Tuesday, April 22, 2008

Hirofumi Uzawa

Revised 9/26/2014

Hirofumi Uzawa is one of the few Japanese worldly economists, professor emeritus of Tokyo University. He originally majored in mathematics at Tokyo University, and obtained a doctorate in Mathematics.

After he became an assistant professor of the University of California, Berkeley and professor of the University of Chicago, and then professor of the Department of Economics at Tokyo University in 1969.

Uzawa initiated the field of neoclassical economic growth and general equilibrium models, though he inclined toward strictly mathematical area of economics.

Many professional economists residing in Japan can be said to have been influenced by him. I met him and Joseph Stiglitz at Doshisha University in 2003. There he talked about social common capital, which was recently of great interest to Prof Uzawa.

However, in Japan he is well known as a ruthless critic of the modern market-oriented (Lucas-Sargent-Barro type) macroeconomics. It seems to me a little strange because he had worked for modern neoclassical economics.

In the 1970s and 1980s he commenced criticizing Chicago economists, Milton Friedman, Robert E. Lucas and Gary S. Becker, for their market-oriented theories. Many of his critics were written in Japanese language and thus may not be known about outside of Japan.

One of his critics is, Rational Expectations Hypothesis (REH), which is now based on modern standard macroeconomic theory, is so unrealistic and unreasonable: people are not rational enough to forecast precisely the states of the future economy. In addition, people don't maximize their utility as the theory predicts when they consume goods and services. The economics based on REH is rather very harmful to policy decision and making in practice.

To be fair, his view on modern economics seems to lean toward political critique of neo liberalism spread all over the US and the world since the 1980s, of which the ideology is free market mechanism, privatization, deregulation, tax cut, cut in deficit government spending, and small public governance.

It can be true that modern economic growth theory has made progress partly due to his effort, but (or therefore) there are actually some economists in Japan who point out that economic research conducted in Japan became behind the time thanks to the influence of Prof Uzawa.

His academic impact on economics research in Japan was so great that many students of economics followed his critics; Modern economics based on REH had not been taught well since ever in economics departments in Japan. There are still many economists claiming that the Ramsey-Cass-Koopmans representative-agent dynasty model is a fucking crazy economics.

On September 26, 2014, Prof Uzawa passed away. He was 86. I recalled that I learned his name at Prof. Drewianka's econ 801, the Hurwics-Uzawa demand theorem and at growth text, the Uzawa-Lucas human-capital model. He blamed Milton Friedman, his ex Chicago colleague, for his market-oriented economics, but only in this point do I disagree with Prof Uzawa. It sounds to me his jealousy to him, but it's OK. There is no doubt in his greatness as an economist. Rest in Peace.

2 comments:

TGT said...

hi...
by the way, what do you think of "Behavioral economics" ?

Taro said...

Hi,tgt-san,

Good question, thank you so much!

Recently I have written some posts closely related to "behavioral economics", obesity.

Prob on obesity is not only microeconomics, but also macroeconomics that I would like to care most.

Obesity is not good for our health in our whole life, but many people choose to get fat, that is, a Pareto-inferior outcome, as a result. Why not? That's the question.

I will try to talk about smoking and that topic is also related to it.

However, I have to say that I don't know a lot about this area, but let me try to write what I am thinking about the idea on "behavioral economics".