Paul Samuelson, AB'35, found his calling in economics at the University of Chicago during the height of the Great Depression and went on to transform the field with new techniques of rigorous analysis. During his formative years at the College he met a brilliant economics graduate student named Milton Friedman, and the two became friends who in their own ways charted the course of 20th-century economics scholarship.
Samuelson died Sunday at his home in Belmont, Mass, at the age of 94. He was one of the nation's most distinguished economists, and in 1970 became the first American to win the Nobel Memorial Prize in Economic Sciences, not long before Friedman won his Nobel in 1976.
Samuelson grew up in Hyde Park and attended Hyde Park High School, where a teacher got him interested in the stock market. He entered the University at the age of 16, and further developed his interest in economics from his first days as an undergraduate.
"I was born as an economist on Jan. 2, 1932," he said of the date when he heard his first lecture as an undergraduate, according to The New York Times. The lecture was on Thomas Malthus, the 18th-century British economist who wrote about the perils of population growth.
As an undergraduate at Chicago, he took economist Jacob Viner's graduate course along with Friedman and George Stigler, who both became celebrated Chicago economists. Although Samuelson and Friedman frequently disagreed on points of policy, they remained friends for years after their time as students.
Samuelson published his first paper in economics at the age of 21. In 1947, he became the first person to receive the John Bates Clark Medal by the American Economic Association as the economist under 40 who "made the most distinguished contribution to the main body of economic thought and knowledge." Friedman received the medal in 1951.
Both wrote for Newsweek and their views balanced each other, with Friedman taking a position that favored little government intervention in the economy while Samuelson took the opposite position. Yet both economists defied easy caricatures; Samuelson advocated tax cuts in the 1960s as a means to stimulate the economy, while Friedman's libertarian leanings sometimes put him at odds with conservatives.
"A historian could well tell the story of 20th-century public debate over economic policy in America through the jousting between Mr. Samuelson and Milton Friedman," The New York Times wrote in its obituary.
Samuelson continued his studies at Harvard, where he received an MA in 1936, and a PhD in 1941. He received an honorary Doctor of Law degree from Chicago in 1961.
As a student, Samuelson examined the contradictions, overlaps and fallacies in the classical language of economics; he sought unification and clarification through mathematics. In his first major work, Foundations of Economic Analysis, published in 1947, he showed how mathematics could make economics a more rigorous discipline.
"Samuelson changed economics in a profound way," said James Heckman, the Henry Schultz Distinguished Service Professor in Economics. "He made economics into a formal science using mathematics. In Foundations, which created the groundwork for rigorous economic analysis, he quoted J. Willard Gibbs to say 'mathematics is a language.' He used that language to make economics speak more clearly and more cogently to address an enormous range of fundamental economic problems.
"One hundred years from now, Samuelson will be mentioned in the same breath as Adam Smith as a founder of the modern field-a man who by allowing economists to speak clearly, also allowed them to address harder problems with clearer answers," Heckman said.
Robert Lucas, AB'59, PhD'64, the John Dewey Distinguished Service Professor in Economics and the College, said he studied Foundations of Economic Analysis to prepare for graduate school. Lucas said Samuelson's perspective as a young scholar helped him better explain economics to his readers.
"I loved the Foundations," Lucas wrote in a 2001 memoir. "Like so many others in my cohort, I internalized its view that if I couldn't formulate a problem in economic theory mathematically, I didn't know what I was doing. I came to the position that mathematical analysis is not one of many ways of doing economic theory: It is the only way. Economic theory is mathematical analysis. Everything else is just pictures and talk."
"Samuelson was the Julia Child of economics, somehow teaching you the basics and giving you the feeling of becoming an insider in a complex culture all at the same time," Lucas wrote.
Samuelson's Economics: An Introductory Analysis, first published in 1948, became the best-selling economics textbook of all time. The book popularized the perspective of British economist John Maynard Keynes and was written when the Great Depression and World War II were fresh in people's minds.
In it he wrote, "It is not too much to say that the widespread creation of dictatorships and the resulting World War II stemmed in no small measure from the world's failure to meet this basic economic problem [the Great Depression] adequately." The book went through multiple editions and was translated into numerous languages.
"The book's emphasis on different themes has changed with the changing of the nation's economic problems," wrote Business Week in 1959.
"The first edition was dominated by the end-of-the-war worry that widespread unemployment would return…later editions put growing stress on fiscal and monetary controls over inflation. In the later editions Samuelson has worked toward what he calls a 'neoclassical synthesis' of ancient and modern economic findings. Briefly, his synthesis is that nations today can successfully control either depression or inflation by fiscal and monetary policies. Some economists feel that Samuelson's book…is really his greatest contribution. It has gone a long way toward giving the world a common economic language."
Samuelson came to MIT in 1940 as an assistant professor of economics and was appointed associate professor in 1944. He was appointed professor at MIT in 1947 and was later named Institute Professor.
Samuelson served widely as a consultant, including as economic advisor to senator, candidate, and President-elect John F. Kennedy. He was the author of the Jan. 5, 1961 "Samuelson Report on the State of the American Economy to President-elect Kennedy," and his consultation for the government brought him further national recognition.
He was concerned about the dangers of inflation and also suggested lowering interest rates to boost home ownership. He was also an expert on welfare economics, public finance theory, international economics and consumer theory and published widely on those topics. Samuelson continued writing on those topics throughout his lifetime.
Survivors include his wife of 28 years, Risha Samuelson; six children from his first marriage to the late Marion Crawford Samuelson; and 15 grandchildren.