Thomas Schelling: An unconventional economist

Thomas (Tom) Schelling was one of the best, and most unconventional, economists of his generation. Using simple arithmetic and more common sense than most economists are born with, he could turn problems upside down and inside out, and come up with novel solutions.

Tom liked to tell a story, over a nice glass of wine, about how he would find a friend in Washington DC if they were separated and had no way of easily finding each other. Essentially, he’d do a thought experiment about where the person might go if they were lost to meet with Tom, and then Tom would do the same thought experiment for himself. The end result might be that the two people could meet at a landmark they both knew, such as the post office. They might both go to that place because they knew it was a landmark that the other person might go to. This led to his important idea – focal points or ‘Schelling points’ – in game theory, on which Tom had a big impact.

Tom’s most influential book was The Strategy of Conflict in which he explored how situations which looked as if they would end in conflict could be reconsidered to produce an outcome in which people cooperated. A key area to which this insight was applied was nuclear warfare, where he argued that nuclear warfare was not a zero-sum game. As others have noted, he would use the analogy of a gunfight between two cowboys to argue that as long as one gunfighter knew that if he drew his gun first and fatally wounded his rival, the other fighter would still have enough time to draw his gun and fatally wound him, therefore neither fighter would draw his gun. This was the essence of the concept of ‘mutually assured destruction.’ Tom played an important role in the 1960’s in advising US Presidents on nuclear strategy.

At the end of the 1960’s Tom was one of the founders of the Harvard Kennedy School, which brought together scholars from different disciplinary backgrounds to tackle key policy challenges. In addition, Tom went on to make major contributions to thinking about racial segregation, traffic congestion, and climate change.

It was for his work on climate change that in 2010 we invited Tom to Manchester for a special conference on this subject in his honour. Tom had been involved in the issue of climate change since the early 80s through his membership on two National Academy of Science committees that produced important policy advice for key US decision-makers. In his insightful keynote address to the conference, Tom explained how global warming was a manageable problem from an economic point of view, but that sensible economics would not prevail any time soon. For example, we could not expect countries to adopt a simple carbon tax that was the same across nations, a standard economic policy recommendation. Tom believed that unconventional approaches, such as geoengineering, should be looked at more seriously. An example of geoengineering might be putting particles in the atmosphere to reduce warming.

Tom did not recommend limited testing of these strategies because he thought these approaches were desirable, but rather because if countries failed to get their acts together, these approaches could be necessary as a last resort. He believed strongly that we ought to better understand their risk and benefits by testing how they might work on a small scale. Tom also contributed greatly to the conference through his thoughtful comments on the presentations of other speakers.

As a wonderful friend and mentor to many economists (including ourselves), his presence will be greatly missed.

Featured image credit: Algebra analyse by Meditations. Public Domain via Pixabay.