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I'm a bit surprised that no one has commented on Sam
Bostaph's story concerning Buchanan's view of Allais's
Nobel prize- that Allais "...hadn't done anything in
twenty years." In fact, Allais published a great deal of
economic work in the years between 1968 and 1988. To
mention only the most important - a 700+ page work on
The General Theory of Surpluses in 1978 (see Allais's
account of this work in the New Palgrave's) - numerous
works on the quantity theory of money and on the rate
of interest from 1968 to 1985, and even much new work
on the expected utility hypothesis, the "Allais paradox"
etc. On the other hand, Allais's work, aside from his
"paradox," seems to have had remarkably little influence
on American economists. Buchanan would have been closer
to the truth had he said that the prize was awarded to a
man who might as well have done nothing in 20 years.
The lack of interest in Allais's work puzzles me. I
vividly remember Allais giving a seminar to a packed
house at the U. of Chicago on his theory of the demand
for money in the early 1960's. The talk had a lot us
puzzled, but the claims for its empirical power were
impressive and exciting. Milton Friedman, in his usual
pellucid fashion, explained Allais's theory in terms
more familar to most of the audience. Friedman seemed
sympathetic to the theory and didn't argue (that night)
with Allais's claims that his theory yielded better
predictions than the various Chicago quantity equations,
despite its requiring fewer estimated parameters. Yet
there was little follow-up that I know of and Friedman's
article on the quantity theory in the New Palgrave doesn't
even cite Allais's work. In his general theory of surpluses,
he claims to prove the three fundamental theorems of welfare
economics even if production sets exhibit increasing returns
to scale! These are very important claims made by a Nobel
prize winner, yet I know of no substatial American work
evaluating them. I'd be grateful if anyone could explain
this neglect or point me toward literature where Allais's work
is evaluated.
Finally, in contrast to Debreu, Allais is very much concerned
with the "real world." Not only has he worked on many
"mundane" practical problems, e.g., a book on pricing policy
for the state-owned coal mines, but in his Nobel lecture he
said that an economic model and the theory it represents must
be accepted or rejected on the basis of its correspondance
with empirical observations. Further, "When neither the
hypotheses nor the implications of a theory can be
confronted with the real world, that theory is devoid of
any scientfiic interest." He has been very critical of much
recent mathematical theorizing that seems unrelated to real
world phenomena.
Mike Lynch
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