The eighth edition of "Ten Nobels for the Future" continues with the successful approach introduced in 1998: in addition to the traditional December conference, devoted this year to the theme "The horizons of development", the calendar also includes visits by four Nobel Laureates who during the year take part in a series of meetings with different audiences, that culminate in a public conference.
The first speaker of the year 2000 is Kenneth J. Arrow, Nobel Laureate in Economics, 1972.

One of the most prominent economic theorists of the twentieth century, Arrow has made contributions to a wide range of areas, from rational expectations to collective choice; from the allocation of risk to the economics of uncertainty; from technological innovation to production and growth. He has also extended the domain of economic analysis to issues such as information, health and safety regulation, education, the environment, racial discrimination and arms control.
While highly varied, his work is nevertheless characterized by a deeply-rooted libertarianism and close attention to ethical issues. Hence his rejection of ideology, his emphasis on the need to link the efficiency of markets with distributive justice and the importance of individual and collective responsibility.

Information and the Role of Public Policy

Wednesday 1 March, 17.00
Centro Congressi Cariplo

In every society, the knowledge needed for social interaction and, in particular, economic interaction is widely dispersed. Each individual, even the most central, has only a small portion of that knowledge. An old metaphor for the economy is that of a computer, perhaps more precisely, a linked system of computers called today a distributed information processing system. This comparison is already to be found in the work of the great Italian economist, Vilfredo Pareto.

The dispersion of knowledge is usually and correctly used as an argument for the superiority of the market as a method of economic organization. This is particularly true when knowledge itself is evolving, so that the revelation of knowledge to a central authority is necessarily imperfect and will not be realized even after a period of time. The failures of the socialist economies exemplify the importance of decentralizing decision-making to the locus of information. But the failure of at least some of the economies in transition to capitalism show that the matters are not so simple. I review the economic literature on the departures from the conditions of perfect competition and for the welfare-improving role of the state with special emphasis on the availability of information.

I then conclude by illustrating some cases where the state or other central authority is apt to have a superiority in information gathering, essentially because information production typically displays increasing returns to scale.