Academic, Economist (1915-2009)
Paul Samuelson became the first American economist to win the Nobel Prize in Economic Sciences in 1970. In 1966, he was given the highest honour at MIT when he was made an Institute Professor. Samuelson is famous for his groundbreaking use of mathematics in economics as well as being the author of the best-selling economics textbook of the 20th Century with his 1948 tome ‘Economics’.
Paul Samuelson set the tone for the use of mathematics in economics. Before his influence, the dismal science was taught using verbal explanations and pseudo-derivations. Samuelson’s use of mathematics to validate theories and principles soon caught on with his peers and helped to justify economics as a science shrouded in logic and rationality.
Samuelson was intrigued by the discrepancy between economic theories and real-world applications during the aftermath of the Great Depression. Resultantly he innovatively mixed maths and economics to develop the multiplier-accelerator model; a model that captures the innate tendency of market economies to fluctuate. Samuelson also introduced us to the ‘correspondence principle’ linking the behavior of individuals with the aggregate stability of the economy.
Samuelson was also responsible for the formation of the Neoclassical synthesis after he intertwined the Neoclassical macro framework of the free market with Keynes’s proposition of government intervention. Samuelson concluded that free-market theories should be deployed during times of stability and government policies, like tax cuts, must be used in periods of inefficiency to stimulate the economic system.
“Economics has never been a science – and it is even less now than a few years ago.”
“What we know about the global financial crisis is that we don’t know very much.”
“Politicians like to tell people what they want to hear – and what they want to hear is what won’t happen.”
– Paul Samuelson