Alchian was born in Fresno, California, into an Armenian family, on April 12, 1914. In his introduction to Alchian’s selected works (1977), economist Ronald Coase made reference to the discrimination that the Armenians of Fresno, and his colleague too, suffered in the first half of the past century. He wrote: “This discrimination, which does not now exist, was not the result, Armen Alchian believes, of any natural unfriendliness or unreasonableness on the part of the other inhabitants of Fresno but was due to the strangeness of the Armenians’ manners and customs, which, because they were unusual and not quickly altered, were not understood and tolerated initially.” Alchian would go to write a paper about discrimination and information based on his personal experience.
Alchian attended California State University, Fresno, for two years before transferring to Stanford University in 1934, where he earned both a B.A. (1936) and a Ph.D. in Economics (1944) with a dissertation on “The Effects of Changes in the General Wage Structure.” During the war, he served as a statistician with the Army Air Corps (1942-1946). He joined the Economic Department at the University of California at Los Angeles in 1946, where he spent the rest of his career, while he was affiliated with the Rand Corporation for many years. He published his first major article, “Uncertainty, Evolution and Economic Theory,” in 1950, and became a full professor in 1958.
Armen Alchian was known to his students and colleagues and others as the founder of the "UCLA tradition" in economics, which emphasizes that individual behavior is "rational" and that this has many unanticipated consequences. It recognizes that "rationality" is the outcome of evolution and learning, and emphasizes frictions such as uncertainty that act as brakes on the individual's ability to make decisions and coordinate with one another.
Alchian was also known as the author (with William Allen) of the first year undergraduate textbook Exchange and Production (original title, University Economics), which has appeared in numerous editions since 1964. This book, familiar to many generations of undergraduates and graduate students alike, is unique. It is much more literary and humorous than any other modern economics textbook that deals with complex issues for an undergraduate audience. Example: “Since the fiasco in the Garden of Eden, most of what we get is by sweat, strain, and anxiety.” It also welcomes controversy rather than shying away from it, in the process daring the reader to disagree.
Because of its literary quality and complexity, the textbook generally did not work with undergraduate or even M.B.A. classes. But its impact was out of all proportion to its sales. Many graduate students, particularly at UCLA, and at the University of Washington, where Alchian’s student Steven Cheung taught), learned their basic economics from this book. Some of the University of Washington students went on to write best-selling textbooks that made many of Alchian and Allen’s insights more understandable to an undergraduate audience. While Alchian played the role of selfish cynic in his class, some who studied under him had the feeling that he put so much care and work into his low-selling text—and into his students—because of his concern for humanity. His best known student is William F. Sharpe, who received the Nobel Memorial Prize in Economic Science in 1990 for his work on finance.
Alchian, a member of the Chicago school of economics, was the author of groundbreaking articles on information and uncertainty. He was a founder of the new institutional economics through his writings on property rights and transaction costs. His writings touched on issues of money, inflation, unemployment, and the theory of business investment. They were characterized by lucid exposition and a minimum of mathematic formalism.
Alchian was elected a Fellow of the American Academy of Arts and Sciences in 1978 and became a Distinguished Fellow of the American Economic Association in 1996. The Armen Alchian Chair in Economic Theory at UCLA was established in July 1997 with contributions from the UCLA Department of Economics, the Sarah Scaife Foundation and the Bradley Foundation.
Alchian, a member of the Chicago school of economics, was the author of groundbreaking articles on information and uncertainty. He was a founder of the new institutional economics through his writings on property rights and transaction costs. His writings touched on issues of money, inflation, unemployment, and the theory of business investment. They were characterized by lucid exposition and a minimum of mathematic formalism.
Alchian was elected a Fellow of the American Academy of Arts and Sciences in 1978 and became a Distinguished Fellow of the American Economic Association in 1996. The Armen Alchian Chair in Economic Theory at UCLA was established in July 1997 with contributions from the UCLA Department of Economics, the Sarah Scaife Foundation and the Bradley Foundation.
