Obituary: John F. Muth (1930-2005)
John F. Muth passed away this past Sunday in his Key West Florida home.
Born in Chicago in 1930, the younger brother of
Richard F. Muth studied industrial engineering as
an undergraduate at Washington University in
Saint Louis, where his family eventually settled.
John F. Muth did his graduate work at the GSIA at
the Carnegie Institute of Technology, now known
as Carnegie-Mellon University, where he received
a Ph.D. in mathematical economics in 1962. He
spent the 1957-58 academic year as a visiting
lecturer at the University of Chicago and the
1961-62 academic year at the Cowles Foundation at
Yale University. He was affiliated with Carnegie
as a research associate from 1956 until 1959, as
an assistant professor from 1959 until 1962, and
as an untenured associate professor from 1962
until 1964. Muth subsequently moved to Michigan
State University and was next employed by Indiana
University from 1969 until 1994. Since his
retirement in 1994, he had been dividing his time
between Bloomington, Indiana and the Florida
Keys, trying to avoid both the harsh Indiana
winters and the Florida hurricane season.
Muth has written three papers that develop the
rational expectations hypothesis (Muth 1960a,
1961, 1981a). Though Muth had little to do with
the macroeconomic interpretation of his
hypothesis, it could very well be the case that
he had never been a true believer in its
microeconomic validity. Instead, it has been
suggested that he may have meant the rational
expectations hypothesis to be an illustration of
the bounded rationality implicit in theories of
rationality and of the rationality implicit in
the bounded rationality approaches (Sent 2002).
Rather than following up on the inconsistencies
he had noted in theories of bounded rationality
and rationality approaches, Muth started digging
up discrepancies in elsewhere, which led him to
move progressively back towards some form of
bounded rationality. In the end, Muth's
hypothesis had enormous unintended consequences,
because others, including his colleague Lucas,
did take rational expectations seriously.
Muth's interests ranged from playing cello to
skiing, sailing, and flying airplanes, though he
had to give up the latter when he discovered that
he was afraid of heights. What made Muth such a
fascinating character is that he jumped onto
inconsistencies in theories long before others
recognized them. What made him such a puzzling
character is that he did not follow through on
his observations concerning these
inconsistencies. He was very critical of his own
work, but very unselfish and helpful in
supporting others. On the one hand, "[m]uch like
Bob Dylan's long-rumored mounds of unreleased
basement tapes, stacks of completed papers that
Muth had written but which he later judged not
worthy of a top journal are said to exist"
(Brannon 1999, 18). On the other hand, many
people have taken advantage of Muth over the
years, including researchers who have become
famous by developing his ideas. Finally, was
always somewhat of a devil's advocate.
SELECTED BIBLIOGRAPHY
Brannon, Ike. 1999. John Muth, Rational
Expectations, and the Nobel Prize. The Ryder
Magazine 02/1999:18.
Groff, Gene K., and John F. Muth, eds. 1969.
Operations Management: Selected Readings.
Homewood, Ill.: Irwin.
Groff, Gene K., and John F. Muth. 1972.
Operations Management: Analysis for Decisions.
Homewood, Ill.: Irwin.
Jacobs, F. Robert, and John F. Muth. 1988. Cycle
Times and Inventories for Finite Queue, Open Flow
Shops with Deterministic Service Times. In The
Economics of Inventory Management, edited by
Attila Chik�n and Michael C. Lovell. Amsterdam:
Elsevier.
Lucas, Robert E., and Thomas J. Sargent, eds.
1981. Rational Expectations and Econometric
Practice. Minneapolis: University of Minnesota
Press.
Muth, John F. 1954. A Note on Balanced Growth. Econometrica 22:493-495.
--. 1960a. Optimal Properties of Exponentially
Weighted Forecasts. Journal of the American
Statistical Association 55.290:299-306. Reprinted
in Robert E. Lucas and Thomas J. Sargent 1981.
--. 1960b. Rational Expectations and the Theory
of Price Movements (Abstract). Econometrica
28:704.
--. 1961. Rational Expectations and the Theory of
Price Movements. Econometrica 29.3:315-335.
Reprinted in Arnold Zellner 1968, David Cass and
Lionel W. McKenzie 1974, and Robert E. Lucas and
Thomas J. Sargent 1981.
--. 1963. The Effect of Uncertainty in Job Times
on Optimal Schedules. In John F. Muth and Gerald
L. Thompson 1963.
--. 1966. Forecasting Models: Their Development
and Implications for Decision-Making. Research
Toward the Development of Management Thought,
Academy of Management 26th Annual Meeting, San
Francisco, California, December 27-29,
1966:108-114.
--. 1981a. Estimation of Economic Relationships
Containing Latent Expectations Variables. In
Robert E. Lucas and Thomas J. Sargent 1981.
--. 1981b. An Equilibrium Choice Model of
Performance and Satisfaction, School of Business,
Indiana University, Discussion Paper #170,
February 27, 1981.
--. 1982. Experience as a Search Process.
Proceedings of the Midwest American Institute of
Decision Analysis Meeting, Milwaukee, April 7-9,
1982:72-74.
--. 1985. Properties of Some Short-Run Business
Forecasts. Eastern Economic Journal 11:200-210.
--. 1986. Search Theory and the Manufacturing
Progress Function. Management Science 32:948-962.
--. 1987. Discussion of Schips' Paper. In
Theoretical Empiricism, edited by Herman Wold.
New York: Paragon House.
--. 1989. A Stochastic Theory of the Generalized
Cobb-Douglas Production Function. In Cost
Analysis Applications of Economics and Operations
Research, edited by Thomas R. Gulledge, Jr. and
Lewis A. Litteral. New York: Springer-Verlag.
--. 1994. Does Economics Need Theories? In Philip A. Klein 1994a.
Muth, John F., and Gerald L. Thompson, eds. 1963.
Industrial Scheduling. Englewood Cliffs, N.J.:
Prentice-Hall.
Sent, Esther-Mirjam. 2002. How (Not) to Influence
People: The Contrary Tale of John F. Muth.
History of Political Economy 34:291-319.
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Esther-Mirjam Sent
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