JosePH e.stIgLItz and BRUCe C. gReenwaLd
It was a real pleasure for us to deliver the First annual Kenneth J.
arrow Lecture at Columbia University—to honor our teacher, some-
one who has had a lifelong influence on our thinking, as he has had on
an entire generation of economists.
there is, in fact, a sense in which everyone in our generation was a
student of Kenneth arrow—even those who were not fortunate enough
to take his class. His ideas influenced us, as did his style of research
and his breadth of vision. He is a true model of a scientist. He could
provide the deﬁnitive proof of the Pareto optimality of the competi-
tive equilibrium (the ﬁrst fundamental theorem of welfare economics),
then go on to explain why the assumptions were wrong—and then go
on to develop models incorporating more realistic assumptions, over-
turning the earlier conclusions about the efﬁciency of the market.
Both arrow and Robert solow, another of our teachers that our lec-
ture honored, performed just those kinds of analytical feats in a series of
papers that inspired this volume. the ﬁrst was a paper that solow wrote
in1956, which showed that an increase in the savings rate wouldnot
lead to an increase in the long-run growth rate—that was determined