Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win theNobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, theSwedish Royal Academies stated that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory".[6]
Samuelson was one of the most influential economists of the latter half of the 20th century.[7][8] In 1996, he was awarded theNational Medal of Science.[6] Samuelson consideredmathematics to be the "natural language" for economists and contributed significantly to the mathematical foundations of economics with his bookFoundations of Economic Analysis.[9] He was author of the best-selling economics textbook of all time:Economics: An Introductory Analysis, first published in 1948.[10] It was the second American textbook that attempted to explain the principles ofKeynesian economics.
Samuelson was born inGary, Indiana, on May 15, 1915, to Frank Samuelson, apharmacist, and Ellanée Lipton. His family, he later said, was "made up of upwardly mobile Jewish immigrants fromPoland who had prospered considerably inWorld War I, because Gary was a brand new steel-town when my family went there".[13] In 1923, Samuelson moved to Chicago where he graduated from Hyde Park High School (nowHyde Park Career Academy).
Samuelson attended theUniversity of Chicago as an undergraduate, earning aBachelor of Arts degree in 1935. He said he was born as an economist at 8:00 am on January 2, 1932, in the University of Chicago classroom.[7] The lecture mentioned as the cause was on the British economistThomas Malthus, who most famously studied population growth and its effects.[13] Samuelson felt there was a dissonance betweenneoclassical economics and the way the system seemed to behave; he saidHenry Simons andFrank Knight were a big influence on him.[14] He next completed hisMaster of Arts degree in 1936, and hisDoctor of Philosophy in 1941 atHarvard University. He won the David A. Wells prize in 1941 for writing the best doctoral dissertation at Harvard University in economics, for a thesis titled "Foundations of Analytical Economics", which later turned intoFoundations of Economic Analysis. As a graduate student at Harvard, Samuelson studied economics underJoseph Schumpeter,Wassily Leontief,Gottfried Haberler, and the "American Keynes"Alvin Hansen.
Samuelson moved to MIT as an assistant professor in 1940 and remained there until his death.[15] Samuelson's biographer argues that a central reason for Samuelson's move from Harvard to MIT was the anti-Semitism that was famously widespread at Harvard at the time. In a 1989 letter to his friendHenry Rosovsky, Samuelson blamed anti-Semitism in Harvard economics above all on chair Harold Burbank, as well as onEdward Chamberlin,John H. Williams,John D. Black, and Leonard Crum.[16]
Samuelson died after a brief illness on December 13, 2009, at the age of 94.[17] His death was announced by theMassachusetts Institute of Technology.[13]James M. Poterba, an economics professor at MIT and the president of theNational Bureau of Economic Research, commented that Samuelson "leaves an immense legacy, as a researcher and a teacher, as one of the giants on whose shoulders every contemporary economist stands".[17]Susan Hockfield, the president of MIT, said that Samuelson "transformed everything he touched: the theoretical foundations of his field, the way economics was taught around the world, the ethos and stature of his department, the investment practices of MIT, and the lives of his colleagues and students".[18] His second wife died in 2019.
As professor of economics at the Massachusetts Institute of Technology, Samuelson worked in many fields, including:[19]
Consumer theory, where he pioneered therevealed preference approach, which is a method by which one can discern a consumer'sutility function, by observing their behavior. Rather than postulate autility function or a preference ordering, Samuelson imposed conditions directly on the choices made by individuals – their preferences as revealed by their choices.[20]
More than any other contemporary economist, Samuelson has helped to raise the general analytical and methodological level in economic science. He has simply rewritten considerable parts of economic theory. He has also shown the fundamental unity of both the problems and analytical techniques in economics, partly by a systematic application of the methodology of maximization for a broad set of problems. This means that Samuelson's contributions range over a large number of different fields.
Samuelson believedunregulated markets have drawbacks, he stated, "free markets do not stabilise themselves. Zero regulating is vastly suboptimal to rational regulating. Libertarianism is its own worst enemy!" Samuelson strongly criticised Friedman andFriedrich Hayek, arguing their opposition to state intervention "tells us something about them rather than something aboutGenghis Khan orFranklin Roosevelt. It is paranoid to warn against inevitable slippery slopes ... once individual commercial freedoms are in any way infringed upon."[7]
Stanislaw Ulam once challenged Samuelson to name one theory in all of the social sciences that is both true and nontrivial. Several years later, Samuelson responded withDavid Ricardo's theory ofcomparative advantage: "That it is logically true need not be argued before a mathematician; that is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp thedoctrine for themselves or to believe it after it was explained to them."[35]
For many years, Samuelson wrote a column forNewsweek. One article included Samuelson's most quoted remark and a favorite economics joke:
To prove that Wall Street is an early omen of movements still to come in GNP, commentators quote economic studies alleging that market downturns predicted four out of the last five recessions. That is an understatement. Wall Street indexes predicted nine out of the last five recessions! And its mistakes were beauties.[36]
In the early editions of his famous, bestselling economics textbook Paul Samuelson joked that GDP falls when a man "marries his maid".[37]
Examine underlying analogies between central features in theoretical and applied economics and
Study howoperationally meaningful theorems can be derived with a small number ofanalogous methods (p. 3),
in order to derive "a general theory of economic theories" (Samuelson, 1983, p. xxvi). The book showed how these goals could be parsimoniously and fruitfully achieved, using the language of the mathematics applied to diverse subfields of economics. The book proposes two general hypotheses as sufficient for its purposes:
Maximizing behavior ofagents (includingconsumers as to utility andbusiness firms as to profit) and
Economicsystems (including a market and an economy) instable equilibrium.
The first tenet suggests that all actors, whether firms or consumers, are striving to maximize something. They could be attempting to maximize profits, utility, or wealth, but it did not matter because their efforts to improve their well-being would provide a basic model for all actors in an economic system.[39] His second tenet focuses on providing insight on the workings of equilibrium in an economy. Generally in a market, supply would equal demand. However, he noted that this isn't always the case and that the important thing to look at was a system's natural resting point.Foundations presents the question of how an equilibrium would react when it is moved from its optimal point.[39] Samuelson was also influential in providing explanations on how the changes in certain factors can affect an economic system. For example, he could explain the economic effect of changes in taxes or new technologies.
In the course of analysis,comparative statics, (the analysis of changes in equilibrium of the system that result from a parameter change of the system) is formalized and clearly stated.
The chapter onwelfare economics "attempt(s) to give a brief but fairly complete survey of the whole field of welfare economics" (Samuelson, 1947, p. 252). It also exposits on and develops what became commonly called theBergson–Samuelsonsocial welfare function. It shows how to represent (in the maximization calculus) all real-valued economic measures of any belief system that is required to rank consistently different feasible social configurations in an ethical sense as "better than", "worse than", or "indifferent to" each other (p. 221).
Samuelson is also author (and from 1985 co-author) of an influential principles textbook,Economics, first published in 1948 (19th ed. as of 2010; multiple reprints). The book sold more than 300,000 copies of each edition from 1961 through 1976 and was translated into forty-one languages. As of 2018, it had sold over four million copies.William Nordhaus joined as co-author on the 12th edition (1985). Sometime before 1988, it had become the best-selling economics textbook of all time.[40][41]
Samuelson was once quoted as saying, "Let those who will write the nation's laws if I can write its textbooks."[42] Written in the shadow of theGreat Depression and theSecond World War, it helped to popularize the insights ofJohn Maynard Keynes. A main focus was how to avoid, or at least mitigate, the recurring slumps in economic activity.
Samuelson wrote: "It is not too much to say that the widespread creation of dictatorships and the resulting World War II stemmed in no small measure from the world's failure to meet this basic economic problem [the Great Depression] adequately."[43] This reflected the concern of Keynes himself with the economic causes of war and the importance of economic policy in promoting peace.[44][45][46]
Samuelson's book was the second to introduce Keynesian economics to a wide audience, and was by far the most successful. Canadian economistLorie Tarshis, who had been a student attending Keynes's lectures at Harvard in the 1930s, published in 1947 an introductory textbook that incorporated his lecture notes, titledElements of Economics.[47][48][49]
Samuelson's textbook was a watershed in introducing the serious study of business cycles to the economics curriculum. It was particularly timely because it followed the Great Depression. The study of business cycles along with the introduction of the Keynesian approach of aggregate demand set the stage for the macroeconomic revolution in America, which then diffused throughout the world through translations into every major language. Generations of students, who then became teachers, learned their first and most influential lessons from Samuelson'sEconomics. It attracted many imitators, who became successful in different niches of the college market.
The text was not without criticism. While it praised the "mixed economy" of market and government, some found that too radical and attacked it as socialist. As a precursor to criticisms of Samuelson'sEconomics textbook,Lorie Tarshis's textbook was attacked by trustees of, and donors to, American colleges and universities as preaching a "socialistheresy".[50] Piling on,William F. Buckley, Jr., in his 1951 book,God and Man at Yale, devoted an entire chapter, attacking both Samuelson's and Tarshis' textbooks. For Samuelson's book, Buckley drew from theEducational Examiner and credited it as an "excellent review of Samuelson's text." ("Note to Chapter Two." p. 234)[51][a] For Tarshis' book, Buckley drew fromMerwin K. Hart's organizationto wit: "I am also grateful to theNational Economic Council for its telling analysis of the Tarshis." ("Note to Chapter Two." p. 234)[51] Buckley essentially characterized both as – in the words ofPaul Davidson – "communist inspired".[51][49] Buckley, for the rest of his life, defended the criticisms set forth in his book.
There are 388 papers in Samuelson'sCollected Scientific Papers.Stanley Fischer (1987, p. 234) writes that taken together they are "unique in their verve, breadth of economic and general knowledge, mastery of setting, and generosity of allusions to predecessors".
Samuelson was co-editor, along withWilliam A. Barnett, ofInside the Economist's Mind: Conversations with Eminent Economists (Blackwell Publishing, 2007), a collection of interviews with notable economists of the 20th century.
Samuelson, Paul A. (1958),Linear Programming and Economic Analysis withRobert Dorfman andRobert M. Solow, McGraw–Hill. Chapter-previewlinks.
Samuelson, Paul A. (1960). "Efficient paths of capital accumulation in terms of the calculus of variations". InArrow, Kenneth J.;Karlin, Samuel;Suppes, Patrick (eds.).Mathematical models in the social sciences, 1959: Proceedings of the first Stanford symposium. Stanford mathematical studies in the social sciences, IV. Stanford, California: Stanford University Press. pp. 77–88.ISBN9780804700214.
Samuelson, Paul A. (1982). "Quesnay's 'Tableau Economique' as a theorist would formulate it today". InMeek, Ronald (author); Bradley, Ian C.; Howard, Michael C. (eds.).Classical and Marxian political economy: essays in honour of Ronald L. Meek. London: Macmillan. pp. 45–78.ISBN9780333321997.{{cite book}}:|editor-first1= has generic name (help)
The Collected Scientific Papers of Paul A. Samuelson, MIT Press. Preview links for vol. 1–3 below. Contents links for vol. 4–7.OCLC1079936608 (all editions).
Samuelson, Paul A. (1966), Vol.1 → viaGoogle Books, 1937–mid-1964.
Samuelson, Paul A. (1966), Vol.2 → viaGoogle Books, 1937–mid-1964.
Samuelson, Paul A. (1972), Vol.3 → viaGoogle Books, mid-1964–1970.
Samuelson, Paul A. (1977), Vol.4 → viaInternet Archive(registration required), 1971–76.
Samuelson, Paul A. (1983). "My Life Philosophy",The American Economist, 27(2),pp. 5–12.
Samuelson, Paul A. (2007),Inside the Economist's Mind: Conversations with Eminent Economists withWilliam A. Barnett, Blackwell Publishing,ISBN1-4051-5917-0
Samuelson, Paul A. (2002),Paul Samuelson and the Foundations of Modern Economics, Transaction Publishers,ISBN978-0-76-580114-2
^TheEducational Reviewer was founded in 1949 by Lucille Cardin Crain (née Marie Lucille Gabrielle Cardin; 1901–1983), a conservative activist whose primary interest was in – as she stated in 1951 – "rooting out radical influences in American education." In each issue, arch-conservative academicians and writers offered their views of high school and college textbooks as evidence ofcollectivist content and the like. The publication, for the first three years, was chiefly financed byWilliam F. Buckley, Jr. Crain's husband, Kenneth Cardwell Crain (1883–1969), was a brother ofGustavus Demetrious Crain, Jr. (1885–1973), founder ofCrain Communications.
^abFrost, Greg (December 13, 2009)."Nobel-winning economist Paul A. Samuelson dies at age 94".MIT News. "In a career that spanned seven decades, he transformed his field, influenced millions of students and turned MIT into an economics powerhouse"
^Szenberg, Michael; Gottesman, Aron A.; Ramrattan, lall (2005).Paul Samuelson: On Being an Economist. New York: Jorge Pinto Books. p. 18.ISBN978-0-9742615-3-9.
^Parker, Randall E. (2002).Reflections on the Great Depression. Cheltenham: Edward Elgar. p. 25.ISBN978-1-84376-335-2.
^Backhouse, R. E. (2014). "Paul A. Samuelson's Move to MIT".History of Political Economy.46: 60.doi:10.1215/00182702-2716118.
^Backhouse, Roger (2017).Founder of Modern Economics: Paul Samuelson, vol. 1: Becoming Samuelson, 1915–1948. Oxford: Oxford University Press. pp. 300–307.ISBN9780190664091.
^Fischer, Stanley. "Samuelson, Paul Anthony (1915–2009)".The New Palgrave Dictionary of Economics. Third Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2018.
^Samuelson, Paul A. (May 1939). "Interactions between the Multiplier Analysis and the Principle of Acceleration".The Review of Economics and Statistics.21 (2):75–78.doi:10.2307/1927758.JSTOR1927758.
^Tobin, James. "Macroeconomics and fiscal policy".Paul Samuelson and Modern Economic Theory. Eds. E. Cary Brown and Robert M. Solow. McGraw-Hill, 1983.
^Samuelson, Paul (1969). "The Way of an Economist". In Samuelson, P. A. (ed.).International Economic Relations: Proceedings of the Third Congress of the International Economic Association. London: Macmillan. pp. 1–11.
^Samuelson, Paul (September 19, 1966). "Science and Stocks".Newsweek. p. 92.
^SeeMarkwell, Donald (2006).John Maynard Keynes and International Relations: Economic Paths to War and Peace. New York: Oxford University Press.ISBN978-0-19-829236-4.
Presentation Speech by ProfessorAssar Lindbeck, Stockholm School of Economics, Award Ceremony, The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, 1970
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