John Hicks

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

Sir John Hicks

Hicks in 1972

Born John Richard Hicks

8 April 1904

Warwick, England

Died 20 May 1989 (aged 85)

Blockley, England

Nationality British

Institution Gonville & Caius College, Cambridge

London School of Economics
 University of Manchester
Nuffield College, Oxford

School or Neo-Keynesian economics

tradition

Alma mater Balliol College, Oxford

Influences Léon Walras, Friedrich Hayek, Lionel

Robbins, Erik Lindahl, John Maynard
Keynes

Contributions IS/LM model

Capital theory, consumer theory, general
equilibrium theory, welfare theory, induced
innovation

Awards Nobel Memorial Prize in Economic

Sciences (1972)

Information at IDEAS / RePEc

Sir John Richard Hicks (8 April 1904 – 20 May 1989) was a British economist. He was
considered one of the most important and influential economists of the twentieth
century. The most familiar of his many contributions in the field of economics were his
statement of consumer demand theory in microeconomics, and the IS/LM model (1937),
which summarised a Keynesian view of macroeconomics. His book Value and
Capital (1939) significantly extended general-equilibrium and value theory.
The compensated demand function is named the Hicksian demand function in memory
of him.
In 1972 he received the Nobel Memorial Prize in Economic Sciences (jointly) for his
pioneering contributions to general equilibrium theory and welfare theory.[1]

Contents

 1Early life
 2Career
  3Later life
 4Contributions to economic analysis
 5Contributions to interpretation of income for accounting purposes
 6See also
 7Selected publications
 8References
 9Further reading
 10External links

Early life[edit]
Hicks was born in 1904 in Warwick, England, and was the son of Dorothy Catherine
(Stephens) and Edward Hicks, a journalist at a local newspaper.[2]
He was educated at Clifton College (1917–1922) and at Balliol College, Oxford (1922–
1926), and was financed by mathematical scholarships. During his school days and in
his first year at Oxford, he specialised in mathematics but also had interests in literature
and history. In 1923, he moved to Philosophy, Politics and Economics, the "new school"
that was just being started at Oxford. He graduated with second-class honors and, as
he stated, "no adequate qualification in any of the subjects" that he had studied.[3]

Career[edit]
From 1926 to 1935, Hicks lectured at the London School of Economics and Political
Science.[4] He started as a labour economist and did descriptive work on industrial
relations but gradually, he moved over to the analytical side, where his mathematics
background returned to the fore. Hicks's influences included Lionel Robbins and such
associates as Friedrich von Hayek, R.G.D. Allen, Nicholas Kaldor, Abba
Lerner and Ursula Webb, the last of whom, in 1935, became his wife.
From 1935 to 1938, he lectured at Cambridge where he was also a fellow of Gonville &
Caius College. He was occupied mainly in writing Value and Capital, which was based
on his earlier work in London. From 1938 to 1946, he was Professor at the University of
Manchester. There, he did his main work on welfare economics, with its application to
social accounting.
In 1946, he returned to Oxford, first as a research fellow of Nuffield College (1946–
1952) then as Drummond Professor of Political Economy (1952–1965) and finally as a
research fellow of All Souls College (1965–1971), where he continued writing after his
retirement.

Later life[edit]
Hicks was knighted in 1964 and became an honorary fellow of Linacre College. He was
co-recipient of the Nobel Prize in Economic Sciences (with Kenneth J. Arrow) in 1972.
He donated the Nobel Prize to the London School of Economics and Political Science's
Library Appeal in 1973.[4] He died on 20 May 1989 at his home in the Cotswold village
of Blockley.[5]
Contributions to economic analysis[edit]
Hicks's early work as a labour economist culminated in The Theory of Wages (1932,
2nd ed. 1963), still considered standard in the field. He collaborated with R.G.D. Allen in
two seminal papers on value theory published in 1934.
His magnum opus is Value and Capital published in 1939. The book built on ordinal
utility and mainstreamed the now-standard distinction between the substitution
effect and the income effect for an individual in demand theory for the 2-good case. It
generalised the analysis to the case of one good and a composite good, that is, all other
goods. It aggregated individuals and businesses through demand and supply across the
economy. It anticipated the aggregation problem, most acutely for the stock of capital
goods. It introduced general equilibrium theory to an English-speaking audience, refined
the theory for dynamic analysis, and for the first time attempted a rigorous statement of
stability conditions for general equilibrium. In the course of analysis Hicks
formalised comparative statics. In the same year, he also developed the famous
"compensation" criterion called Kaldor–Hicks efficiency for welfare comparisons of
alternative public policies or economic states.
Hicks's most familiar contribution in macroeconomics was the Hicks–Hansen IS–LM
model,[6] published in his paper “Mr. Keynes and the "Classics"; a suggested
interpretation”. This model formalised an interpretation of the theory of John Maynard
Keynes (see Keynesian economics), and describes the economy as a balance between
three commodities: money, consumption and investment. Hicks himself wavered in his
acceptance of his IS-LM formulation; in a paper published in 1980 he dismissed it as a
‘classroom gadget’.[7]

Contributions to interpretation of income for accounting

purposes[edit]
Hicks's influential discourse on income sets the basis for its subjectivity but relevancy
for accounting purposes. He aptly summarized it as follows. “The purpose of income
calculations in practical affairs is to give people an indication of the amount they can
consume without impoverishing themselves”.[8]
Formally, he defined income precisely in three measures:
Hicks's number 1 measure of income: “the maximum amount, which can be spent
during a period if there is to be an expectation of maintaining intact the capital value of
prospective receipts (in money terms)” (Hicks, 1946, p. 173)[9]
Hicks's number 2 measure of income (market price-neutral): "the maximum amount
the individual can spend during a week, and still expect to be able to spend the same
amount in each ensuing week” (Hicks, 1946, p. 174).[9]
Hicks's number 3 measure of income (takes into account market prices): “the
maximum amount of money which an individual can spend this week, and still expect to
be able to spend the same amount in real terms in each ensuing week” (Hicks, 1946,
p. 174)[9]
See also[edit]
 Hicksian demand function
 Hicks optimality
 Hicks-neutral technical change
 List of economists
 Nobel Prize in Economics

Selected publications[edit]
 1932, 2nd ed., 1963. The Theory of Wages. London,
Macmillan.
 1934. "A Reconsideration of the Theory of Value," with R.
G. D. Allen, Economica.
 1937. "Mr Keynes and the Classics: A Suggested
Interpretation," Econometrica.
 1939. "The Foundations of Welfare Economics", Economic
Journal.
 1939, 2nd ed. 1946. Value and Capital. Oxford: Clarendon
Press.
 1940. "The Valuation of Social Income," Economica,
7:105–24.
 1941. "The Rehabilitation of Consumers' Surplus," Review
of Economic Studies.
 1942. The Social Framework: An Introduction to
Economics.
 1950. A Contribution to the Theory of the Trade Cycle,
Oxford: Clarendon Press.
 1956. A Revision of Demand Theory, Oxford: Clarendon.
 1958. "The Measurement of Real Income," Oxford
Economic Papers.
 1959. Essays in World Economics, Oxford: Clarendon
Press.
 1961. "Measurement of Capital in Relation to the
Measurement of Other Economic Aggregates", in Lutz and
Hague, editors, Theory of Capital.
 1965. Capital and Growth. Oxford: Clarendon Press.
 1969. A Theory of Economic History. Oxford: Clarendon
Press. Scroll to chapter-preview links.
 1970. "Review of Friedman", Economic Journal.
 1973. "The Mainspring of Economic Growth", Nobel
Lectures, Economics 1969–1980, Editor Assar Lindbeck,
World Scientific Publishing Co., Singapore, 1992.
 1973. Autobiography for Nobel Prize
  1974. "Capital Controversies: Ancient and
Modern", American Economic Review.
 1975. "What Is Wrong with Monetarism", Lloyds Bank
Review.
 1976. Economic Perspectives. Oxford: Clarendon Press.
 1979, "The Formation of an Economist." Banca Nazionale
del Lavoro Quarterly Review, no. 130 (September 1979):
195–204.
 1980. "IS-LM: An Explanation," Journal of Post Keynesian
Economics.
 1981. Wealth and Welfare: Vol I. of Collected Essays in
Economic Theory. Oxford: Basil Blackwell.
 1982. Money, Interest and Wages: Vol. II of Collected
Essays in Economic Theory. Oxford: Basil Blackwell.
 1983. Classics and Moderns: Vol. III of Collected Essays in
Economic Theory. Oxford: Basil Blackwell.
 1989. A Market Theory of Money. Oxford University Press.

References[edit]
1. ^ The Sveriges Riksbank Prize in Economic Sciences in
Memory of Alfred Nobel 1972. Nobelprize.org. Retrieved on 28
July 2013.
2. ^ Creedy, John (2011). John and Ursula Hicks (PDF).
Department of Economics, The University of
Melbourne. ISBN 9780734044761.
3. ^ John R. Hicks – Biographical. Nobelprize.org (20 May 1989).
Retrieved on 2013-07-28.
4. ^ Jump up to:a b "Sir John Hicks". London School of Economics.
13 March 2009. Retrieved 8 July 2012.
5. ^ john hicks – British Academy Retrieved 15 January 2018.
6. ^ Hicks, J. R. (1937). "Mr. Keynes and the 'Classics', A
Suggested Interpretation". Econometrica. 5 (2): 147–
159. JSTOR 1907242.
7. ^ Hicks, J. R. (1980). "'IS-LM': An Explanation". Journal of Post
Keynesian Economics. 3 (2): 139–154. JSTOR 4537583.
8. ^ "The Hicks' Concept of Income and Its Relevancy for
Accounting Purposes". Retrieved 17 August 2016.
9. ^ Jump up to:a b c "The Hicks' Concept of Income and Its
Relevancy for Accounting Purposes". Retrieved 18
August 2016.

Further reading[edit]
 Christopher Bliss, [1987] 2008. "Hicks, John Richard
(1904–1989)", The New Palgrave: A Dictionary of
Economics. Abstract.
  Sen, Amartya; Zamagni, Stefano; Scazzieri, Roberto
(2008). Markets, money and capital: Hicksian economics
for the twenty-first century. Cambridge, UK New York:
Cambridge University Press. ISBN 9780521873215.

External links[edit]
Wikimedia Commons has
media related to John
Hicks.

Wikiquote has quotations

related to: John Hicks

 John Hicks page on the History of Economic Thought

website.

Awards

Laureate of the Nobel Memorial Prize

Preceded by in Economics Succeeded by
Simon Kuznets 1972 Wassily Leontief
Served alongside: Kenneth J. Arrow

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Keynesians

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Laureates of the Nobel Memorial Prize in Economic Sciences

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dCat Identities (via VIAF): 89700672
Categories:
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