Ragnar Anton Kittil Frisch (March 3, 1895 – January 31, 1973) was a Norwegian economist and pioneer econometrician. Frisch's work advanced economics in a number of aspects: He formalized production theory; in econometrics he worked on time series and linear regression analysis; with Frederick Waugh, he introduced the celebrated Frisch-Waugh theorem; his work on impulse-propagation business cycles was one of the principles behind modern New Classical business cycle theory; and he played a role in introducing econometric modeling to government economic planning and 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," among others. With Jan Tinbergen, Ragnar Frisch was a joint winner of the 1969 Nobel Prize for Economics.
Ragnar Frisch was not just a theoretician, developing models out of a desire to achieve an abstract goal. He was serious about the need to solve social problems, and he believed that his work, strictly following the scientific method and using mathematics to test the models, was the correct method to do so. Ultimately, Frisch felt that his ability to understand these economic principles was a gift from God, and he wanted to use his talents and their fruits to improve society for all people.
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 contact 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 to popularize Frisch's ideas.
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 modernizing and recapitalizing 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.
Ragnar Frisch received the Antonio Feltrinelli prize from the Accademia Nazionale dei Lincei in 1961, and the Nobel Memorial Prize in Economics (jointly with Jan Tinbergen) in 1969, 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.
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 quantification 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 this new economic science, econometrics, in 1930, Frisch founded the Econometric Society. In the constitution of the society, Frisch wrote 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.
Facing the Great Depression, Frisch started to advocate econometrics as the tool to solve the problems of economy and society. He believed that econometricians had a special responsibility to engage in social action, and bring about positive change. He thus proposed five activities that an econometrician must engage in:
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 the 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).
Frisch was one of the founders of economics as a modern science. In this effort, he developed the new field of econometrics, which brought together mathematics, statistics, and economics to subject economic laws to numerical verification. He made a number of significant advances in the field of economics and coined a number of new words, including "econometrics," "microeconomics," and "macroeconomics."
Frisch 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 during the previous five years.
Beyond developing economics as a science, Frisch also advocated that it be used to help solve real problems in the world. Dedicated to the scientific method, he was a firm believer in the power of mathematical quantification and scientific methodology as the way to approach all questions. Nevertheless, in his autobiography at the time of receiving his Nobel Prize, Frisch acknowledged:
deep thankfulness to Whom all this is due: To the Lord Who has steered my steps over the years, and Who has been my refuge in the superior matters which no science can ever reach.
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