A.D. Roy

Andrew Donald Roy (28 June 1920 – 12 March 2003) was a British economist who is known for the Roy model of self-selection and income distribution and Roy's safety-first criterion.

Early life and education Andrew Donald Roy was born 28 June 1920. His father, Donald Whatley Roy, was a physician. A. D. Roy began studies in mathematics at Sidney Sussex College, Cambridge, in 1938. He won the distinguished Tripos award in 1939 in mathematics. His studies were interrupted by the outbreak of World War II, and he eventually served in the Fourteenth Army in India. He fought in the Battle of Imphal which stemmed the Japanese invasion of India in 1944. During his service, Roy contracted jaundice and suffered a nervous collapse, which lingered in the form of depression. After the war, he returned to Cambridge to study economics and history and was awarded a second Tripos award in economics in 1948. He later married Katherine Juliet Grove-White, and the pair had a son, Donald James Roy, and two daughters. He completed his Master of Arts in Economics at Cambridge in 1950, reading under Professor Edward Austin Gossage Robinson. Roy died on 12 March 2003 of heart disease. (See Sullivan, 2011 for a more complete biography and Heckman and Sattinger, 2015 for an intellectual biography.)

Career Roy was appointed Faculty Assistant Lecturer in Statistics at Cambridge University in 1949. In 1950, Roy was appointed Director of Economic Studies at Cambridge and then University Lecturer in Economics and Politics at Sidney Sussex College in 1951. While at Cambridge, Roy wrote an influential paper on productivity and the shape of the distribution of earnings which he substantially generalized in his seminal 1951 article on self-selection and income inequality (Roy, 1951). In addition, Roy made a fundamental contribution to portfolio theory in his paper 'Safety First and the Holding of Assets' (1952).

Roy left Sidney Sussex in 1962 to serve as Economic Consultant and later Senior Economic Advisor to the Treasury. In 1964, Roy entered civil service, and worked for the Treasury, Department of Trade and Industry, Ministry of Defence, and Department of Health and Social Security. During this time, Roy addressed issues more closely related to macroeconomics such as labor productivity (Roy, 1982; Roy and Wenban-Smith, 1983 ).

Contributions Roy (1951) Cox, 1958 ). Like later work by Quandt (1972), Gronau (1974) and Heckman (1974, 1976 ), he added a choice mechanism to the model of potential outcomes in the statistical literature determining allocations of individuals across sectors associated with outcomes. Roy introduced economic decision-making into the determination of occupations and earnings and thereby anticipated procedures later used for the rigorous analysis of earnings data.

Roy's selection phenomenon has been applied and extended to a wide range of other contexts, including: choice of market versus non-market work and wage comparisons (Gronau, 1974; ); and more general decision rules (see the survey in Heckman and Vytlacil, 2007a ). His work also affected analysis of choice in: union versus non-union sectors (Lee, 1978 ); levels of education (Willis and Rosen, 1979 ); geographical region (Robinson and Tomes, 1982 ); marital status (McElroy and Horney, 1981 ); occupational choice (Miller, 1984 ); piece rate versus salary pay structures (Lazear, 1986 ); industry changers (Solon, 1988; Gibbons and Katz, 1992 ); immigration (Borjas, 1990 ); and segmented labor markets (Magnac, 1991 ). Flinn and Heckman (1982) extend Roy's selection model by incorporating choices based on search. See French and Taber (2011) for a comprehensive discussion of the use of the Roy model in labor economics.

Analysis of selection bias has led to substantial improvements in the evaluation of social programs (Heckman et al., 1996, 1997; Abbring and Heckman, 2007; Heckman and Vytlacil, 2007a, ). A further extension considers general equilibrium models of income distribution and treatment effects (Heckman et al., 1998; Abbring and Heckman, 2007 Both developed the mean-variance trade-off for a portfolio of correlated assets (Markowitz, 1991). Reflecting on his 1952 work For a more extensive discussion of Roy's contribution to portfolio theory, see Bernstein (1992) and Sullivan (2011).

Publications The distribution of earnings and of individual output Economic Journal, vol. 60(239), pp. 489–505. (1950). Some Thoughts on the Distribution of Earnings Oxford Economic Papers, New Series, Vol. 3, No. 2 (1951). Safety First and the Holding of Assets Econometrica Vol. 20, No. 3 (1952). Labour productivity in 1980: an international comparison National Institute Economic Review, vol. 101(1), pp. 26–37. (1982). Trends in UK Productivity: A Production Function Approach Roy, A. D.; Wenban-Smith, G. London, UK: National Institute of Economic and Social Research. (1983).