Vickrey, William Spencer (1914-1996), an American economist, shared the 1996 Nobel Prize in economic sciences with James Alexander Mirrlees of the United Kingdom for their work on how economic decisions are made when there is limited information, especially when it applies to one or more parties to a market transaction or between government and citizens. Vickrey’s focus on incomplete or asymmetric information led to his recommendations for better income tax systems, auction pricing, and public pricing of utilities, for example.
Vickrey’s research career included work on the pricing of public utilities, such as electric power and public transportation. In the 1950’s, he published a famous study of the New York subway fare system. He believed in congestion pricing for public utilities. This means that consumers pay more at peak periods, which encourages them to use the system at off-peak times and so helps to spread usage more evenly throughout the day. After the end of World War II in 1945, he helped to create an improved tax system for Japan. In the 1960’s, he developed a theory of auctions. In this system, the bids are sealed and the person who bids the highest price pays only the price of the second-highest bidder. This method produces a more accurate valuation of the project or object being auctioned and has become known as the Vickrey auction.
Vickrey was born on June 21, 1914, in Victoria, British Columbia. His father was a United States citizen, and his mother was Canadian. Vickrey grew up in New York City and its suburbs. He earned his doctorate in economics from Columbia University in New York City. His book Agenda for Progressive Taxation, published in 1947, was reprinted as a classic economics text in 1972. In the book, Vickrey argued that income tax should be based on long-term earnings rather than on annual income. During World War II, Vickrey was a conscientious objector. He spent the war working on a new inheritance tax for Puerto Rico. He taught economics at Columbia from 1946 until his retirement in 1982. In 1971, he was named McVickar professor of political economy at Columbia. Vickrey died on Oct. 11, 1996.
