William Vickrey Contributions to Public Policy

1 William Vickrey Contributions to Public Policy Bill Vickrey's cast of mind was that of a theorist. His interests, however, lay in public policy. This combination of traits-in addition to genius-resulted in his producing a magnificent body of research in applied economic theory, but at the same time in his having only limited success in the public policy arena. The apparent failure of his crusading, whether for congestion pricing, cumulative averaging in income taxation, a larger deficit, or full employment, was a source of real disappointment to him. He should have realized, however, that those traits which lead to good applied theorizing-abstracting from detail and focusing on only a few aspects of a policy issue-are not conducive to balanced policy advice. He should also have taken heart in the thought of Keynes' proverbial academic scribbler. While Vickrey's work has to date had only a modest impact on public policy, there is good reason to believe that in the fullness of time his ideas will percolate into public policy culture and have considerable influence, and that many of his policy proposals, appropriately modified to account for practical considerations, will be taken up. His seminal work on auction theory has already had a major impact on the allocation of drilling rights, timber rights and bandwidth; his work on marginal-cost pricing has been influential in the adoption of more sophisticated pricing policies by a wide range of public utilities and will become increasingly influential as cost-effective technologies to implement his proposals are developed; congestion pricing of urban auto travel is being actively debated in a host of jurisdictions, and crude forms of it have been introduced in some; his proposals for an income tax system with a more coherent treatment of progression should receive renewed attention when the pendulum swings back towards more compassionate public policy; and in time even his now-heretical views on macroeconomic policy may gain an audience in policy circles. This essay will not do justice to Vickrey's breadth of conceptualization, inventiveness, subtlety of thought, depth of intellect, and generosity of spirit. To appreciate these, there is no substitute for reading his papers. An excellent collection of them, along with a commented 2 bibliography, is presented in Public Economics: Selected Papers by William Vickrey. This essay will have done its job if it persuades the reader to peruse the book. Vickrey's style of economics was such that it is impossible …