The Father of Modern Economics
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1970 was awarded to Paul Anthony Samuelson, for the scientific work through which he has developed static and dynamic economic theory and actively contributed to raising the level of analysis in economic science.
It was the second Nobel prize and the first Nobel prize to an American Economist. The contribution of Paul Samuelson in the field of economics is invaluable. He very delicately knitted Mathematics Analysis and Economics Analysis into Mathematical Economics. The concepts like calculus, matrices used to be esoteric before Samuelson strongly proposed them. His work in economic theory ranges from modern welfare economics, linear programming, Keynesian economics, economic dynamics, international trade theory, logic choice to maximisation.
Paul Samuelson was born in Gary, Indiana, in 1915. He was born to a family of upwardly mobile Polish immigrants. His childhood memories were filled with the recession of 1919-21 and other major economics changes happing in the society. But in his memoir published in 2009 he wrote “I was reborn, born as an economist, at 8:00 AM on January 2nd 1932, in the University of Chicago classroom.” He got his bachelor’s degree from University of Chicago at an early age of 20, and then he joined graduate program of Harvard University. He was an outstanding student and earned Junior Fellow of the Society of Fellows, with the freedom to pursue his own research he wrote pathbreaking papers in the field of theory of consumer choice, inter temporal structure of prices and interest rates and many other areas, including his prize winning dissertation in 1941, which was later published as the landmark book Foundations of Economic Analysis in 1947.
He was appointed as an instructor at Harvard in Fall 1940, and within a month he joined as an assistant professor at MIT. He became Institute Professor in 1966, a department started as Industrial Economics to teach economics to engineers claimed the work ranking soon under the leadership of Paul Samuelson. He relentlessly contributed to the field of economics and also taught/guided economists like George Akerlof, Robert Engle, Lawrence Klein, Paul Krugman, Franco Modigliani, Robert Merton and Joseph Stiglitz who also became Nobel Laureates.
There is a lot more to say about Paul Samuelson, a lot more to say about his work, a lot more to say about his analytical skill, a lot more to say about his contribution to Mathematical Economics and a lot more to say about a person who was so complete and managed his personal life too with six kids. But I would like let others who he has influenced and who have worked with him to say about him.
George Akerlof, Nobel Prize winner, MIT PhD, Berkeley professor:
When I was at MIT in the 1960′s Paul Samuelson was far and away the leading economist in the country. He was the leading adviser to the Kennedy administration, the leading economic theorist and also the author of the leading elementary textbook. Yet he also found time to be tremendously involved in the MIT economics PhD program. He always kept his door open and attended such events as the department picnic.
Samuelson was also incredibly efficient, and, as students, we used to receive pink slips, which were pink memos, with some thought of his in our mailboxes. When I wrote about his participation in the program and his interaction with all the students in a commemorative volume for him some years later, I received one of his pink slips, which said, “Thank you for the comments. I had never thought of myself as Mr. Chips.” He may not have thought of himself that way, but of course he was.
I also remember taking a course from him where he discussed, in the spring of 1964, a long time before (Milton) Friedman and (Edmund) Phelps became famous for it, the natural rate (of employment) hypothesis. Samuelson thought that there might be some truth to it, but thought that if it were not true that believing it would do great harm. Governments would then keep employment low because of unfounded fears of accelerating inflation. Samuelson was way ahead of his time, not just in considering the natural rate (of employment) hypothesis, but also in appreciating that it might not be true.
Robert Lucas, Nobel Prize winner, University of Chicago Professor. (Excerpted from his memoir):
“Samuelson was the Julia Child of economics, somehow teaching you the basics and giving you the feeling of becoming an insider in a complex culture all at the same time. I loved the Foundations. Like so many others in my cohort, I internalized its view that if I couldn’t formulate a problem in economic theory mathematically, I didn’t know what I was doing. I came to the position that mathematical analysis is not one of many ways of doing economic theory: It is the only way. Economic theory is mathematical analysis. Everything else is just pictures and talk.”
Avinash Dixit, Princeton Professor, MIT PhD:
“It is indeed sad, and it is difficult to imagine the profession without him. In every decade since the 1930s he made pathbreaking contributions, any one of which would have been the pride of someone else’s whole career.
“For me it is a special bereavement. My whole style of research, and the techniques that support almost all of my own papers, derive from his foundational articles. The whole idea of modeling full equilibrium of a specific applied context lies behind my work with Joe Stiglitz on monopolistic competition and with Victor Norman on international trade. As to the techniques I learned from him and used: comparative statics of constrained optimization, the correspondence principle and the envelope theorem, factor price equalization in international trade, valuation of real options, the list could go on.”
Ben Bernanke, Federal Reserve Chairman, MIT PhD:
“Paul Samuelson was both a path-breaking and prolific economic theorist and one of the greatest teachers that economics has ever known. I join with many other former students and colleagues of Paul’s in mourning the passing of a titan of economics.”
References:
Dixit A. (2012), Paul Samuelson’s Legacy, Annual Reviews of Economics, Vol 4
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