A Journey into Harold Hotelling's Economics
Thomas Michael Mueller
Journal of Economic Literature (Forthcoming)
Harold Hotelling (1895–1973) was an important contributor to twentieth-century American economics, as evidenced by the many seminal results he left behind: the ‘Hotelling law,’ the ‘Hotelling rule,’ the ‘Hotelling lemma’ and so on. The overall thrust of his research and his way of conceiving mathematical economics, however, have so far received little attention. Based on a detailed examination of Hotelling’s work and several collections of unpublished archival material, this article provides a thorough analysis of Hotelling’s contribution to economics, including his academic career, his view of the role of mathematics in science, and his attachment to policymaking. The results are as follows. A self-taught economist in the 1920s, Hotelling built a research program that, despite apparently being highly technical, was primarily conceived as applied science to solve concrete social and economic issues. Mathematics was, for him, a toolbox to clarify the set of hypotheses behind any reasoning and to compare typical situations abstracted from observed facts. Hotelling’s economics was oriented by a Georgist agenda, which explains some of his favorite topics and helps to place his theoretical results in historical context. In the end, although his research was not exempt from criticism, Hotelling appears as an outstanding figure in the history of twentieth-century economics. When we recall that he trained the greatest, from Kenneth J. Arrow to William Vickrey, we have an even better understanding of the importance of his legacy in contemporary economic analysis.