A Century of Economics and Engineering at Stanford

Abstract

This paper documents the disciplinary exchanges between economists and engineers at Stanford throughout the 20th century. We elucidate how this cross-fertilization was mediated by the institutional structure of the university. We outline the role of key scholars such as Kenneth Arrow and Robert Wilson, as well as engineers turned administrators like Frederick Terman. We show that engineers largely drew upon successive economic theories of decision and allocation with a view to improving practical industrial management decisions. Reciprocally, economists found in engineering the tools they needed to rethink production and growth theory (from linear programming to optimal control theory, an epistemology of “application” that emphasized awareness to institutional details, trials and errors and experiments to improve the design of processes and machines, and all sorts of industrial settings to operationalize their theories of decision, strategic interaction and bargaining. By the 2000s, they had turned into economic engineers designing markets and other allocation mechanisms. These cross-disciplinary exchanges were mediated by Stanford’s own institutional culture, notably its use of joint appointments, the development of multidisciplinary “programs” for students, the ability to attract a variety of visitors every year, the entrepreneurial and contract-oriented vision of its administrators, and the close ties with the industrial milieu that came to be called the Silicon Valley.