Holbrook Working

Who was Holbrook Working?

Holbrook Working, a professor of economics and statistics at Stanford University’s Food Research Institute, is known for his contributions on hedging, the theory of futures prices – which anticipated the efficient market hypothesis, an early theory of market maker behavior, and the theory of storage.

He disagreed with Keynes’s backwardation theory of futures prices, which argued that short hedgers drive down futures prices because of their demand for price insurance. Working argued that there could be hedgers on both sides of the market and that hedging was essentially not a risk reduction technique, but "speculation in the basis" which allows informed traders and commodity dealers to profit from their knowledge of future changes in the difference between futures and spot prices.

A native of Fort Collins, Colorado, Working received his Ph.D. in Agricultural Economics from the University of Wisconsin–Madison in 1921. Before joining the Food Research Institute in 1925, he taught at Cornell University and the University of Minnesota. His younger brother Elmer Working made a major contribution on the identification problem for demand curves in econometrics, with which Holbrook Working was also involved.