Armen Alchian: A Great Loss to the Economics Community

Armen Alchian: A Great Loss to the Economics Community

Yesterday, the 19th of Feb, the economics community lost another famed scholar – Armen Alchian, 98, professor emeritus at the University of California Los Angeles.

Known by colleagues as “the Armenian Adam Smith,” Dr. Alchian was a fixture at UCLA, the department he joined in 1946.  He spent the entirety of his academic career at UCLA, remaining on active staff until 1984, when he took up his place as a professor emeritus. According to the UCLA Obituary, he kept his office on the campus open to students until 2007. In addition to his work at UCLA he was also affiliated with RAND Corporation, was a Fellow of the American Academy of Arts and Sciences (1978) and a Distinguished Fellow of the American Economics Association (1996).

Dr. Alchian was best known as a price theorist, especially for his work in employer-employee relations. His most famous work is his coauthored 1964 Textbook Exchange and Production. It is in this publication that Alchian explains the “Alchian-Allen Effect” or Theorem; an effect explained as the result of “when a fixed cost is added to substitute goods, the more expensive one becomes relatively less expensive, and so people are likely to increase consumption of the higher quality good.” This theory has also come to be known as the ‘Third Law of Demand.”

Dr. William Allen, Professor Emeritus at UCLA and coauthor of Exchange and Production, described Dr. Alchian’s approach to the economics profession as “broadly empirical and commonsensical, imaginatively utilizing fundamental theoretical concepts and straightforward logic to account for an astonishing variety of market and social phenomena”.

A testament to his great work, his 1972 paper: “Production, Information Costs, and Economic Organization” was recognized by the American Economic Review on their 100th Anniversary as one of the 20 most influential articles published.

Many of today’s prominent economists are so because of his teaching. Here are a selection of his former students, admirers and others who have paid tribute to him in the economics blogosphere:

UCLA’s Obituary

Café Hayak: has written a few words, but promised more on the topic

FEE (Foundation for Economic Education)

Marginal Revolution

Wall Street Journal

The Independent Institute – Beacon Blog

EconLib

A collection of his works can be found here – HT Alex Tabarrok at Marginal Revolution