Lawrence R. Klein, Awarded Nobel Prize in 1980,

Lecture presented October 25, 1984.

Lawrence Klein pioneered the first econometric model to be used regularly for business forecasting. He also developed mathematical equations to describe and predict the functioning of the economy as a whole.

The Nobel Committee recognized Professor Klein “for the creation of econometric models and the application to the analysis of economic fluctuations and economic policies.”

Quotes from Lawrence Klein’s October 1984 lecture at Trinity University:

A truly exceptional group of people was assembled in Chicago during the late 1940s. I doubt that such a group could ever be put together again in economics. From our closely knit group, four Nobel laureates have emerged, and two others came from the next bunching of Cowles researchers – partly at Chicago and partly at Yale. We worked as a team and focused on a single problem – to put together an econometric model of the American economy (a second attempt after Tinbergen’s of the 1930s) – using the best of statistical theory, economic theory, and available data. After about four or five years of intensive research built up around this theme, the team dispersed to new openings in academic life. The effort was kept alive through my own research, and many of the brilliant people of our group went on to do their work in quite different branches of economics – Koopmans in activity analysis, Arrow in general equilibrium theory, Simon in decision analysis, Anderson in statistics, Marschak in the theory of organization, and so on.

During the 1960s the computer was finally harnessed for the needs of econometrics; it had first been used for scientific, engineering, and large-scale data processing (such as censuses). During this decade all those complicated calculations that we had contemplated during the development years of econometrics at the Cowles Commission became possible.

I feel the same way about other popular excursions into the media that I feel about politics. The trade-offs with what I believe to be good economics are not acceptable, and I feel more comfortable writing in the scholarly domain.

Additional resources on Lawrence R. Klein are available at the Nobel web site.

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