Joseph Stiglitz

Joseph Stiglitz

Overview

Joseph E. Stiglitz is an influential American economist known for founding much of modern information economics. He received the 2001 Nobel Prize in Economic Sciences for his analyses of markets with asymmetric information and has held prominent academic and policy positions, including professor at Columbia University and chief economist of The Roosevelt Institute. His work spans information asymmetry, risk and risk aversion, monopolistic competition, the economics of research and development, and critiques of international financial institutions.

Early life and education

• Born in Gary, Indiana (1943).
• B.A., Amherst College (1964); Fulbright research fellow at the University of Cambridge.
• Ph.D., Massachusetts Institute of Technology (1967).
• Academic posts at Stanford, MIT, Princeton, and Columbia.

Career highlights

• Chair, President’s Council of Economic Advisers (under President Clinton).
• Chief Economist and Senior Vice President, World Bank (1997–2000).
• Chief Economist, The Roosevelt Institute.
• Played a leading role in founding the Institute for New Economic Thinking (INET) after the 2008 financial crisis.
• Chaired the U.N. Commission on Reforms of the International Monetary and Financial System (2009).

Key contributions

Information economics and information asymmetry

Stiglitz helped establish information economics, showing how unequal information among parties changes market outcomes and can lead to market failure. He developed the theory of screening—mechanisms by which the less-informed party induces the better-informed party to reveal private information. Screening is widely applied in insurance, lending, and labor markets.

Risk aversion and decision making under uncertainty

Stiglitz analyzed how individuals’ and firms’ attitudes toward risk affect saving, investment, and production decisions. His work clarifies how changes in risk and risk aversion influence portfolio choice, precautionary saving, and macroeconomic behavior.

Monopolistic competition and product diversity

In work with A. K. Dixit, Stiglitz formalized models of monopolistic competition in which many firms sell differentiated products. Their analysis links product variety, advertising, and market power to welfare and industry structure.

Economics of research & development

Stiglitz revived interest in the economics of R&D, emphasizing how the speed and incentives for innovation affect overall industry innovation and social welfare.

Policy critique and institutional reform

As World Bank chief economist, Stiglitz publicly challenged prevailing policy prescriptions—such as rapid capital liberalization and uniform “shock therapy” transitions—arguing for more nuanced, institution-sensitive approaches. He has advocated reform of global financial governance and the economics profession’s methods and assumptions.

Honors and roles

• Nobel Prize in Economic Sciences (2001).
• Shared Nobel Peace Prize as a contributing author through the Intergovernmental Panel on Climate Change (2007).
• John Bates Clark Medal (1979).
• Appointed to the Pontifical Academy of the Social Sciences.
• Named one of Time magazine’s “100 Most Influential People” (2011).
• President, International Economic Association (2011).
• Serves on boards such as the Acumen Fund and Resources for the Future.

Selected works

• Stiglitz, J. E., and M. Rothschild. “Increasing Risk: I. A Definition.” Journal of Economic Theory, 1970. (Risk aversion)
• Dixit, A. K., and J. E. Stiglitz. “Monopolistic Competition and Optimum Product Diversity.” American Economic Review, 1977. (Monopolistic competition)
• Measuring What Counts: The Global Movement for Well-Being (book).
• Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity (book).

Legacy

Stiglitz’s theoretical breakthroughs transformed understanding of real-world markets where information is imperfect. His blend of rigorous theory and active policy engagement has influenced academic research, regulatory design, development economics, and debates on globalization and financial reform.

Key takeaways

• Principal architect of information economics and the concept of screening.
• Major contributions to risk theory, monopolistic competition, and R&D economics.
• Prominent public intellectual who has shaped policy debates on global finance and institutional reform.