Economist Lawrence R. Klein dies at 93
MIT alum and Nobel-winning economist passed away on Sunday
Lawrence R. Klein, who predicted America’s economic boom after World War II and who was awarded the 1980 Nobel in economic science for developing statistical models that are used to analyze and predict global economic trends, died Sunday at his home in Gladwyne, Pa. He was 93.
His daughter Hannah Klein confirmed the death.
As World War II was ending, Klein, widely regarded as a brilliant theorist, disputed the conventional wisdom that the postwar period would drive the U.S. economy back into a lengthy depression. Using his econometric models based on mathematical equations, he correctly forecast a flourishing economy built on surging demand for consumer goods and housing.
Although he often testified before federal bodies and served as an economic adviser to Jimmy Carter during his 1976 presidential campaign, Klein chose to remain in academia — he taught economics at the University of Pennsylvania for 33 years — and rejected an offer to join the Carter administration.
“I am just an academic giving advice,’’ he told People magazine in 1976. ”If you are a technician and are asked for help, it is a social obligation of citizenship to give it.“
Klein’s use of vast survey data to build statistical economic models for the United States and several other countries has been adopted by economists around the world.
“Few, if any, research workers in the empirical field of economic science have had so many successors and such a large impact as Lawrence Klein,” the Nobel committee wrote in awarding him the Nobel Memorial Prize in Economic Science.
Jere R. Behrman, a professor of economics and sociology at Penn and a longtime colleague, said Klein’s work was built on the idea that the economy is a set of complex organisms — millions of people, millions of households, corporations, government and other entities — and that it is important to have simple models of these economies to understand their essence. Such models, he said, allow economists “to make predictions about what is likely to happen in the economy if there is a significant change in international markets, such as an increase in the price of petroleum.’’
“Before Klein,’’ he added, ”there had been very little work on these aggregate models.“
Lawrence Robert Klein was born in Omaha, Neb., on Sept 14, 1920, the second-born of three children of Leo Byron Klein, an office clerk, and the former Blanche Monheit. He attended public schools there and became fascinated with economics at a young age.
“Although I was not aware of it at the time, growing up during the Great Depression was to have a profound impact on my intellectual and professional career,” he wrote in an autobiographical essay for the Nobel committee.
At the same time, he developed an obsession for baseball and became a batboy for a minor league team in Omaha. But his dream of a baseball career ended when, at age 10, he was hit by a car and suffered a badly broken right leg, an injury that affected him for the rest of his life, Hannah Klein said. (At Penn, he became a passionate Phillies fan, she said.)
After moving with his family to San Francisco, he received an undergraduate degree in economics from the University of California, Berkeley, then pursued graduate studies at the Massachusetts Institute of Technology, becoming one of its first Ph.D. students in economics and earning his doctorate in just two years.
At MIT, Klein was a protégé of the economist Paul A. Samuelson, a professor only five years his senior. Samuelson, the first American to win the Nobel in economic science, in 1970, became his dissertation adviser and provided what Klein called “an unforgettable experience.”
He left MIT in 1944 to join the econometrics team at the Cowles Commission of the University of Chicago. Its director, Jacob Marschak, gave him the assignment of reviving the early attempts at econometric model building that had been made by Jan Tinbergen, a Dutch economist and the 1969 Nobel laureate.
In Chicago, Klein was surrounded by economic heavyweights like Herbert A. Simon, Trygve Haavelmo and Theodore Anderson. It was also there that he met Sonia Adelson, an economics student from Newport, R.I., whom he married. It was his second marriage.
His wife survives him, as do three daughters, Hannah Klein, Rebecca Klein Kennedy and Rachel Klein; a son, Jonathan; seven grandchildren; and four great-grandchildren.
After spending an academic year in Europe in 1947, Klein returned the next year to join the staff of the National Bureau of Economic Research in Cambridge, Mass., invited by Arthur F. Burns, who also specialized in macroeconometrics and was later chairman of the Federal Reserve.
During his heady days in Chicago, Klein joined the Communist Party, a move that later haunted him, Hannah Klein said. In the 1976 interview with People, he said that party members had insisted that he sign up before lecturing to a Communist audience on Marxist economics. He left the party in 1947. But while teaching at the University of Michigan in 1954, his past association came up during the House Un-American Activities Committee hearings, and the university denied him tenure.
Klein then uprooted his family and moved everything, including the family Chevrolet, to England, where he taught at Oxford for four years. In 1958, an invitation from the Wharton School of the University of Pennsylvania brought him home. He joined the Penn economics faculty and taught graduate and undergraduate students until 1991. He was named a Nobel laureate shortly before his 60th birthday.
As part of his research, he predicted correctly that the pent-up demand for consumer goods after World War II, coupled with the purchasing power of the returning soldiers, would result not in an economic crisis but in a surge in spending and a flourishing economy. He was equally astute in predicting a similar result at the end of the Korean War several years later.
In his later work, he extended his theories on model building to focus on the links between different economies — the flow of goods and services and capital between countries. He traveled to other countries frequently to assess their economies and founded The International Economic Review, a journal produced jointly by Penn and Osaka University in Japan. In Philadelphia, he founded a research group, Wharton Econometric Forecasting Associates (later acquired by IHS, a Denver-based research company), and was principal investigator of its Project LINK, which created a global econometric model with which to forecast trends.
“The only satisfactory test of economics is the ability to predict,” he wrote.