Jacques H. Drèze (5 August 1929 – 25 September 2022) was a Belgian economist noted for his contributions to economic theory, econometrics, and economic policy as well as for his leadership in the economics profession. Drèze was the first president of the European Economic Association in 1986 and was the president of the Econometric Society in 1970. Jacques Drèze was also the father of five sons. One son is the economist, Jean Drèze, who is known for his work on poverty and hunger in India (some of which has been in collaboration with Amartya K. Sen); another son, Xavier Drèze, was a professor of marketing at UCLA.
Contributions to economics Drèze's contributions to economics combine policy relevance and mathematical techniques.
Indeed, models basically play the same role in economics as in fashion: they provide an articulated frame on which to show off your material to advantage ... ; a useful role, but fraught with the dangers that the designer may get carried away by his personal inclination for the model, while the customers may forget that the model is more streamlined than reality.
Economics of uncertainty and insurance Between games of strategy and games against nature, there remains a middle ground where uncertainties are partially controllable by the decision-maker—situations labelled "games of strength and skill" by von Neumann and Morgenstern, or "moral hazard" in subsequent work. Such problems of moral hazard have been discussed by Jacques Drèze in his dissertation, leading to the 1961 paper (8), whose analysis was generalized in 1987 (76), and simplified in 2004 (123). Drèze's theory allows for preferences depending on the state of the environment. Rational behaviour is again characterised by subjective expected utility maximisation, where the utility is state-dependent, and the maximisation encompasses the choice of an optimal subjective probability from an underlying feasible set. With reference to state-dependent preferences and moral hazard, a natural application of long-standing interest to economists concerns the provision of safety, for instance through road investments that are aimed at saving lives. In this area, Jacques Drèze introduced in 1962 (12) the "willingness-to-pay" approach, which is now widely adopted. That approach rests on individual preferences aggregated as per the theory of public goods. The willingness to pay approach thus fits squarely in economic theory. The work of Jacques Drèze on the economics of uncertainty through the mid-eighties is collected in his volume Essays on Economic Decisions under Uncertainty (B2), published in 1987. The book is organised in seven parts, covering successively decision theory, market allocation, consumption, production, the firm under incomplete markets, labor and public decisions. Under market allocation comes an important paper (21) on the interpretation and properties of the general equilibrium model pioneered in Arrow (1953). The more significant piece in the next part is a classic paper with Franco Modigliani on savings and portfolio choice under uncertainty (28). There follow three papers on industry equilibrium (17, 42, 62). In 1975 Drèze contributed "the first general equilibrium analysis of quantity rationing necessitated by prices failing to adjust to equate supply and demand", which "have introduced significant elements of realism to the basic model, . . . given insight, and . . . have had a major impact on subsequent work. For example, the fix-price approach to Keynesian macroeconomics . . . grows largely out of the Drèze paper." In the early seventies, motivated by the potential role of price rigidities for enhancing risk-sharing efficiency, Jacques Drèze undertook to define equilibria with price rigidities and quantity constraints and to study their properties in a general equilibrium context. His 1975 paper (36, circulated in 1971) introduces the so-called "Drèze equilibrium" at which supply (resp. demand) is constrained only when prices are downward (resp. upward) rigid, whereas a preselected commodity (e.g. money) is never rationed. Existence is proved for arbitrary bounds on prices, through an original approach repeatedly used ever since. That paper is a widely cited classic. It was followed by several others (51, 55, 63, 75), exploring the properties of the new concept. Of particular significance to future developments is a joint paper with Pierre Dehez (55), which establishes the existence of Drèze equilibria with no rationing of the demand side. These are called "supply-constrained equilibria". They correspond to the empirically relevant macroeconomic situations.
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