Ragnar Frisch

From New World Encyclopedia
Revision as of 23:56, 5 August 2007 by Igor Bali (talk | contribs) (→‎Work)
Previous (Raghavendra Swami)
Next (Ragnarök)

Ragnar Anton Kittil Frisch (March 3, 1895 – January 31, 1973) was a Norwegian economist and pioneer econometrician He is famous for his development of large-scale econometric models connected to economic planning and national income accounting. He was the creator of much of the nomenclature used in the world of economics today, coining words such as, "econometrics," "flow-input" and "point-output" for example. He was a founder of econometrics as an independent discipline and had a great impact on the world of economics and econometrics. With Jan Tinbergen, he was a joint winner of the 1969 Nobel Prize for Economics.

Life

Ragnar Frisch was born on March 3, 1895 in Oslo, Norway, the son of gold and silversmith Anton Frisch and Ragna Fredrikke Kittilsen. Being expected to continue his family business, Frisch became an apprentice in the David Andersen jewelry workshop in Oslo.

However, on his mother's advice, while doing his apprenticeship Frisch also started studying at the University of Oslo. His chosen topic was economics, as it seemed to be "the shortest and easiest study" available at the university. In 1919 Frisch received his degree, and in 1920 he passed his handicraftsman tests and became a partner in his father's workshop.

In 1921, Frisch received a fellowship from the university which enabled him to spend three years studying economics and mathematics in France and England. After his return to Norway in 1923, although the family's business was having difficulties, he continued his scientific activity, feeling that research, not jewelry, was his real calling. He published several papers in probability theory, beginning teaching at the University of Oslo in 1925 and, in 1926, gaining his Ph.D with a thesis in mathematical statistics.

Frisch received a fellowship from the Rockefeller Foundation to visit the United States in 1927. There, he looked for other economists interested in the new mathematical and statistical approaches to economics, making contacts with Irving Fisher, Wesley Clair Mitchell, Allyn Young, and Henry Schultz. He wrote a paper analyzing the role of investment in explaining economic fluctuations. Wesley Mitchell, who had just written a book on business cycles, helped widely popularize Frisch's paper.

Although his fellowship was extended to travel to Italy and France, the next year Frisch had to return to Norway because of his father's death. He spent one year to modernize and recapitalize the workshop by selling family assets and finding a jeweler to manage the business for him. In 1928, he returned to academic work, being appointed associate professor in statistics and economics at the University of Oslo. He founded the Rockefeller-funded Institute of Economics at the University of Oslo and became its Director of Research. He also founded the first econometric laboratory there. He became a full professor at the Oslo University in 1931.

Frisch married Marie Smedal in 1920 and they had a daughter, Ragna. His granddaughter, Nadia Hasnoui (Ragna's child), became a Norwegian television personality. After his first wife died in 1952, he remarried in 1953, to his childhood friend Astrid Johannessen.

Ragnar Frisch received the Antonio Feltrinelli prize from the Accademia Nazionale dei Lincei in 1961 and the Nobel Memorial Prize in Economics in 1969 (jointly with Jan Tinbergen) for "having developed and applied dynamic models for the analysis of economic processes." He also worked as an economic expert in developing countries, including Egypt and India. He retired from teaching in 1965.

Ragnar Frisch died on January 31, 1973, in Oslo, Norway.

Work

In 1926, Frisch published his seminal article Sur un problème d'économie pure, in which he outlined his view that economics should follow the same path towards theoretical and empirical quantization as other sciences, especially physics. He believed that econometrics would help realize that goal, and that the use of mathematical tools would yield a better understanding of economics:

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 is possible, into a science in the strict sense of the word (Frisch 1926).

The article offered theoretical axiomatizations which lead to a precise specification of both ordinal and cardinal utility, followed by an empirical estimation of the cardinal specification. He introduced the measurement of marginal utility. Frisch also started lecturing a course on production theory introducing a mathematization of the subject.

After the introduction of the new economic science, econometrics, in 1930 Frisch founded the Econometric Society. In the constitution of the society, Frisch put that it had the goal to promote studies which would unify the empirical-quantitative and theoretical-quantitative aspects of economics, making economics resemble natural sciences.

In 1927 and 1928 Frisch published a series of articles on the statistics of time series. In 1929 he published his first important essay on econometric methodology, Correlation and scatter in statistical variables, followed in the same year by Statics and dynamics in economic theory, which introduced dynamics in economic analysis. His distinction between the terms “static” and “dynamic” helped formalize production theory.

Faced by the Great Depression, Frisch started to advocate econometrics as the tool to solve the problems of economy and society. He believed that econometricians have a special responsibility to engage in social action, and bring about positive change. He thus proposed five activities that an econometrician must engage in:

  1. The descriptive procedure (engaging in descriptive, historical and experimental work);
  2. The understanding procedure (engaging in rational part of the investigation);
  3. The prediction procedure (engaging in predicting the future phenomena);
  4. The human purpose decision (engaging in moral evaluation of the possible outcomes of our decisions)
  5. Social engineering (engaging in bringing the change to life).

From the mid-1930s Frisch wrote extensively on business cycles. He was likely the first person to have made the distinction between the study of individual firms and industries (“microeconomics”), and aggregate economy (“macroeconomics”). His work on impulse-propagation business cycles helped formalize modern New Classical business cycle theory.

In their 1933 paper, Frisch and Frederick Waugh introduced their famous Frisch-Waugh theorem, which states that the determination of the coefficients in a standard regression model via ordinary least squares and a method involving projection matrices are equivalent.

Influenced by the devastation of World War II, and before that the Great Depression, Frisch developed the view that neither economics nor politics can act alone to solve the world problems. He argued that both have to work together to bring change to society. He developed a set of planning tools and growth models that was successfully used by Norwegian government after the war.

By the end of his life, however, he changed his opinion, seeing that econometricians have misinterpreted and misused his ideas:

I have insisted that econometrics must have relevance to concrete realities—otherwise it degenerates into something which is not worthy of the name econometrics, but ought rather to be called playometrics (Frisch, 1970).

Legacy

Frisch was one of the founders of economics as a modern science. He made a number of significant advances in the field of economics and coined a number of new words including econometrics and macroeconomics. His 1926 paper on consumer theory helped set up Neo-Walrasian research. He formalized production theory (1965). In econometrics he worked on time series (1927) and linear regression analysis (1934). With Frederick Waugh, he introduced the celebrated Frisch-Waugh theorem (Econometrica 1993) (sometimes referred to as the Frisch-Waugh-Lovell theorem). His 1933 work on impulse-propagation business cycles was one of the principles behind modern New Classical business cycle theory. He also played a role in introducing econometric modeling to government economic planning and accounting.

He was one of the founders of the Econometric Society and editor of Econometrica for over twenty years. The Frisch Medal, so named in his honor, is given every two years for the best paper published in the aforementioned Econometrica in the previous five years.

Publications

  • Frisch, Ragnar. 1926. Sur un problème d'économie pure [On a problem in pure economics]. Norsk Matematisk Forenings Skrifter, 1(16), 1-40
  • Frisch, Ragnar. 1927. Sammenhengen mellem primærinvestering og reinvestering [The relationship between primary investment and reinvestment]. Statsøkonomisk Tidsskrift, 41, 117-152
  • Frisch, Ragnar. 1929. Correlation and scatter in statistical variables. Nordic Statistical Journal, 1, 36-102
  • Frisch, Ragnar. 1929. Statikk og dynamikk i den økonomiske teori [Statics and dynamics in economic theory]. Nationaløkonomisk Tidsskrift, 67, 321-379
  • Frisch, Ragnar. 1934. Statistical Confluence Analysis by Means of Complete Regression Systems. Universitetets Okonomiske
  • Frisch, Ragnar. 1952. The occurrence test. Institute of Economics, University of Oslo
  • Frisch, Ragnar. 1960. Planning for India: Selected Explorations in Methodology. Asia Publishing House.
  • Frisch, Ragnar. 1965. Theory of Production. Rand McNally
  • Frisch, Ragnar. 1966. Maxima and Minima: Theory and Economic Applications. Springer. ISBN 9027700931
  • Frisch, Ragnar. 1970. Econometrics in the world of today. In W. A. Eltis, M. F. G. Scott, J. N. Wolfe (eds.), Induction, Growth and Trade, Essays in honour of Sir Roy Harrod (p.163). Oxford University Press.
  • Frisch, Ragnar. 1971. Cooperation between politicians and econometricians on the formalization of political preferences. Sveriges industriforbund
  • Frisch, Ragnar. 1971. On a Problem in Pure Economics. In J.S. Chipman, L. Hurwicz, M.K. Richter and H.F. Sonnenschein (eds), Preferences, Utility and Demand: A Minnesota Symposium. Harcourt Brace Jovanovic Inc, 386-423. Translated by J.S. Chipman from Frisch (1926a).
  • Frisch, Ragnar. 1975. Economic Planning Studies. Springer. ISBN 9027702454
  • Frisch, Ragnar. 1978 (original published in 1932). New Methods of Measuring Marginal Utility. Porcupine Press. ISBN 0879918632
  • Frisch, Ragnar & Frederick V. Waugh. 1933. Partial Time Regressions as Compared with Individual Trends. Econometrica, 1(4), 387-401.

References
ISBN links support NWE through referral fees

External links

Credits

New World Encyclopedia writers and editors rewrote and completed the Wikipedia article in accordance with New World Encyclopedia standards. This article abides by terms of the Creative Commons CC-by-sa 3.0 License (CC-by-sa), which may be used and disseminated with proper attribution. Credit is due under the terms of this license that can reference both the New World Encyclopedia contributors and the selfless volunteer contributors of the Wikimedia Foundation. To cite this article click here for a list of acceptable citing formats.The history of earlier contributions by wikipedians is accessible to researchers here:

The history of this article since it was imported to New World Encyclopedia:

Note: Some restrictions may apply to use of individual images which are separately licensed.

Retrieved from https://www.newworldencyclopedia.org/p/index.php?title=Ragnar_Frisch&oldid=395955

Content is available under Creative Commons Attribution/Share-Alike License; additional terms may apply. See Terms of Use for details.
Copyright Logo
Powered by MediaWiki