Francis Edgeworth
Francis Ysidro Edgeworth (8 February 1845 in Longford - 13 February 1926 in Oxford) was a British economist and statistician.
Trajectory
The son of an Irish father and a Spanish mother, he studied at Trinity College in Dublin and at Balliol College in Oxford, graduating in Literature and Humanities and later obtaining his doctorate in Right.
He was the first to apply a serious approach to the notion of individual decision in economics. He developed the theory of profit by introducing the indifference curve and the Edgeworth box, well known among microeconomics students. Editor of the Economic Journal since its creation in 1891 he was succeeded by John Maynard Keynes in 1926.
As a self-taught mathematician and statistician, he is remembered for the eponymous Edgeworth series. He was also a lawyer, holding the Tooke Chair in Economics at King's College London and later the Drummond Chair in Political Economy at Oxford. He is considered one of the forerunners of welfare economics.[citation needed ]
His most notable book on economics was Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences, published in 1881 at the beginning of his economics career. He frequently referenced literary sources and interspersed the writing with passages in various languages, including Latin, French, and ancient Greek. Mathematics was equally difficult, and several of his creative applications of mathematics to economic or moral questions were deemed incomprehensible.[citation needed] However, one of the most influential figures of the time, Alfred Marshall, commented in his review of Mathematical Psychics:
"This book shows clear signs of genius, and is a promise of great things to come... His readers can sometimes wish that he had kept his work a little longer until he had worked it out a little more completely. and obtained that simplicity that can only be obtained through long work. But taking it for what it claims to be, "a tentative study," we can only admire its brilliance, strength and originality."
Edgeworth's close friend, William Stanley Jevons, said:
"Whatever the readers of this book may think about it, they would probably all agree that it is very remarkable... There is no doubt that, in the style of his composition, Mr. Edgeworth It doesn't do justice to your issue. His style, if not obscure, is implied, so the reader has to decipher each important sentence like a riddle.& # 34;
He was awarded the Guy's Gold Medal by the Royal Statistical Society in 1907. Edgeworth served as President of the Royal Statistical Society, 1912–14. In 1928, Arthur Lyon Bowley published a book devoted to F. Y. Edgeworth's Contributions to Mathematical Statistics.
Contributions to the economy
In Mathematical Psychics (1881), his most famous and original book, he criticizes Jevons's barter theory, showing that under a system of "rehire" there will be, in fact, many solutions, an "contract indeterminacy". The "range of final settlements" Edgeworth's was later resurrected by Martin Shubik (1959) to be the game-theoretic concept of "the core".
Edgeworth's conjecture
When the number of agents in an economy increases, the degree of indeterminacy decreases. In the limiting case of an infinite number of agents (perfect competition), the contract becomes fully determined and identical to the "equilibrium" of the economists. The only way to resolve this indeterminacy of the contract would be to appeal to the utilitarian principle of maximizing the sum of the agents' utilities in the range of final agreements. By the way, it was in this 1881 book that Edgeworth introduced the generalized utility function, U(x,y,z,...), to economics and drew the first 'indifference curve' for it..
International trade
He was the first to use community supply curves and indifference curves to illustrate his main propositions, including the "optimum tariff".
Tax Paradox
Taxing a good can result in a decrease in price.
In this sense, he laid the utilitarian foundations for a highly progressive taxation, arguing that the optimal distribution of taxes should be such that "the marginal disutility incurred by each taxpayer should be the same" (Edgeworth, 1897).
Monopoly Pricing
In an 1897 article on monopolistic pricing, Edgeworth criticized Cournot's exact solution to the duopoly problem with quantity adjustments, as well as the "instantaneously competitive" de Bertrand in a duopoly model with price adjustment. At the same time, Edgeworth showed how price competition between two firms with capacity constraints and/or increasing marginal cost curves results in indeterminacy. This gave rise to the Bertrand-Edgeworth oligopoly model.
Marginal Productivity Theory
Edgeworth criticized the theory of marginal productivity in several articles (1904, 1911) and attempted to refine the neoclassical theory of distribution on a more solid basis. Although his articles on war finance issues during World War I were original, they were a bit too theoretical and did not achieve the practical influence he hoped for.
Edgeworth's Limit Theorem
Edgeworth's limit theorem relates to the equilibrium of supply and demand in a free market.
Although Edgeworth's economic ideas were original and profound, his contemporaries frequently complained about his lack of clarity. He was prone to verbiage and coining obscure words without providing a definition for the reader.