Dr. Peter A. Diamond, Paul A. Samuelson Professor of Economics, has been named to receive the inaugural Erwin Plein Nemmers Prize in Economics from Northwestern University.
Professor Diamond, who will receive a $100,000 stipend, was cited for opening "new and exciting fields of research, setting both a standard and a direction for economists."
He will spend the spring quarter next year in residence at Northwestern as the Erwin Plein Nemmers Prize Visiting Professor of Economics.
The prize is named for the father of a former Northwestern faculty member and his brother whose bequests provided the funds.
Northwestern President Arnold R. Weber said the bequests stipulated that the economics prize and a companion prize in mathematics be awarded for "work of lasting significance" and "outstanding achievement in the discipline as demonstrated by major contributions to new knowledge or the development of significant new modes of analysis."
Professor Diamond's work, he said, "fits precisely" the criteria. "Few economists write an article that opens up a whole new field of analysis for other economists," he said. "Peter Diamond has done so not only once but three times in his career."
The first pathbreaking article, in 1965, showed how to analyze the effects of the public debt on the behavior of the economy in the long run. It has formed the basis for much of what has been written in the past decade about the growth of US public debt. The second article revolutionized the study of sales and property taxes, showing governments how they could raise the required amount of revenue while minimizing the harmful affects of the taxes on the functioning of the economy. The third opened up a new way of thinking about prosperity and recession, emphasizing how the actions of each producer "spill over," enlarging (or shrinking) the market for other goods.
Dr. Diamond also has "participated actively in policy discussions and debate, especially in the areas of Social Security and health policy, where individual choice and social insurance come together," President Weber said.
Robert M. Solow, Institute Professor and Nobel laureate in economics, was a member of the selection committee for the prize. "Diamond is famous among economists for getting things right the first time," he said.
Dr. Diamond was a founding member of the National Academy of Social Insurance. He is a member of the National Academy of Sciences and the American Academy of Arts and Sciences, and a fellow of the Econometric Society.
He has been a research associate of the National Bureau of Economic Research since 1991.
He is the author of A Search Equilibrium Approach to the Micro Foundations of Macroeconomics (MIT Press, 1984) and co-editor of Uncertainty in Economics: Readings and Exercises (Academic Press, 1978).
Professor Diamond received a BA in mathematics from Yale University in 1960 and the PhD in economics from MIT in 1963. He began his teaching career at the University of California at Berkeley and joined the MIT faculty in 1966. He was head of the Department of Economics in 1985-86.
A version of this article appeared in the May 11, 1994 issue of MIT Tech Talk (Volume 38, Number 32).