Theodore Bergtrom, Distinguished Fellow 2015
Theodore C. (Ted) Bergstrom’s career is noteworthy for the breadth, depth, and originality of his many contributions, and for the often breathtaking clarity with which he reconstructs his insights in the minds of his readers. Ted Bergstrom is a scholar’s scholar, and a teacher’s teacher.
Bergstrom’s originality is evident in his simple but powerful observation that if local public goods are also normal goods, then one can fairly assume the marginal rate of substitution of the median voter is also that of the person with the median income. Using median characteristics across localities, one can estimate the demand function for local public expenditures (1973 AER, 1983 Econometrica) and test its efficiency (1988 JPubE).
That externalities can be regulated with tradable pollution permits was Bergstrom’s original insight (1976 JPubE), an idea that has now become a reality. The efficiency of this depends on how preferences are aggregated, such as by majority voting. This led Bergstrom to also provide the first true characterization of conditions that are sufficient for majority voting to lead to Pareto efficient policy (1979, Scan.J.Econ). This question is made simpler still if the Pareto efficient allocations are independent of the allocation of wealth. Bergstrom shows that a necessary and sufficient condition for this is that preferences display a particularly extreme form of transferrable utility (Econometrica 1983). This discovery provided an important benchmark commonly used by theorists of Public Economics to this day.
In a tremendously influential paper, Bergstrom turns from publicly provided to privately provided public goods. On the Private Provision of Public Goods (1986 JPubE) showed in stark simplicity and elegance how the equilibrium in such economies is independent of the distribution of income and how this result is changed when non-contributors are considered. This work is credited for launching a vigorous and important new literature on private contributions.
Never far from Ted Bergstrom’s heart is the topic of benevolence. He has written on general equilibrium in the presence of “non-malevolent” consumers, systems of benevolent utility functions, the opportunity cost of virtue, and on cost-benefit analysis in a benevolent society. He taught us that individuals are better off subsidizing the virtue of others (1989 J. Econ. Pers.) and that efficiently providing public goods in the presence of benevolence is not a simple act of adding personal plus altruistic utility and weighing it against social cost (2006 AER).
Bergstrom’s expertise also extends to the economics of the family, the game theory of evolution, the economics of academic publishing, and the unique incentives of tissue donations. Bergstrom has taught us to think more rigorously about the Rotten Kid Theorem, developed an economic model of courtship, shown that evolution shapes ethical rules for siblings, explained how benevolent preferences can be sustained by natural selection, and published influential surveys on the family (e.g. 1996 JEL).
Ted Bergstrom holds the Cherie and Aaron Raznick Chair in Economics at the University of California, Santa Barbara. He earned his PhD from Stanford University in 1967, and is a Fellow of the Econometric Society.