Kenneth Arrow quotes - page 2

In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political' decisions, and the market mechanism, typically used to make ‘economic' decisions. In the emerging democracies with mixed economic systems Great Britain, France, and Scandinavia, the same two modes of making social choices prevail, though more scope is given to the method of voting and to decisions based directly or indirectly on it and less to the rule of the price mechanism. Elsewhere in the world, and even in smaller social units within the democracies, the social decisions are sometimes made by single individuals or small groups and sometimes (more and more rarely in this modern world) by a widely encompassing set of traditional rules for making the social choice in any given situation, for example, a religious code. (Kenneth Arrow)
Studying oneself is not the most comfortable of enterprises. One is caught between the desire to show oneself in the best possible light and the fear of claiming more than one's due. View quote
Kenneth Arrow
The formal structure of a decision problem in any area can be put into four parts: ( 1 ) the choice of an objective function denning the relative desirability of different outcomes; (2) specification of the policy alternatives which are available to the agent, or decisionmaker, (3) specification of the model, that is, empirical relations that link the objective function, or the variables that enter into it, with the policy alternatives and possibly other variables; and (4) computational methods for choosing among the policy alternatives that one which performs best as measured by the objective function. View quote
Kenneth Arrow
Decision theory, as it has grown up in recent years, is a formalization of the problems involved in making optimal choices. In a certain sense - a very abstract sense, to be sure - it incorporates among others operations research, theoretical economics, and wide areas of statistics, among others. View quote
Kenneth Arrow
Trust is an important lubricant of a social system. It is extremely efficient; it saves a lot of trouble to have a fair degree of reliance on other people's word. Unfortunately this is not a commodity which can be bought very easily. If you have to buy it, you already have some doubts about what you have bought. View quote
Kenneth Arrow
From the point of view of seeking a consensus of the moral imperative of individuals, such consensus being assumed to exist, the problem of choosing an electoral or other choice mechanism, or, more broadly, of choosing a social structure, assumes an entirely different form from that discussed in the greater part of this study. View quote
Kenneth Arrow
Certainly, there is no general principle that prevents the creation of an economic theory based on other hypotheses than that of rationality. View quote
Kenneth Arrow
The idealist doctrine then may be summed up by saying that each individual has two orderings, one which governs him in his everyday actions, and one which would be relevant under some ideal conditions and which is in some sense truer than the first ordering. It is the latter which is considered relevant to social choice, and it is assumed that there is complete unanimity with regard to the truer individual ordering. View quote
Kenneth Arrow
It is this thinking which I think gives rise to the greatest tragedies of history, this sense of commitment to a past purpose which reinforces the original agreement precisely at a time when experience has shown that it must be reversed. View quote
Kenneth Arrow
I am old-fashioned enough to retain David Hume's view that one can never derive "ought” propositions from "is” propositions. The two issues, method and value, are distinct. View quote
Kenneth Arrow
In eras when authority or at least specific authorities have been questioned, there is more tendency to examine the roots of and the need for authority. The owl of Minerva flies not in the dusk but in the storm. (Kenneth Arrow)
I want to stress that rationality is not a property of the individual alone, although it is usually presented that way. Rather, it gathers not only its force but also its very meaning from the social context in which it is embedded. View quote
Kenneth Arrow
In this aspect, the case for democracy rests on the argument that free discussion and expression of opinion are the most suitable techniques of arriving at the moral imperative implicitly common to all. Voting, from this point of view, is not a device whereby each individual expresses his personal interests, but rather where each individual gives his opinion of the general will. View quote
Kenneth Arrow
L. Walras first formulated the state of the economic system at any point of time as the solution of a system of simultaneous equations representing the demand for goods by consumers, the supply of goods by producers and the equilibrium condition that supply equal demand on every market. View quote
Kenneth Arrow
The choice among these alternatives in any given case depends on the degree of difficulty consumers have in making the choice unaided, and on the consequences of errors of judgment. It its the general social consensus, clearly, that the laissez-faire solution for medicine is intolerable. The certification proposal never seems to have been discussed seriously. View quote
Kenneth Arrow
My research, even before 1972, moved in directions beyond those cited for the Nobel Memorial Prize. Most of it, in one way or another, deals with information as an economic variable, both as to its production and as to its use. View quote
Kenneth Arrow
The major driver of economics is the equilibrium approach, which has taken various forms over the years. General equilibrium is the statement that all the different parts of the economy influence each other, even if it's remote, like mortgage-backed securities and their demands on automobiles. View quote
Kenneth Arrow
Krugman's whole attack is directed at a statement made neither by Arthur nor by Cassidy. Krugman has not read Cassidy's piece with any care nor has he bothered to review what Arthur has in fact said. View quote
Kenneth Arrow
I don't know which way human psychology will go wrong. We have a world in which there is uncertainty. There are new technologies. And one of the problems is that we do things today with a thought to the future. Any purchase is one for the future. If you buy a refrigerator you are making a commitment to the future, so that you have food to eat for the next ten years. That's a simple theory, one of many simple theories -- theories that people agree on and that don't, in a fundamental way, change. But every once in a while there is unemployment, and wages will drop, and there will be several different interpretations. View quote
Kenneth Arrow
Evolutionary theory tends to explain quite well in retrospect how various species emerged. It's not very good on prediction. Nevertheless, one cannot say that there isn't a lot of knowledge that's been obtained in this field. In the same way, with these complex physical phenomena between solid state physics, you can say a lot of things without necessarily knowing the next step. View quote
Kenneth Arrow
Knowledge is a free good. The biggest cost in its transmission is not in the production or distribution of knowledge, but in its assimilation. This is something that all teachers know. (Kenneth Arrow)
Unsolved problems, that's one of the great signs of progress in my opinion. View quote
Kenneth Arrow
Now virtue may not always be its own reward, but in any case it is not usually bought and paid for at market rates. View quote
Kenneth Arrow
One thing I learned from meteorology is that being an actual science was no guarantee of exactness. View quote
Kenneth Arrow
Education is still, in spite of private education, a state matter. View quote
Kenneth Arrow