James Tobin
Candlefocus EditorTobin was born in Champaign, Illinois in 1918 and went on to earn a Ph.D. in economics from Harvard University in 1947. After graduation, Tobin was hired by Yale's Cowles Foundation for Research in Economics, where he worked for forty years, attaining prestigious positions such as Sterling Professor of Economics and, later, the Paul E. Gray Professor of Economics. In addition to his achievements as a professor, Tobin also served as a member of President John F. Kennedy's Council of Economic Advisers, where he was able to make meaningful policy changes that shaped the economy of the 1960s and beyond.
Throughout his career, Tobin developed several key theoretical principles, several of which are still used by economists today. The most notable of these is Portfolio Selection Theory, which allows investors to maximize the expected return of a portfolio while minimizing the risk involved. The mathematical principles of this model are still used by financial advisors and asset managers today.
Tobin also developed what is now known as the Tobin Tax, or Currency Transaction Tax. This is a tax on international currency transactions in order to discourage speculation and promote a stable currency market. In addition to working on policy, Tobin was renowned for his ability to explain economic concepts to non-experts, allowing his work to influence a much wider audience.
In recognition of his contributions to the field, Tobin was awarded the 1981 Nobel Prize in Economics. As was common for him, Tobin donated the cash prize from the award to fund research projects at Yale.
Tobin passed away in 2002 at the age of 84, having achieved an indisputable legacy in economic theory. Although he was a highly influential figure during his lifetime, his contributions are still being felt today in the ever-changing field of economics.