James Tobin (March 5, 1918 – March 11, 2002) was an American economist who served on the Council of Economic Advisers and consulted with the Board of Governors of the Federal Reserve System, and taught at Yale University. He contributed to the development of key ideas in the Keynesian economics of his generation and advocated government intervention in particular to stabilize output and avoid recessions. His academic work included pioneering contributions to the study of investment, monetary and fiscal policy and financial markets. He also proposed an econometric model for censored dependent variables, the well-known tobit model. Along with fellow neo-Keynesian economist James Meade in 1977, Tobin proposed nominal GDP targeting as a monetary policy rule in 1980. Tobin received the Nobel Memorial Prize in Economic Sciences in 1981 for "creative and extensive work on the analysis of financial markets and their relations to expenditure decisions, employment, production and prices." Outside academia, Tobin was widely known for his suggestion of a tax on foreign exchange transactions, now known as the "Tobin tax." This was designed to reduce speculation in the international currency markets, which he saw as dangerous and unproductive.
Life and career
Early life Tobin was born on March 5, 1918, in Champaign, Illinois. His father was Louis Michael Tobin (b. 1879), a journalist working at the University of Illinois Urbana–Champaign and was credited as the inventor of "Homecoming." His mother, Margaret Edgerton Tobin (b. 1893), was a social worker. Tobin attended the University Laboratory High School of Urbana, Illinois, a laboratory school on the university's campus. In 1935, he was admitted to Harvard College with a national scholarship. During his studies he first read Keynes' The General Theory of Employment, Interest and Money, published in 1936. Tobin graduated summa cum laude in 1939 with a thesis centered on a critical analysis of Keynes' mechanism for introducing equilibrium involuntary unemployment. His first published article, in 1941, was based on this senior thesis. Tobin earned his master degree at Harvard in 1940. In 1941, he worked for the Office of Price Administration and Civilian Supply and the War Production Board. In 1942 he enlisted in the US Navy, spending the war as an officer on destroyers including (among possibly others) the USS Kearny (DD-432). After the war he returned to Harvard, receiving his Ph.D. in 1947 with a thesis on the consumption function written under the supervision of Joseph Schumpeter. In 1947 Tobin was elected a Junior Fellow of Harvard's Society of Fellows, which allowed him the freedom and funding to spend the next three years studying and doing research.
Academic activity and consultancy In 1950 Tobin moved to Yale University, where he remained for the rest of his career. He joined the Cowles Foundation, which moved to Yale in 1955, also serving as its president between 1955–1961 and 1964–1965. His main research interest was to provide microfoundations to Keynesian economics, with a special focus on monetary economics. One of his frequent collaborators was his Yale colleague William Brainard. In 1957 Tobin was appointed Sterling Professor of Economics at Yale. Besides teaching and research, Tobin was also strongly involved in the public life, writing on current economic issues and serving as an economic expert and policy consultant. During 1961–62, he served as a member of John F. Kennedy's Council of Economic Advisers, under the chairman Walter Heller, then acted as a consultant between 1962 and 1968. Here, in close collaboration with Arthur Okun, Robert Solow and Kenneth Arrow, he helped design the Keynesian economic policy implemented by the Kennedy administration. Tobin also served for several terms as a member of the Board of Governors of Federal Reserve System Academic Consultants and as a consultant of the US Treasury Department. Tobin was awarded the John Bates Clark Medal in 1955 and, in 1981, the Nobel Memorial Prize in Economics. He was a fellow of several professional associations, holding the position of president of the American Economic Association in 1971. He was an elected member of the American Academy of Arts and Sciences, the American Philosophical Society, and the United States National Academy of Sciences. In 1972 Tobin, along with fellow Yale economics professor William Nordhaus, published Is Growth Obsolete?, an article that introduced the Measure of Economic Welfare as the first model for economic sustainability assessment, and economic sustainability measurement. In 1982–1983, Tobin was Ford Visiting Research Professor of economics at the University of California, Berkeley. In 1988 he formally retired from Yale, but continued to deliver some lectures as Professor Emeritus and continued to write. He died on March 11, 2002, in New Haven, Connecticut. Tobin was a trustee of Economists for Peace and Security.
Personal life James Tobin married Elizabeth Fay Ringo, a former M.I.T. student of Paul Samuelson, on September 14, 1946. They had four children.
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