“Deep in the human nature, there is an almost irresistible tendency to concentrate physical and mental energy on attempts at solving problems that seem to be unsolvable. Indeed, for some kinds of active people, only the seemingly unsolvable problems can arouse their interest.” - Ragnar Frisch
It was in the year 1969 when The Sveriges Riksbank decided to commemorate Economists for their contribution in Economics science with a Noble Prize. The Economics science was increasingly influenced by mathematics and statistics which helped to substantiate the ideas and theories of Economist. The economic theories represented in the form of mathematical equations helped a layman to understand the complex economic processes such as cyclical fluctuations, economic growth, and reallocations of economic resources.
It was the success of statistical analysis of time series, which helped to quantify the economic problem, that motivated the Bank of Sweden to award Prize in Economic Science dedicated to the memory of Alfred Nobel to the pioneers of ECONOMETRICS field, Ragnar Frisch and Jan Tinbergen. The major contribution of these two economist was the construction of theories for stabilisation of policies and long-term economic planning.
Ragnar Frisch:
Ragnar Frisch was born in Oslo, March 3, 1895 to a gold and silversmith Anton Frisch. He was destined to follow gold and silver family tradition, but it was his mother who motivated him to take up university study. He went ahead and got a university degree in Economics in Oslo in 1919. Ragnar traveled abroad to study Economics and Mathematics for a year and later completed his Ph.D in Mathematical Statistical subject in Oslo University in 1926. He was subsequently appointed as full Professor in Oslo in 1931 and there after he was Director of Research of the newly-established Economic Institute in the Oslo University.
Ragnar’s major contribution is in the field of Econometrics. His pioneer work in the early thirties involved a dynamic formulation of the theory of economic cycles. He demonstrated how a dynamic system with difference and differential equations for investments and consumption expenditure, with certain monetary restrictions, produced a damped wave moment with wavelengths of 4 and 8 years. By exposing the system to random disruptions, he also demonstrated how these wave movements became permanent and uneven in a rather realistic manner.
Ragnar Frisch is also credited for founding Econometrica Journal. In Rangar’s very first paper in economics in 1926 the term “Econometrics” (in French) was introduced for the first time. In the same passage he formulated the first epigraph for econometrics as a science:
“Intermediate between mathematics, statistics, and economics, we find a new discipline which for lack of a better name, may be called Econometrics. Econometrics has as its aim to subject abstract laws of theoretical political economy or ‘pure’ economics to experimental and numerical verification, and thus to turn pure economics, as far as possible, into a science in the strict sense of the word”
Jan Tinbergen:
Jan Tinbergen was born in The Hague, The Netherlands, in 1903, as the first of five children to Dirk Tinbergen, a schoolmaster teaching Dutch language and Jeannette who was also a teacher. His brother Nikolaas Tinbergen, an ethologist, in Physiology and Medicine also won a Noble Prize in 1973. He studied at the University of Leiden, where he earned a doctoral degree in physics. In 1929 he joined the Central Bureau of Statistics, the economic planning unit of Dutch government, where he was a business-cycle research expert for the League of Nations. Jan later joined as a professor at the Netherlands School of Economics, Rotterdam, and pursued academic career for the rest of his life.
Jan gained acclamation with his pioneering efforts to build mathematical models of how whole economies work, more specifically, how shocks like harvest failures or stock market crashes rebound through an economy to influence output, inflation and employment. His greatest work was to study cyclical fluctuations in United States. Jan built up an econometric system involving some 50 equations, and determined reaction coefficients and “leads and lags” with the help of statistical analysis.
References:
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1969/tinbergen-facts.html
http://www.jstor.org/stable/2171799?seq=1#page_scan_tab_contents
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