- Person
- Simon Kuznets
- Lived
- 1901–1985
- Field
- Economics
- From
- Russian-born American
The story
When the Great Depression struck, American policymakers had no reliable figure for the total size of the economy. They could see factories closing and unemployment rising, but they could not measure how much national income had fallen or where. In 1931, at the request of his mentor Wesley Clair Mitchell, Simon Kuznets took charge of the National Bureau of Economic Research's work on US national income accounts.
Kuznets had to solve many problems at once: missing sources, biased estimates and the basic question of what national income should include. In 1934 he presented an assessment of the national income of the United States for 1929 to 1932, the first official estimate of its kind. He later extended the series to cover 1919 to 1938, and then back to 1869. He credited earlier work by W. I. King and the contributions of colleagues including Lillian Epstein, Elizabeth Jenks and Edna Ehrenberg.
His book National Income and Its Composition, 1919–1938, published in 1941, became one of the most significant works on gross national product. Kuznets was not the first economist to attempt such calculations, but his work was so comprehensive and precise that it set the standard for the field. It also let economists study the structure of national income in detail, including how it was divided among different groups.
In 1936 Kuznets led the creation of the Conference on Research in Income and Wealth, which brought together government officials and academic economists to develop the US national income and product accounts. In 1947 he helped found its international counterpart, the International Association for Research in Income and Wealth. He also helped the US Department of Commerce standardise the measurement of gross national product.
His improved methods became classics and formed the basis of the modern system of national accounts. Today, when a government reports quarterly growth or a central bank judges whether an economy is overheating, it relies on a measuring framework that grew out of the work Kuznets began in the depths of the Depression.
Why it matters
Kuznets's methods formed the basis of the modern system of national accounts, which every country now uses to measure its economy.
About Simon Kuznets
Pinsk-born economist who built the first official estimates of US national income, laying the foundations of GDP, and won the 1971 Nobel Prize for his empirical study of economic growth.
More about Simon Kuznets
- Simon Kuznets proposed the famous Kuznets curveIn 1955 Simon Kuznets proposed that as countries develop, income inequality first rises and then falls, an idea known as the Kuznets curve.
- Simon Kuznets discovered the 15–25 year economic swingsStudying US data back to 1865, Simon Kuznets identified economic cycles lasting 15 to 25 years, now known as Kuznets cycles or long swings.
- Simon Kuznets launched the study of how nations growSimon Kuznets compiled 60 years of data for 14 countries to explain modern economic growth, helping to found the field of development economics.
- Simon Kuznets showed savings rates stay stable over timeIn 1942 Simon Kuznets used long-run data to show that the US savings rate stayed roughly constant from the 1870s to the 1940s, overturning a prediction drawn from Keynes.
- Simon Kuznets warned that GDP does not measure welfareSimon Kuznets helped standardise the measurement of national output, but cautioned that a nation's welfare can scarcely be inferred from a measure of national income.
- Simon Kuznets helped nations build economic statisticsAfter World War II, Simon Kuznets advised the governments of China, Japan, India, Korea, Taiwan and Israel on setting up their national systems of economic information.
Sources
- Simon Kuznets Wikipedia
- Simon Kuznets Jewish Virtual Library
- Simon Kuznets, Biographical NobelPrize.org
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.