James Tobin, winner of the 1981 Nobel Prize in economics, honored professor at Yale University and one of the most influential economists of his times, died March 11 at the age of 84.
The Sterling Professor Emeritus of Economics at Yale, Tobin was described by fellow Nobel laureate Paul Samuelson as “the archetype of a late-twentieth-century American scholar.”
“Jim Tobin was among the most gifted and inspiring of his generation of economists,” said Yale University President Richard C. Levin, who is the Frederick William Beinecke Professor of Economics and a former student of Tobin. “He possessed a rare clarity of mind and a deep moral sensibility. We who had the privilege to study with him would all agree that he was our greatest teacher.”
Tobin had a distinguished teaching career spanning over 50 years during which he made many outstanding contributions to economic theory. His fundamental concern, however, was how economic policies affected people’s lives. He believed that the federal government could use fiscal and monetary measures to benefit society.
William Brainard, the Arthur M. Okun Professor of Economics at Yale, a colleague and former student of Tobin, said of a theory course Tobin taught: “It was abstract, but Jim never let you lose sight that the ultimate reason for studying theory was to make the world a better place.”
Tobin was born on March 5, 1918, in Champaign, Illinois, to a social worker mother and a father who became sports information director for the University of Illinois. Tobin grew into adulthood during the Depression. In a 1981 interview with The New York Times, he cited his experience growing up in that era as his inspiration for studying economics. “It was easy to get interested in economics,” he said, “because it was clear that the things that were wrong with the world had a lot to do with economics.”
He won an academic scholarship to Harvard in 1935. There Tobin was introduced to the theories of the British economist John Maynard Keynes, whose then newly published book “The General Theory of Employment, Interest and Money,” advocating governmental intervention in the economy, came to influence Tobin’s later academic research, including the work for which he received the Nobel Prize.
Tobin earned his three academic degrees from Harvard: his bachelor’s in 1939; his master’s, the following year; and his Ph.D. in 1947, after wartime service.
In 1941 he went to work for the U.S. government in Washington, D.C., first in the Office of Price Administration and then with the Civilian Supply and War Production Board. Tobin enlisted in the Navy following the attack on Pearl Harbor. At the Navy officers training program at Columbia University, he met the future Secretary of State Cyrus R. Vance and the novelist Herman Wouk.
In his book, “The Caine Mutiny,” Wouk immortalized his friend as the character Tobit, a midshipman with “a mind like a sponge…ahead of the field by a spacious percentage.”
After serving four years on the U.S.S. Kearny in the Atlantic and Mediterranean, ending his naval duty as Executive Officer of the ship, Tobin returned to Harvard to earn his doctorate. He stayed at Harvard as a junior fellow until 1950. That year he received his academic appointment at Yale as associate professor of economics. He was promoted to full professor five years later, and was named the Sterling Professor of Economics in 1957.
Tobin’s early research provided theoretical underpinnings for Keynesian macroeconomic theory, and led to the modern theory of portfolio choice and asset pricing.
In the early 1950s Tobin served as an editor at two prestigious economic journals, Econometrica and the Review of Economic Studies. In 1955, he was recognized by the American Economic Association’s John Bates Clark Medal as the “American economist under the age of forty…judged to have made a significant contribution to economic thought and knowledge.” The same year he became director of the Cowles Foundation for Research in Economics, an organization dedicated to connecting mathematical and statistical studies to economics, which had just moved from the University of Chicago to Yale.
In 1960, Tobin’s work came to the attention of President-elect John F. Kennedy, and won him a place on the President’s Council of Economic Advisers. When tapped for this post, Tobin initially resisted, identifying himself as “an ivory tower economist.” “That’s all right, professor,” Kennedy replied, “I am what you might call an ivory tower president.”
The report that Tobin wrote with the two other members of the Council, Kermit Gordon and Walter Heller, was a seminal statement of political and economic policy that was to dominate public discourse for many decades and is still hotly disputed today. Council members recommended goals of full employment, greater competition and stiffer enforcement of anti-trust legislation. The report also advocated increased investment in science and technology, industrial and commercial infrastructure, education and training.
After a year and one-half in the Kennedy administration, Tobin returned to Yale and to the concerns of the academy. At the same time, he became increasingly vocal in the political arena, taking strong issue with the presidential campaign of Barry Goldwater, writing articles in magazines of political opinion, such as Daedalus and The New Republic. In the 1960s he espoused the “negative income tax,” as a method for achieving income redistribution while maintaining incentives to work. In 1972 he joined George S. McGovern’s campaign for the presidency as an adviser on economic reform.
In 1981, Tobin received the highest honor awarded in his field. In presenting him with the Nobel Memorial Prize for economic science, the Royal Swedish Academy of Science cited his “creative and extensive work on the analysis of financial markets and their relations to expenditure decisions, employment, production and prices.” The Academy also noted, “Unlike many other theorists in the field, Tobin does not confine his analysis solely to money, but considers the entire range of assets and debts…. Few economic researchers of today could be said to have gained so many followers or exerted such influence on contemporary research.”
The Academy recognized the importance of Tobin’s “portfolio theory,” which, summed up in his own words is simply, “Don’t put your eggs in one basket.”
Although Tobin formally retired in 1988, he continued to work at the highest level. Among the awards he received are the Eckstein Prize of Eastern Economic Association, 1988; Grand Cordon, Order of The Sacred Treasure, Japan, 1988; Centennial Medal, Harvard University Graduate School, 1989; and Medal of the Presidency of the Italian Republic, 1993. The James Tobin Professorship of Economics was established at Yale University in 1994.
The author of dozens of books and hundreds of articles, Tobin continued writing until the end of his life. Recent books include “Money, Credit and Capital,” 1997; “Full Employment and Growth,” 1996; and “Essays in Economics, vol. IV, Theory and Policy,” 1996.
Tobin’s ideas continue to play a prominent role in political discourse. The “Tobin tax,” his 1971 proposal for a foreign currency exchange tax aimed at stabilizing exchange rates and reducing global financial speculation, has become a rallying cry of the anti-globalization movement, which, as a free trade advocate, he strongly disavowed.
He is survived by his wife of 55 years, the former Elizabeth Fay Ringo, their four children, Margaret, Michael, Hugh and Roger, and three grandchildren.
Memorial gifts may be made to the James Tobin Fund for Graduate Study in Economics, in care of the President’s Office, Yale University, P.O. Box 208229, New Haven, CT 06520
A memorial service will be held in Yale’s Battell Chapel, corner of Elm and College streets in New Haven, on Saturday, April 27 at 2 p.m. A reception will follow.
