Walter Oi, 1929 – 2013






It was a quirky brand of humor, and not to everyone’s taste, but it was assuredly to mine, and it was part of what endeared him to me. There are so many stories about Walter’s quirks that if I tried to type them all, I’d never get this posted. So first let me mention his real work. Walter was a superb economist. One of his best known contributions was the analysis of two-part pricing: Should Gilette sell cheap razors to increase the demand for razor blades, or should it sell cheap razor blades to increase the demand for razors? Should Amazon sell cheap e-books to increase the demand for Kindles, or cheap Kindles to increase the demand for e-books? Should Disneyland set high admission fees and low prices for the ride tickets, or vice versa?

Walter nailed this problem, with a complete analysis of when you should sell cheap razors and when you should sell cheap blades. For forty years, his ideas have formed the basis of everything we know about monopoly pricing. (You can read about some of these ideas in Chapter 16 of The Armchair Economist.) This was just one of Walter’s many landmark papers, on an extraordinarily broad range of topics. (See Eric Hanushek‘s appreciation here for a more complete picture.) But the work he claimed to be proudest of was his role in ending the military draft.

In 1967, people were still making the ridiculous claim that an army of underpaid draftees is cheaper than an all-volunteer force — based, apparently, on the ridiculous assumption that the cost of a soldier is well measured by his paycheck. But of course this isn’t true. The social cost of putting, say, a carpenter in the army is that we have one less carpenter doing civilian work. That’s true whether you pay him one dollar a year or a million.

To make this clearer: Imagine that I tax you $100,000 a year and offer to return it all to you in wages if you join the army, which you agree to do. Now instead imagine that I simply draft you and pay you nothing. By the ridiculous accounting of 1967, the first plan costs $100,000 and the second costs zero — even though there’s surely no important difference between them.

Despite the games he liked to play about quantities of blood and related matters, Walter Oi could, when he wanted to, be scrupulous with facts — and his scrupulous estimates of the true cost of a conscripted military were instrumental in ending the draft, which was abolished in 1973. It was a triumph for Walter’s (and others’) careful research, persistence and powers of persuasion. It was a victory of good economic sense, and a victory for freedom. You can read William Meckling’s account of the great battle, and of Walter’s central role in it, here.

But you can’t talk about Walter without coming back to his eccentricities. You could always count on him to derail a boring conversation by saying something perfectly irrelevant and perfectly incomprehensible, and then forcing everyone to guess what he was talking about. Once in the midst of a dreadfully dull discussion about the possible future business strategies of the Xerox corporation, Walter interjected (in that booming voice, always that booming voice): “I’ll tell you what scares me, boy. It’s that Ukrainian guy.” Of course, someone — it might have been me — fell for it and asked “Ummm…what Ukrainian guy?”. To which the answer was a perfectly predictable booming affirmation: “That Ukrainian guy. That’s what scares me, boy. That Ukrainian guy.” After several equally uninformative rounds, we dragged it out of him: Sometime in the mid-nineteenth century, some Ukrainian guy bought some land in Canada, then rode out in a stagecoach to inspect his land, and somehow got abandoned in the woods. “Scares the hell out of me, boy — being lost in the woods like that.”

He loved that kind of guessing game, and I fear that I’ve failed to convey how charmingly he pulled it off. (In fairness, I know there were some who were immune to that charm. I was decidedly not). Once, in an academic seminar, the speaker had just launched into talking about “a public good, which we’ll call X, ” when Walter silenced the room by asking “What is the one example of a pure public good?”. (A public good, in economic jargon is — more or less — a good that you and I can consume at the same time without interrupting each others’ enjoyment — like, perhaps, an outdoor concert.) When it became clear that the seminar couldn’t go on until he got an answer, someone ventured to offer “Ummm…national defense?” (This is a textbook answer, since you and I are both protected by the same army at the same time.) Walter’s response: “NOPE. What is the one example of a pure public good?” We pretty much went all around the room offering examples (“A non-crowded highway?” “NOPE!”) until it became clear that we’d exhausted all our ideas. Walter broke into a grin of triumph before announcing that “It’s the Saint Louis Arch. Because no matter how much you look at that arch, it doesn’t stop me from looking.”

Surreal? Sure, but no more so than being told that a one hundred pound man and a three hundred pound man have exactly the same quantity of blood. Aside from the bizarre choice of Saint Louis Arch (instead of, say, Niagara Falls or the Chicago skyline) note the locution: “It doesn’t stop me from looking.” Walter, the blind man, took every opportunity to speak in visual images. Once at a seminar, commenting on the Indian accent of the speaker, he leaned over to a colleague and whispered “Gee, if you closed your eyes, you’d think this guy was G.S. Maddala.” And the day after a party, he was always eager to deconstruct the fashions (“Did you SEE how bright her dress was?”), presumably after getting the rundown from a co-conspirator.

He must have cultivated these traits for a very long time, because the Economics Department at the University of Chicago has a long (but sometimes broken) tradition of awarding, at the end of each academic year, the “Walter Y. Oi Award” to the graduate student who has asked the most irrelevant question — presumably in commemoration of something Walter asked in his own student days at Chicago over half a century ago. I’m not sure anybody knows what that question was, but according to one rumor, it came in the midst of a fairly technical lecture in Milton Friedman‘s Price Theory class, where Walter suddenly raised his hand and asked “Do you just make this stuff up as you go along, or what?”.

And somehow this reminds me of the time he walked into the coffee room and asked: “How much would you have to pay for a block of stainless steel?”. I asked him what size. He waved off the question and said “Not too big”. I will forever regret that I failed to answer “Not too much.”

As the child of parents born in Japan, Walter (at the age of 14) was interned at Camp Amache during World War II, along with the rest of his family, and he was always (quite understandably) bitter about the experience. Sometimes he wanted to talk about that, and occasionally I drew him out. Once I asked him if they separated families in the camps. “Not usually”, he said — “But if they declared you a dangerous alien, which they could do whenever they wanted, then your family got separated. It was completely arbitrary. And that happened to us. They called my father a dangerous alien, and they separated us”.

I asked him if he could think of any reason why they might have chosen his father to pick on. Only after several rounds of denial did he grumblingly admit that “It might have been because he was the Treasurer of the Committee to raise funds for the Japanese Navy.”

Walter always made me laugh and (more often than I’ve hinted at in this already-too-long post) he often made me think. I learned a lot of economics from him, and I’m grateful for that. I’m grateful too for the inspiring and bittersweet stories he shared about a 14 year old boy, rapidly losing his sight, assigned to load watermelons on trucks in the internment camp where his government had sent him — a boy who emerged as a champion of intellectual inquiry, a champion of liberty, the curator of a unique persona that was a living work of art, and the subject of countless anecdotes, all recollected with love.


19 Responses to “Walter Oi, 1929 – 2013”

  1. 1 1 JohnE

    A great loss. As a grad student, I was one of his TAs for his Law and Economics class. I remember he fundamentally changed my understanding of externalities. He will be missed.

  2. 2 2 RFlood

    Terrible news. Walter was a great teacher and long-time friend. I’m not sure people spending most of their careers at Rochester appreciate Walter, the coffee room or the normally (reasonably) high level of conversation in that room

  3. 3 3 Ken Arromdee


    There’s a big difference because
    1) The tax comes from all wage earners. Not every wage earner is drafted. So the draftee personally is taxed less than his salary and the difference is made up with taxes from non-draftees. This doesn’t affect the total cost, but does distribute it differently.
    2) The political capital needed to raise taxes is separate from the political capital needed to draft soldiers. You might be able to draft soldiers and you might also be able to hire soldiers, yet you might not be able to raise taxes for the purpose of hiring soldiers.

  4. 4 4 Kirk

    Somehow I managed to read this post and not find myself inspired to argue about an economic point made in it. Go figure…

  5. 5 5 Navin Kumar

    I’ve never heard of Oi untill today, but this is the most charming obituary that I’ve ever read.

  6. 6 6 James Kahn

    This beautifully and accurately captures the essence of Walter. Thanks.

  7. 7 7 Rick Bond

    An excellent tribute. Thanks

  8. 8 8 Pete

    I had the pleasure of taking Law and Economics years ago. About half of each class was wonderfully educational. The other half was Professor Oi rambling in a way that cracked me up in a way I’ll never forget.

  9. 9 9 Cameron

    Can I have some suggested reading for just a regular armchair Joe/Jane? Walter Oi seems like a hell of a person and I’d love to read anything approachable that he wrote.

  10. 10 10 Lisa L

    I had the enormous fortune to be Walter’s research assistant for three years (84-87) having started out as a reader. He was a boss, a mentor and a true friend and besides his brilliance, he was one of the most unusually special, funny, sweet and dear people you could ever meet. I’ll never forget when he detected with his acute hearing that I’d changed my shoes at lunchtime and accused me of having ‘shacked up’ with my boyfriend overnight. He was perfectly right, and it was vintage Walter to remark!

  11. 11 11 Ken B


    But it will make me look askance next time you make some implausible factual claim.

  12. 12 12 Scott F

    It makes me just a bit more proud to be a UR grad knowing a man like Prof. Oi taught there. I’m glad I caught a glimpse of him and his dog meandering about, before leaving the undergraduate campus.

  13. 13 13 Daniel


    Key word being quantity right?

  14. 14 14 Alex

    They each have exactly one man’s-worth of blood?

  15. 15 15 Peter Swan

    Very sad to hear of Walter’s passing. I got to know him well during my 6 months as a visitor at Rochester and met him at the annual meetings not so long ago. He was superb in seminars where he would point to an error in the equation on the board (this was prior to powerpoints). Despite being completely blind, his vision in being able to spot error was close to perfect. he had an extraordinary grasp of price theory and great powers of exposition. Fortunately for me, what he thought was an error in some of my work on price discrimination was sound. I recall the diminutive and blind Walter debating the towering John Kenneth Galbraith on television and winning handsomely, despite the fame of the Harvard economist.

  16. 16 16 Sungil Nam

    As a student of Walter Oi who supervised my Ph.D. work, I praise and thank you for what you have written here. Your writing demonstrates what really is scholarship and friendship among academics. We all miss Walter terribly, but Walter’s work continues to be alive with collegues like you. Thanks again.

  17. 17 17 bigjeff5

    @Ken #3

    In the first scenario, it costs the government nothing for each individual soldier, since they are only returning money already taken in taxes. The net cash flow there is zero – you are taxed $100k, which is then returned as $100k in wages. To make things easy the government could simply debt you the $100k in taxes and then credit it back to you in wages. No money needs to change hands at all.

  18. 18 18 Steve Landsburg

    bigjeff5: And by that reasoning, in the alternative scenario, it still costs the government nothing for each individual soldier since they tax me (a non-soldier) $10,000 and then pay that to the soldier so that their net cash flow is still zero.

  19. 19 19 Sue Slechta

    I was one of Walter’s personal assistants in the late 80s early 90s, and just learned of his death. I am deeply saddened, but found this obituary of him to be absolutely wonderful. He did have that big booming voice, that asked the craziest questions of people. Often, people would be in his office when i was around, and he would ask some off the wall question, and after they left he would ask me to describe their expression or body language when he asked it. It was always fun to work for him. He called me about once a year to see how i was doing until fairly recently. I still have the graduation present he gave me, an LL Bean messenger bag. I still use it when i travel. I will definitely miss hearing his voice over the phone lines.

  1. 1 Walter Oi has passed away
  2. 2 Walter Oi 1929 – 2013 | Catallaxy Files
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