April 2017 newsletter - Sir Tony Atkinson
01 Apr 2017
On January 1, the world lost one of its greatest, and one of its kindest, economists — Anthony Barnes Atkinson. He was a revered teacher and colleague and a devoted public intellectual, who gave of his enormous talents and energies to creating a world with greater social justice-the motivating force behind his entering the economics profession. Knowing that he had incurable cancer, Tony spent his last year chairing a World Bank Commission on Global Poverty, addressing a question to which he had already made important contributions: how best to monitor and measure poverty. A year earlier, he had set out an original and insightful agenda for dealing with inequality in his book, Inequality — What Can be Done?
That book and the Commission Report reflected his lifelong passions: the belief that something could be done about poverty and inequality, that economics was a moral science, and that the study of economics and in particular the measurement of inequality and poverty could help our society do something about these scourges. There is no doubt that Atkinson’s contributions have made an enormous difference.
Atkinson was devoted to serving this Society and the economics profession with devotion throughout his life.1 He was President of the Royal Economic Society from 1995 to 1998 and president of the International Economic Association, the European Economic Association, the Econometric Society, and Section F of the British Association for the Advancement of Science. He was the leader in the field of public economics; he founded and for a quarter century was the editor of the Journal of Public Economics in 1971, still the leading journal in that field.
He was a serial institution builder — after being appointed professor of economics at the University of Essex at the age of 27, he along with luminaries like Chris Bliss helped build that school into a leading institution. After stints as a visiting professor at MIT, professor of political economy at UCL, and, for 12 years, at LSE, with a brief interlude as a Professor at his alma mater, Cambridge, he spent the last 14 years at Nuffield College, 11 as Warden. At LSE, he helped found and chaired the Suntory-Toyota International Centre for Economics and Related Disciplines.
His contributions were amply recognized by society and his peers. He was knighted in 2000 and made a Chevalier de la Légion d'Honneur in 2001. He was a fellow of the British Academy, an honorary member of the American Academy of Arts and Sciences and the American Economic Association, and a member of the Accademia Nazionale dei Lincei — and awarded 21 honorary doctorates.
Tony was my first student, in 1966. Frank Hahn, his tutor at Churchill College and my supervisor as a Fulbright Fellow, asked me to give him supervisions. I was perhaps misled into thinking that all students would be of that caliber. Thus began a half century of collaboration and friendship with both Tony and his wife Judith, who shared so many of the same social commitments and interests. Interestingly, our first collaboration, ‘A New View of Technological Change’, published in the Economic Journal in 1969, was not on public finance but on the nature of technical progress, inspired by lectures of Nicky Kaldor. It was selected by the EJ in 2015 as one of the best ten articles of the past century.
Our friendship continued as Judith and Tony spent the next year at MIT, where I had returned to MIT as an assistant professor. Here, Tony was to begin his lifelong work of studying inequality, and begin one of his most influential papers, on the measurement of inequality. I was working with Mike Rothschild on the question of ranking of probability distributions: when could one say that one distribution was more disperse than another. Tony saw that the same issue arose in comparing income distributions. His 1970 paper published in the Journal of Economic Theory, ‘On the Measurement of Inequality’, demonstrated a remarkable result: one distribution would be preferred to another by all inequality averse societies if and only if its Lorenz curve lay inside the other. He was concerned too about the inadequate normative basis for the most commonly used measures of inequality, like the Gini coefficient. He proposed an easily computable measure that has since come to be called the Atkinson measure: what fraction of income would society be willing to give up to get rid of all its inequality. For plausible values of inequality aversion, the number, for an unequal society like the US, are striking, upwards of a third.
At the time, Peter Diamond and James Mirrlees were founding the theory of optimal taxation, based on the earlier work of Frank Ramsey. Tony and I had both entered economics with a belief that we could establish a more scientific basis for understanding and addressing inequality. But Ramsey’s analysis had a very disturbing implication: one should tax necessities, like food, at a higher rate than luxuries, because of the low demand elasticity. Something was fundamentally wrong with Ramsey's formulation. We discovered two critical flaws: Ramsey ignored concerns about distribution and assumed that the only taxes available were indirect taxes. Our paper ‘The Structure of Indirect Taxation and Economic Efficiency’, published in 1972 in the Journal of Public Economics, reformulated Ramsey, deriving simple formulae that embedded distributional weights-and giving results that were more in accord with out intuitions about just taxation. Then our paper ‘The Design of Tax Structure: Direct Versus Indirect Taxation’, published in 1976, upset the Ramsey analysis in a more fundamental way: with a conventional separability assumption, we showed that there should be no indirect taxation if one could impose an optimal income tax.
A little misunderstood theory can be dangerous: a whole strand of work grew out of this analysis, erroneously concluding that there should be no capital taxation.
Around this time we decided to write our graduate text, which we titled Lectures in Public Economics. We didn’t want to provide a comprehensive treatise of the subject; what we wanted to do was to change the way the profession thought about public economics. Writing the book with Tony was inspiring; as we wrote up old results in a way that we hoped would be easily understood by graduate students, we kept deriving new results. On every galley I would scribble a new theorem or conjecture. Tony kept a copy of a page of my notes to him, supposedly as evidence that there was someone with worse handwriting than his. The book would never have been completed were it not for his calm but firm hand: we had to stop revising.
That firm reasoned calmness was typically Tony - or at least so it appeared to me, a brash American. But we cared deeply about the same things. After I left the UK in 1979, our paths frequently crossed. We had toyed with the idea of doing a new edition, but both of us had moved on to other projects, and it proved impossible to carve out the time to do it. But when Princeton University Press decided to reprint the book in 2015, we decided to write a preface together describing broadly how a book written now would have been different from the one we had written 35 years earlier. I was amazed how coincident our ideas and perspectives were. And we were both surprised that there were so many rich nuggets that we had laid out that had not yet been adequately taken up, rethinking, for instance, the incidence of taxation in the presence of problems of credit rationing, corporate governance problems, or market power.
Tony was committed to the notion that better data-and a better understanding of the data-on poverty and inequality was necessary if we are to monitor what is happening and devise strategies to combat inequality and poverty. He made major contributions, was President of the Luxembourg Income Study (providing the most comprehensive data base for cross country comparisons of income and wealth distribution) from 2011 until his death, and became the mentor of distinguished scholars like Thomas Piketty and Emmanuel Saez, with whom he collaborated extensively. Together, they have made landmark achievements-so important at this moment when inequality is soaring.
We shall all miss Tony dearly.
Joseph E Stiglitz,
Columbia University, New York
1. I have omitted from this obituary mention of the long list of public bodies on which he served, showing the high regard in which he was held, his commitment to public service, and the range of his interests. He served as chairman of the Taxation Review Committee of the Fabian Society, of the Atkinson Review of the Measurement of Government Output, ONS, and of the Economics Committee of the Social Science Research Council.
The breadth of his interests and commitments was also reflected in other committees on which he served: the Social Justice Commission, the Economic and Social Research Council, the Royal Commission on the Distribution of Income and Wealth, the Retail Prices Index Advisory Committee, and the Pension Law Review Committee. For 14 years, he served as Trustee of the Nuffield Foundation. His engagements were not limited to the UK: he was, for instance, chair of the Academic Advisory Board of the Anglo-German Foundation, and a member of the Conseil d’Analyse Economique, advising the French Prime Minister, and of the European Statistics Governance Advisory Board. He was also a member of the international Commission on the Measurement of Economic Performance and Social Progress, which I chaired. I witnessed the magnitude of his contribution, especially when it came to the subtleties of the measurement of government output.