Armen Alchian was an economist of Armenian descent. He was born in California in 1914. Later, he earned a Ph.D. from Stanford. Afterward, he went on to work with the Army Air Corps. This eventually led to his position as an economist in the RAND Corporation. The acronym RAND stands for Research and Development. The company is a nonprofit think tank initially doing research exclusively for the US Armed Forces.
One of the things Armen is most famous for is his work studying what influences prices. He developed many models and offered many analyses of the work of other economists. These skills served him well in the 1950s while working with RAND. The USA carried out the first test of an H-bombin 1952. Armen Alchian was an employee of RAND during the bomb’s development.
Armen Alchian’s Method
The year before its creation, the people in the economics department were understandably curious about how the bomb was made. As you can expect, the physicists and engineers would not tell them due to the sensitivity of the information. Armen told them he would figure it out himself. He looked at documents from the Department of Commerce and cross-referenced that with information about who dealt in which metals that could be in the H-bomb. He watched the stock prices of these companies for the 6 months leading up to the bomb test.
This is how he found the answer. The stock price of Lithium Corp of America jumped from around $3 to $13 (and fell back down after the test). He wrote a memo inside of RAND about his discovery. Shortly after, they asked him to withdraw it. He then sat on this story for decades before sharing it to preserve this dangerous secret at a time when it was not common knowledge.
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