Richard E. Caves, professor of Economics, is the first recipient of the $5000 Graduates' Award for Good Teaching in Economics established last June by John Kenneth Galbraith, Warburg Professor Emeritus of Economics.

"It was a unanimous decision to give Caves the award. There aren't enough superlatives to describe him as a teacher," Thomas A. Pugel, one of the five second-year Economics graduate students that the comprise the Galbraith Prize Committee, said yesterday.

Caves said yesterday he is "extremely pleased" with the award particularly because "the Faculty of Arts and Sciences does not put a lot of value on teaching ability in evaluating faculty members."

The prize--which is in effect the Economics graduate students' evaluation of their professors--will be awarded every year until 1985 when Galbraith's seed gift of $50,000 is exhausted. "I think he gave the prize in something of a tongue-in-cheek spirit," Karl E. ("Chip") Case, head tutor of the Economics Department, said last night.

"I am really happy about the award. Caves devotes a tremendous amount of his time to teaching, and he's just as good an undergraduate teacher as a graduate teacher," Case said.

Galbraith, who retired last year, announced the establishment of the award during his speech at Commencement Day for the Class of 1975.