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Wassily Leontief (August 5, 1906 – February 5, 1999), born at Munich, Germany), was an economist notable for his research on how changes in one economic sector may have an effect on other sectors. Leontief won Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1973. Early life Wassily Leontief, the son of Wassily W. Leontief (professor of Economics) and Genia, entered the University of Leningrad in present day St. Petersburg in 1921. He earned his Learned Economist degree (equivalent to Master of Arts) in 1924 at the age of 19. Opposition to Communism He was arrested several times because of his opposition to Communism. In 1925, he was allowed to leave the USSR, so he continued his studies at the University of Berlin and, in 1928, he earned a Ph.D. degree in Economics with a dissertation on Circular Flows in Economics. Early Professional Life From 1927 to 1930, he worked at the Institute for World Economics of the University of Kiel. There he researched the derivation of statistical demand and supply curves. In 1929, he travelled to China to assist the Ministry of Railroads as an advisor. In 1931, he went to the United States, and was employed by the National Bureau of Economic Research. Marriage and Affiliation with Harvard In 1932, Leontief married the poet Estelle Marks. His wife died in 2005. Their only child, Svetlana Leontief Alpers, was born in 1936. Harvard University employed him in the same year (1932) in its Department of Economics, and, in 1946, he became a professor of Economics. Around 1949, Leontief used the primitive computer systems available at the time at Harvard to model data provided by the U.S. Bureau of Labor Statistics to divide the U.S. economy into 500 sectors. Leontief modeled each sector with a linear equation based on the data and used the computer, the Harvard Mark II, to solve the system, one of the first significant uses of computers for mathematical modeling. Leontief set up the Harvard Economic Research Project in 1948 and remained its director until 1973. Starting in 1965, he chaired the Harvard Society of Fellows. Affiliation with New York University In 1975, Leontief joined New York University and founded and directed the Institute for Economic Analysis. Death Leontief died in New York City, New York, USA, on Friday, February 5, 1999 at the age of 93. Personal It is known that he enjoyed fly-fishing, ballet, and fine wines. He vacationed for years at his farm in Vermont, but after moving to New York in the 1970's Leontief relocated his summer residence to Lakeville, Connecticut. Major contributions Leontief is primarily associated with the development of the linear activity model of General equilibrium and the use of input-output analysis that results from it. He has also made contributions in other areas of economics, such as international trade where he documented the famous Leontief paradox. He was also one of the first to establish the composite commodity theorem. Leontief earned the Nobel Prize in Economics for his work on input-output tables. Input-output tables analyze the process by which inputs from one industry produce outputs for consumption or for inputs for another industry. With the input-output table, one can estimate the change in demand for inputs resulting from a change in production of the final good. An unrealistic assumption of this analysis is that input proportions are fixed. It is for this reason that the use of input-output analysis is limited to rough approximizations rather than prediction. Input-output was novel and inspired large-scale empirical work. It has been used for economic planning throughout the world, whether in Western, Socialist or Third World countries. Leontief used input-output analysis to study the characteristics of trade flow between the U.S. and other countries, and found what has been named Leontief's paradox; "this country resorts to foreign trade in order to economize its capital and dispose of its surplus labor, rather than vice versa, i.e., U.S. exports were relatively labor-intensive when compared to U.S. imports. This is the opposite of what one would expect, considering the fact that the U.S.'s comparative advantage was in capital-intensive goods. According to some economists, this paradox has since been explained as due to the fact that when a country produces "more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of imports." There also exists a trend that can be seen in the U.S. that could explain Leontief's paradox, and this is that in the last four decades, money has been becoming more expensive while labor has been becom ing cheaper. Leontief was also a very strong proponent of the use of quantitative data in the study of economics. Throughout his life Leontief campaigned against "theoretical assumptions and nonobserved facts". According to Leontief, too many economists were reluctant to "get their hands dirty" by working with raw empirical facts. To that end, Wassily Leontief did much to make quantitative data more accessible, and more indispensable, to the study of economics. Publications Awards In Honor Tufts University awards the Leontief Prize for economics in his honor. Memberships Quote We move from more or less plausible but really arbitrary assumptions, to elegantly demonstrated but irrelevant conclusions. See also | |||||||
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