterly Journal of Economics is a peer-reviewed academic journal published by the Oxford University Press. Its current editors-in-chief are Pol Antràs, Robert J. Barro, Lawrence F. Katz, and Andrei Shleifer (Harvard University). It is the oldest professional journal of economics in the English language,

and covers all aspects of the field—from the journal's traditional emphasis on microtheory, to both empirical and theoretical macroeconomics. According to the Journal Citation Reports, the journal has a 2015 impact factor of 6.662, ranking it first out of 347 journals in the category "Economics".Some of the most influential and well-read papers in economics have been published in the Quarterly Journal of Economics, including:

"Distribution as Determined by a Law of Rent" (1891), by John B. Clark

"The Positive Theory of Capital and Its Critics" (1895), by Eugen von Böhm-Bawerk

"Petty's Place in the History of Economic Theory" (1900), by Charles Henry Hull

"Fallacies in the Interpretation of Social Cost" (1924), by Frank H. Knight

"The General Theory of Employment" (1937), by John Maynard Keynes (an expansion on Keynes' General Theory)

"The Interpretation of Voting in the Allocation of Economic Resources" (1943), by Howard Rothmann Bowen

"A Contribution to the Theory of Economic Growth" (1956), by Robert Solow

"The Market for "Lemons": Quality Uncertainty and the Market Mechanism" (1970), by George Akerlof

"Job Market Signaling" (1973), by Michael Spence

"Equilibrium in Competitive Insurance Markets: The economics of markets with imperfect information" (1976), by Michael Rothschild and Joseph Stiglitz

"A Reformulation of the Economic Theory of Fertility" (1988), by Robert Barro and Gary Becker

"A Theory of Competition among Pressure Groups for Political Influence" (1983), by Gary Becker

"A Contribution to the Empirics of Economic Growth" (1992), by N. Gregory Mankiw, David Romer, and David N. Weil

"Golden Eggs and Hyperbolic Discounting" (1997), by David Laibson

"Does Social Capital Have An Economic Payoff? A Cross-Country Investigation" (1997) by Stephen Knack and Philip Keefer

"A Theory of Fairness, Competition, and Cooperation" (1999), by Ernst Fehr and Klaus M. Schmidt

"Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory" (2000), by Richard Clarida, Jordi Galí, and Mark Gertler

"Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence" (2002) by Timothy F. Bresnahan, Erik Brynjolfsson and Lorin M. Hitt

Ric Griffin

Kobina Eric "Ric" Griffin is a fictional character from the BBC medical drama Holby City, portrayed by actor Hugh Quarshie. The character first appeared on-screen on 9 October 2001 in episode "Rogue Males" - series 4, episode 1 of the programme. Ric is the longest serving main character in the show, having played the role for almost 18 years.

Screening (economics)

Screening in economics refers to a strategy of combating adverse selection, one of the potential decision-making complications in cases of asymmetric information, by the agent(s) with less information. The concept of screening was first developed by Michael Spence (1973), and should be distinguished from signalling, a strategy of combating adverse selection undertaken by the agent(s) with more information.

For purposes of screening, asymmetric information cases assume two economic agents—which we call, for example, Abel and Cain—where Abel knows more about himself than Cain knows about Abel. The agents are attempting to engage in some sort of transaction, often involving a long-term relationship, though that qualifier is not necessary. The "screener" (the one with less information, in this case, Cain) attempts to rectify this asymmetry by learning as much as he can about Abel.

The actual screening process depends on the nature of the scenario, but is usually closely connected with the future relationship.

In education economics, screening models are commonly contrasted with human capital theory. In a screening model used to determine an applicant's ability to learn, giving preference to applicants who have earned academic degrees reduces the employer's risk of hiring someone with a diminished capacity for learning.

Signalling (economics)

In contract theory, signalling (or signaling; see spelling differences) is the idea that one party (termed the agent) credibly conveys some information about itself to another party (the principal). Although signalling theory was initially developed by Michael Spence based on observed knowledge gaps between organisations and prospective employees, its intuitive nature led it to be adapted to many other domains, such as Human Resource Management, business, and financial markets.In Michael Spence's job-market signalling model, (potential) employees send a signal about their ability level to the employer by acquiring education credentials. The informational value of the credential comes from the fact that the employer believes the credential is positively correlated with having greater ability and difficult for low ability employees to obtain. Thus the credential enables the employer to reliably distinguish low ability workers from high ability workers.

Sword and Sorceress series

The Sword and Sorceress series is a series of fantasy anthologies originally edited by Marion Zimmer Bradley, and originally published by DAW Books. As she explained in the foreword to the first volume, she created the anthology to redress the lack of strong female protagonists in the subgenre of sword and sorcery. At the time, most female characters in sword and sorcery were little more than stock damsels in distress, or pawns who were distributed at the conclusion of the story as "bad-conduct prizes" (Bradley's term) for the male protagonists. Many of the early sword-and-sorcery works featured attitudes toward women that Bradley considered appalling.

As the Sword and Sorceress series grew in popularity with readers, she began to receive increasing numbers of excellent submissions. As a result, she had to become more selective, and to shorten her reading periods accordingly. For the eighteenth volume, which she was editing at the time of her death, she had enough material for three volumes. After her death, it was decided to take as many as possible of the stories she had tentatively chosen and publish them in three annual volumes, thus extending the series. After volume twenty was published, the publisher decided to extend an invitation for an additional volume under Diana L. Paxson, an editor who had worked with Bradley, with the possibility of additional volumes being published if it became a success.

The Sword and Sorceress series is noteworthy not only for its introduction of strong female protagonists into a subgenre previously dominated by male characters, but for its financial success. Unlike most anthologies of original fantasy short fiction, they routinely earned out their advances and continued to pay their authors royalties for years afterward, often on foreign sales. In addition, many authors who made their first professional sales in the Sword and Sorceress anthologies subsequently enjoyed successful careers as novelists.

In February 2007, the Marion Zimmer Bradley Literary Works Trust, which holds her copyrights, negotiated a contract with Norilana Books to publish a new volume and proceed to elicit submissions. The book was published in November 2007, and the editor was Elisabeth Waters. Norilana Books has published four more books of the series, also edited by Elisabeth Waters. Since 2012 the Marion Zimmer Bradley Literary Works Trust has published the Sword and Sorceress anthologies.

The Market for Lemons

"The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a well-known 1970 paper by economist George Akerlof which examines how the quality of goods traded in a market can degrade in the presence of information asymmetry between buyers and sellers, leaving only "lemons" behind. In American slang, a lemon is a car that is found to be defective only after it has been bought.

Suppose buyers cannot distinguish between a high-quality car (a "peach") and a "lemon". Then they are only willing to pay a fixed price for a car that averages the value of a "peach" and "lemon" together (pavg). But sellers know whether they hold a peach or a lemon. Given the fixed price at which buyers will buy, sellers will sell only when they hold "lemons" (since plemon < pavg) and they will leave the market when they hold "peaches" (since ppeach > pavg). Eventually, as enough sellers of "peaches" leave the market, the average willingness-to-pay of buyers will decrease (since the average quality of cars on the market decreased), leading to even more sellers of high-quality cars to leave the market through a positive feedback loop.

Thus the uninformed buyer's price creates an adverse selection problem that drives the high-quality cars from the market. Adverse selection is a market mechanism that can lead to a market collapse.

Akerlof's paper shows how prices can determine the quality of goods traded on the market. Low prices drive away sellers of high-quality goods, leaving only lemons behind. In 2001, Akerlof, along with Michael Spence, and Joseph Stiglitz, jointly received the Nobel Memorial Prize in Economic Sciences, for their research on issues related to asymmetric information.

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