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KU's Vernon Smith becomes Nobel laureate
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Vernon Smith
Photo courtesy George Mason University
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Known as "the father of experimental economics,"
Vernon Smith, g'51, in October won a Nobel Prize; he is believed
to be the first KU alumnus to win the world-renowned honor.
Smith, a Wichita native, is a professor of law and economics
at the George Mason University campus in Arlington, Va. He
will share the $1 million prize with Daniel Kahneman, professor
of psychology at Princeton University.
Smith, who will travel to Stockholm in December to accept
the prize and deliver his Nobel lecture at the Royal Swedish
Academy of Sciences, said the prize came as a relief, because
"my friends have been predicting this for about 20 years,
and I was glad they were finally right."
In the days following the announcement, Smith interspersed
his daily routine with moments of celebration and numerous
requests from the press and academe. As he stepped off an
elevator on his way to lecture to Japanese patent attorneys,
he was greeted with a warm embrace of congratulations from
a graduate student who had taken Smith's class last spring.
Striding into the law class in jeans, running shoes and his
trademark ponytail, the 75-year-old Smith paused for a colleague's
casual introduction ( "Hey, everyone, this is Vern. He
just won the Nobel Prize. Tell 'em what you do, Vern")
before launching into an animated explanation of his 1956
experiments, which revolutionized the study of economics.
He conducted his early studies at Purdue University, where
he assembled 22 students —11 buyers and 11 sellers —for
an imaginary auction in which each participant knew only the
value of what he or she was trading. This controlled market,
which Smith described in a landmark paper in 1962, proved
that markets could be simulated-an avant-garde theory at the
time. "I didn't expect the experiment to work that well,"
he recalled. "But we showed that the ideal of a large
competitive market that relied on perfect information didn't
hold."
Smith's so-called wind-tunnel testing, singled out by the
Nobel committee, allows researchers to identify potential
flaws in market structure. He helped New Zealand privatize
its electricity industry in 1991, and did similar work in
the mid-1990s in Australia. In the United States, his public
policy positions have included a call for privatizing public
lands owned by the federal government.
Smith will donate his share of the Nobel prize to George
Mason's Interdisciplinary Center for Economic Science, where
he is a research scholar. He also is a fellow of the Mercatus
Center at George Mason. He moved to George Mason University
from the University of Arizona in 1997 with funding from the
Koch Foundation of Wichita.
In 1995, former KU chemistry professor F. Sherwood Rowland
received the Nobel Prize in chemistry. Rowland was an assistant
professor of chemistry from 1956 to 1964.
Links to information about Vernon Smith:
http://almaz.com/nobel/economics/2002b.html
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