Our Colleague Walter Oi Has Passed Away
December 26, 2013 Economists

Walter was one of the most important economists of the latter half of the 20th century. and a pretty neat guy to boot. My colleague Steve Landsburg has penned a worthwhile appreciation of him here. Please do read it.  Here are some tidbits:

 It was Walter who told me that when all frozen pies had 12 inch diameters, apple was the most popular flavor — but when 7 inch pies came on the market, apple immediately fell to something like fifth place. His explanation: When you’re buying a 12 inch pie, the whole family has to agree on a flavor, and apple wins because it’s everyone’s second choice. With 7 inch pies, family members each get their pick, and apple is almost nobody chooses apple.

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?

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.

As the child of parents born in Japan, Walter (at the age of 14) was interned atCamp Amache during World War II, along with the rest of his family

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 freedom, and the subject of countless anecdotes, all recollected with love.


"1" Comment
  1. I was fortunate enough to be a student of Walter (and his dog). Thanks for posting this.

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