Hoover Institution senior fellow Kevin M. Murphy today (September 20) was named one of 25 MacArthur Fellows for 2005 by the John D. and Catherine T. MacArthur Foundation.
Murphy also is the George J. Stigler Distinguished Service Professor at the University of Chicago’s Graduate School of Business.
Kevin Murphy is a wide-ranging economist with an aptitude for applying careful empirical analyses within rigorous theoretical frameworks to economic questions of immense social import. Early in his career, Murphy identified how trends in wage inequality reflect underlying changes in demand for labor. These studies not only considered such variables as work experience, education, race, and gender but also highlighted the importance of within-group wage variability in understanding labor economics.
Murphy also considered the phenomenon of addiction from an economic perspective. Contrary to widely held beliefs that addiction distorts economic judgment, Murphy and colleagues developed a model of "rational addiction," in which consumers anticipate the expected future consequences of their current actions; he developed empirical analyses supporting this model from data on cigarette consumption. Using his model in conjunction with a structural analysis of the industry, Murphy explained the counterintuitive observation of increasing profits for cigarette manufacturers despite decreasing demand for their products.
More recently, he has shown that, particularly for conditions such as heart disease and cancer, investment in basic health research and care results in orders of magnitude returns in economic value. In these areas, and many others, Murphy challenges preconceived notions and attacks seemingly intractable economic questions, placing them on a sound empirical and theoretical footing.
Kevin Murphy received an A.B. (1981) from the University of California, Los Angeles, and a Ph.D. (1986) from the University of Chicago. He is the author of numerous articles, appearing in such publications as the Journal of Law and Economics, Journal of Political Economy, and American Economic Review. He is also the coauthor of Social Economics: Market Behavior in a Social Environment (2000) and coeditor of Measuring the Gains from Medical Research: An Economic Approach (2003).
He also is the recipient of the John Bates Clark Medal from the American Economic Association, which is given once every two years to the outstanding American economist under the age of 40. He also received a Sloan Foundation Fellowship and an Earhart Foundation Fellowship.
MacArthur Fellows, who each receive $500,000 in “no strings attached” support over the next five years, are selected for their creativity, originality, and potential. By providing resources without stipulations or reporting requirements, the MacArthur Foundation offers the opportunity for fellows to accelerate their current activities or take their work in new directions. The unusual level of independence afforded to the fellows underscores the spirit of freedom intrinsic to creative endeavors, according to the foundation.
