Myron S. Scholes: Nobel Prize
in Economics Recipient-1997
by Seymour “Sy” Brody
Myron S. Scholes is an American-Canadian Jewish recipient of the Nobel Prize in Economics, which he shared with Robert C. Merton, in 1997, for a new method to determine the value of derivatives.
He was born on July 1, 1941, in Timmins, Canada, a prosperous gold mining area. His father practiced dentistry here, while his mother and his uncle established a chain of small department stores. When he was ten years old, his family moved to Hamilton, Ontario.
Scholes primary education was through the public school system. When he was 16, his mother died of cancer. About this time, his sight was impaired as his corneas developed scar tissue. He had trouble reading and he became a very good listener. When he was twenty-six years old, they successfully did cornea transplants which improved his sight.
He attended McMaster University, in Hamilton, and he received his B.A. degree, majoring in economics, in 1962. Scholes decided to do his graduate work at the University of Chicago. It was here that he came in contact with many recipients of the Nobel Prize in economics. He received his MBA degree in 1964 and his Ph.D. degree in 1969.
When Scholes finished his dissertation, he became an Assistant Professor of Finance at the Sloan School of Management (MIT). Here, he met Fischer Black and for the next few years, they did research in asset pricing, which included the work on their famous option pricing model.
In 1973, Scholes accepted an appointment at the University of Chicago School of Business, where he could work and do research with the other notable economists on the staff. In 1981, he went to Stanford University and he remained here until he retired from teaching in 1996.
It was in 1990 when Scholes decided to become more involved directly with the financial markets and he went to Salomon Brothers as a special consultant. It wasn’t long when he and some of his associates co-founded a hedge fund called “Long-Term Capital Management. It was very successful the first few years until 1997, when the East Asian crisis and the Russian Financial crisis caused them to lose more than 4 billion dollars and forced them into bankruptcy. This was the same year that Scholes received the Nobel Prize, which he shared with Robert C. Merton.
Scholes is currently the Chairman of the Platinum Grove Management Fund and he serves on the boards of many organizations.
He has received honorary degrees from three universities: University of Paris-Dauphine, France, 1989, McMaster University, Canada, 1990 and Katholieke Universiteit Leuven, Netherlands, 1998.
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