Edmund S. Phelps' formative years at Yale

Though Edmund S. Phelps was accepted to several top PhD programs, he chose to attend Yale because he “gathered that Yale’s economics department had become hugely cosmopolitan and strikingly diverse in its views,” according to a memoir he published in 2023.

It also offered the best fellowship, thanks to its newest institution.

The Cowles Foundation had just moved to Yale from the University of Chicago in 1955 when Phelps began his PhD. Research assistant stipends, workshops, and access to research funds and resources were part of the lure.  

James Tobin, a future Nobel Laureate and the Cowles Foundation director at the time, wrote in 1963 that “the possibility of a Cowles affiliation has made it possible for the Department to recruit, in the face of stiff competition, a number of new Ph.D.'s whom the Department desired... Persons thus recruited, whom it is doubtful Yale would have attracted otherwise.” Tobin, who had advised Phelps’ PhD dissertation, pointed to the young economist as proof of his conviction.

After a year at RAND, Phelps was once again recruited by the Cowles Foundation. He was offered a joint research-teaching position, which Cowles offered to select scholars that allowed for a reduced teaching load and additional research funds.

“Nothing comparable was available,” Phelps wrote of the Cowles offer. “So, I went back east to try to restart my career as an economic theorist.”

Phelps’ time at Yale was a fruitful start to his career. In December 1960 he published his first Cowles Foundation Discussion Paper (CFDP), which he listed as his first published article in his CV for many years. It was the first of 17 CFDPs published in his 6 years at Cowles. He would also publish three journal articles in that time, including his famous “Golden Rule of Accumulation” paper.

A second paper published during Phelps’ time at Cowles was “The Accumulation of Risky Capital,” published first as a CFDP in February 1961 and then in the journal Econometrica in 1962 and included in a Cowles Foundation Monograph, Risk Aversion and Portfolio Choice, in 1967.

It was also in his first year that John F. Kennedy was elected president, tapping Tobin for his Council of Economic Advisers. Phelps wrote that “it was during my time at Cowles that I would feel closer to the world that my colleagues and I would be addressing in our work.”

Tjalling Koopmans, another Cowles director and future Nobel Laureate, was impressed with Phelps’ research. In a letter to Tobin in March of 1962, Koopmans suggests featuring and funding Phelps’ and Tobin’s work on economic growth in a major grant proposal to the NSF.

Unfortunately, in 1965, Phelps was informed that he had not received tenure at Yale. His original position with the Cowles Foundation had been a six-year commitment, so he left for the University of Pennsylvania in 1966.

Just a year later, Phelps’ book on the golden rule of accumulation was published. Koopmans sent a letter to Alfred Cowles about Phelps’ book, writing that it was “as much a product of Cowles Foundation research as the work that goes into our monographs…We are proud of the product.”

The Cowles Foundation remained proud of its alumnus, citing him as an example of the excellent training that junior faculty received at the Foundation. In 1977, for example, William Brainard wrote that “the list of major figures in the economics profession who have spent part of their formative years at Cowles is impressive and includes the following: Arrow, Cass, Christ, Debreu, Hurwicz, Klein, Malinvaud, Modigliani, Phelps, Radner, Simon and Watts.”

In 2006, Phelps joined his mentors as a recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Years later, in 2014, Edmund Phelps returned to New Haven to accept Yale’s Wilbur Cross Medal for Alumni Achievement. The peer-nominated award is the highest honor for Yale’s PhD alumni.

“I had many interactions with Arthur Okun and some contact with Gérard Debreu and Jacob Marschak—all in Yale’s Cowles Foundation for Research in Economics,” he wrote. “In my view, Yale’s department had the most impressive roster of economists since the so-called Cambridge Circus.”

See Edmund Phelps’ Cowles Foundation Discussion Papers

Quotes in this article are compiled from Cowles Foundation archive materials and My Journeys in Economic Theory by Edmund Phelps, Copyright 2023 Columbia University Press.