RIP Oliver Williamson

Oliver Williamson died yesterday at age 87, I do not know of what. He was famous as the main developer of New Institutional Economics, following the influence of Ronald Coase, which emphasizes the role of transactions costs in the formation and development of economic (and some other) institutions.  He received the Nobel Prize in 2009, along with Elinor Ostrom, but his influence was really quite vast for a man from a working class background, born in Superior, Wisconsin.

I checked, and although there may be another one ahead of him, as near as I can tell at his death only one other living economist had more Google Scholar citations. Andrei Shleifer has about 295,000 (h has a problem getting that trip to Stockholm because of his infamous corruption problem involving Russia), while Ollie had about 276,000.  The all time leader is Karl Marx at about 333,000.

A reason for this is that his work became enormously influential across other disciplines, especially management and law.  Indeed, he is one of the few individuals I know of (I know of only one other, Shyam Sunder at Yale) who was simultaneously in an economics department, a separate business school (I think the Management dept), and a law school, all of which he was at UC-Berkeley.  The only other person I know of who was in more departments was the late polymathic Nobel Prize winner, Herbert Simon, more on him below.

I got to know Ollie through my being editor of the Journal of Economic Behavior and Organization (JEBO), 2001-2010.  He was both an Honorary Editor and the person who wrote the very first paper ever published in the journal back in 1980, "The organization of work: a comparative institutional assessment."  It only got 545 citations and was eclipsed by the second paper to appear in the journal, the one by Richard Thaler in which he introduced the idea of "mental accounting," which was cited by the Nobel committee when he got his prize (He would tell my predecessor as editor, the founding editor, Richard Day, that Day was lucky that Thaler "gave" him that big hit paper).  After I stopped being JEBO editor I joined him on being an honorary one, with the others currently so being George Akerlof, Richard Easterlin, Alan Kirman, and Vernon Smith.  Anyway, while I was editor I had quite a few dealings with Ollie and would see him later, including having him in to speak at JMU a few years ago.

I will tell a rather odd story about him that has some historical intellectual significance, I think, one that is not public knowledge.  So he got a Masters from Stanford, where he studied with the late Kenneth Arrow among others and then got his PhD where he studied with the late Herbert Simon, the father of the idea of "bounded rationality" who also coined the term "behavioral economics," although as I have argued in several papers that approach long predated Simon (who had over 900 published papers and at his death was in four departments at Carnegie-Mellon: management, psychyology, cognitive science, and computer science, with the comp sci building there named for him, and he was also in the philosophy dept for awhile but never in an econ dept, and his PhD was in poli sci/public administration from U-Wis-Milwaukee).  Anyway, Simon, whom I also knew quite well, died shortly after I succeeded Dick Day as editor of JEBO.

Following that there was a special session at the ASSA meetings in Atlanta, I think Jan. 2002, honoring Simon, with his sociologist daughter in attendance. Various people spoke, several of them Nobelists themselves, including both Arrrow and Williamson, as well as Dick Day (not a Nobelist).  I was not a speaker, but got invited thanks to Dick Day to the luncheon afterwards, with Dick and Ken and Ollie there, along with several others.  I was aware that there was a bit of difference between Arrow and Simon over rationality in economics, with Arrow's general equilibrium theory assuming perfect rationality by economic agents, while Simon had pushed the idea of bounded rationality.  I then triggered a major blowup by asking Ollie which he tended to agree with, the late Simon being honored there, or the very present Arrow.  He just smiled and did not answer, but my question set off Dick Day who was very much a supporter of Simon on this and a critic of rationality in economics (with me tending to agree with that). Anyway, Dick launched into a perfervid attack on Arrow like I had never seen.  Ken was a very cool customer and largely fended Dick off quite capably (Arrow was somebody I never saw lose an argument), although it was clear Dick was scoring some points, and it became a bit embarrassing, especially given the presence of Herb's daughter. I actually felt a bit guilty about what I had done, but it was in fact quite a substantial debate unlike almost any I have seen (and I was the one who finally calmied it down by a careful intervention). But throughout it, Oliver Williamson, the man in the middle, held his peace and said nothing.

Anyway, he was a good guy, despite having given me some hard times when I was editor (he had strong views about many things).  But I liked him and very much respected him, and I regret his passing.  RIP, Oliver Williamson.

Barkley Rosser