Stephen Ross, a former Yale economics and finance professor who pioneered several foundational theories in the field of neoclassical finance, died on Friday. He was 73.
Ross was widely known for the theories he developed in the mid-1970s about arbitrage pricing and economic agency. He taught at Yale from 1984 to 1997, eventually earning distinction as a Sterling Professor of economics and finance.
“Steve was a wildly successful practitioner of finance and an entrepreneur whose influence on practice is hard to overstate,” School of Management professor Rick Antle said. “He was a Sterling Professor in title and a Sterling Professor in fact. He led the recruitment of faculty members of unparalleled caliber to the SOM in its early days.”
Ross was also recognized for his contributions to risk-neutral pricing and the binomial model for pricing derivatives, different methods of valuing a given stock. Economics professor and Nobel laureate Robert Shiller said Ross’ death came as a shock to him, adding that Ross was an important influence on his life.
“He always had an open mind and could see the complexities in the real world,” Shiller said. “Some of his ideas, notably his arbitrage pricing theory, remain fundamental to financial theory.”
In addition to his academic contributions, Ross worked as an advisor to various U.S. government departments and investment companies.
In 1988, Ross served as president of the American Finance Association, and in 2015, he received the Deutsche Bank Prize in Financial Economics. His other accolades include the 2012 Onassis Prize for Finance and the 2007 Jean-Jacques Laffont Prize.
Yale economics professor John Geanakoplos ’75 remembered Ross not only as a renowned economist but also as a close companion and colleague. Geanakoplos said Ross was a basketball lover, a wine connoisseur and a generous tipper.
“He was wonderful to me all the time I’ve known him,” Geanakoplos said. “He was a dear friend, and this is a terrible loss and a big shock.”
School of Management professor William Goetzmann ’78 GRD ’90 remembered Ross as a “teacher, mentor and friend,” and former School of Management Dean Sharon Oster said Ross was a founding faculty member of the SOM who attracted some of the school’s most distinguished faculty.
“He was a groundbreaking scholar, a spectacular teacher and a great friend to many of us,” Oster said.
Ross was an associate editor of several economic journals and wrote over 100 articles in the field. In 2004 he published the book “Neoclassical Finance,” a pioneering work in the field of the same name, which Ross helped establish.
Antle called Ross a kind, generous and loyal friend who made “absolutely pathbreaking” contributions to finance.
“I will miss him terribly,” Antle said. “And, if misery loves company, I know that my misery is ecstatic.”
Prior to his time at Yale, Ross was a faculty member at the University of Pennsylvania’s Wharton School, and after leaving Yale in 1997, he taught economics at the Massachusetts Institute of Technology.
Ross is survived by Carol, his wife of 49 years, and his children Katherine and Jonathan Ross. The MIT Sloan School of Management has not yet released a date for memorial services and a celebration of Ross’ life.