It is with great sadness that NERA says goodbye to Fred Kahn. Fred was part of the NERA family since the beginning 50 years ago, and remained one of the firm’s best friends and guiding lights for the rest of his life. At the time of his death he was the Robert Julius Thorne Professor of Political Economy, Emeritus, at Cornell University and continued to serve as a testifying expert witness on behalf of NERA’s clients.
Fred played an important role in the founding of NERA, acting as an advisor to founders Irwin Stelzer and Jules Joskow. In addition, he acted as an expert witness in many regulatory matters on behalf of NERA over the past half century. He was particularly influential in client issues regarding antitrust, flat rate pricing for telecommunications, marginal costing in both telecommunications and electricity, and net neutrality.
Fred was truly a giant and trailblazer in the field of economics, and his storied economic career spanned more than seven decades. He received his bachelor's degree (summa cum laude at the age of 18) and master's degree from New York University, and earned his doctorate in economics from Yale University. Following service in the US Army, he served as Chairman of the Department of Economics at Ripon College in Wisconsin. He later moved to the Department of Economics at Cornell University, where he spent the majority of his academic career. During his tenure at Cornell, Fred served as Chairman of the Department of Economics (1958-63), as a member of the Board of Trustees of the University (1964-69), and as Dean of the College of Arts and Sciences (1969-74).
Fred took leave from Cornell in 1974 to assume the Chairmanship of the New York Public Service Commission. In his time there he was instrumental in using marginal costs to help price electricity and telecommunications services; this was novel at the time but is routinely performed today.
As Chairman of the Civil Aeronautics Board (CAB) in the late 1970s, Fred oversaw the deregulation of the airline industry and became known as the "father of deregulation." The CAB was disbanded when deregulation of commercial air fares made the agency no longer necessary. This is one of the very few examples of a regulatory agency deregulating itself out of existence. Fred was tapped by President Jimmy Carter in 1978 to serve as an advisor on inflation and as chair of the Council on Wage and Price Stability, and was known as the president’s “Inflation Czar.”
Fred testified before US House and Senate committees 70 times and also served on a variety of public and private boards and commissions, including the senior staff of the President's Council of Economic Advisors, the Attorney General's National Committee to Study the Antitrust Laws, and as the chair of the International Institute for Applied Systems Analysis Advisory Committee on Price Reform and Competition in the USSR.
He is the author of more than 130 academic papers as well as eight books, including The Economics of Regulation, which is still considered the pre-eminent work in the field almost four decades later; and most recently of Whom the Gods Would Destroy, or How Not to Deregulate (2001) and Letting Go: Deregulating the Process of Deregulation (1998), which focuses on deregulation of the electric power and telecommunications industries.
Fred never lost his zest for life and passion for principle. Only a few months ago, he filed a brief with the US Federal Energy Regulatory Commission and (with both respect and sharp humor) crossed swords with the editors of Public Utilities Fortnightly on behalf of marginal-cost theory, which guided his thinking on regulation for decades.
Fred is survived by his wife, Mary Simmons Kahn; two daughters, Rachel Kahn-Fogel and Hannah Kahn; a son, Joel; a nephew for whom he and his wife were legal guardians, Peter S. Boone; eight grandchildren; and two great-grandchildren.
The field has lost one of its greatest minds, but his thinking and work will continue to influence economists, academics, and policymakers for years to come. Those of us who had the privilege to know Fred personally will miss his unique mix of intelligence, humor, and humility. We at NERA extend our deepest condolences to Fred’s family and colleagues.
Everyone who knew Fred loved him for his sense of humor (along with many other virtues).
When Fred stepped down from his deanship at Cornell many years ago, he summed up his former job as follows: "Dean is to faculty as fire hydrant is to dogs."
Then, when he retired from Cornell and became Professor Emeritus, he said, "They made me emeritus but I didn't know what it meant so I looked it up: E means 'you're out' and meritus means 'you deserved it'!"
- Dick Rapp
I met Fred for the first time when I was a young Assistant Professor. I was speaking at a conference at Middlebury College and Fred was the keynote speaker for the grand dinner the first night of the conference. Fred arrived early and sat in on the last session of day 1 -- that was my session. One of the panelists was a Middlebury economics major. He had won a paper contest and the prize was a chance to present his paper at this conference. His topic: The Merits and Demerits of Airline Deregulation. I can only imagine how he felt standing up to deliver his paper with Fred Kahn in the audience.
His paper was an excellent undergraduate paper, but, as with even the very best undergraduate work, it had its flaws. When the session ended and the cocktail hour began, Fred sought out this young man and took him aside. I -- and others -- watched as Fred and this student stood together in a corner for almost 30 minutes. Fred often had his arm placed paternalistically across this kid's shoulders. It was clear that what Fred was doing was teaching. In the best and purest sense of the term, he was teaching. He could have ignored the student. He could have denigrated his work. But not Fred. He took this opportunity to recognize the quality of what this economics major did and, more importantly -- and more striking -- he gave him the opportunity to learn something. This was the ultimate teaching moment.
To top it off, Fred mentioned this young man's paper in his keynote speech, going out of his way to note several points the student made that Fred had not previously thought about and how that student taught HIM something!
Fred was a kind, generous man. He was decent, in the purest sense of that word. He will be missed by those of us who knew him. He will also be missed by those who will not have the opportunity to get to know him.
- Steven Schwartz
Fred was a remarkable man: a first-rate economist who could actually communicate (though in some of the longest sentences known to mankind), blessed with boundless grace, wit, and charm. I was fortunate to have met Fred before I joined NERA, when he was the Civil Aeronautics Board Chairman and I was a young academic consultant for the CAB. After joining NERA, I was delighted to learn of Fred's affiliation with the firm, and I treasure the many times we worked together over the past 30 years.
Fred's intellect, energy, and enthusiasm for his work remain an inspiration to all of us.
- Gary Dorman
I somehow ended up in the enviable position of working closely with Fred on telecommunications issues -- an experience that was more than equivalent to earning a second degree at mid-career.
People who are fortunate to have worked with Fred (as well as many others who have read his contributions) have benefited from the examples of his timeless works, his facility with words and language, and his performances. Watching Fred in any of these areas and taking to heart the example he set is truly a lesson plan for being a better economist and consultant -- indeed a better person. Not only was Fred willing to share his compendium of economic insights, but also to listen and learn from others -- including colleagues, associates, clients, and even economists and others with opposing views on major issues.
What a career! What a life! Those of us who knew him are enormously fortunate and privileged to have been along for part of the ride.
- Timothy Tardiff
Back in the early 1990s I was teaching transport economics and used some of Fred's papers to illustrate the effects of US airline deregulation.
Then when I worked for the European Commission on predatory behaviour in aviation I cited Fred's work on this subject, and contacted him to seek his opinion. I was quite surprised (since I didn't know him then) to get a speedy and very helpful response. Then in 1997, almost in my first week working in NERA's London office, Fred appeared in person one morning, fresh at the age of over 80 off an overnight flight from New York, to deliver a sparkling and clear lecture on airline economics. Later I was even privileged to appear on the same 'bill' as Fred in a NERA seminar on the same subject. It was a great pleasure to have met him and to have enjoyed his writings.
- John Dodgson
It happened that I helped Fred get back to the Cornell Club as I was staying at the Algonquin nearby. I guess it was at the time that Hethie became a Special Consultant. Anyway, in the taxicab I said something about Gilbert and Sullivan, just to pass the time. He started singing "On the Avenue, Fifth Avenue." And, yes, we were driving down 5th Avenue so Irving Berlin's Easter Parade was much more relevant than Gilbert and Sullivan. That was fun. Oh, and I helped Jeff buy him some airplane seats on eBay for his 90th birthday -- first class seats no less. That was fun as well.
- Wayne Olson