KNIGHT, FRANK HYNEMAN

born Nov. 7, 1885, White Oak township, McLean county, Ill., U.S. died April 15, 1972, Chicago, Ill. American economist who is considered the founder of what came to be called the Chicago school of economics. Knight was educated at the University of Tennessee and at Cornell University, where he obtained his Ph.D. in 1916. He then taught at the University of Iowa (191927) and at the University of Chicago (192752), becoming emeritus in 1952. Among the many students whom he influenced was the noted economist Milton Friedman. His book Risk, Uncertainty and Profit, published in 1921, is one of his most important contributions to economics. In it he distinguishes between insurable and noninsurable risks. According to Knight, profit, earned by the entrepreneur who makes decisions in an uncertain environment, is the reward for bearing uninsurable risk. Knight also produced a monograph, Economic Organisation, which became a classic exposition of microeconomic theory. Its lucidity in perceiving logical distinctions may have been due to Knight's early training as a philosopher, a training which made him skeptical of much economic theory. Knight was also an important critic of the Austrian school of economics and its theory of capital. He wrote extensively on liberal forms of social organization, criticizing attempts at social engineering.