Sunday, December 13, 2009

Paul Samuelson: 1915-2009

Paul Samuelson died at the age of 94. RIP.

This winner of the 1970 economics memorial Nobel prize and an uncle of Larry Summers has been mentioned on this blog several times.
  • In 1947, Paul Samuelson introduced Le Chatelier's principle to economics: negative feedbacks govern stable systems, including economic systems, and mechanisms materialize that act against the initial changes; the longer timescale one considers, the more negative feedbacks - e.g. channels to consume excessive "commodity" in the environment - emerge; this observation is likely to hold in climate science, too; the slower types of responses we consider, the more negative the total feedback factor is likely to be
  • Paul Samuelson made an offer to Steve McIntyre of Climate Audit to get a full scholarship for PhD in mathematical economics at MIT when such offers were rare; this was one of the observations I mentioned to argue that Steve McIntyre has been an unusually good mathematician since he was young

  • Samuelson invented the term "F-twist" for Milton Friedman's dictum that "assumptions don't matter" - that hypotheses should be evaluated according to the agreement with their predictions with the observations, not according to the a priori plausibility of their assumptions (and when the predictions agree, the hypotheses with more exotic assumptions should be even taken more seriously). Needless to say, Friedman used this principle to argue in favor of the credibility of the hypothesis that the economies are optimized when the money supply (stop printing banknotes and/or throw them from helicopters at the right times) is the only centrally controlled variable
  • Václav Klaus mentioned Paul Samuelson as a guru who could elevate his co-author, William Nordhaus, of a famous economics textbook - when he endorsed some Nordaus' observations about the importance of the discount rate for inter-generational considerations

1 comment:

  1. we might do well to remember that while a fair amount of nice math has been applied to economics the results are so far not impressive. Indeed several of samuelson's predictions (that runaway inflation would follow energy price deregulation in the early eighties or that the soviets would catch up with the americans in per capita gdp by 1990(because of the superiority of socialism?)) help to make this point