ByJUSTIN LAHARTandJON HILSENRATH
Paul A. Samuelson, whose analytical work laid the foundation for modern economics, died Sunday. He was 94.
Mr. Samuelson, the first American to win the Nobel Prize in economics and the author of one of the most-ubiquitous college textbooks ever, was "one of the greatest teachers that economics has ever known" and "a titan of economics," according to Federal Reserve chairman Ben Bernanke.
"Paul Samuelson was both a path-breaking and prolific economic theorist," said Mr. Bernanke, a former student of Mr. Samuelson's at the Massachusetts Institute of Technology.
Actively publishing into the 2000s, Mr. Samuelson's career in economics spanned eight decades. As a high school student in 1932, he wandered into an economics lecture at the University of Chicago and was enamored. But attending Chicago as an undergraduate during the Great Depression, he became acutely aware, he said in an interview with The Wall Street Journal earlier this year, of the differences between what was being taught in the classroom and "what I heard out the windows and I heard from the street."
In 1935 he went, despite his Chicago professors' protestations, to Harvard University for his graduate work. His 1941 PhD thesis, later published as "Foundations of Economic Analysis," examined the mathematical structure underlying economics. The approach revolutionized the field, to the point where economists today are often consumed with finding mathematical proofs for their theories.
"For me, it is a special bereavement," said Princeton University economist Avinash Dixit. "My whole style of research, and the techniques that support almost all of my own papers, derive from his foundational articles."
Mr. Samuelson started teaching at MIT in 1940, the beginning of a lifelong association with the university that helped its economics program become the most highly-regarded in the world. Through his "Economics" textbook, first published in 1948 and for years the most widely used college textbook on any topic, his analytical approach became the standard for undergraduate courses. It also introduced the work of John Maynard Keynes into the college curriculum. Now in its 19th edition, it is still popular. Mr. Bernanke keeps a copy signed by Mr. Samuelson on the shelves in his office at the Fed.
"There's just an enormous amount of what every undergraduate learns that we take for granted that Paul played an absolutely critical role in codifying and uncovering," said MIT economist and National Bureau of Economic Research president James Poterba, who remembers carrying around Mr. Samuelson's textbook as a high school student. "It's like trying to envision how did people do mechanics before Newton."
In 1970, Mr. Samuelson was the first American to win the Nobel Prize in economics, the second year the prize was offered. "Samuelson's contribution has been that, more than any other contemporary economist, he has contributed to raising the general analytical and methodological level in economic science," wrote the Nobel prize committee. "He has in fact simply rewritten considerable parts of economic theory."
Mr. Samuelson, a lifelong Democrat, acted as an adviser to Presidents John F. Kennedy and Lyndon B. Johnson, though he refused to take an official position in government. Mr. Samuelson hailed from a family of well-known economists, including brother Robert Summers, sister-in-law Anita Summers and nephew Lawrence Summers.
"Above all else, Paul Samuelson was a scholar," Lawrence Summers, who runs President Obama's National Economic Council, said Sunday. "He used to proudly remark that he had never spent a full week in Washington. But through his research, teaching, and writing he had more impact on the economic life of this country and the world than any government economic official and many presidents."
Mr. Samuelson, in a March interview with The Wall Street Journal, took aim at those trying to quell the financial crisis. "The typical pundit today would be somebody who might have been my student at MIT 25 years ago. I have great admiration for Ben Bernanke. But having been born in 1956 he did not have a feel for what it was like. If you were born after 1950, you really don't have the feel of that Great Depression in your bones," he said. "Being a bright boy at MIT, it's not really a substitute for that.
Indeed, MIT PhDs now dominate the profession and hold many high positions in government, including Mr. Bernanke and Christina Romer, chair of the Council of Economic Advisers.
An economics column Mr. Samuelson wrote for Newsweek from 1966 to 1981 brought his views on economics to a wider audience. One of his columns also included his most widely repeated quip.
"To prove that Wall Street is an early omen of movements still to come in GNP, commentators quote economic studies alleging that market downturns predicted four out of the last five recessions," he wrote in 1966. "That is an understatement. Wall Street indexes predicted nine out of the last five recessions! And its mistakes were beauties."
He remained intensely interested in what was happening in the economy through this year, holding forth on the effects of the worst economic crisis since the one that marked the start of his career in the 1930s, and offering analysis.
"I thought from the beginning this was going to be very serious because it was people like me -- people at MIT and Chicago -- who created all these wonderful derivatives," he said. "The way they were formulated by financial engineers, they were not understood by any CEO. They didn't even know who they were in the bathtub with."