He joins the University of California in Berkeley, first as an assistant professor and later on a tenure position. In his first year at Berkeley he writes “The market for lemons: Quality uncertainty and the market mechanism”, published in 1970, which has been cited for his Nobel Prize. But he credits his friend Tom Rothenberg with much of the work and inspiration.
Both brothers progress to Yale, where George studies liberal arts before turning to economics and mathematics. He receives his BA in 1962.
George Arthur Akerlof is born on June 17, 1940, in New Haven, Connecticut. He has an older brother. The family moves several times with his father’s changing work circumstances, living in Pittsburgh, Washington and Princeton.
George Akerlof shares the 2001 Nobel Prize in Economics with Michael Spence and Joseph Stieglitz „for their analyses of markets with asymmetric information“. Akerlof has shown that, if sellers have more information than buyers about product quality – like in the used car market – low-quality products may squeeze out high-quality products. He also showed how asymmetric information of borrowers and lenders may explain spiraling borrowing rates on local Third World markets.
Although not a Republican, he serves at the Council of Economic Advisers for the Nixon government.
Akerlof teaches as a professor at the London School of Economics.
He spends a year at the Federal Reserve Board in Washington, DC.
Akerlof returns to Berkeley in 1980, where he works on social problems in the employment market. When his wife is named to the Board of Governors of the Federal Reserve System in 1994, the family moves to Washington. When Janet becomes an Economic Adviser for President Clinton, Berkeley gives Akerlof full-time leave to look after the household and his son. The family returns to Berkeley in 1999. Akerlof continues working on macroeconomics and poverty and remains on the staff at Berkeley.
He takes leave from Berkeley to spend a year at the Indian Statistical Institute in New Delhi, working on a program to allocate the waters of a dam in northern Punjab. He also writes articles on Indian fiscal policy and the role of the caste system in unemployment.
He goes on to MIT, where he gains his PhD in economics in 1966.
During his time as an advisor for the government, he meets and marries his first wife Kay Leong. But they split when his failure to get promoted at Berkeley pushes him into a phase of monomaniacal focus on his work.
While in Washington, he meets and marries Janet Yellen. Their son Robert is born 1981.