This Day in Jewish History |

1906: A Nobel-prize Winning Economist Who Noticed Smog Is Born

Ruth Schuster
Ruth Schuster
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Harvard.Credit: Bloomberg
Ruth Schuster
Ruth Schuster

On August 5, 1906, the Nobel Prize-winning Harvard economist Wassily Leontief, Jr., who pioneered an economic analysis method that shows how change in one industry can affect the entire economy, was born.

These days people drift in and out of professions almost as frequently as they change their underwear, but once upon a time there were these things called job security and family tradition. Leontief’s father, Wassily W. Leontief, was an economist, and Wassily Jr. knew from an early age that he liked input-output analysis: studying the ripple effect in economics.

Some sources say Leontief the son was born in Munich, while others insist he was born in St. Petersburg. In his autobiographical blurb for the Nobel Prize organization, he doesn’t name a birth city.

Wherever the event took place, Leontief was born to Wassily Sr., a scion of a merchant family who became a professor of economics in Russia, and Slata Leontief of Odessa, who later changed her name to Evgenia, and who came from a Jewish family.

The son was a child prodigy. Leontief began studies at the University of Leningrad in 1921, at age 15, and earned a degree in economics equivalent to a master’s at 19. He came to the attention of the authorities because of his support for academic independence and freedom of speech — and for Pitirim Sorokin, an ardent opponent of Communism who immigrated to the United States in 1923. The young Leontief was serially arrested by the Cheka security service, until he too was allowed to leave Russia in 1925, because the authorities mistakenly thought he was dying of cancer. Leontief moved to Germany, completing a doctorate at the University of Berlin in 1928, on circular flows in economics. In 1929 he spent some time in China, advising its ministry of railroads.

From there he went to the United States, where he began teaching at Harvard in 1932, the year he married the poet Estelle Marks. They had one daughter, Svetlana, in 1936.

Leontief earned the rank of professor in 1946 and created a new world of computerized economic modeling by dividing the U.S. economy into 500 sectors, at a time when computers were far more primitive than they are now.

In 1973, Leontief was awarded the Nobel Prize “for the development of the input-output method and for its application to important economic problems.” What he did was mathematically demonstrate how changes in one economic sector can affect other economic sectors. His models are used to this day by the top economic institutions of the world, including the World Bank and United Nations.

He taught at Harvard for 44 years, after which he moved over to New York University, where he directed the Institute for Economic Analysis until his retirement.

Leontief also documented what has come to be called the Leontief Paradox: the seeming absurdity that despite being the most capital-flush country on the planet, the United States was exporting labor-intensive commodities and importing capital-intensive commodities. His 1954 finding flouted economic theory, which predicted that a given country’s trade patterns would be based on its comparative advantage. That, for the U.S., proved not to be so. Some economists later suggested that if “capital” were interpreted more broadly to include “human capital,” the paradox would be resolved, since the goods being exported were made thanks to high-quality human capital, not unskilled labor.

Toward the end of his career, Leontief began paying more attention to the environment. In a seminal 1972 paper published in Geography, he built one of his classic input-output models with two economic sectors that produce pollution and a discrete economic sector to remove that pollution. His purpose was to show that environmental issues could be analyzed in the broad framework of economics, a position now unreservedly adopted.

Wassily Leontief died in 1999 at the age of 92, and his wife died six years later. He is survived by his daughter Svetlana Alpers, a professor emerita of the history of arts at the University of California, Berkeley.