An economist is a professional and practitioner in the social science discipline of economics .
54-585: Sir John Richard Hicks (8 April 1904 – 20 May 1989) was a British economist . He is 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
108-413: A ⋅ x a − 1 ⋅ y b b ⋅ y b − 1 ⋅ x a = a y b x {\displaystyle MRS={\frac {a\cdot x^{a-1}\cdot y^{b}}{b\cdot y^{b-1}\cdot x^{a}}}={\frac {ay}{bx}}} . The MRS is the same for the function v ( x , y ) =
162-546: A ⋅ log x + b ⋅ log y {\displaystyle v(x,y)=a\cdot \log {x}+b\cdot \log {y}} . This is not a coincidence as these two functions represent the same preference relation – each one is an increasing monotone transformation of the other. In general, the MRS may be different at different points ( x 0 , y 0 ) {\displaystyle (x_{0},y_{0})} . For example, it
216-420: A diminishing marginal rate of substitution. It can be shown that consumer analysis with indifference curves (an ordinal approach) gives the same results as that based on cardinal utility theory — i.e., consumers will consume at the point where the marginal rate of substitution between any two goods equals the ratio of the prices of those goods (the equi-marginal principle). Revealed preference theory addresses
270-546: A function u such that: But critics of cardinal utility claim the only meaningful message of this function is the order u ( A ) > u ( B ) > u ( C ) {\displaystyle u(A)>u(B)>u(C)} ; the actual numbers are meaningless. Hence, George's preferences can also be represented by the following function v : The functions u and v are ordinally equivalent – they represent George's preferences equally well. Ordinal utility contrasts with cardinal utility theory:
324-519: A non-conformist minister. 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 honours and, as he stated, "no adequate qualification in any of
378-534: A numeric function, an agent's preference relation can be represented graphically by indifference curves. This is especially useful when there are two kinds of goods, x and y . Then, each indifference curve shows a set of points ( x , y ) {\displaystyle (x,y)} such that, if ( x 1 , y 1 ) {\displaystyle (x_{1},y_{1})} and ( x 2 , y 2 ) {\displaystyle (x_{2},y_{2})} are on
432-413: A preference relation on X {\displaystyle X} . It is common to mark the weak preference relation by ⪯ {\displaystyle \preceq } , so that A ⪯ B {\displaystyle A\preceq B} reads "the agent wants B at least as much as A". The symbol ∼ {\displaystyle \sim } is used as a shorthand to
486-532: 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. 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
540-427: A variety of major national and international firms in the financial and commercial sectors, and in manufacturing, retailing and IT, as well as in the public sector – for example, in the health and education sectors, or in government and politics . Some graduates go on to undertake postgraduate studies , either in economics, research, teacher training or further qualifications in specialist areas. Unlike most nations,
594-421: 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
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#1732870165517648-464: Is any monotonically increasing function, then the functions v and v give rise to identical indifference curve mappings. This equivalence is succinctly described in the following way: In contrast, a cardinal utility function is unique up to increasing affine transformation . Every affine transformation is monotone; hence, if two functions are cardinally equivalent they are also ordinally equivalent, but not vice versa. Suppose, from now on, that
702-404: Is continuity . A preference relation is called continuous if, whenever B is preferred to A, small deviations from B or A will not reverse the ordering between them. Formally, a preference relation on a set X is called continuous if it satisfies one of the following equivalent conditions: If a preference relation is represented by a continuous utility function, then it is clearly continuous. By
756-524: Is a formalized role. Professionals here are employed (or engaged as consultants ) to conduct research, prepare reports, or formulate plans and strategies to address economic problems. Here, as outlined, the analyst provides forecasts, analysis and advice, based upon observed trends and economic principles; this entails also collecting and processing economic and statistical data using econometric methods and statistical techniques. In contrast to regulated professions such as engineering, law or medicine, there
810-518: Is a function representing the preferences of an agent on an ordinal scale . Ordinal utility theory claims that it is only meaningful to ask which option is better than the other, but it is meaningless to ask how much better it is or how good it is. All of the theory of consumer decision-making under conditions of certainty can be, and typically is, expressed in terms of ordinal utility. For example, suppose George tells us that "I prefer A to B and B to C". George's preferences can be represented by
864-406: Is an additive function : There are several ways to check whether given preferences are representable by an additive utility function. If the preferences are additive then a simple arithmetic calculation shows that so this "double-cancellation" property is a necessary condition for additivity. Debreu (1960) showed that this property is also sufficient: i.e., if a preference relation satisfies
918-562: Is in accordance with the fact, stated above, that these preferences cannot be represented by a utility function. For every utility function v , there is a unique preference relation represented by v . However, the opposite is not true: a preference relation may be represented by many different utility functions. The same preferences could be expressed as any utility function that is a monotonically increasing transformation of v . E.g., if where f : R → R {\displaystyle f:\mathbb {R} \to \mathbb {R} }
972-496: Is indifferent between this bundle and the bundle ( x 0 − λ ⋅ δ , y 0 + δ ) {\displaystyle (x_{0}-\lambda \cdot \delta ,y_{0}+\delta )} . This means that he is willing to give λ ⋅ δ {\displaystyle \lambda \cdot \delta } units of x to get δ {\displaystyle \delta } units of y. If this ratio
1026-400: Is kept as δ → 0 {\displaystyle \delta \to 0} , we say that λ {\displaystyle \lambda } is the marginal rate of substitution (MRS) between x and y at the point ( x 0 , y 0 ) {\displaystyle (x_{0},y_{0})} . This definition of the MRS is based only on
1080-645: 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 . Hicks was born in 1904 in Warwick , England, and was the son of Edward Hicks, editor and part proprietor of the Warwick and Leamington Spa Courier newspaper, and Dorothy Catherine, née Stephens, daughter of
1134-552: Is not a legally required educational requirement or license for economists. In academia, most economists have a Ph.D. degree in Economics . In the U.S. Government, on the other hand, a person can be hired as an economist provided that they have a degree that included or was supplemented by 21 semester hours in economics and three hours in statistics, accounting, or calculus. In fact, a professional working inside of one of many fields of economics or having an academic degree in this subject
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#17328701655171188-401: Is often considered to be an economist; see Bachelor of Economics and Master of Economics . Economics graduates are employed in varying degrees depending on the regional economic scenario and labour market conditions at the time for a given country. Apart from the specific understanding of the subject, employers value the skills of numeracy and analysis, the ability to communicate and
1242-434: Is possible that at ( 9 , 1 ) {\displaystyle (9,1)} the MRS is low because the person has a lot of x and only one y , but at ( 9 , 9 ) {\displaystyle (9,9)} or ( 1 , 1 ) {\displaystyle (1,1)} the MRS is higher. Some special cases are described below. When the MRS of a certain preference relation does not depend on
1296-402: Is preferentially-independent of the subset { z }, if for all x i , y i , z , z ′ {\displaystyle x_{i},y_{i},z,z'} : In this case, we can simply say that: Preferential independence makes sense in case of independent goods . For example, the preferences between bundles of apples and bananas are probably independent of
1350-456: Is represented by a utility function v ( x , y ) {\displaystyle v(x,y)} . Suppose the preference relation is monotonically increasing , which means that "more is always better": Then, both partial derivatives, if they exist, of v are positive. In short: Suppose a person has a bundle ( x 0 , y 0 ) {\displaystyle (x_{0},y_{0})} and claims that he
1404-478: Is to give people an indication of the amount they can consume without impoverishing themselves”. 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) Hicks's number 2 measure of income (market price-neutral): "the maximum amount
1458-899: The UK are the more than 3500 members of the Government Economic Service . Analysis of destination surveys for economics graduates from a number of selected top schools of economics in the United Kingdom (ranging from Newcastle University to the London School of Economics ), shows nearly 80 percent in employment six months after graduation – with a wide range of roles and employers, including regional, national and international organisations, across many sectors. Some current well-known economists include: [REDACTED] The dictionary definition of economist at Wiktionary Ordinal utility In economics , an ordinal utility function
1512-449: The MRS is a function λ ( y ) {\displaystyle \lambda (y)} , a possible function v Y {\displaystyle v_{Y}} can be calculated as an integral of λ ( y ) {\displaystyle \lambda (y)} : In this case, all the indifference curves are parallel – they are horizontal transfers of each other. A more general type of utility function
1566-548: The Nobel Prize to the London School of Economics and Political Science 's Library Appeal in 1973. He died on 20 May 1989 at his home in the Cotswold village of Blockley . Heterodox 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
1620-447: The broad philosophical theories to the focused study of minutiae within specific markets , macroeconomic analysis, microeconomic analysis or financial statement analysis , involving analytical methods and tools such as econometrics , statistics , economics computational models , financial economics , regulatory impact analysis and mathematical economics . Economists work in many fields including academia, government and in
1674-581: The bundle, i.e., the MRS is the same for all ( x 0 , y 0 ) {\displaystyle (x_{0},y_{0})} , the indifference curves are linear and of the form: and the preference relation can be represented by a linear function: (Of course, the same relation can be represented by many other non-linear functions, such as x + λ y {\displaystyle {\sqrt {x+\lambda y}}} or ( x + λ y ) 2 {\displaystyle (x+\lambda y)^{2}} , but
John Hicks - Misplaced Pages Continue
1728-418: The capacity to grasp broad issues which the graduates acquire at the university or college . Whilst only a few economics graduates may be expected to become professional economists, many find it a base for entry into a career in finance – including accounting, insurance, tax and banking, or management . A number of economics graduates from around the world have been successful in obtaining employment in
1782-412: The consumer is equally satisfied with. The further a curve is from the origin, the greater is the level of utility. The slope of the curve (the negative of the marginal rate of substitution of X for Y) at any point shows the rate at which the individual is willing to trade off good X against good Y maintaining the same level of utility. The curve is convex to the origin as shown assuming the consumer has
1836-409: The double-cancellation property then it can be represented by an additive utility function. If the preferences are represented by an additive function, then a simple arithmetic calculation shows that so this "corresponding tradeoffs" property is a necessary condition for additivity. This condition is also sufficient. When there are three or more commodities, the condition for the additivity of
1890-655: The economist profession in Brazil is regulated by law; specifically, Law № 1,411, of August 13, 1951. The professional designation of an economist, according to said law, is exclusive to those who graduated with a Bachelor of Economics degree in Brazil. According to the United States Department of Labor , there were about 15,000 non-academic economists in the United States in 2008, with a median salary of roughly $ 83,000, and
1944-433: 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’. 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
1998-423: 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
2052-421: The existence of a representing function: When these conditions are met and the set X {\displaystyle X} is finite, it is easy to create a function u {\displaystyle u} which represents ≺ {\displaystyle \prec } by just assigning an appropriate number to each element of X {\displaystyle X} , as exemplified in
2106-504: 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 , 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
2160-630: The indifference relation: A ∼ B ⟺ ( A ⪯ B ∧ B ⪯ A ) {\displaystyle A\sim B\iff (A\preceq B\land B\preceq A)} , which reads "The agent is indifferent between B and A". The symbol ≺ {\displaystyle \prec } is used as a shorthand to the strong preference relation: A ≺ B ⟺ ( A ⪯ B ∧ B ⪯ ̸ A ) {\displaystyle A\prec B\iff (A\preceq B\land B\not \preceq A)} if: Instead of defining
2214-605: 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). 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) Economist The individual may also study, develop, and apply theories and concepts from economics and write about economic policy . Within this field there are many sub-fields, ranging from
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2268-565: 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
2322-426: The latter assumes that the differences between preferences are also important. In u the difference between A and B is much smaller than between B and C, while in v the opposite is true. Hence, u and v are not cardinally equivalent. The ordinal utility concept was first introduced by Pareto in 1906. Suppose the set of all states of the world is X {\displaystyle X} and an agent has
2376-418: The linear function is simplest.) When the MRS depends on y 0 {\displaystyle y_{0}} but not on x 0 {\displaystyle x_{0}} , the preference relation can be represented by a quasilinear utility function, of the form where v Y {\displaystyle v_{Y}} is a certain monotonically increasing function. Because
2430-531: The opening paragraph. The same is true when X is countably infinite . Moreover, it is possible to inductively construct a representing utility function whose values are in the range ( − 1 , 1 ) {\displaystyle (-1,1)} . When X {\displaystyle X} is infinite, these conditions are insufficient. For example, lexicographic preferences are transitive and complete, but they cannot be represented by any utility function. The additional condition required
2484-493: The ordinal preference relation – it does not depend on a numeric utility function. If the preference relation is represented by a utility function and the function is differentiable, then the MRS can be calculated from the derivatives of that function: For example, if the preference relation is represented by v ( x , y ) = x a ⋅ y b {\displaystyle v(x,y)=x^{a}\cdot y^{b}} then M R S =
2538-665: The private sector, where they may also "study data and statistics in order to spot trends in economic activity, economic confidence levels, and consumer attitudes. They assess this information using advanced methods in statistical analysis, mathematics, computer programming [and] they make recommendations about ways to improve the efficiency of a system or take advantage of trends as they begin." In addition to government and academia, economists are also employed in banking , finance , accountancy , commerce , marketing , business administration , lobbying and non- or not-for profit organizations. In many organizations, an " Economic Analyst "
2592-400: The problem of how to observe ordinal preference relations in the real world. The challenge of revealed preference theory lies in part in determining what goods bundles were foregone, on the basis of them being less liked, when individuals are observed choosing particular bundles of goods. Some conditions on ⪯ {\displaystyle \preceq } are necessary to guarantee
2646-418: The same curve, then ( x 1 , y 1 ) ∼ ( x 2 , y 2 ) {\displaystyle (x_{1},y_{1})\sim (x_{2},y_{2})} . An example indifference curve is shown below: [REDACTED] Each indifference curve is a set of points, each representing a combination of quantities of two goods or services, all of which combinations
2700-449: The set X {\displaystyle X} is the set of all non-negative real two-dimensional vectors. So an element of X {\displaystyle X} is a pair ( x , y ) {\displaystyle (x,y)} that represents the amounts consumed from two products, e.g., apples and bananas. Then under certain circumstances a preference relation ⪯ {\displaystyle \preceq }
2754-478: The subjects" that he had studied. From 1926 to 1935, Hicks lectured at the London School of Economics and Political Science . 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 ,
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#17328701655172808-483: The theorems of Debreu (1954) , the opposite is also true: Note that the lexicographic preferences are not continuous. For example, ( 5 , 0 ) ≺ ( 5 , 1 ) {\displaystyle (5,0)\prec (5,1)} , but in every ball around (5,1) there are points with x < 5 {\displaystyle x<5} and these points are inferior to ( 5 , 0 ) {\displaystyle (5,0)} . This
2862-665: The top ten percent earning more than $ 147,040 annually. Nearly 135 colleges and universities grant around 900 new Ph.D.s every year. Incomes are highest for those in the private sector, followed by the federal government, with academia paying the lowest incomes. As of January 2013, PayScale.com showed Ph.D. economists' salary ranges as follows: all Ph.D. economists, $ 61,000 to $ 160,000; Ph.D. corporate economists, $ 71,000 to $ 207,000; economics full professors, $ 89,000 to $ 137,000; economics associate professors, $ 59,000 to $ 156,000, and economics assistant professors, $ 72,000 to $ 100,000. The largest single professional grouping of economists in
2916-502: The utility function is surprisingly simpler than for two commodities. This is an outcome of Theorem 3 of Debreu (1960) . The condition required for additivity is preferential independence . A subset A of commodities is said to be preferentially independent of a subset B of commodities, if the preference relation in subset A, given constant values for subset B, is independent of these constant values. For example, suppose there are three commodities: x y and z . The subset { x , y }
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