Tjallings Koopmans declared his intention to resign his research directorship of the Cowles Commission for Economic Research at the University of Chicago effective June 30, 1954, having served in that position for six years. This necessitated a search for an economist who could satisfy the needs of both the Cowles Commission and the Chicago Department of Economics. Kenneth Arrow, a Cowles alumnus so-to-speak, was the first target of the search. In this post you will find transcriptions of some of the relevant correspondence in the matter. Arrow was offered a salary of $12,000 (approximately $140,000 at today’s prices) which was equal to that of Koopmans and $1000 less than that of the more senior Jacob Marschak.
For a history of the Cowles Commission and Foundation for Research in Economics, see Robert W. Dimand’s Cowles Working Paper (November 2019).
Plot-spoiler: Arrow declined the offer, “The activity of administration represents for me, I feel, a violation of the principle of comparative advantage, especially if one takes account of my strong subjective preferences,” to which Economics in the Rear-view Mirror can only add, “Good Choice!”
Postscript: Economics in the Rear-view Mirror has appended the September 30 announcement of Arrow’s being appointed executive head of the Stanford economics department. OK, so the comparative advantage argument could have played a role in his Chicago decision, assuming he believed a move would have increased the productivity of both the Stanford and Chicago faculties! Now I’ll bet that having experienced winters in Chicago and Stanford, the family simply decided to stay in California.
Posted earlier: a mini c.v. for Arrow as of 1951.
________________________
COWLES COMMISSION
FOR RESEARCH IN ECONOMICS
THE UNIVERSITY OF CHICAGO
CHICAGO 37, ILLINOIS
July 21, 1953
Professor T. W. Schultz
c/o Hotel Maury
Casilla Correo 1385
Lima, Peru
Dear Mr. Schultz:
The Central Administration and the Board of Trustees have now approved our recommendation with respect to Arrow. Please find enclosed a copy of my letter to Arrow. I presume that Dean Tyler will send you a copy of his letter. May I ask you, if you can find time, to write to Arrow to support this offer, and to indicate the participation the Economics Department? In case you have secretarial assistance, may we have a carbon of your letter?
It may be winter in South America just now, but here it is mid-summer, with all that that means. Hoping that you find your trip interesting and profitable,
Sincerely yours,
[signed]
Tjalling C. Koopmans
TCK:lb
Enclosure
* * * * * * * * * * * * *
[COPY]
July 21, 1953
Professor Kenneth J. Arrow
c/o The RAND Corporation
1700 Main Street
Santa Monica, California
Dear Ken:
In this letter, which will reach you simultaneously with a letter from Dean Tyler, I am writing to express the gratification of the Cowles Commission research staff in general, and of myself in particular, at the action of the University and of the Executive Committee of the Commission, in extending to you an invitation to join our staff as Director of Research. The Executive Committee has acted on the unanimous recommendation of our faculty, which reflects our great confidence in you as an intellectual leader. We believe that, above all others in the field, you are the person capable of giving the Commission the research leadership it needs during the years just ahead. Needless to say, we hope that you will decide to accept.
I well remember your statement this April that you wished not to be considered for a position which like this one has administrative aspects. As illustration you mentioned that you did not wish to become chairman of your department at Stanford either. The fact that you are now taking another view of the latter task gives us the courage to ask you to reconsider your attitude toward the former. The administrative aspects of this position are adjustable in terms of your own preferences. I think you will find Ross Cardwell capable of discharging those administrative functions which you may wish to avoid. He brings to this a real understanding and sympathy for the objectives of the group.
Mr. Schultz will write to you concerning the participation of the Economics Department in this offer. Since he is currently in South America, some time will go by before his letter can reach you. Let me say only that the Department is likewise unanimous in its support for a joint offer, and hopes that you will regard participation in its teaching and other activities an compatible with your primary responsibility with regard to the Commission. A tentative ratio, two-thirds Commission, one-third Department, is proposed for your consideration.
I am writing to Jascha [Jacob Marschak], who is currently at the Institute for Numerical Analysis, to inform him that this offer has now been approved. Please feel free to discuss the matter with him and to regard him as an additional source of information. We also hope that you will find it possible to visit Chicago some time in September so that you may inform yourself fully with regard to the opportunities and challenge of this position. The best timing of this visit depends somewhat on Mr. Schultz’ plans, on which I am not fully informed.
In conclusion, I want you to know that I look forward with great anticipation to the prospect of a reintensified contact with you, both in research and in a personal way. We all hope that our proposal is challenging enough to you to earn your serious consideration and, ultimately, your acceptance.
Please give our best regards to Selma. We hope that she will look with sympathy on our trying to get you both back to Chicago.
Cordially yours,
Tjalling C. Koopmans
cc: Executive Committee (A. Cowles, R. L Cardwell, T. W. Schultz, R. W. Tyler)
J. Marschak
________________________
COPY
The University of Chicago
Chicago 37, Illinois
The Division of the Social Sciences
Office of the Dean
July 21, 1953
Professor Kenneth J. Arrow co The RAND Corporation
1700 Main Street
Santa Monica, California
Dear Mr. Arrow:
I take great pleasure in inviting you to become Professor of Economics of the University of Chicago and Director of Research in the Cowles Commission. This is a regular tenure position as a full professor at a salary of $12,000 per year effective for 1954-55, on a 4-E contract. As you may have heard, the provisions of the 4-E contract have recently been liberalized so that the faculty member retains his earnings from royalties, from occasional lectures, and other occasional short-term assignments.
The interest in your appointment is indicated by the fact that you were the unanimous selection of the Executive Committee of the Cowles Commission, as well as the research staff of the Commission and the faculty of the department of economics. We are all anxious to have you join us and feel sure that we can provide you with excellent conditions for making an important intellectual contribution. We hope that you will come to Chicago at our expense sometime in September to look into the situation as fully as you wish and to work out conditions that are satisfactory, including the time when you would be able to join our staff.
Sincerely yours,
[unsigned copy]
R. W. Tyler
Dean
RWT:rk
________________________
[COPY]
August 24, 1953
Professor Kenneth J. Arrow
c/o The RAND Corporation
1700 Main Street
Santa Monica, California
Dear Mr. Arrow:
I have returned from my field work in Peru and Mexico and learned with great pleasure from Dean Tyler and Professor Koopmans that the Chancellor has approved our recommendation to invite you to come to the University of Chicago as Professor of Economics and Director of Research in the Cowles Commission. Dean Tyler has already formally extended to you this invitation and Professor Koopmans has written to you at some length. May I convey to you the fact that this invitation is rare in that it is the unanimous view and wish of the members of the Department of Economics. This expresses in the strongest possible terms our own very high regard for your professional achievements as an economist and our firm wish to have you become one of us.
Sincerely yours,
[unsigned copy]
Theodore W. Schultz
TWS:jw
________________________
[COPY]
September 11, 1953
Professor Kenneth J. Arrow
c/o The RAND Corporation
1700 Main Street
Santa Monica California
Dear Ken:
This is further to my handwritten letter of about a month ago, in which I indicated that I would write again upon returning to Chicago. Let me again express the hope that you may be able to visit us at a time convenient to you. I continue to believe that this is the most effective procedure for you to obtain clarification on points such as those ou have raised in conversation with Jascha. However, in case you should prefer to seek clarification by correspondence, may I suggest that you write to Dean Tyler if you have questions relating to the Cowles Commission (with a carbon copy to me) and to Mr. Schultz for questions relating to the Department.
We had an interesting and fruitful meeting at Kingston, in which high temperature and a light program contributed to a relaxed atmosphere.
Looking forward to hearing from you.
Cordially,
[unsigned copy]
Tjalling C. Koopmans
TOK:lb
Cc: J. Marschak, T.W. Schultz, R.W. Tyler
________________________
The RAND Corporation
1700 Main St. • Santa Monica • California
15 September 1953
Professor Theodore W. Schultz
Department of Economics
The University of Chicago
Chicago 37, Illinois
Dear Professor Schultz:
Thank you very much for your letter of August 24. I am indeed thrilled by the evidence of approbation by my former colleagues at the University of Chicago.
However, for reasons set forth in the enclosed letter to Dean Tyler, I feel that I should not accept the offer. The activity of administration represents for me, I feel, a violation of the principle of comparative advantage, especially if one takes account of my strong subjective preferences.
Best regards to all members of the Department.
Sincerely yours,
[signed]
Kenneth J. Arrow
KJA: ge
encl.
________________________
[COPY]
15 September 1953
Dean R. W. Tyler
The Division of the Social Sciences
The University of Chicago
Chicago 37, Illinois
Dear Dean Tyler:
I have thought over very seriously the kind and flattering offer to serve as Research Director of the Cowles Comission. It is with a great deal of regret that I feel that I must decline.
The stimulating and vital intellectual atmosphere at the University of Chicago and the high salary offered were very strong inducements, but I feel that I am not temperamentally qualified to assume the administrative responsibilities called for. I would feel strongly the conflict between pursuing my individual research and the responsibilities of leadership, and I do not feel that I would make a satisfactory resolution. I wish to thank you again, not least, for your willingness to wait this long for me to come to a decision.
Sincerely yours,
[unsigned copy]
Kenneth J. Arrow
KJA:ge
cc: Prof. T. C. Koopmans, Prof. T. W. Schultz [checkmark]
________________________
[COPY]
The University of Chicago
The Division of the Social Sciences
Office of the Dean
September 21, 1953
Mr. Kenneth J. Arrow
The RAND Corporation
1700 Main Street
Santa Monica, California
Dear Mr. Arrow:
We are greatly disappointed that you feel it unwise to accept our invitation to become Director of Research for the Cowles Commission. We think you have an important contribution to make to our University. Hence, I hope we can work out some other position here that would appeal to you.
Sincerely yours,
R. W. Tyler
Dean
RWT:rk
cc: Mr. T. W. Schultz [checkmark], Mr. T. C. Koopmans
Source: University of Chicago Archives. Department of Economics, Records. Box 42, Folder 4.
________________________
Postscript
New Economics Executive Named
Kenneth J. Arrow, professor of economics and statistics at Stanford, has been appointed executive head of the University’s Department of Economics, President Wallace Sterling announced yesterday.
Nationally known for his work in the analysis of criteria for economic decisions, Dr. Arrow has been on the Stanford faculty since 1949. As department head he replaces Professor Edward S. Shaw, who has resigned to devote full time to teaching and research.
Dr. Arrow heads a project at Stanford supported by the Office of Naval Research to study the efficiency of economic decision-making.
As a post-doctoral fellow of the Social Science Research Council, Dr. Arrow traveled extensively in Western Europe for nine months of 1952, studying statistical problems of national economic planning.
He lectured at Oxford University and the Institute of Applied Economics in Paris and was one of a small group of distinguished American economists invited to participate in a colloquium on the theory of risk. The colloquium was conducted in Paris by the National Center of Scientific Research of the French Ministry of Eduaction.
Professor Arrow was graduated by the College of the City of New York in 1940 with Phi Beta Kappa honors and as winner of the Pell medal for highest scholastic proficiency.
He served as assistant professor at the University of Chicago in 1948-49. Appointed acting assistant professor at Stanford in 1949, he became associate professor in 1950 and this year was promoted to full professor.
[Note: the promotion was announced April 28, effective September 1, 1953.]
Source: The Stanford Daily, 1 October 1953.
Image Source: Kenneth J. Arrow as Guggenheim Fellow (1972) John Simon Guggenheim Memorial Foundation.