Paul Samuelson joked that stock markets had predicted nine of the last five recessions
Paul Samuelson said he was born as an economist at 8 a.m. on 2 January 1932, during a lecture on Malthus. He went on to make mathematics the working language of economics, write the best-selling economics textbook ever, and in 1970 become the first American to win the Nobel prize in the field.
Samuelson was born on 15 May 1915 in Gary, Indiana, then a new steel town, to a pharmacist father from a family of Jewish immigrants from Poland. He grew up partly in Chicago and studied at its university, where Frank Knight and Henry Simons shaped him, before moving to Harvard for graduate work under Joseph Schumpeter, Wassily Leontief and Alvin Hansen. His dissertation won the prize for the best in Harvard economics and became Foundations of Economic Analysis, published in 1946.
Harvard did not keep him. In 1940 he took an assistant professorship at MIT, where he stayed for the rest of his life; his biographer points to the antisemitism then rife in Harvard's economics department, and Samuelson himself later blamed its chair, Harold Burbank, above all. At MIT he helped build a world-class department, and his family tree came to include Kenneth Arrow as a brother-in-law and Larry Summers as a nephew.
Foundations borrowed methods from classical thermodynamics and rested on two assumptions: that people and firms maximise something, and that economies tend toward stable equilibrium. From there he formalised comparative statics, the study of how an equilibrium shifts when a parameter changes, and his reach spread across consumer theory, where revealed preference infers tastes from actual choices, public goods, trade theory, finance and macroeconomics. He was central to the neoclassical synthesis blending Keynesian and neoclassical ideas. Challenged by Stanislaw Ulam to name one social science result both true and nontrivial, he chose Ricardo's comparative advantage.
His 1948 textbook Economics was only the second American one to explain Keynes. He advised Presidents Kennedy and Johnson, called himself a cafeteria Keynesian, and traded blows with Milton Friedman in rival Newsweek columns, insisting that free markets do not stabilise themselves. He received the National Medal of Science in 1996 and died on 13 December 2009, aged 94.
Source: Paul Samuelson
