The politicians who invited George Stigler (1911-1993) to a White House dinner after he was awarded a Nobel Prize in 1982 were dismayed when Stigler, during a press conference, described the economy as in a depression. His friends were not surprised. Stigler's record of advocating laissez-faire policies is matched by a reputation for being a straight shooter who calls them as he sees them.
The University of Chicago's "school" of economic thought has been known for its opposition to activist government policies throughout this century. Tall and lanky George Stigler shared stewardship over this tradition with his short, fellow Nobel Prize--winning friend, Milton Friedman, for almost half a century. Friedman is best known for his work in macroeconomics and monetary theory, while Stigler has been a pioneer in the study of modern microeconomics.
Stigler's research has been testimony to the notion that genius often consists of an ability to see old ideas in new ways. He received his Ph.D. in 1938 from the University of Chicago and spent most of his career there, with occasional side tours to Minnesota, Columbia, and the London School of Economics. He has extended the frontiers of economic study in many areas, including industrial organization, the economics of information, and the sources and effects of government regulation. A hallmark of his work has been rigorous hypothesis testing to ascertain which economic theories seem supported by real-world data.
Stigler fundamentally disagrees with those who view the market system as inherently defective because few markets conform to the assumptions of pure or perfect competition. Stigler has found that industries characterized by monopolistic competition or oligopoly act much more competitively with respect to price, than most models of imperfect competition predict. In particular, he rejects the sticky prices assumed in the kinked demand curve model. Empirical work that found no relationship between price "stickiness" and market structure led him to urge the abandonment of kinked demand models.
Stigler was among the first to consider information as an economic good that consumers and firms alike pursue until its marginal benefits and marginal costs are equal. Stigler's seminal 1961 article fueled an explosion of research effort that helped launch the economics of information as a major subdiscipline of economics. He was also the first major modern economist to perceive that regulation is often instigated by the regulated. His extended studies of antitrust policies and regulation have made him extremely skeptical that much government economic activity is in the public interest.
Another focus of his interest has been the sociology of economics as a field of study. His essays on the development of economic theory and methodology are a staple of economists' reading lists. When Stigler challenged his grandson to name Adam Smith's best friend, the youngster is said to have responded, "You, Grandpa." (Most likely correct answer: David Hume.) Nevertheless, the boy's answer accurately reflected George Stigler's lasting enthusiasm for the ideas of the eighteenth-century Scottish moral philosopher and economist.