September 25, 2003

R.I.P. Franco Modigliani

I remember when I was a graduate student I would just sit back and listen to him think, and be amazed:

WSJ.com - Economist, Nobel Laureate Franco Modigliani Dies at 85: Franco Modigliani, a Massachusetts Institute of Technology professor who won the Nobel Prize in economics for his work on how people save money for their old age, has died at 85.... "He was certainly one of the giants," said Bengt Holmstrom, head of the economics department at MIT. "The intensity was the hallmark of his style. It was hard to think about anybody else who was as passionate about economics." Mr. Modigliani, who was born in Italy and emigrated to the United States just days before the outbreak of World War II, won the Nobel in 1985 for theories on how people save and for his work on how to determine the market value of businesses...

Posted by DeLong at September 25, 2003 07:58 PM | TrackBack

Comments

"who was born in Italy and emigrated" because racially persecuted, should be added

Posted by: Hans Suter on September 26, 2003 04:07 AM

The article says: "A Jew, Mr. Modigliani left Italy shortly after its racial laws were instituted in 1938, and arrived in the United States the following year."

Posted by: Andrew on September 26, 2003 08:03 AM

For the benefit of non subscribers to Journal I would like to add this other part of the article, too:
"On Tuesday, Mr. Modigliani joined two other MIT Nobel laureates in economics -- Paul Samuelson and Robert Solow -- in a letter published in The New York Times that criticized the Anti-Defamation League's decision to honor Italian Prime Minister Silvio Berlusconi.

Mr. Berlusconi had been quoted as saying Mussolini never killed anyone. More than 7,000 Jews were deported under Mussolini, 5,910 of whom were killed."

Posted by: Hans Suter on September 26, 2003 08:48 AM

For the benefit of non subscribers to Journal I would like to add this other part of the article, too:
"On Tuesday, Mr. Modigliani joined two other MIT Nobel laureates in economics -- Paul Samuelson and Robert Solow -- in a letter published in The New York Times that criticized the Anti-Defamation League's decision to honor Italian Prime Minister Silvio Berlusconi.

Mr. Berlusconi had been quoted as saying Mussolini never killed anyone. More than 7,000 Jews were deported under Mussolini, 5,910 of whom were killed."

Posted by: Hans Suter on September 26, 2003 08:50 AM

"A Jew, Mr. Modigliani"

Not really surprising. Jews make up 41% of the world total (53%of the US total) of Nobel winners in economics. For physics, Jews are 26% of the world total and 37% of the US total. For medicine, its 28% of the world total and 40% of the US total. In the literature department, Jews have been total slackers, winning only 11% of the world total and 25% of the US prizes.

Modigliani was surely one lucky individual to have escaped the Holocaust. It makes one wonder how many geniuses didn't make it. The crucible of Jewish life in Europe was Poland, and of those Jews living there in September 1939, 99% (approximately 3 million) were subsequently murdered (250,000 had previously escaped to Russia). In Lithuania, a great centre of Jewish learning, 94% of Jews (nearly 250,000) were murdered, mainly by the local population. In Hungary, which produced many famous Jewish nuclear physicists, mathematicians and film directors, over 600,000 Jews were murdered (100,000 in one eight-day period) out of a total pre-war population of 900,000. Belarus, which produced many famous Jewish intellectuals, lost 800,000 Jews out of a total pre-war population of just over one million. So, all in all, I guess the world has missed out on an awful lot. Not just from the generation that were wiped out, but also from their descendants. Truly not just a Jewish tragedy.

Posted by: Pooh on September 26, 2003 12:06 PM

The one day I got the honor of meeting Franco Modigliani was to have lunch with him and Stanley Black at Vanderbilt. He sat in on one of Dr. Black's lectures pertaining to rational expectations and the new classical model. Something odd struck me about Dr. Black's presentation - it was as if all agents had the same expectations. When I asked this question, Modigliani went much further with my query noting that not only would all agents have to believe in the same model but it was also the case that "God's Model" as he put it (after all, we mortal Ph.D.'s don't really know the true model) had to be the new classical model where labor markets cleared instantly. Someone I suspected this good Catholic was ridiculing the notion that God was a new classical economist. Such wisdom in so few words! Maybe this week, one of the brightest and most delightful economists I have ever met will discuss economics with God.

Posted by: Hal McClure on September 26, 2003 12:34 PM

"Not really surprising..."

I suppose it's also worth noting that Jews comprise an astonishingly miniscule fraction of the Earth's population: 16 million out of 6 billion, or about 0.27%.

Posted by: William Stranix on September 26, 2003 01:05 PM

"Not really surprising..."

I suppose it's also worth noting that Jews comprise an astonishingly miniscule fraction of the Earth's population: 16 million out of 6 billion, or about 0.27%.

Posted by: William Stranix on September 26, 2003 01:08 PM

"I suppose it's also worth noting that Jews comprise an astonishingly miniscule fraction of the Earth's population: 16 million out of 6 billion, or about 0.27%"

In actual fact there are currently only 12.9 million Jews in the world. The last time there were over 16 million Jews was just before the Holocaust in 1939 when there were 16.7 million.

Posted by: Pooh on September 26, 2003 03:14 PM

Pooh, I'm really intrigued about where you get your figures from, I´m a bit skeptical about them, considering that there are very few jews in postwar Europe, and almost no jews in Asia, so almost all of the jewish nobel prizes would have to come from the US or from preWWII Europe.

Posted by: Andres on September 26, 2003 03:36 PM

Pooh, I'm really intrigued about where you got your figures from. I'm a bit skeptical about them: given the fact that there are very few jews in post WWII Europe, and there are almost no jews in Asia (and Israel's only nobel prize was last year's Daniel Kahneman), it would mean almost all of the jewish nobelists might have come from the US or from preWWII Europe (and from Europe, exempt Britain, whose jewish population has always been tiny). It's hard to reach the figures you present unless the proportion of jewish nobelists from the US is much higher than the one you give.

Posted by: Andres on September 26, 2003 03:50 PM

Franco was a gentle fellow with a mind like a steel trap.

I remember MIT finance research seminars, where he would ask visiting Finance dignitaries seemingly simple-minded questions on their papers. For example, he would ask Gene Fama “trivial” questions about the Capital Asset Pricing Model. We students squirmed in our seats, shooting each other nervous glances which would silently say, “How embarrassing.”

I came to realize that Franco did this for two excellent reasons: (1) by asking "stupid" questions, he was giving us students “permission” to do the same and take risks, and (2) by asking "basic" questions and having presenters "start from scratch," he would uncover any flaws in the presenters' logic...and when he discovered a flaw, Franco would hang on like a bulldog until the presenter yelled "uncle."

Once, a young economics professor (name withheld), now famous, presented a paper on an industry’s profitability. Franco’s colleague, Fischer Black, surmised, on the basis of the paper’s title, that the young professor had estimated an identity. Soon Franco came to the same conclusion. With simple, yet withering, logic, Franco made it clear to all, including the author, that the incredibly high R-squares resulted from regressing a tautology.

Posted by: Emily on September 26, 2003 05:33 PM

One of my best moments as a grad student happened when Franco thought I was a young assistant professor, and showered me with attention after a faculty lunch...

Posted by: econBras on September 26, 2003 06:10 PM

"Pooh, I'm really intrigued about where you got your figures from. I'm a bit skeptical about them"

I have a number of sources. Try this:

http://www.science.co.il/Nobel.asp

"exempt Britain, whose jewish population has always been tiny"

With 300,000 Jews, Britain has the seventh largest Jewish population in the world. It has been as high as 500,000 Jews.

"and Israel's only nobel prize was last year's Daniel Kahneman"

With less than 1/1000th of the world population it's amazing she has any.

Although Israeli Jews might have not have performed as well as their American brothers in the Nobel stakes, they are doing just fine on a number of other similar fronts. Thus, in a recent survey by a leading American consulting firm which ranked the advancement of the human race by the number of patents that citizens of each country applied for each year Israel came third, right after Japan and the United States (source Ha'aretz). In proportion to its population, Israel has the largest number of startup companies in the world. In absolute terms, Israel has the largest number of startup companies than any other country in the world, except the US. Israel has the highest per capita ratio of scientific publications in the world by a large margin. With more than 3,000 high-tech companies and start-ups, Israel has the highest concentration of hi-tech companies in the world (apart from Silicon Valley). Israel leads the world in the number of scientists and technicians in the workforce, with 145 per 10,000, as opposed to 85 in the U.S., over 70 in Japan, and less than 60 in Germany. With over 25% of its work force employed in technical professions. Israel places first in this category as well. Israel has the highest ratio of university degrees to the population in the world.
(Much of the above was taken verbatim from an article by Israel Insider)

Posted by: Pooh on September 27, 2003 01:00 AM

Andres,

A large part of your confusion probably emanates from the fact that the Nobel is awarded on the basis of country of birth and not current residence or domicile. Thus, there have been a number of Nobel prizes won by Jewish citizens of the UK (such as Sir Ernst Chain and Sir Aaron Klug), but their country of origin has been elsewhere. And yes, a number of prizes were won by Jews in pre-Holocaust Europe, and that in itself is incredible given the enormous barriers most Jews had to overcome to obtain even a rudimentary education.

It might also be noted that virtually all the prizes were won by Ashkenazi Jews who today make up only just over half of the world's Jewish population.

Posted by: Pooh on September 27, 2003 01:22 AM
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