- Person
- Wassily Leontief
- Lived
- 1905–1999
- Field
- Economics
- From
- Russian-American
The story
Wassily Leontief grew up in St. Petersburg, the son of an economics professor and of Genya Becker, who came from a wealthy Jewish family in Odessa. Detained several times by the Soviet secret police for supporting academic freedom, he was allowed to leave the USSR in 1925, earned his doctorate in Berlin and in 1931 moved to the United States, joining Harvard in 1932.
His goal was to turn the abstract idea of a whole, interlocking economy into numbers. The French economist Léon Walras had written such a system as equations in 1874, but nobody had filled it in with data, partly because governments did not collect figures on what industries sell to one another. With a small Harvard grant Leontief paid graduate students to compile those flows for the United States in 1919 and 1929. Because computers did not yet exist, he used a mechanical machine at MIT that could solve nine simultaneous equations in three or four hours, so his first model had just nine sectors. He published the first results in 1936 and 1937 and a full book in 1941; by 1949, using Harvard’s Mark II computer, he had split the economy into about 500 sectors.
An input-output table is a grid in which each row shows where an industry’s output goes and each column shows what it must buy. From it one can calculate the full ripple effect of a change: more car production means more steel, glass and electricity, which in turn means more coal, fuel and machinery, and so on. The Nobel committee, awarding him the 1973 prize, called him the sole and unchallenged creator of the technique and noted that it was used for planning and forecasting in both market and centrally planned economies, for military mobilisation, for tracing price changes and, in a newer extension, for following pollution back to the industries that cause it.
Input-output tables became part of the international System of National Accounts in 1968, and the United Nations still publishes a handbook guiding statistical offices in compiling them. Today they are used to estimate the regional job effects of new plants or closures, to model the economic damage of disasters and supply-chain breaks, and, in environmentally extended form, to calculate the greenhouse gas emissions embodied in the goods people buy.
Why it matters
Governments, researchers and businesses use Leontief’s input-output tables to see how a change in one industry ripples through jobs, prices, supply chains and emissions across the whole economy.
About Wassily Leontief
Economist who left Soviet Russia and invented input-output analysis, the map of how industries feed one another that statistics offices and planners worldwide still use. Nobel 1973.
Sources
- Press release: The Prize in Economics 1973 NobelPrize.org
- Faculty of Arts and Sciences Memorial Minute: Wassily Leontief Harvard Gazette
- Handbook on Supply and Use Tables and Input-Output Tables with Extensions and Applications United Nations
- Wassily Leontief Wikipedia
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