Posted on Saturday, March 30, 2013 at 8:08 pm


March 3, 2013
Originally posted at

Remembering Armen Alchian

by Kam-Ming Wan

(Kam-Ming Wan is an Assistant Professor of Finance at the School of Accounting and Finance of the Hong Kong Polytechnic University. Prior to joining PolyU, he held a faculty position at the School of Economics and Finance of the University of Hong Kong and the School of Management of the University of Texas at Dallas. He received his Ph.D. from the Department of Economics at the University of California at Los Angeles in 1999.)



The Economics profession has lost a giant today. Professor Armen Alchian passed away peacefully in his sleep at his home in Los Angeles on February 19, 2013. He was 98 years old.

Armen Alchian was influential in many areas of economics including Law and Economics, Industrial Organization, and Macroeconomics. He dedicated his entire academic life and service to the Department of Economics at UCLA, starting in 1946. Like Ronald Coase (Nobel laureate in Economics in 1991), Armen Alchian was not a prolific writer. His articles, however, were both deeply insightful and highly influential. For example, his article on “Uncertainty, Evolution, and Economic Theory” is still widely cited today – more than 60 years after its original publication in 1950. Similarly, his paper (coauthored with Harold Demsetz) on “Production, Information Costs, and Economic Organization” was selected as one of the top 20 articles in the past century published in the American Economic Review, a leading journal for the profession.

His contributions in Economics have been extensively written about and deeply appreciated among first-rate economists. For example, James Buchanan (Nobel laureate in Economics in 1986) regarded Armen Alchian as the best blackboard economist that he has ever known; Kenneth Arrow (Nobel laureate in Economics in 1972) and Oliver Williamson (Nobel laureate in Economics in 2009) consider Alchian an icon in the profession; and Ronald Coase (Nobel laureate in Economics in 1991) regards him as the best modern economist to use the most fundamental economic forces to explain a wide variety of apparently completely different problems. For a more detailed description of his contributions in Economics, please visit the memoriam page of UCLA Department of Economics at

Although his work was highly influential and many people in the profession believe that he deserved to win the Nobel Prize in Economics, this recognition never came to him. Frederick Hayek (Nobel laureate in Economics in 1974) once claimed that “There are two economists who deserve the Nobel prize because their work is important but won’t get it because they didn’t do a lot of work: Ronald Coase and Armen Alchian”. Ironically, Frederick Hayek was half wrong as Ronald Coase won the Nobel Prize in Economics in 1991.

Nevertheless, his influences on teaching and learning, albeit important, were less extensively discussed. This article attempts to fill this void. For nearly half a century, Professor Alchian’s influence was felt strongly among students at UCLA. In fact, he was a legend to generations of graduate students there. Armen Alchian trained an “army” of highly successful students including academic scholars in top universities around the globe, judges, and policymakers. One of his best known students is William F. Sharpe, who received the Nobel Prize in Economics in 1990 for his work on finance. William Sharpe describes Professor Alchian’s teaching as follows: “Armen Alchian was my role model at UCLA. He taught his students to question everything; to always begin an analysis with first principles; to concentrate on essential elements and abstract from secondary ones; and to play devil’s advocate with one’s own ideas.”

To Armen Alchian, learning was never unidirectional but a two-way process in which teachers and students learn from each other. More importantly, he always put learning first. His motto was: “what students learn and learn well is what counts and not what you (the teacher) explain to them about what you know”. Therefore, Professor Alchian rarely “explained” any economic concepts in the classroom. Instead, he used a Socratic approach to let students actively participate in the discussion and learn from each other.

This teaching approach has two advantages. First, it stimulates students’ thinking and fosters creativity. Professor Alchian prepared mysterious questions (or riddles) and challenged students to explain them. For example, when he taught the concept of price discrimination, he did not start with an outright definition. Instead, he asked students why automakers in Korea were selling their cars in the U.S. at a lower price than in Korea despite transportation costs. This method encouraged students to learn the underlying economic principles and know how to apply them in a real world setting. It also forced students to explore other possible ways to explain the same phenomenon. This sort of creative thinking is essential in economics because in the real world facts can often be consistent with more than one underlying theory.

Second, this teaching approach provides opportunities for students to have their misconceptions corrected. Many students who have prior training in Economics believe that they understand Economics. However, when you ask them seemingly basic concepts, they often stumble. For example, what is opportunity cost? If you play tennis and suffer from a sore elbow afterward, does the cost of playing tennis include the resulting sore elbow? What is the law of demand? Investors sometimes employ momentum trading strategy and buy stocks when prices are on the rise. Is this behavior a violation of the first law of demand? Alternatively, can the demand curve be upward sloping?

Professor Alchian emphasized the importance of expressing your ideas to others. In the classroom, he would ask students to explain passages or examples in the textbook. His philosophy was “if you cannot express it clearly, you don’t know it”. For those who were brave enough to try, he would reward students with extra credits (a better grade) for not just learning the concepts but also demonstrating the ability to articulate them correctly. To him, learning began in the classroom, but it did not stop there. Indeed, Professor Alchian would occasionally call up employers of his former students to inquire if his students had expressed certain concepts (that they learnt in the classroom) to their bosses.

His teaching style was similar to that of his writing. Professor Alchian included only the most essential concepts or materials in his class and always abstracted from the tangential ones. It is with great sadness that Economics has lost a Master today. Armen Alchian has left a rich legacy as an economist and a teacher. Not only did he develop many beautiful yet basic economic concepts, he enriched many lives. He will be sorely missed.



世界經濟學界痛失一位巨匠。 2013 年2月19日,阿爾欽(Armen Alchian)教授【附圖】在洛杉磯家中於睡夢中安然離世,享年98 歲。

眾所周知,阿爾欽教授在涉及產權經濟學、產業組織及宏觀經濟學等眾多經濟領域極富影響力;自1946 年,他將畢生精力奉獻給加州大學洛杉磯分校(UCLA)的教學研究工作。正如Ronald Coase(1991 年諾貝爾經濟學獲獎者)一樣,阿爾欽不是一位多產作家;然而,他的著作充滿洞察力,並對經濟學界產生重大影響,他於上世紀50 年代發表的著名論文《不確定性、演化與經濟理論》在今天仍被廣泛引用;此外,他與Harold Demsetz 共同寫就的《生產、資訊費用和經濟組織》,被世界經濟學頂級期刊《美國經濟評論》選為「100年來最具影響力的20篇論文」。


阿爾欽對經濟學的貢獻被眾多世界一流的經濟學家廣泛傳頌。James Buchanan (1986 年諾貝爾經濟學獲獎者)認為,阿爾欽是他所結識的最出色理論型經濟學家,Kenneth Arrow(1972 年諾貝爾經濟學獲獎者)與Oliver Williamson(2009 年諾貝爾經濟學獲獎者)視阿爾欽為學界的一個標誌;Ronald Coase 稱頌阿爾欽是最出色的現代經濟學家。阿爾欽擅長以最基本的經濟學理論解釋眾多領域的問題。如欲瞭解更多阿爾欽在經濟學領域的貢獻,可瀏覽UCLA 紀念主頁( )。

儘管阿爾欽在學界影響深遠,並且很多學者 認為他有實力獲得諾貝爾獎,但是他最終沒能獲得這一殊榮。Frederick Hayek(1974 年諾貝爾經濟學獲獎者)曾表示, 「我認為有兩位經濟學家,憑藉他們的傑出工作,理應獲得諾貝爾獎,但是由於他們的實際工作量較小而沒有得獎,他們是Ronald Coase(按其後在1991獲獎)與阿爾欽。」阿爾欽儘管對學術教育影響深遠,卻很少被人提及,希望本文能盡力填補這一空白。

近半個世 紀,阿爾欽在 UCLA 的學生中極具影響力。事實上,對於一代又一代UCLA 學生來說,他是一個傳奇。阿爾欽培養了一批頗有建樹的學生,包括眾多世界著名大學的頂級學者、法官及政策機構的高級官員,其中一個是William F. Sharpe ─在1990 年,他被授予諾貝爾經濟學獎,以表彰其在金融經濟學方面的傑出貢獻。William Sharpe 這樣評論阿爾欽的教學: 「阿爾欽是我在UCLA 時的榜樣。他教導學生學會質疑,從基礎理論入手進行分析,關注要素並去繁就簡,勇於挑戰 自己的固有想法。」

對於阿爾欽,學習從來都不是單向的知識傳授,它是一個雙向過程,教師與學生互相學習;更重要的是,在教學中,阿爾欽始終把學習放在首 位,他的座右銘就是「重要的是學生學到了什麼,而不是你(教師)傳授了多少知識」;因此,阿爾欽在課堂上很少直接介紹經濟學概念。他用類似於蘇格拉底的教 學方式來啟發學生,鼓勵他們積極參與討論並互相學習。


這種教學方式有兩方面優點。首先,它 鼓勵學生思考並培養學生的創造力。阿爾欽準備了許多玄妙的問題(或謎題),並要求學生們解答。例如,當講解價格歧視理論(price discrimination)時,阿爾欽不會直接提出定義,反之,他會詢問學生: 「儘管需要承擔高昂的運輸費用,為什麼韓國汽車製造商仍然會以低於本國市場的價格在美國銷售其汽車?」這種教學方式鼓勵學生掌握現象背後的經濟理論,並知 道如何在實際生活中應用。它也促使學生努力探索社會現象的其他可能解釋。這一點非常重要,因為現實中同一個現象可以從很多角度去詮釋。

第二點,阿爾欽的教學方式讓學生有機會糾正自己的誤解。許多曾經學習過經濟學的學生認為,他們已掌握這一學科;然而,他們有可能被一些看似基礎的概念絆倒,例 如,什麼是機會成本?如果你打網球之後感到手臂酸痛,打網球這一行為的機會成本包括手臂酸痛這一結果嗎?什麼是需求定律?根據動量交易策略,投資者購買價 格上漲的股票,此現象違反需求定律嗎?或者,需求曲線有可能顯示為向上傾斜嗎?

阿爾欽強調向他人表達自我觀點的重要性。在課堂上,他會要求學生解釋書本上的段落或事例。他的理念是, 「如果你不能清楚地表達某件事,說明你還沒有真正理解它」。對於那些勇於嘗試的學生,他以學分(或更好的成績)來獎勵他們不斷學習,以及能準確表達自己觀點的能力。






[The author is very grateful to Mike Akemann, Arline Alchian Hoel, (Ginger) Zhe Jin, Shijun Liu, Fred Luk, Philip Tzang for their insightful comments.  Thanks also to Xinran Li and Y.K. Fu for their translation and editorial services.  The Chinese version of this article was published in the Hong Kong Economic Journal (信報) on 2/27/2013]

Below include other articles on remembering Armen Alchian (update frequently):

  1. UCLA Dept. of Economics (including Harold Demsetz, David Levine, and John Riley):
  2. Stanford University Dept. of Economics:
  3. Los Angeles Times:
  4. David Henderson (Hoover Institute, Stanford University):
  5. Tom Hubbard (Kellog School of Management, Northwestern University):
  6. Robert Higgs (Senior Fellow, the Independent Institute):
  7. Daniel Benjamin (Senior Fellow, Property and Environment Research Center):
  8. Peter J. Boettke (George Mason University):
  9. David Glasner (Economist, Federal Trade Commission):
  10. Charles Rowley (President and General Director, The Locke Institute):

In Chinese:

  1. Steven N.S. Cheung ( 张五常):

In Audio:

  1. Don Boudreaux (Cato Institute):


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