Holbrook Working

Holbrook Working (1895 – October 5 1985), a professor of economics and statistics at Stanford University’s FoodResearch Institute, is known for his contributions on hedging, the theory of futures prices – which anticipated the efficient market hypothesis, an early theory of market maker behavior, [ [http://business.kent.edu/erf/Papers/1954/s54-09.pdf Price Effects of Scalping and Daytrading] Proceedings of the Symposium on Futures Markets and the Public Interest, Chicago, 1954, accessed 4/24/07.] and the theory of storage (including the "Working curve" which plots the difference between short term and long term grain futures prices against current inventory). [ [http://cepa.newschool.edu/het/profiles/working.htm The Working Brothers] History of Economic Thought, accessed 4/24/07]

He disagreed with Keynes’s backwardation theory of futures prices, which argued that short hedgers (farmers) drive down futures prices because of their demand for "price insurance". Working argued that there could be hedgers on both sides of the market and that hedging was essentially not a risk reduction technique, but "speculation in the basis" which allows informed traders and commodity dealers to profit from their knowledge of future changes in the difference between futures and spot prices.

A native of Fort Collins, Colorado, Working received his Ph.D. in AgriculturalEconomics from the University of Wisconsin-Madison in 1921. Before joining the Food Research Institute in 1925, he taught at Cornell University and the University of Minnesota. His younger brother Elmer Working made a major contribution on the identification problem for demand curves in econometrics, which Holbrook Working was also involved with.

He was a founding member of the Econometric Society and was elected a Fellow of the American Agricultural Economics Association, the American Statistical Association, and the American Association for the Advancement of Science. [ [http://histsoc.stanford.edu/pdfmem/WorkingH.pdf Stanford Historical Society] accessed 4/24/07.] In 1981 he was awarded the Wilks Memorial Award by the American Statistical Association.

Notable papers

*"The Statistical Determination of Demand Curves", 1925, Quarterly Journal of Economics
*"Review of Mitchell", 1928, Journal of the American Statistical Association
*"A Random Difference Series for Use in the Analysis of Time Series", 1934, Journal of the American Statistical Association
*"Differential Price Behavior as a Subject for Commodity Price Analysis", 1935, Econometrica
*"Futures Trading and Hedging", 1953, American Economic Review
*"Hedging Reconsidered", 1953, Journal of Farm Economics
*"New Concepts Concerning Futures Markets and Prices", 1962, American Economic Review
*"Tests of a Theory Concerning Floor Trading on Commodity Exchanges", 1967, Food Research Institute Studies

References