Ragnar Frisch was a renowned Norwegian economist, best remembered for founding the discipline of econometrics, which can be described as the branch of economics that aims to give empirical content to economic relations. Being one of the joint winners of the first Nobel Memorial Prize in Economic Sciences in 1969 (with Jan Tinberger), it was also he who coined the widely used term macroeconomics/microeconomics in 1933. Frisch can also be undoubtedly regarded as one of the founding fathers of economics as a modern science. He made several significant advances in the field of economics and his paper in consumer theory written in 1926 helped set up the Neo-Walrasian research. It was also he who helped formalize production theory, which is the study of production, or the economic process of converting inputs to outputs. In 1930, he founded ‘The Econometric Society’, an international society of academic economists wanting to apply statistical tools to their field. There were about 700 Elected Fellows of the Econometric Society as of 2014, which makes it one of the most renowned research affiliations. For more than twenty years, he remained the editor of the journal ‘Econometrica’.
Childhood & Early Life
Ragnar Frisch was born to Anton Frisch and Ragna Frederick Frisch, on 3 March 1895, in Oslo, Norway. His father was a gold and silversmith. His family had emigrated from Germany to the town of Konsberg in Norway in the 17th century itself. Since his ancestors had been working in the silver mines of Konsberg for generations, his grandfather became a goldsmith and continued the legacy, and Ragnar’s father also did the same.
Like his father, Ragnar was also expected to continue the family business, which led him to becoming a trainee in the David Andersen workshop, which was situated in Oslo. However, because of his mother’s insistence, he got admitted at the Royal Frederick University (University of Oslo), while continuing his training as well.
With economics as his main subject, he received his bachelor’s degree in 1919. The following year, he also passed the handicraftsman tests, and started working in his father’s workshop as an associate.
In 1921 Frisch received a fellowship from his university which gave him the opportunity to go to France and England for higher studies. There Frisch spent three years studying economics and mathematics, after which he returned to Norway.
Continue Reading Below
You May Like
By the time, Ragnar Frisch returned to Norway in 1923, he had realized that economics was his real calling. At that time his family business was having difficulties but Ragnar Frisch was more inclined towards his scientific research.
He published a few papers on probability theory and began teaching at the University of Oslo in 1925. He earned his Ph.D. with a thesis in mathematical statistics the following year. His lectures on production theory were eventually published as a book much later in 1965.
He published his first seminal article in 1926, which was named ‘Sur un problem d’economie pure’. His view was that just like other sciences, economics should follow the same path towards theoretical and empirical quantification. Ecometrics, as Frisch felt, would only help realize that goal. According to him, a better understanding of economics could be gained with the use of mathematical tools.
In 1927, he went to the United States after receiving a scholarship from the Rockefeller Foundation. There he associated with many other economists, like Irving Fisher, Allyn Young, and Henry Schultz. He also wrote a paper where he analyzed the role of investments in explaining economic fluctuations. American economist Wesley Mitchell popularized his paper as he felt that it was introducing new and advanced methods.
His fellowship was extended and although it gave him the opportunity to travel to France and Italy, Ragnar Frisch had to go back to Norway because of his father’s death. He then had to spend one year in modernizing and financing his family business, as well as looking for someone to manage the business on his behalf.
After that he resumed his academic career and very soon, in 1928, got appointed as an Associate Professor of Statistics and Economics at the University of Oslo itself. After publishing several articles on statistics as well as economic metrology, and introducing dynamics in economic analysis, Frisch became a full Professor in the University in 1931.
Over the years he became well-known mainly for the development of large-scale econometric modeling linked to both economic planning as well as national income accounting. Including the trade cycle production theory and statistical theory, Frisch was involved with a wide range of macroeconomic topics.
Ragnar Frisch firmly believed that economics can help solve the problems people face in society. However, the devastation caused by the World War II and the Great Depression greatly influenced him and he arrived at the conclusion that economics and politics alone can never solve the problems that the world is suffering from. He argued that social transformation was necessary as well. However, because of misinterpretation of his statement by others, he was forced to withdraw his opinion.
In his later years, Frisch also worked as an advisor to the government on issues related to economics and planning, though he was never given an official position. Many of his economic tools and methods were of great use to the Norwegian government.
Along with Frederick Waugh, he introduced the famous Frisch-Waugh theorem. According to this theorem, in a standard regression model, the determination of the coefficients via ordinary least squares is equivalent to a method involving projection matrices.
Ragnar Frisch penned numerous important articles in his lifetime, some of which were ‘The Relationship between Primary Investment and Reinvestment’ (1927), ‘Theory of Production’ (1965), and ‘Econometrics in the World of Today’ (1970).
Awards & Achievements
Ragnar Frisch, along with Dutch economist Jan Tinbergen, was jointly awarded the first Nobel Memorial Prize for Economic Sciences in 1969, for developing as well as applying dynamic models for the analysis of economic processes.
Personal Life & Legacy
Ragnar Frisch married Marie Smedal in 1920 and had a daughter named Ragna. After Marie’s death in 1952, he got remarried to his childhood friend Astrid Johannsen. This marriage lasted till his death.
He passed away on January 31, 1973, in Oslo, Norway.
The Frisch Medal, named after him, is awarded every two years by ‘The Econometric Society’, for exceptional empirical or theoretical research work published in the magazine ‘Econometrica’ during the past five years. It is considered as one of the top three prizes in the field of economics.