Glenn Loury on Peter Diamond

Glenn Loury has kindly forwarded me a letter he wrote earlier this year in appreciation of Peter Diamond, one of the co-recipients of this year's Nobel Memorial Prize in Economics. The tribute was written for the occasion of Diamond's retirement, and seems worth publishing today:

April 20, 2010
Prof. James Poterba, Chair
Department of Economics
Massachusetts Institute of Technology

Dear Jim:

It is a pleasure to contribute a brief note of tribute to Peter Diamond, on this occasion of celebration for his work as scholar and teacher.

Peter was an inspiration and role model for me during my student years at MIT. My encounters with him -- in the classroom and in his office -- left an indelible impression. I recall going over to the Dewey Library shortly after arriving in Cambridge, in the summer of 1972, and digging out Peter's doctoral dissertation. This was a mistake! Peter's reputation as a powerful theorist had been noted by my undergraduate teachers at Northwestern. I wanted to see how this reputed superstar had gotten his start. Just how good could it be, I wondered? I had no idea! What I discovered was an elegant, profound and exquisitely argued axiomatic treatment of the general problem of representing consumption preferences over an infinite time horizon, extending results obtained by his undergraduate teacher and the future Nobel Laureate, Tjallings Koopmans.

I prided myself on being a budding mathematician in those years. Yet, Peter's effortless mastery in that dissertation of the relevant techniques from topology and functional analysis, and his successful application of those methods to a problem of fundamental importance in economic theory -- all accomplished by age 23, younger than I was at the moment I held his thesis binder in my hands! – was simply stunning. This set what seem to me then, and still seems so now, to be an unapproachable standard. I was depressed for weeks thereafter!

Even more depressing was what I discovered as I got to know Peter better over the course of my first two years in the program: that mathematical technique was not even his strongest suit! An unerring sense of what constitute the foundational theoretical questions in economic science, and a rare creative gift of being able to imagine just the right formal framework in the context of which such questions can be posed and answered with generality -- this, I came to understand, is what Peter Diamond was really good at.

And so, I learned from him in those years what turned out to be the most important lesson of my graduate educational experience -- that, in the doing of economic theory and relative to the behavioral significance of the issue under investigation, technique is always a matter of secondary importance -- neither necessary nor sufficient for the production of lasting insights. I learned this from the careful study of Peter's seminal contributions to growth theory, the theories of taxation and social insurance, the theories of choice under uncertainty and the allocation of risk-bearing, the theories of legal rules and institutions, and the theory of unemployment. I also learned this from Peter's elegant and comprehensive lectures on the work in these areas of himself and that of other scholars. And so I came -- slowly and fitfully, because I was rather attached to the joys of doing mathematics for its own sake -- to see the world the way that Peter Diamond saw it. And, in the process, I became a much better economist.

Peter graciously agreed to be the second reader on my dissertation, even though I was writing outside of his areas of specialization at the time, and my intellectual indebtedness to him only increased over the course of my last two years at MIT. It has by now become rather clear that I shall never be able to discharge that debt.

So, thanks Peter, for your extraordinary generosity as a teacher, and for your unmatched example as a scholar.

Glenn C. Loury
Merton P. Stoltz Professor of the Social Sciences
Professor of Economics and of Public Policy
Brown University

The following passage from the letter is worth repeating:

And so, I learned from him in those years what turned out to be the most important lesson of my graduate educational experience -- that, in the doing of economic theory and relative to the behavioral significance of the issue under investigation, technique is always a matter of secondary importance -- neither necessary nor sufficient for the production of lasting insights.

I have had very little time for blogging recently, thanks to two new courses, but if I can find the time I'd like to write a post on Diamond's classic 1982 paper on search, and the wonderful coconut parable he used in order to illuminate the theory.