- Person
- Simon Kuznets
- Lived
- 1901–1985
- Field
- Economics
- From
- Russian-born American
The story
Simon Kuznets did more than anyone to build the modern measure of a nation's output. Beginning in 1931 at the National Bureau of Economic Research, he produced the first official estimates of US national income, later extending them back to 1869. He pioneered the concept now known as gross domestic product, which tries to capture all economic production in a country in a single number, and he helped the US Department of Commerce standardise the measurement of gross national product.
Yet Kuznets was clear about the limits of his own creation. He disapproved of using national income as a general indicator of well-being, writing that the welfare of a nation can scarcely be inferred from a measure of national income. A single total, however carefully calculated, said nothing about who received the income, how people lived or what the society valued.
His own research reflected that view. He studied how income was distributed among households and how the structure of society changed as economies grew, not just the overall total. He analysed proportions between output and income, consumption and savings, and used long series of data to test theories, showing in 1942 that a prediction drawn from Keynes about rising savings did not hold over the long run. His comparison of inequality across countries led to the idea known as the Kuznets curve.
Kuznets also looked beyond economics narrowly defined. He tied growth to demography, the spread of knowledge and institutions, and in his studies of the 1970s he stressed how science and technology interacted with institutional change and how the moral and political climate of a society could affect the course of growth. He was influenced by thinkers such as A. C. Pigou, who studied when markets fail to maximise welfare.
His warning has outlived him. Debates about measuring well-being alongside output, and efforts to track inequality, health and quality of life next to GDP, echo the caution of the man who created the numbers. For Kuznets, national income figures were a starting point for understanding a society, never the final word on its welfare.
Why it matters
Kuznets's warning reminds policymakers that economic output is a tool for understanding prosperity, not a full measure of human welfare.
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 produced the first US national income figuresIn 1934 Simon Kuznets delivered the first official estimate of US national income, laying the groundwork for the measure we now call GDP.
- 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 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
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.