John Hicks

For other people named John Hicks, seeJohn Hicks (disambiguation).

Sir John Hicks
Hicks in 1972
Born	John Richard Hicks (1904-04-08)8 April 1904 Warwick,England, UK
Died	20 May 1989(1989-05-20)(aged 85) Blockley,England, UK
Academic career
Institution	Gonville and Caius College, Cambridge London School of Economics University of Manchester Nuffield College, Oxford
School or tradition	Neo-Keynesian economics
Alma mater	Balliol College, Oxford
Influences	Léon Walras,Friedrich Hayek,Lionel Robbins,Erik Lindahl,John Maynard Keynes
Contributions	IS–LM model Capitaltheory,consumer theory,general equilibrium theory,welfare theory,induced innovation
Awards	Nobel Memorial Prize in Economic Sciences(1972)
InformationatIDEAS / RePEc

Sir John Richard Hicks(8 April 1904 – 20 May 1989) was a Britisheconomist.He is considered one of the most important and influential economists of the twentieth century. The most familiar of his many contributions in the field ofeconomicswere his statement ofconsumer demand theoryinmicroeconomics,and theIS–LM model(1937), which summarised aKeynesianview ofmacroeconomics.His bookValue and Capital(1939) significantly extendedgeneral-equilibriumand value theory. Thecompensated demand functionis named the Hicksian demand function in memory of him.

In 1972 he received theNobel Memorial Prize in Economic Sciences(jointly) for his pioneering contributions togeneral equilibrium theoryandwelfare theory.

Early life

Hicks was born in 1904 inWarwick,England, and was the son of Dorothy Catherine (Stephens) and Edward Hicks, a journalist at a local newspaper.

He was educated atClifton College(1917–1922)and atBalliol College, Oxford(1922–1926), and was financed by mathematical scholarships. During his school days and in his first year at Oxford, he specialised in mathematics but also had interests in literature and history. In 1923, he moved toPhilosophy, Politics and Economics,the "new school" that was just being started at Oxford. He graduated withsecond-class honoursand, as he stated, "no adequate qualification in any of the subjects" that he had studied.

Career

From 1926 to 1935, Hicks lectured at theLondon School of Economics and Political Science.He started as a labour economist and did descriptive work on industrial relations but gradually, he moved over to the analytical side, where his mathematics background returned to the fore. Hicks's influences includedLionel Robbinsand such associates asFriedrich von Hayek,R.G.D. Allen,Nicholas Kaldor,Abba LernerandUrsula Webb,the last of whom, in 1935, became his wife.

From 1935 to 1938, he lectured atCambridgewhere he was also a fellow ofGonville & Caius College.He was occupied mainly in writingValue and Capital,which was based on his earlier work in London. From 1938 to 1946, he was Professor at theUniversity of Manchester.There, he did his main work on welfare economics, with its application to social accounting.

In 1946, he returned toOxford,first as a research fellow ofNuffield College(1946–1952) then asDrummond Professor of Political Economy(1952–1965) and finally as a research fellow ofAll Souls College(1965–1971), where he continued writing after his retirement.

Later life

Hicks was knighted in 1964 and became an honorary fellow ofLinacre College.He was co-recipient of the Nobel Prize in Economic Sciences (withKenneth J. Arrow) in 1972. He donated the Nobel Prize to theLondon School of Economics and Political Science's Library Appeal in 1973.He died on 20 May 1989 at his home in theCotswoldvillage ofBlockley.

Contributions to economic analysis

Hicks's early work as alabour economistculminated inThe Theory of Wages(1932, 2nd ed. 1963), still considered standard in the field. He collaborated with R.G.D. Allen in two seminal papers onvalue theorypublished in 1934.

Hismagnum opusisValue and Capitalpublished in 1939. The bookbuiltonordinal utilityand mainstreamed the now-standard distinction between thesubstitution effectand theincome effectfor an individual indemand theoryfor the 2-good case. It generalised the analysis to the case of one good and acomposite good,that is, all other goods. It aggregated individuals and businesses through demand and supply across the economy. It anticipated theaggregation problem,most acutely for the stock of capital goods. It introducedgeneral equilibrium theoryto an English-speaking audience, refined the theory for dynamic analysis, and for the first time attempted a rigorous statement of stability conditions for general equilibrium. In the course of analysis Hicks formalisedcomparative statics.In the same year, he also developed the famous "compensation" criterion calledKaldor–Hicks efficiencyfor welfare comparisons of alternative public policies or economic states.

Hicks's most familiar contribution inmacroeconomicswas theHicks–Hansen IS–LM model,published in his paper “Mr. Keynes and the "Classics"; a suggested interpretation”.This model formalised an interpretation of the theory ofJohn Maynard Keynes(seeKeynesian economics), and describes the economy as a balance between three commodities: money, consumption and investment. Hicks himself wavered in his acceptance of his IS–LM formulation; in a paper published in 1980 he dismissed it as a ‘classroom gadget’.

Contributions to interpretation of income for accounting purposes

Hicks's influential discourse onincomesets the basis for its subjectivity but relevancy for accounting purposes. He aptly summarized it as follows. “The purpose of income calculations in practical affairs is to give people an indication of the amount they can consume without impoverishing themselves”.

Formally, he defined income precisely in three measures:

Hicks's number 1 measure of income:“the maximum amount, which can be spent during a period if there is to be an expectation of maintaining intact the capital value of prospective receipts (in money terms)” (Hicks, 1946, p. 173)

Hicks's number 2 measure of income(market price-neutral): "the maximum amount the individual can spend during a week, and still expect to be able to spend the same amount in each ensuing week” (Hicks, 1946, p. 174).

Hicks's number 3 measure of income(takes into account market prices): “the maximum amount of money which an individual can spend this week, and still expect to be able to spend the same amount in real terms in each ensuing week” (Hicks, 1946, p. 174)

See also

• Hicksian demand function
• Hicks optimality
• Hicks-neutral technical change
• List of economists
• Nobel Prize in Economics

Selected publications

• 1932, 2nd ed., 1963.The Theory of Wages.London, Macmillan.
• 1934. "A Reconsideration of the Theory of Value," withR. G. D. Allen,Economica.
• 1937."Mr. Keynes and the Classics: A Suggested Interpretation,"Econometrica.
• 1939. "The Foundations of Welfare Economics",Economic Journal.
• 1939, 2nd ed. 1946.Value and Capital.Oxford: Clarendon Press.
• 1940. "The Valuation of Social Income,"Economica,7:105–24.
• 1941. "The Rehabilitation of Consumers' Surplus,"Review of Economic Studies.
• 1942.The Social Framework: An Introduction to Economics.
• 1950.A Contribution to the Theory of the Trade Cycle.Oxford: Clarendon Press.
• 1956.A Revision of Demand Theory.Oxford: Clarendon Press.
• 1958. "The Measurement of Real Income,"Oxford Economic Papers.
• 1959.Essays in World Economics.Oxford: Clarendon Press.
• 1961. "Measurement of Capital in Relation to the Measurement of Other Economic Aggregates", in Lutz and Hague, editors, Theory of Capital.
• 1965.Capital and Growth.Oxford: Clarendon Press.
• 1969.A Theory of Economic History.Oxford: Clarendon Press. Scroll to chapter-previewlinks.
• 1970. "Review of Friedman",Economic Journal.
• 1973."The Mainspring of Economic Growth",Nobel Lectures, Economics 1969–1980,Editor Assar Lindbeck, World Scientific Publishing Co., Singapore, 1992.
• 1973.Autobiographyfor Nobel Prize
• 1973.Capital and Time: A Neo-Austrian Theory.Oxford, Clarendon Press.
• 1974. "Capital Controversies: Ancient and Modern",American Economic Review.
• 1974.The Crisis in Keynesian Economics.New York, Basic Books.
• 1975. "What Is Wrong with Monetarism",Lloyds Bank Review.
• 1977.Economic Perspectives.Oxford: Clarendon Press.LCCN77-5770
• 1979. "The Formation of an Economist." Banca Nazionale del Lavoro Quarterly Review, no. 130 (September 1979): 195–204.
• 1979.Causality in Economics.Oxford: Basil Blackwell.
• 1980. "IS-LM: An Explanation,"Journal of Post Keynesian Economics.
• 1981.Wealth and Welfare: Vol I. of Collected Essays in Economic Theory.Oxford: Basil Blackwell.
• 1982.Money, Interest and Wages: Vol. II of Collected Essays in Economic Theory.Oxford: Basil Blackwell.
• 1983.Classics and Moderns: Vol. III of Collected Essays in Economic Theory.Oxford: Basil Blackwell.
• 1989.A Market Theory of Money.Oxford University Press.

Further reading

• Christopher Bliss, [1987] 2008. "Hicks, John Richard (1904–1989)",The New Palgrave: A Dictionary of Economics.Abstract.
• Sen, Amartya;Zamagni, Stefano;Scazzieri, Roberto (2008).Markets, money and capital: Hicksian economics for the twenty-first century.Cambridge, UK New York: Cambridge University Press.ISBN9780521873215.

External links

• John R. Hickson Nobelprize.org

• John Hickspage on theHistory of Economic Thought website.
• Works by or about John HicksatInternet Archive