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Chicago Exam Questions Problem Sets Suggested Reading Syllabus

Chicago. Price Theory. Reading Assignments, Problems, Exam. Friedman, 1951-52

 

According to the class roll kept by Milton Friedman, we know that Gary Becker attended his graduate price theory course Economics 300A in the Autumn quarter of 1951 (presumably Becker then took 300B during the Winter quarter of 1952, but I could not find that quarter’s roll in Friedman’s papers). This post even has Friedman’s partial answer key for the True/False/Uncertain questions for Economics 300B!

The reading assignments for the two-quarter core price theory sequence taught by Milton Friedman in 1948 , and in 1958 have been posted earlier (1946 300A only).  This post gives the reading assignments with open and gated links where available (some of the papers are only available at the gated jstor.org). These can be compared to the readings for the price theory course Friedman taught at Columbia in 1939-40. 

I have put in boldface the 1951 additions to make a comparison with the 1948 version easier. Worth noting: an asterisk designates optional and not required reading.

Only one item was dropped from the 1948 reading list:

Meyers, A. L. Elements of Modern Economics, ch 5, 7, 8, 9.

The October 1951 version of the Reading Assignments for Economics 300A and B was published as an appendix to J. Daniel Hammond’s “The development of post-war Chicago price theory” in The Elgar Companion to Chicago School Economics, edited by Ross  B. Emmett, pp. 7-24. This Hammond article offers much context and is very much worth consulting.

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October, 1951

Economics 300A and B
Reading Assignments by M. Friedman

(Notes:

  1. It is assumed students are familiar with material equivalent to that contained in George Stigler,  The Theory of Price. [Revised edition, 1952] or Kenneth Boulding, Economic Analysis [Third edition, 1955].
  2. Readings marked with asterisk (*) are recommended, not required.)

Knight, F. H., The Economic Organization, esp. pp. 1-37. HB172.K73.
Keynes, J. N., The Scope and Method of Political Economy, ch. I and II, pp. 1-83. HB171.K45.
Hayek, F. A., “The Use of Knowledge in Society,” American Economic Review, Sept., 1945; Reprinted in Individualism and Economic Order. HB1.A6.

Marshall, Alfred, Principles of Economics, Bk III, ch 2, 3, 4; Bk V, ch 1,2. HB171.M36.
Friedman, Milton, “The Marshallian Demand Curve,” Journal of Political Economy, December 1949. YF6.
Schultz, Henry, The Meaning of Statistical Demand Curves, pp. 1-10. HB201.S398.
Working, E. J. “What do Statistical ‘Demand Curves’ Show?” Quarterly Journal of Economics, XLI (1927), pp. 212-27. HB1.Q3.
Knight, F. H. Risk, Uncertainty, and Profit, ch 3. HB601.K7. 1940.
*Lange, O., “On the Determinateness of the Utility Function”, Review of Economic Studies, Vol I (1933-34), pp. 218 ff. HB1.R45.
*Allen, R.G.D., “The Nature of Indifference Curves,” Ibid, pp 110 ff. HB1.R45.
Hicks, J. R., Value and Capital, Part I (pp 11-52). HB171.H64.
*Wallis, W. A., and Friedman, Milton, “The Empirical Derivation of Indifference Functions”, in Lange et al, Studies in Mathematical Economics and Econometrics. HB99.C5.
*Friedman, Milton and Savage, L. J., “The Utility Analysis of Choices Involving Risk,” Journal of Political Economy LVI (August 1948) pp. 279-304. HB1.J7.

 

Marshall, Book V, ch 3, 4, 5, 12, Appendix H. HB171.M36.
Robinson, Joan, Economics of Imperfect Competition, ch 2. HB201.R65.
Clark, J. M., The Economics of Overhead Costs, ch 9. HB195.C62.
Viner, Jacob, “Cost Curves and Supply Curves”, Zeitschrift fuer Nationaloekonomie, Bd III (Sept, 1931), pp 23-46. H5.Z55.
Friedman, Milton, “The Relationships Between Supply Curves and Cost Curves,” (dittoed) YF9.
Chamberlin, Edward, The Theory of Monopolistic Competition, ch 3, sec. 1, 4, 5, 6; ch 5. HB201.C44.
Harrod, R. F. “Doctrines of Imperfect Competition”, Quarterly Journal of Economics, May 1934, sec. 1, pp. 442-61. HB1.Q3.
Stigler, G. J., “Monopolistic Competition in Retrospect,” Lecture 2 in Five Lectures on Economic Problems. HB171.S82.
*Triffin, Robert, Monopolistic Competition and General Equilibrium Theory, esp. Part II. HD41.T8 and H31.H33, v. 67.
*Robinson, E. A. G., The Structure of Competitive Industry. H045.R732.
*___________________, Monopoly. H041.R65.
*Plant, Arnold, “The Economic Theory Concerning Patents for Inventions,” Economica, Feb, 1934. HB1.E42.
*Dennison, S. R., “The Problem of Bigness,” Cambridge Journal, Nov. 1947. Y03.

 

Marshall, Book IV, ch 1, 2, 3; Bk V, ch 6. HB171.M36.
Clark, J. B., The Distribution of Wealth, Preface, ch 1, 7, 8, 11, 12, 13, 23.
Mill, John Stuart, Principles of Political Economy, Book II, ch 14. HB171.M667.
Hicks, J. R., The Theory of Wages, ch 1-6. HD4909.H63.
Smith, Adam, The Wealth of Nations, Bk I, ch 10. HB161.S652.
Marshall, Bk VI, ch 1-5. HB171.M36.
Friedman, Milton, and Kuznets, Simon, Income from Independent Professional Practice, Preface, pp. v to x; ch 3, Sec 3, pp. 81-95, ch 4, Sect 2, pp. 118-137, App, Sec 1 & 3, pp. 142-151, 155-61. HD4965.U5F8.
Knight, F. H. “Interest” in Encyclopaedia of the Social Sciences, also in Ethics of Competition. H04965.U5F8.
Keynes, J. M. The General Theory of Employment, Interest, and Money, ch 11-14. HB171.K46.
Weston, J.F., “A Generalized Uncertainty Theory of Profit,” American Economic Review, March, 1950, pp. 40-60. HB.A6.

 

Cassell, Gustav, Fundamental Thoughts in Economics, ch. 1, 2,3. Ch. 1, 2, 3. HB 179.C283.
_________________, The Theory of Social Economy, ch 4. HB179.C283.
J. R. Hicks, “Mr. Keynes and the ‘Classics’; A Suggested Interpretation”, Econometrica, vol 5, April 1937, pp. 147-159. HB1.E23, v. 5.
Franco Modigliani, “Liquidity Preference and the Theory of Interest and Money,” Econometrica, vol 12, No. 1 (Jan 1944) esp. Part I, sec. 1 through 9, sec 11 through 17, Part II, sec 21. HB1.E23, v.12.
A. C. Pigou, “The Classical Stationary State,” Economic Journal, vol 53, December, 1943, pp. 343-51. HB1.E3, v. 53.
____________, “Economic Progress in a Stable Environment,” Economica, 1947, pp. 180-90.HB1.E42, v. 14.
Patinkin, Don, “Price Flexibility and Full Employment,” American Economic Review, XXXVIII, 4, Sept. 1948, pp. 543-64. YP6.

 

Source: Hoover Institution Archive, Milton Friedman Papers, Box 77, Folder 1 “University of Chicago, Economics 300 A & B”.

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Economics 300A
Autumn, 1951
PROBLEMS FOR READING PERIOD

  1. In an anti-trust case against the Aluminum Company of America, Judge Learned Hand argued that the Aluminum Company could be regarded as having essentially a complete monopoly on aluminum despite the existence of a highly competitive market in secondary or reclaimed aluminum (made from scrap) accounting for about one-third of the total aluminum used for fabrication. He justified this conclusion on the grounds that all secondary aluminum derives ultimately from primary aluminum produced earlier and hence that the Aluminum Company through its control of the output of primary aluminum indirectly controlled the quantity of scrap available.

            Evaluate the economic validity of this argument. To simplify your analysis assume that a single firm, say the Aluminum Company of America, has a complete monopoly of primary aluminum; that aluminum for fabrication comes from primary aluminum and secondary aluminum; and that primary and secondary aluminum are perfect substitutes. Indicate in detail how to determine the optimum price for the Aluminum Company to charge and the optimum output for it to produce if (a) the secondary aluminum is refined and sold by a large number of firms under competitive conditions; (b) it has a complete monopoly of secondary aluminum as well.

            Hand’s conclusion presumably is that the price of aluminum would be the same in cases (a) and (b). Is he correct? If not, would it be higher in case (b) than in case (a)? Lower?

 

  1. It is widely argued that entrepreneurs engaged in a number of different activities somehow have a “competitive advantage” over entrepreneurs engaged only in one even if no technical economies are achieved by combining the activities. This general argument and the supposed advantage take many different forms: sometimes it is that one activity provides a “guaranteed” market for another activity; sometimes that one activity provides financing or capital for another; sometimes that a monopoly in one line confers an advantage in another. A recent example of this reasoning is contained in a report by The Chicago Daily news financial columnist on November 20, 1951 that Sears-Roebuck had completed an arrangement with Kaiser-Frazer to market an automobile under the name of “Allstate.” The columnist commented “also there is the Allstate Insurance Company, a wholly owned subsidiary, which would benefit heavily through liability and other policies written in connection with the sales of an Allstate automobile….Some of the gossip around Detroit has been to the effect that the Allstate would have Sears batteries and tires and certain other Sears accessories as original equipment—which would mean more business for these departments of the company.”

(a) The key question is, of course, whether the financial incentive to Sears to market an automobile is greater because it owns the subsidiary companies than it would be if it did not own them. You will find it helpful in answering this question to consider first two intermediate questions: (b) Given that Sears does own the subsidiary companies and that it is going to market an automobile under its name, is it in its own interests to require that the car be equipped with accessories produced by its companies? (c) To require that cars it sells be insured by its own insurance company?

            In answering both questions (a) and (b), consider separately two cases: (1) The subsidiary companies can be regarded as operating under highly competitive conditions; (2) the subsidiary companies can be regarded as having a monopoly of the products they produce. Do the conclusions depend on the assumption made about competitive conditions? Assume throughout that there are no “technical” economies from combining the various activities.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.9.

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Economics 300A
Final Examination
December 17, 1951

  1. (15 points)
    (a) Appraise: “Recent studies of domestic consumption in low-cost municipalities demonstrate that the demand for electric current is highly elastic, expanding rapidly as the cost declines. The national average consumption of the United States was 604 kilowatt-hours in 1933. The average charge to consumers on October 1, 1934, for the whole country is reported as 5.4 cents per kilowatt-hour. In Seattle where the average cost is 2.58 cents, the average consumption is 1,098 kilowatt-hours. In Tacoma, the charge is 1.726 cents and the consumption 1,550. In 26 cities of Ontario, the average charge is 1.45 cents and the consumption 1,780. Finally, in Winnipeg, where the average net charge is only 8 mills per kilowatt-hour the average per capita consumption exceeds 4,000 kilowatt-hours.” (Report of the National Resources Board, December 1, 1934, Government Printing Office, 1934, p. 39.)

(b) Will a specific tax (a tax of a specified number of dollars per physical unit) on a commodity raise its price more or less than an equivalent ad valoremtax (a tax of a specified percentage of the price)? Assume that the commodity is produced and sold under competitive conditions.

  1. (15 points) (a) Figure 1 gives the locus of points of tangency between indifference curves and budget lines parallel to ab (and cd). ABCDEFGH is therefore and “expansion path” or curve showing the quantity of X and Y and individual would buy at different incomes and constant relative prices. Fill in the following table with as precise statements as are deducible from Fig. 1 by observation without measurement:

 

 

 

Segment

Income elasticity of

Good is Superior (S), Inferior (I), or Uncertain (U)

X

 Y X

Y
AB
BC
CD
DE
EF
FG
GH

(b) ABCDEF in Figure 2 is the locus of points of tangency between indifference curves and budget lines representing different money prices for X but the same money price of Y and money income (i.e. budget lines like ab and ac rotating about a). Fill in the following table with as precise statements as are deducible from Fig. 2 by observation without measurement.

Segment

 Income elasticity of Good is Superior (S), Inferior (I), or Uncertain (U)
X Y X Y
AB
BC
CD
DE
EF

 

  1. (20 points) “Monopolistic competition robs the old concept of industry (and also the Chamberlinian group) of any theoretical significance…The value of these groupings is only a concrete, empirical one…Which firms shall be included in any one group will have to be decided, not on an a prioribasis, but after an empirical survey of market realities…In the general pure theory of value, the group and the industry are useless concepts…When the study of competition is freed from the narrowing assumptions of pure competition, only two terms remain essential for the analysis: the individual firms, on the one hand; the whole collectivity of competitors on the other.” (Triffin)

(a) Explain why “monopolistic competition robs the old concept of industry…of any theoretical significance.”
(b) Explain the general position summarized in this quotation and discuss it critically.

  1. (20 points) Find the mistakes (there are at least six) in the accompanying diagram showing long and short run marginal and average cost curves, and explain the general principle corresponding to each particular mistake.

 

  1. The accompanying diagram showing a set of indifference curves between income and work is part of a diagram given by Boulding in Economic Analysis in his discussion of the effects of various types of direct taxation, and reproduced by Schwartz and Moore in the March 1951 American Economic Review. The latter write, “Given O Q2Q5 as a rate of pay, the equilibrium position is P1 where the rate of pay is equal to the MRS between leisure and income. Let us assume that we are to collect a tax from this individual equal to OL. One method of collecting the tax would be to levy a poll tax, leaving the rate of pay unaltered, as LP5. Another direct tax would be a proportional income tax represented by OSP2 which would have the effect of lowering (flattening) the rate of ‘take-home’ pay. To extract the same amount of revenue as the poll tax does, this rate of pay must be tangent to an indifference curve at an intersection with LP5. Thus P2Q2 = OL. Since the rate of ‘take-home’ pay is flatter, P2 must lie below and to the left of P5; i.e. less effort is expended and the worker enjoys a smaller net income. More important, his welfare is diminished because he must be on a lower indifference curve…Given the premises of the conventional indifference curve pattern, this must necessarily be true.”

(a):

(1) Why do the indifference curves in the diagram slope positively?
(2) How can you justify their being drawn concave upwards?
(3) The statement that OQ2Q5 is “a rate of pay” is of course wrong. OQ2Q5 is a line. Reword the statement so it is accurate.
(4) What do the authors mean by MRS?

(b) If we suppose the diagram to stand for a “representative” individual, or one of a society of identical individuals all to be taxed alike, the last sentence in the quotation is false: the authors’ welfare conclusion does not follow from their premises and arguments. Point out the fallacy in the proof.

(c) Under what conditions is the authors’ welfare conclusion valid? Can you give a proof of your statement?

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.9.

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Economics 300B
Winter, 1952
PROBLEM FOR READING PERIOD

Available evidence tentatively indicates that (1) average income of white families living in the same size city is roughly the same in the North and the South; (2) the wage rate of a white worker in any given occupation is higher in the North than in the South for cities of the same size; (3) property income is roughly of equal importance for white families in the North and the South.

For purposes of this question, accept these as correct statements of fact. Can you suggest any way of reconciling the apparent contradiction among them? Presumably, any reconciliation will turn on the larger fraction of negroes and greater discrimination against them in the South than in the North.

Spell out your suggestion in detail, explaining the theoretical links if any between the higher fraction of negroes and greater discrimination, on the one hand, and the indicated results on the other. Indicate how the validity of your suggestion would be tested.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.10.

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ECONOMICS 300B
Final Examination
March 12, 1952

    1. (35 points) Indicate whether each of the following statements is true (T), false (F), or uncertain (U), and state briefly the reason for your answer. It is to be understood that in each question the appropriate “other things” are to be held constant.
      1. The imposition of a minimum wage for labor of type X higher than the preceding wage leads to an increase in the number of laborers of type X employed. It follows that labor of type X is hired under monopsonistic conditions. [True]
      2. Under both competition and monopoly in the product market, marginal value product of a factor to a firm is equal to marginal physical product of the firm times marginal revenue to the firm from the sale of the product. [True]
      3. Marginal productivity analysis shows that, in the absence of monopsony, a laborer gets as a wage his marginal value product. If this analysis is correct, it follows that unions can raise wages in the absence of monopsony only if they either make each worker more efficient, or increase demand for the product, or make the demand for the product more elastic. [False]
      4. The law of variable proportions (or diminishing returns) is contradicted by the fact that agricultural output of this country has increased tremendously despite a decrease in the proportion of the working population on farms. [False]
      5. The rate of interest is equal to the rate of time preference of consumers. [True]
      6. At present levels of operation, three quarters of the total cost of the XYZ railroad is overhead cost that does not vary with traffic, only one quarter is variable cost. It follows that marginal cost is much less than average cost. [False]
      7. The demand curve of an individual firm for a factor of production is identical with its marginal value productivity curve for the same factor of production. [False]
      8. The demand curve of a firm for a factor of production is a meaningless concept if the firm is a monopsonistic purchaser of that factor. [True]
      9. A declining long run supply curve is impossible in a competitive industry. [False]
      10. Marginal factor cost is equal to the price per unit of a factor whenever the product market is competitive. [False]
      11. According to the theory of joint demand, the absolute value of the elasticity of derived demand for a factor of production will be smaller the more inelastic the supply of that factor. [False]
      12. The fact that individuals do not choose occupations solely on the basis of their pecuniary attractiveness helps explain why the supply curve of labor for a particular occupation has an elasticity greater than zero. [True]
      13. If all types of services were used only in fixed proportions, a marginal-productivity theory would be neither necessary nor possible. [False]
      14. Our society is often described as a “profit” economy or “profit-maximizing” economy. The word “profit” is here used in the same sense as in the uncertainty theory of “profit.” [False]
      15. “Profit” as defined in the uncertainty theory of profit is the expected return to any factor assuming uncertainty over and above the guaranteed expected income it can obtain if it assumes no uncertainty. [False]
      16. If one income is higher than another before income tax it will also be higher after a progressive income tax, provided only that the marginal tax never exceeds 100%. It follows that if one accepts the theory that individuals act as if they sought to maximize their income, he must also accept the conclusion that such taxes do not alter individual’s actions and hence are not shifted. [False]

17 and 18. A minimum wage law is repealed. The wage rate of a class of workers hired under competitive conditions was equal to the minimum before repeal and falls after repeal. It follows that:

      1. The total wage bill for this class of labor will rise, remain constant, or fall, according as the elasticity of demand for labor of this class is greater than, equal to, or less than unity in absolute value. [True]
      2. The quantity of labor of this class employed will fall, remain constant, or rise according as the elasticity of supply of labor of this class is positive, zero, or negative. [False]
      3. The great technological improvements in the past few decades in the production of synthetic fibers (rayon, nylon, etc.) and associated decline in their relative price has, among other effects, tended to raise the price of meat in general, especially of lamb and mutton. [True]
      4. At the same time, stringent rationing of meat consumption in Great Britain, by tending to offset this effect, has improved the competitive position of the synthetic fiber industry, and so enabled it to expand more than otherwise. [True]
  2. (15 points) “The wages of every class of labour tends to be equal to the net product due to the additional labour of the marginal labourer of that class.
    “This doctrine is not a theory of wages: but is a useful part of a theory.” (Marshall)(a) What does Marshall mean by “net product”? [4] By “Marginal labourer”?[4]
    (b) Explain and evaluate the second sentence in the quotation. [7]
  3. (15 points) It is frequently argued that a tax on a product imposed at the manufacturing level involves a greater burden on consumers than a tax yielding the same revenue imposed at the retail level because the tax is “pyramided,” i.e., the “margins” of wholesalers and retailers are viewed as given percentages of purchase price and so, it is argued, price will tend to rise not only by the tax but also by the “margins” on the tax.
    Evaluate this argument.
  4. (10 points) The price of nylon thread for use in making women’s hosiery was recently lowered drastically when DuPont decided to make much larger quantities available. The resulting decline in the price of hosiery was viewed by at least some manufacturers and retailers as a misfortune and as portending smaller profits for themselves. Were they right? In the short run? In the long run? Justify your answers.
  5. (10 points) A subsidy of $X is paid per acre of land devoted to growing soy beans. Will this lead to a rise or to a decline in the yield per acre on land devoted to growing soy beans prior to the introduction of the subsidy? Justify your answer.
  6. (15 points)
    (a) What is the Pigou effect?[4] What relevance does it have to the theory of the rate of interest?[4]
    (b) List some economic decisions that would be affected by a change in the rate of interest. Indicate why they would be affected and if possible the direction of the effect. [7]

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 76, Folder 76.10.

Image Source: Milton Friedman (undated). University of Chicago Photographic Archive, apf1-06230, Special Collections Research Center, University of Chicago Library.

Categories
Chicago Columbia Economists Gender

Chicago. Ph.D. Alumna, 1927. Mabel Agnes Magee. Professor at Wells College.

 

 

This post provides some biographical material for Mabel Agnes Magee who received her Ph.D. in economics from the University of Chicago in 1927. As I was browsing through Chicago departmental records, I came across her name in a form submitted to hire her as an assistant for three quarters in 1927-28 at a salary of $500. I decided to put on my detective gumshoes and see what I could find about her pre- and post-Chicago life. From at least 1930 (U.S. Census) through her retirement, she taught at the sister college to Cornell, Wells College.  Mabel Magee was born in Massachusetts, did her undergraduate studies at Simmons College, received an M.A. from Columbia University, taught briefly at Wheaton College in Massachusetts, went on Chicago for her Ph.D. in economics. So except for her graduate training at Columbia and Chicago, Mabel Magee spent her academic life entirely in women’s colleges. She is mentioned in Wade L. Thomas’ “A Brief History of the New York State Economics Association” (New York Economic Review, Fall 2011) as the host of meetings at Wells College in May 1948 that constituted the beginning of the “Central New York Economics Conference” that was the predecessor to the New York State Economics Association.

Mabel Magee retired from Wells College to DeBary, Florida, a town just north of Orlando. I have found no indication that she either married or had children. Also, up to now I have not been able to determine when she died. 

__________________

AEA Listing, 1957

MAGEE, Mabel Agnes, Box 469, DeBary, Fla. (1925) Wells Col., prof. emeritus, teach., gov. serv.; b. 1889; B.S., 1912, Simmons Col.; M.A., 1920, Columbia; Ph.D., 1927, Chicago. Fields 14abd, 8, 2b. Doc. dis. Women’s clothing industry of Chicago: study of labor relations. Pub. Trends in location of women’s clothing industry (Univ. of Chicago, 1931); “Constitutional and statutory limitations on local taxation,” 1936, 1938, 1944, “Constitutional and statutory provisions regarding local property taxation,” Tax Systems. Res. Role of federal property its local finance. Dir. Dir. of Amer. Schol.

 

Source: The American Economic Review, Vol. 47, No. 4, Handbook of the American Economic Association (Jul., 1957), p. 186.

__________________

1912 Simmons Yearbook,  Microcosm

[Portrait and signature], 698 Salem Street, South Groveland, Massachusetts. Groveland High School.

Source: Simmons College. Microcosm 1912, p. 66.

__________________

1923 Wheaton College 1923, Nike

Mabel Agnes Magee was listed as instructor in economics and history in the department of economic and sociology at Wheaton College

[Education] B.S. Simmons College; A.M. Columbia University.

[Previous Employment] Registrar’s Assistant, Simmons College; Private Secretary to president of South End National Bank, Boston; Teller at Haverhill National Bank; Private Secretary to William J. Mack, Impartial Chairman and Arbitrator Ladies’ Garment Industry, Cleveland, Ohio.

Source: Wheaton College yearbook Nike 1923  (edited by class of 1924, Wheaton College), p. 16.

__________________

Miscellaneous Facts Drawn from U.S. Census Reports

1900.  Born December 1889.

1910.  Home on Salem Street in Groveland, Massachusetts. Parents: John and Hannah Magee, born in Canada and Massachusetts, respectively. Two brothers: George and Edward L. Magee.

1920.  [same information, without brother George in household, note: last name incorrectly transcribed as “Magie”]

1930. Home on Main Street South in Ledyard, New York. Occupation “Teacher” at Wells College. Head of household: Anne C. Jones (34 yrs). Also residing there: Mariam R. Small (31 yrs), Elisabeth G. Kimball (30 yrs), and Andrew McGardon (47 yrs).

__________________

From other AEA published membership information

1928. Address given at Faculty Exchange, University of Chicago.

1938. Institutional affiliation given as Wells College.

1948. Institutional affiliation given as Wells College.

1966. No longer included in AEA membership directory.

__________________

 Foreign travel

1952. Arrived in New York City from Amsterdam on a KLM flight on August 25.

1961. Arrived in New York City from Paris on Lufthansa 806. U.S. address given as 12 Estiella [sic, Estrella] Road, Debory [sic, DeBary], Florida.

Source:  From ancestry.org’s immigration and emigration data base.

__________________

 

Image Source:  Senior portrait of Mabel Agnes Magee in the Simmons College Yearbook, Microcosm 1912, p. 66.

Categories
Chicago Curriculum Iowa Statistics

Chicago. Henry Simons argues for an undergraduate sequence of mathematics/statistics for economists, 1937

 

 

The letter below written by Henry Simons to Henry Schultz in 1937 is evidently a typed copy of what was originally a letter on official University of Chicago stationary. The typed header matches the printed header of University of Chicago stationary and there is no signature at the end.

Simons appears to be seeking Schultz’s support for the introduction of a “Mathematics for Economists” course into the undergraduate economics curriculum as well as for providing different courses for students who intend to go on to more advanced economics training versus the sort of survey courses that would constitute the entirety of the life-time economics education of non-econ-majors. An interesting aside: Simons problematized the lack of analytical preparation displayed by the students coming from Social Services Administration that he saw reducing the standards in the economics courses that they were required by their program to attend.

_____________________________

The University of Chicago
The Department of Economics

Memorandum to Members of the Department from Henry Schultz. July 8, 1937

The attached letter from Mr. Henry C. Simons might very well serve as a basis of discussion. It may be necessary to call a meeting to discuss this question before the quarter is over.

*  * *  *  *  *

THE UNIVERSITY OF CHICAGO
Department of Economics

June 4, 1937

Dear Mr. Schultz:

Out at Ames last week I heard about some plans of their economics department which made me very envious. They are getting ready to offer next year a sequence of three courses combining elementary mathematics and statistics; and they expect afterwards to make these courses prerequisites to their advanced (divisional) courses in economics. Moreover, they seem to be facing squarely the task (1) of providing a significant amount of training in the calculus, (2) of eliminating or cutting down those parts of the usual freshman mathematics which are of little use for their students, and (3) of mixing in with the formal mathematics perhaps as much statistics as is covered in a one-Quarter course.

If they carry out these plans, their students will soon be better prepared for substantial economics training than are even those few students here who complete Math. 104, 105, and 106—not to mention those who meet only our minimum requirement of one course in college mathematics. Meantime, nothing is being done to improve our situation here. Mrs. Logdon’s courses were a slight improvement over the old elementary mathematics; but they represent only a small beginning toward what might be done. The 104 course has its merits; but the two following courses, I gather, largely compensate for any departures from tradition which the first course involves. We still have not faced the fact that the traditional freshman mathematics, however suitable for students who will specialize in mathematics or physics, is very ill-suited to the needs of students going into other divisions or of those concluding their formal education at the college level.

I feel that we should face now the responsibility of providing a suitable minimum of training in mathematics, formal and applied, for all students in the College. Nothing can more easily be defended as a part of general education or as intellectual preparation for serious work in the Divisions. The need here might well be met by a three-course sequence of the kind which they are planning at Ames—although I am not competent to prescribe, or disposed to quarrel, about details. There are obvious advantages in mixing a certain amount of applied mathematics with the more formal training; and the fundamentals of statistics can be taught to best advantage only as mathematics and in the atmosphere of mathematics courses. As regards these fundamentals, there is no need for differentiation of courses according to divisions or departments—except possibly in the case of the physical sciences. With appropriate work in the College, divisional statistics courses in the various departments might then achieve their proper emphasis upon special applications in the special fields.

Our own Division probably could not now be induced to impose such a requirement for admission. Some departments would doubtless oppose it vigorously. This situation, however, does not argue against developing in the College the sequence of courses which would be most useful. If the proper courses were available, we could make them prerequisite for divisional work in economics; and, at the least, we could urge the advisers in the College to explain that students coming to us without such preparation would be somewhat handicapped on that account. Some other departments and divisions might go along with us. The Division of Biology certainly should do so; the School of Business and the Law School would probably cooperate eventually; and the School of Social Services Administration needs this sort of thing badly, both to protect their own standards and to guard us against the demoralization of standards which a large influx of their ill-prepared students can produce in the economics courses which they require.

It remains to point out that an important step could be taken now by our own department. Our announcements indicate that “Social Science II or equivalent” is prerequisite for divisional courses in economics. The policy here involved is, I believe, grossly mistaken. Instead of requiring this sequence, we should recommend against it in the case of students preparing for divisional work with us, or, at least, indicate clearly that the existing mathematics sequence is distinctly preferable as preparation. The typical student now gets a survey of social science in the first year, another in the second year, and still another (the five 201 courses) in the first two quarters of the third year. This represents an outrageous squandering of the student’s time, considering the alternatives actually sacrificed. Social Science II has perhaps a proper function; but it is not that of preparing students for divisional work. It may be appropriate to offer such a sequence for students who will enter other divisions and who will have no further work in social science fields. Our own students, however, should be getting more fundamental education—should be taking courses involving the more rigorous intellectual discipline in which their subsequent training will be somewhat  deficient.

If there be disagreement on some of these suggestions, there should be little opposition to my minimum proposal, namely, that Math. 106 be indicated in our announcements as a prerequisite alternative to Social Science II. Frankly, this is what it is in fact now, when I am acting as departmental counselor.

In passing, I will mention another suggestion which I have urged repeatedly in meetings and in memoranda. Something should be done to stop this concentrating of the 201 courses in the first two quarters of the student’s divisional work. These courses should not constitute merely another hurdle which students must get over before they are permitted to concentrate upon departmental courses. They should be spread throughout the last two years, as a continuing correction against narrow departmental specialization in outlook and interest—not studied hastily in a lump and forgotten.

The advisers in the College have finally discovered that Math. 104 is useful for students going into economics. They should all be told now to recommend105 and 106 as well and to suggest that good and serious students should be prepared to take at least some calculus after they leave the College (if not before). It is surprising how many of our seniors now complain bitterly because their College advisers failed to offer such suggestions.

I trust that some of these suggestions will seem to merit discussion.

Sincerely,

Henry C. Simons

 

Source: The University of Chicago Archives. Department of Economics. Records. Box 41, Folder 12.

Image Source: Henry Calvert Simons portrait at the University of Chicago Photographic Archive, apf1-07613, Special Collections Research Center, University of Chicago Library.
Henry Schultz from “[Photograph]: Henry Schultz 1893-1938.” Econometrica 7, no. 2 (1939).

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Chicago Exam Questions Fields

Chicago. Money and banking prelim exam questions, 1969

 

In Milton Friedman’s papers at the Hoover Institution Archives are filed copies of three preliminary exams for graduate students in economics from the Winter Quarter of 1969. Recent posts featured the transcriptions of the price theory prelim and the macroeconomics prelim ( or “income, employment and price level” as was the Chicago wont to say). This post takes a walk on the monetary side, namely, with the prelim for the field of money and banking. This exam was followed in the archival folder by a handwritten table by Friedman with the points awarded for the seventeen candidates who took the exam. Out of a maximum score of 240 possible points, the top exam received 189 points.  Failing grades were for 118 points and below (four examinees). The exams have Friedman’s mostly illegible notes written on them, presumably indications of the correct answers. Perhaps some day there will be a brave soul with greater patience than I possess who will try transcribing these academic scribblings of a few years back. 

The reading list for Milton Friedman’s money course from the Winter Quarter 1970 has been posted earlier.

_________________

MONEY AND BANKING
Preliminary Examination for the Ph.D. and the A.M. Degree
Winter Quarter, 1969

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your code number and NOT your name
Name of examination
Date of examination

Results of the examination will be sent to you by letter

Answer all questions. Time: 4 hours

  1. [40] The Federal Reserve has recently altered the method of calculating required and actual reserves. Required reserves are now calculated on the basis of average deposits two weeks earlier. Actual reserves equal average cash in vault two weeks earlier plus deposits at Federal Reserve Banks the current week. (There are a few other minor technical details that can be neglected.)
    Under this new system, the adjustment mechanism of the banking system is in principle dynamically unstable (explosive) for any one week by itself.

(a) Explain why the system is dynamically unstable.
(b) What factors render the system stable in practice?
How does the new system affect:
(c) The Federal Reserve’s ability to control the money supply;
(d) The significance of excess reserves, free reserves, and borrowings.

  1. [25] “Central bankers were highly receptive to the Keynesian analysis of monetary policy because it fitted in with their own preconceptions, which were based on the real-bills doctrine.” Explain why you agree or disagree, in the process summarizing the history of the real-bills doctrine.
  1. [25] A major relationship in most income-determination models is the negative interest elasticity of investment. But during the post war period in the U.S., falling interest rates have been accompanied by declining rates of investment in plant and equipment and a rising volume of residential construction.

(a) Does that suggest that residential construction is more interest-elastic than investment in plant and equipment?
(b) How far, if at all, has the observed pattern been related to central bank policy and the structure of financial intermediaries?

  1. [40 ]

(a) Construct a model for the analysis of economic policy in a closed economy, with an exogenous money supply, an income-elastic tax system, flexible prices, and saving a constant fraction of income.
(b) For a unique equilibrium, which variables do you regard as determined by this model, and which outside the model?
(c) Distinguish between monetary and fiscal policy in terms of your model.
(d) Can monetary policy be used to maintain stable prices? Can fiscal policy? Indicate the conditions in the model necessary for only one or the other to be effective.

  1. [40] Consider the problem of explaining the response in a stationary economy to a change that leads to increased unemployment of resources, such as an unanticipated fall in the demand for goods and services. Suppose that any increases in unemployment are temporary, with dynamic properties of the system such that there will be a return to an “equilibrium” or “natural” rate of unemployment if no further unanticipated shocks occur.

(a) Explain what the “natural rate of unemployment” means.
(b) Assume that the quantity of money is constant. Sketch out an explanation of the time path of output, employment of labor, price of goods, price of labor, and interest rate.
(c) Indicate what each of the following concepts means and how, if at all, each is relevant in explaining the adjustments: search unemployment, labor as a quasi-fixed factor of production, Phillips curve, expectations.

  1. [40] The loss in real value of money during inflation has been likened to a tax. Assume that inflation is fully anticipated. How much is the tax, who bears it, and who receives the proceeds:

(a) If there are 100 percent reserves and the central bank pays no interest on reserves, with commercial banks otherwise regulated?
(b) Same as (a) except there is fractional reserve banking?
(c) If there is fractional reserve banking and the central bank pays no interest on reserves, with commercial banks forbidden to pay a nominal rate of interest deposits higher than would be paid in the absence of inflation?
(d) Same as (c) except banks are also forbidden to charge nominal interest rates on loans higher than would prevail in the absence of inflation?
(e) If there is fractional reserve banking, no interest rate regulation on commercial banks, and the central bank pays interest on reserves totaling to the interest payments earned on its assets?

  1. [30] Assume that the U.S. stops pegging the price of gold and of other currencies, and in reaction to this measure[?], the European common market countries form a currency bloc linked internally by fixed exchange rates and permit the exchange rates of the common market currencies to float relative to the dollar. Assume that all other currencies float relative to the dollar.
    Compare monetary adjustment within the two currency areas (i.e. adjustment of the fifty states of the U.S. as compared to adjustment of the six countries of the common market).

 

Source: Hoover Institution Archives. Papers of Milton Friedman, Box 77, Folder 8 “University of Chicago , Econ 331”.

Image Source:  Milton Friedman (undated) from University of Chicago Photographic Archive, apf1-06231, Special Collections Research Center, University of Chicago Library.

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Chicago Exam Questions

Chicago. Graduate economics prelim. Theory of income, employment and price level, 1969

 

The price theory prelim for 1969 at Chicago was transcribed for the previous post. Today’s post gives us the 1969 prelim examination questions for core macroeconomics (in Chicago speak of the day: “Theory of Income, Employment and Price Level”).

The M.I.T. general macroeconomic exams for 1959-1971 were transcribed and collected into a single post.

The copy of the exam in Milton Friedman’s papers at the Hoover Institution includes (Warning: Plot-spoiler!) the answers to the True-False-Uncertain questions:    1=F; 2=F; 3=T; 5=T; 5=F; 6=T; 7=T.

_____________

CORE EXAMINATION
Theory of Income, Employment and Price Level
Winter, 1969

Preliminary Examination for the Ph.D.

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your Code Number and NOT your name
Name of Examination
Date of Examination

Results of the Examination will be sent to you by letter

Answer all questions. Time: 3 hours

 

I.

  1. [20] Indicate whether each of the following statements is True (T), False (F), or Uncertain (U), and state briefly your reasons:

____1. If the capital stock is growing, then the marginal efficiency of investment is greater than the marginal product of capital.

____2. In an economy growing at a rate of 4 percent per year in which the income elasticity of demand for money is 2.0, a budget deficit of up to 8 percent of government expenditures can be financed by money creation without producing inflation.

____3. In a simple income determination model, the elasticity of income with respect to changes in the marginal propensity to consume is mpc/(1-mpc).

____4. The instability of the growth equilibrium in Harrod-Domar models can validly be attributed to the particular assumptions made about the production function.

____5. A decline in prices raises real balances for a fixed quantity of money. This is known as the real balance effect.

____6. A real balance effect is compatible with a liquidity trap.

____7. A decrease in rental rates on cars which led to no change in the total number of cars in operation would raise recorded national income.

  1. [20] Fill in the missing numbers and briefly describe how you obtained them. Neglect any effects of the corporation or personal income taxes. Assume all rates are on an annual basis.
Annual interest rate on government consols = 6.5 percent
Annual dividends as a percent of earnings = 25 percent
Dividend yield of common stock = 3 percent
Rate of return on real estate = 5 percent
Annual percentage rate of change of a price index of goods and services =  ______
Percentage rate of change in the price per share of common stock =   ______
  1. [40] Assume that in a closed economy [with flexible prices] tax revenue is proportionate to income, that the government fixes the level of its spending, and that the government finances all budget deficits by money creation. Analyze the consequences of this policy for [What is] the equilibrium level or rate of change of nominal income and show the effect of an increase in the level of government spending from an initial position of equilibrium[?] Discuss separately two cases: (a) the government fixes the nominal level of its spending; (b) the government fixes the real level of its spending.
  2. [30] “It is of no manner of consequence with regard to the domestic happiness of a state whether money be in a greater or less quantity. The good policy of the magistrate consists only in keeping it, if possible, still increasing” (David Hume, 1742). What is the verdict of two centuries of further writing on money on this proposition?
  3. [30] “Many commentators have written as if commercial banks were losing deposits to their non-banking competitors. A closer look, however, shows that this notion is misleading.
    “If a commercial bank depositor writes a check in favor of his mutual savings bank, the savings bank will either re-deposit the check in its own commercial bank account or extend mortgage credit to an individual. The individual, in turn, will either deposit the check in his bank account or turn it over to the seller of the house he is buying. And the seller will either put the check in his bank account or turn it over to his creditors who will put it in theirs….
    “The crucial point is that commercial banks compete for deposits only with other commercial banks. They cannot lose deposits to other financial institutions or financial instruments.”
    Discuss.
  4. [30] Consider the following neo-Keynesian system in which Ctis real consumption, Itis real investment, Ytis real income and Xtis real autonomous expenditures.

{{C}_{t}}-\gamma {{C}_{t-1}}=k\left( 1-\nu \right){{Y}_{t}}
{{I}_{t}}-\delta {{I}_{t-1}}=m\left( 1-\delta \right){{Y}_{t}}+{{X}_{t}}-\delta {{X}_{t-1}}
{{Y}_{t}}={{C}_{t}}+{{I}_{t}}

What are the necessary conditions for stability? If these are satisfied, can the model generate cycles?

  1. [30] Panama has no central bank but uses U. S. currency (plus some coin of its own), relabeling a dollar as a Balboa.
    Netherlands has a central bank, which issues a national currency denominated in guilders.
    The U. S. has a central bank which issues a national currency denominated in dollars.
    The U.S. and Netherlands have fixed exchange rates with other major currencies. Assume that none of the countries has any extensive exchange control.
    The monetary authorities of all three countries proclaim that they cannot control the quantity of money.
    Discuss.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman, Box 77, Folder 8 “University of Chicago , Econ 331”.

Image Source: David Hume’s toe in Edinburgh.

Categories
Chicago Exam Questions

Chicago. Graduate prelim exam questions for price theory, 1969

 

For comparison’s sake, here are the questions for the price theory prelim exam at the University of Chicago in 1964.

_________________

PRICE THEORY
Preliminary Examination for the Ph.D. and the A. M. Degree
Winter Quarter, 1969

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your code number and NOT your name
Name of examination
Date of examination

Results of the examination will be sent to you by letter

Answer all questions. Time: 3 hours

I.

  1. A recent survey found that supermarkets in low income areas charge higher average prices than supermarkets in high income areas for many identical items. This is consistent with

_____(a) price discrimination in the sale of groceries

_____(b) no price discrimination

_____(c) lack of competition in the retail grocery market

_____(d) competition in the retail grocery market.

Check those that apply.

 

On the following questions, indicate whether True (T), False (F), or Uncertain (U), with brief explanation.

  1. A firm produces output xusing inputs a1 and a2, which it purchases competitively at prices p1 and p2. Its total cost is given by

C=A{{x}^{\gamma }}p_{1}^{{{a}_{1}}}p_{2}^{{{a}_{2}}}

where A, ?, a1, a2 are constants.

_____(a) The demand for the first factor is given by

{{a}_{1}}=\frac{\partial C}{\partial {{p}_{1}}}=\frac{{{\alpha }_{1}}C}{{{p}_{1}}}

_____(b) The production process of the firm exhibits constant returns to scale.

_____(c) The above cost function corresponds to a Cobb-Douglas production function.

 

  1. Consider a price system involving four commodities, q1, q2, q3, and q4. If the goods are gross substitutes, it can be shown that the equilibrium will

_____(a) Satisfy the Hicks conditions of perfect stability, and

_____(b) Be dynamically stable.

Assume demand shifts from the first commodity to the second commodity. Again, assuming that the commodities are gross substitutes, it can then be demonstrated that:

_____(c) P1/P2falls and P3/P4remains unchanged;

_____(d) P2/P3rises and P1/P4falls;

_____(e) P3/P1rises by a smaller proportion than P2/P1.

 

_____ 4. If the consumer’s utility function is separable, then his marginal utility must be declining for all goods.

_____ 5. In a two good world, consumer indifference curves must be everywhere convex to the origin. Otherwise there is no solution to the consumer’s problem of maximizing his satisfaction subject to his budget constraint.

_____ 6. Three top executives leave company A and join company B. The price of company A’s stock falls and the price of company B’s stock rises. This proves that the executives are being exploited.

 

II.

In Ronald Coase’s celebrated article on the nature of social cost the first example concerns the externality imposed by a cattle ranch that is next to a corn farm. The cattle can wander into the corn farm and eat some of the corn. This increases cost to the corn farmer and imposes an externality on him. Construct a formal analysis of the following situation:

(i) Let there be two firms such that the output of each firm is an “input” in the production function of the other. Let the other inputs be of the same kind, say, labor and capital. Let the output prices be given and let the input prices be given. Derive the profit maximizing solution for the two firms.

(ii) Give a precise measure of the externality and show that the solution in (i) does not depend on who pays whom.

(iii) Under what conditions will the dollar amount of the externality be proportional to the output of the other firm?

 

III.

Consider an economy with two, L and K, factors of production producing goods, X and Y, under conditions of constant returns to scale. Assume that X is relatively L-intensive at all factor prices.

(a) Analyze the effect of an increase in L on the production of X and Y on the assumption that the relative price of X and Y is constant. How would the increase in L affect the share of L in the economy’s income?

(b) Analyze the effect of an increase in the relative price of X on relative and absolute factor rewards, and on the share of L in the economy’s income. Would your answer be altered if both production functions were of Cobb-Douglas type?

(c) Analyze the effect of an increase in K on the relative price of X on the assumption that neither X nor Y is inferior in the community’s consumption.

 

IV.

What effect would you expect the British devaluation of the pound from $2.80 to $2.40 to have had on the dollar price of Rolls Royce cars? Justify your conclusion, preferably by diagrams describing the position of the company, indicating explicitly any assumptions you regard as relevant. Assume that wage rates in Britain in pounds are not affected by the devaluation.

 

V.

The difference between the price of foreign crude oil and the price of domestic crude oil (landed at the same U.S. port) times the quantity of oil consumed in the U.S. is roughly $5 billion. This has been cited as an estimate of the cost to the U.S., in terms of wasted resources, of the whole set of governmental measures special to oil (oil import quotas, percentage depletion allowances, prorationing of oil, etc.). Indicate as specifically as you can the defects, if any, in this measure, and the information needed to set a dollar value on each defect.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman, Box 77, Folder 8 “University of Chicago , Econ 331”.

Image Source: Lecture Hall 1, Social Science Research Building. University of Chicago Photographic Archive, apf2-07482, Special Collections Research Center, University of Chicago Library.

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Berkeley Carnegie Institute of Technology Chicago Columbia Cornell Duke Economist Market Harvard Illinois Indiana Iowa Johns Hopkins M.I.T. Michigan Minnesota Northwestern Princeton Salaries Stanford UCLA Virginia Wisconsin Yale

Economics Faculty Salaries for 15 U.S. universities. Hart Memo, April 1961

 

Here we have a memo written by member of the Columbia University economics department executive committee, Albert G. Hart, that presents the results of what appears to be his informal polling of the chairpersons of 21 departments. Fifteen of the departments provided the salary ranges at four different ranks. No further details are provided, this one page memo was simply filed away in a folder marked “memoranda”. Maybe there is more to be found in Hart’s papers at Columbia University. Up to now I have only sampled Hart’s papers for teaching materials and perhaps next time, I’ll need to look into his papers dealing with departmental administrative affairs.

For a glance at salaries about a half-century earlier:  Professors and instructors’ salaries ca. 1907. 

________________

AGH [Albert Gailord Hart] 4/21/61

CONFIDENTIAL information on economic salaries, 1960-61, from chairmen of departments

Institution

 Professors Associate professors Assistant professors

Instructors
Harvard

$12,000-22,000

 $9,000-12,000 $7,500-8,700

$6,500
Princeton

$12,000-…?…

 $9,000-11,500 $7,000-8,750

$6,000-6,750
California

$11,700-21,000

 $8,940-10,344 $7,008-8,112

$5,916-6,360
MIT

$11,000-20,000

 $8,000-11,000 $6,500-9,000

$5,500-5,750
Minnesota

$11,000-18,000

 $8,500-11,000 $6,800-8,400

?
COLUMBIA

$11,000-20,000

 $8,500-10,000 $6,500-7,500

$5,500-5,750
Northwestern

$11,000-…?…

 $8,000-11,000 $6,800-7,500

?
Duke

$11,400-16,000

 $8,200-10,000 $7,200-8,200

$5,800-6,500
Illinois

$11,000-15,000

 $7,500-10,000 $6,900-8,600

$6,500-7,100
Cornell

$10,000-15,000

 $8,000-10,000 $6,500-7,500

$5,500-6,500
Indiana

$10,000-14,800

 $8,300-10,000 $6,500-7,500

?
Michigan

$10,000-…?…

 $8,700-..9,500 $6,600-8,000

$5,000
Virginia

$..9,800-15,000

 $7,800-..9,800 $6,600-7,800

?
Wisconsin

$..9,240-16,150

 $8,000-..9,000 $6,550-8,460

$5,250-5,450
Iowa State (Ames)

$..8,500-13,000

 $7,500-..8,500 $6,700-8,000

$4,700-6,600

[…]

Note: The following institutions for which data were not included in the source materials are believed to pay their economists at scales at or above the Columbia level:

Carnegie Tech
Chicago
Johns Hopkins
Stanford
Yale
UCLA

[…]

 

Source:  Columbia University Archives. Columbia University, Department of Economics Collection. Carl Shoup Materials: Box 11, Folder: “Economics—Memoranda”.

Categories
Chicago Courses Suggested Reading

Chicago. Reading list for Price Theory (Econ 300 A&B). Friedman 1958

 

The reading assignments for the two-quarter core price theory sequence taught by Milton Friedman in 1948 have been posted earlier.  This post gives the reading assignments with open and gated links where available (some of the papers are only available at the gated jstor.org) for the same sequence ten years later. I have put in boldface the 1958 additions to make a comparison with the 1948 version easier. Worth noting: an asterisk designates optional and not required reading.

Only one item was dropped from the 1948 reading list:

Meyers, A. L. Elements of Modern Economics, ch 5, 7, 8, 9.

______________________________

September, 1958

ECONOMICS 300 A and B
Reading Assignments by M. Friedman

(Notes:

  1. It is assumed students are familiar with material equivalent to that contained in George Stigler, Theory of Price, or Kenneth Boulding, Economic Analysis.
  2. Mimeographed lecture notes on 300A and B summarize the main points covered in the course.
  3. The American Economic Association Readings in Price Theory contains an excellent selection of articles on our general topic, only a few of which are listed separately below.
  4. Readings marked with asterisk (*) are recommended, not required.)

 

KNIGHT, F. H., The Economic Organization, esp. pp. 1-37.  HB172.K73.

KEYNES, J. N., The Scope and Method of Political Economy, Ch. I and II, pp. 1-83.  HB171.K45.

FRIEDMAN, MILTON, “The Methodology of Positive Economics,” in Essays in Positive Economics.

HAYEK, F.A., “The Use of Knowledge in Society,”American Economic Review, Sept. 1945; reprinted in Individualism and Economic Order. HB1.A6.

 

MARSHALL, ALFRED, Principles of Economics, Bk III, Ch 2, 3, 4; Bk V, Ch 1,2. HB171.M36.

FRIEDMAN, MILTON, “The Marshallian Demand Curve,” Journal of Political Economy, Dec. 1949. YF6. Reprinted in Essays in Positive Economics.

SCHULTZ, HENRY, The Meaning of Statistical Demand Curves, pp. 1-10. HB201.S398.

WORKING, E. J. “What do Statistical ‘Demand Curves’ Show?”, Quarterly Journal of Economics, XLI (1927), pp. 212-27. HB1.Q3.

KNIGHT, F. H. Risk, Uncertainty, and Profit, Ch 3. HB601.K7. 1940.

*LANGE, O., “On the Determinateness of the Utility Function”, Review of Economic Studies, Vol I (1933-34), pp. 218 ff. HB1.R45.

*ALLEN, R.G.D., “The Nature of Indifference Curves,” Ibid, pp. 110 ff. HB1.R45.

HICKS, J. R., Value and Capital, Part I (pp. 11-52). HB171.H64.

*HICKS, J. R., A Review of Demand Theory.

*SAMUELSON, PAUL, Foundations of Economic Analysis.

*WOLD, H., Demand Analysis. Ch. 1.

*FRIEDMAN, MILTON, A Theory of the Consumption Function.

*STIGLER, G., “The Early History of Empirical Studies of Consumer Behavior”, Journal of Political Economy, April, 1954.

FRIEDMAN, MILTON, “Income and Substitution Effects of a Change in Price”. (Mimeographed). YF4.

*SLUTSKY, EUGEN, “On the Theory of the Budget of the Consumer”. Readings in Price Theory, pp. 27-56.

MOSAK, J. L., “On the Interpretation of the Fundamental Equation in Value Theory”, in Lange, et. al., Studies in Mathematical Economics and Econometrics. HB99.C5.

*WALLIS, W. A., and FRIEDMAN, MILTON, “The Empirical Derivation of Indifference Functions”, in Lange et al, Studies in Mathematical Economics and Econometrics. HB99.C5.

*FRIEDMAN, MILTON and SAVAGE, L. J., “The Utility Analysis of Choices Involving Risk,” Journal of Political Economy, LVI (August 1948) pp. 279-304. HB1.J7. Reprinted in Readings in Price Theory, pp. 57-96. HB99.C5.

___________, “The Expected-Utility Hypothesis and the Measurability of Utility”, Journal of Political Economy, Dec. 1952, pp. 463-474. HB99.C5.

ALCHIAN, ARMEN, “The Meaning of Utility Measurement”, American Economic Review, March 1953, pp. 26-50.

MARSHALL, Book V, Ch 3, 4, 5, 12, Appendix H. HB171.M36.

*ROBINSON, JOAN, Economics of Imperfect Competition, Ch 2. HB201.R65.

CLARK, J. M., The Economics of Overhead Costs, Ch 9. HB201.R65.

*VINER, JACOB, “Cost Curves and Supply Curves”, Zeitschrift fuer Nationaloekonomie, Bd III (Sept, 1931), pp. 23-46. H5.Z55. Reprinted in Readings in Price Theory, pp. 198-232.

APEL, HANS, “Marginal Cost Constancy and Its Implications”, American Economic Review, XXXVIII (Dec. 1948), pp. 870-885.

SMITH, CALEB, “Survey of the Empirical Evidence on the Economies of Scale”, in Business Concentration and Price Policy, pp. 213-30 and Comment by Milton Friedman, pp. 230-38.

CHAMBERLIN, EDWARD, The Theory of Monopolistic Competition, Ch 3, sec. 1, 4, 5, 6; Ch 5. HB201.C44.

*HARROD, R. F. “Doctrines of Imperfect Competition”, Quarterly Journal of Economics, May 1934, sec. 1, pp. 442-61.

STIGLER, G. J., “Monopolistic Competition in Retrospect”, and “Competition in the United States”, in Five Lectures on Economic Problems. HB171.S82.

*TRIFFIN, ROBERT, Monopolistic Competition and General Equilibrium Theory, esp. Part II. HD41.T8 AND H31.H33, v. 67.

HARBERGER, A. C., “Monopoly and Resource Allocation”, Proceedings, American Economic Review(May, 1954).

*ROBINSON, E. A. G., The Structure of Competitive Industry. HO45.R732.

STIGLER, G. J., “The Statistics of Monopoly and Merger”, Journal of Political Economy, February, 1956.

STIGLER, G. J., “The Kinky Oligopoly Demand Curve and Rigid Prices”, in Readings in Price Theory.

*ROBINSON, E. A. G.,  Monopoly.

*PLANT, ARNOLD, “The Economic Theory Concerning Patents for Inventions,” Economica, Feb, 1934. HB1.E42.

*DENNISON, S. R., “The Problem of Bigness,” Cambridge Journal, Nov. 1947. YO3.

 

MARSHALL, Book IV, Ch 1, 2, 3; Bk V, Ch 6. HB171.M36.

CLARK, J. B., The Distribution of Wealth, Preface, Ch 1, 7, 8, 11, 12, 13, 23.

MILL, JOHN STUART, Principles of Political Economy, Book II, Ch 14.  HB171.M667.

HICKS, J. R., The Theory of Wages, Ch 1-6. HD4909.H63.

SMITH, ADAM, The Wealth of Nations, Bk I, Ch 10. HB161.S652.

MARSHALL, Bk VI, Ch 1-5. HB171.M36.

FRIEDMAN, MILTON and KUZNETS, SIMON, Income from Independent Professional Practice, Preface, pp. v to x; Ch 3, Sec 3, pp. 81-95, Ch 4, Sect 2, pp. 118-137, App, Sec 1 & 3, pp. 142-151, 155-61. HD4965.U6F8.

FRIEDMAN, MILTON, “Choice, Chance, and the Personal Distribution of Income,” Journal of Political Economy, Aug., 1953, pp. 277-90.

KNIGHT, F. H. “Interest” in Encyclopaedia of the Social Sciences, also in Ethics of Competition. HO4965.E46.

KEYNES, J. M., The General Theory of Employment, Interest, and Money, Ch 11-14. HB171.E46.

LERNER, ABBA P., “On the Marginal Product of Capital and the Marginal Efficiency of Investment”, Journal of Political Economy, Feb. 1953, pp. 1-14.

CLOWER, R. W., “Productivity, Thrift, and the Rate of Interest”, Economic Journal, March 1954, pp. 107-15.

WESTON, J. F., “A Generalized Uncertainty Theory of Profit”, American Economic Review, March 1950, pp. 40-60. HB1.A6.

___________, “The Profit Concept and Theory: A Restatement”, Journal of Political Economy, April 1954, pp. 152-170.

CASSELL, GUSTAV, Fundamental Thoughts in Economics, Ch. 1, 2,3. HB179.C283.

___________, The Theory of Social Economy, Ch 4. HB179.C31

HICKS, J. R., “Mr. Keynes and the ‘Classics’; A Suggested Interpretation”, Econometrica, Vol. 5, April 1937, pp. 147-159. HB1.E23, V. 5.

MODIGLIANI, F., “Liquidity Preference and the Theory of Interest and Money,” Econometrica, Vol. 12, No. 1 (Jan. 1944) esp. Part I, Sec. 1-9, Sec 11-17, Part II, Sec 21. HB1.E23, v. 12. Reprinted in American Economic Association, Readings in Monetary Theory, pp. 186-240.

*PIGOU, A. C., “The Classical Stationary State,” Economic Journal, Vol. 53, Dec. 1943, pp. 343-51. HB1.E3, v. 63.

___________, “Economic Progress in a Stable Environment,” Economica, 1947, pp. 180-90. HB1.E42, v. 14. Reprinted in Readings in Monetary Theory, pp. 241-251.

PATINKIN, DON, “Price Flexibility and Full Employment”, American Economic Review, XXXVIII, 4, Sept. 1948, pp. 543-564. YP6. Reprinted in Readings in Monetary Theory, pp. 252-283.

 

Source:  Hoover Institution Archives. Papers of Milton Friedman. Box 77, Folder “1. University of Chicago, Econ 300A & B”.

Image Source: University of Chicago Photographic Archive apf1-06230, Special Collections Research Center, University of Chicago Library

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Chicago Exam Questions Suggested Reading Syllabus

Chicago. Undergraduate International Monetary Affairs. Metzler, 1962

 

It is interesting to see that University of Chicago economics undergraduates in 1962 were still expected to learn something about mercantilism and classical international economic theory with a dash of Friedrich List as a chaser in Lloyd Metzler’s course on international monetary relations and policies. Oh yes, and Alfred Marshall gets into the act as well! 

_____________________

Lloyd A. Metzler

ECONOMICS 271
Reading List
Winter, 1962

  1. Mercantilism and the Classical Theory of Comparative Advantage.

P. T. Ellsworth, The International Economy, Revised Edition, chapter 2.
Eli Heckscher, “Mercantilism,” in Encyclopaedia of the Social Sciences, Vol. X.
David Ricardo, Principles of Political Economy and Taxation, chapter 7.
John Stuart Mill, Essays on Some Unsettled Questions in Political Economy, Essay 1.

  1. Mechanism of the Foreign Exchange Market.

Alan R. Holmes, The New York Foreign Exchange Market, Federal Reserve Bank of New York, March 1959.
P. T. Ellsworth, The International Economy, Revised Edition, chapter 15.
Frank A. Southard, Jr., Foreign Exchange Practice and Policy.
Peter B. Kenen, Giant among Nations, Harcourt Brace, 1958.

  1. National Income and the Balance of Payments.

J. E. Meade, The Theory of International Economic Policy, Vol. I, The Balance of Payments, Oxford University Press, Part I.
U.S. Department of Commerce, U.S. Income and Output, 1958.
R. F. Bennett, “Significance of International Transactions in National Income,” in Studies in Income and Wealth, Vol. VI, National Bureau of Economic Research.
Alfred Marshall, Money, Credit, and Commerce, Book III, chapters 1-4.

  1. Postwar Monetary Developments.

Randall Hinshaw, “Toward Currency Convertibility,” Princeton University, Essays in International Finance, No. 31, 1958.
Robert Triffin, Europe and the Money Muddle, Yale University Press, 1957.
Alice Bourneuf and E. A. Goldenweiser, “The Bretton Woods Agreements,” Federal Reserve Bulletin, September 1944.

  1. Regional Monetary Arrangements.

Jacob Viner, The Customs Union Issue, Chapter 4.
Committee for Economic Development, The European Common Market and its Meaning to the United States, CED, May, 1959.
James E. Meade, Problems of Economic Union, University of Chicago Press, 1953.

  1. Undeveloped Areas and the Theory of Economic Growth.

Friedrich List, A National System of Political Economy.
Walter W. Rostow, The Process of Economic Growth, chapters 1-4.
Colin Clark, Conditions of Economic Progress, chapters 2, 3, 4, 11.
Aldous Huxley, Brave New World Revisited, chapter 1.
A. J. Brown, Introduction to the World Economy, chapters 1-4, chapter 6.

 

Source:  Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Lloyd Appleton Metzler Papers, Box 9, Folder “271 Class Notes. Win. ‘62”.

_____________________

L. A. Metzler

ECONOMICS 271
COURSE EXAMINATION
Winter, 1962

(1) Outline the principal policies of mercantilist economics and show how these policies were justified as being in the national interest of the country concerned.

(2) How were the mercantilist doctrines refuted by the classical economists, particularly by Ricardo and Mill?

(3) Did the classical economists establish a case for universal free trade? Explain.

(4) What are the main features of an undeveloped or backward country and how can the obstacles to economic development be overcome?

(5) How do you account for the decline in public interest in Malthus’ doctrine of population during the middle of the nineteenth century? What explains the recent revival of interest?

(6) Suppose that England, France and the United States have flexible exchange and that, at a given moment of time, these rates are:

New York—London: $4 = £1.
New York—Paris: $0.25 = F. 1
London—Paris: F12 = £1

If an arbitrageur has bank balances in all these countries, show how he can operate in such a way as to leave all of his foreign balances unchanged and at the same time increase his domestic balances. What effect will these operations have on all three rates?

(7) Demonstrate the conditions under which devaluation will improve a country’s balance of trade. In doing this you should define the balance of trade in both domestic and foreign currencies.

 

Source:  Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Lloyd Appleton Metzler Papers, Box 9, Folder “Course Exams 270-271”.

Source Image: Posting by Margie Metzler on the Metzler Family Tree at the genealogical website, ancestry.com.

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Chicago Duke Economic History Economists Harvard Northwestern

Harvard. Economics Ph.D. alumnus (1929), later Chicago professor, E.J. Hamilton.

 

In an earlier post Economics in the Rear-view Mirror provided the undergraduate and graduate academic transcripts of Earl J. Hamilton, who besides having gone on to a distinguished career as a leading economic historian also served as the editor of the Journal of Political Economy for seven years. For this post I have transcribed c.v.’s from ca. 1948 and from Hamilton’s emeritus years, presumably from the 1970s, but he did live for nearly another two decades.

The previous post was dedicated to a long-time professional colleague and friend, Jacob Marschak, with whom Hamilton had overlapped at the Universidad Internacional (Santander, Spain) during the summer of 1933, and to whom Marschak had written for some advice regarding an application for a possible University of Chicago job.

Earl Hamilton died May 7, 1989. [Find-a-Grave link]

____________________

On Hamilton’s research on economic history

John H. Munro. “Money, Prices, Wages, and ‘Profit Inflation’ in Spain, the Southern Netherlands, and England during the Price Revolution era: ca. 1520-ca. 1650”. História e Economia—Revista Interdisciplinar. Vol. 4, No. 1 (1° semester 2008), pp. 13-71.

John H. Munro’s eh.net review of Hamilton’s American Treasure and the Price Revolution in Spain, 1501-1650 (1934).

See:  Earl J. Hamilton Papers on the Economic History of Spain 1351-1830.

____________________

Hamilton’s unfinished John Law Project

“John Law has attracted the interest of many writers. In the twentieth century two of the most active scholars researching on John Law were Paul Harsin and Earl Hamilton…Hamilton, who devoted some fifty years of his life to Law, never produced his promised biography and left only a couple of short articles on the man he so passionately studied…

Unfortunately, there is little order in the Hamilton papers. It will take the librarians of Duke University, assisted by experts on Law and his System, many years to classify them…As such, Earl and Gladys Hamilton will have left a very rich legacy for future generations of scholars.”

Source:    Antoin E. Murphy, John Law: Economic Theorist and Policy-maker.  Clarendon Press, (1997), especially Chapter 2 “Law’s Writings and his Critics”, pp. 8-13.

____________________

Earl J. Hamilton c.v., ca. 1948

THE UNIVERSITY OF CHICAGO
Chicago 37, Illinois
DEPARTMENT OF ECONOMICS

EARL. J. HAMILTON, Professor of Economics, University of Chicago

Previous and Present Positions: Assistant professor of economics, 1927-29, professor, 1929-44, director of graduate study in economics, 1938-44, Duke University; professor of economics, 1944-47, Northwestern University; professor of economics, 1947—, University of Chicago. Delegate for Spain, International Scientific Committee on Price History, 1930-36; lecturer, Universidad Internacional (Santander, Spain), summer, 1933, Colegio de Mexico, summer, 1943; rapporteur, Committee on World Regions, Social Science Research Council, spring, 1943; director of civilian instruction, Army Finance School, 1943-44. Editor of the Journal of Political Economy, August, 1948—.

Degrees: B.S., with Honors, 1920, Mississippi State College; M.A., 1924, University of Texas; Ph.D., 1929, Harvard University.

Affiliations: Economic History Association (Vice-President, 1941-42, Bd. Editors, 1941—); American Association of University Professors; American Historical Association; Economic History Society (Engl.); Corresponding Member, Hispanic Society of America; Fellow, Royal Economic Society, American Association for the Advancement of Science, and American Academy of Arts and Sciences.

Publications: American Treasure and the Price Revolution in Spain, 1501-1650 (1934); Money, Prices, and Wages in Valencia, Aragon, and Navarre, 1351-1500 (1936); War and Prices in Spain, 1651-1800 (1947); El Origen del Capitalismo y Otros Ensayos de Historia Económica (1948). Articles on history of economic thought, economic history, money, and prices.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Earl J. Hamilton Papers, Box 2, Folder “Correspondence-Misc. 1930’s-1940’s and n.d.”.

____________________

Earl J. Hamilton c.v.
early 1970s[?]

THE UNIVERSITY OF CHICAGO
DEPARTMENT OF ECONOMICS

1126 East 59thStreet
Chicago, Illinois 60637

 

Earl J. Hamilton

Born at Houlka, Mississippi on May 17, 1899

B.S. with Honors, Mississippi State University 1920
M.A. University of Texas 1924
Ph.D. Harvard University 1929

Docteur Honoris Causa, University of Paris 1952; LL.D. Duke University 1966; Doctor Honoris Causa University of Madrid 1967.

Have held Thayer Fellowship and Frederick Sheldon Traveling Fellowship, Harvard University; Social Science Research Council Fellowship; Guggenheim Memorial Fellowship; and Faculty Research Fellowship from the Ford Foundation.

Have spent a total of more than twelve years gathering research data in the archives and manuscripts divisions of libraries in France, Italy, Holland, Spain, Belgium, England, Scotland and Latin America.

Speak, read, and write French, Italian, German, Spanish and Dutch.

Assistant Professor of Economics, Duke University, 1927-1929
Professor of Economics, Duke University, 1929-1944
Professor of Economics, Northwestern University, 1944-1947
Professor of Economics, University of Chicago, 1947-1968
Distinguished Professor of Economic History, State University of New York at Binghamton, 1967-1969
Now Professor Emeritus of Economics, University of Chicago and Distinguished Professor of Economic History Emeritus, State University of New York Binghamton.

Editor of the Journal of Political Economy for seven years.

President of the Economic History Association, 1951-1952.

Have determined from original manuscript sources the volume of precious metals imported into Europe from Mexico and Peru in the first hundred and seventy years after the discovery of America and have written a history of price in Spain from 1350 to 1800 based on contemporaneous account books, published in three volumes by the Harvard University Press. I have published a book of essays in Spanish entitled El Florecimiento del Capitalismo y Otros Ensayos de Histoira Económica [1948].

Am now writing from manuscript sources in the archives of France, Italy, Belgium, Holland, England and Scotland, to be published in four or five volumes a definitive history of John Law’s System, one of the greatest inflationary and deflationary episodes in history, popularly known as the Mississippi Bubble, and a biography of John Law of Lauriston.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Archive. Earl J. Hamilton Papers, Box 2, Folder “Various Financial Correspondence (Personal) (1930s-1960s)”.

Image Source:  University of Chicago Photographic Archive, apf1-02446, Special Collections Research Center, University of Chicago Library.