Lawrence Klein, economics forecasting pioneer

Lawrence R. Klein
Lawrence R. Klein
Posted: October 23, 2013

Lawrence R. Klein, 93, of Gladwyne, a University of Pennsylvania economics professor who won a Nobel Prize and was considered the father of modern economic forecasting, died Sunday, Oct. 20, of a heart ailment at his home.

Dr. Klein, who observed both the Depression and the post-World War II boom, influenced many of the current generation of economic forecasters by developing models in the 1950s and 1960s.

Many of the economic forecasts taken as commonplace today - such as the effect of interest rates on economic growth - exist because of Dr. Klein's innovations, say economists.

Dr. Klein also founded Wharton Econometric Forecasting Associates Inc., later called WEFA, a spin-off of his research at Wharton, as a forecasting and consulting firm.

"He was a genius," said Mark Zandi, one of the nation's most-quoted economic forecasters, who looked to Dr. Klein as adviser for his doctoral dissertation. "Before Dr. Klein, economics was almost entirely theoretical, and after him, it was almost all empirical."

Zandi recalled that when he visited Dr. Klein in his office at Wharton to ask if he would be his adviser, Dr. Klein chatted about Zandi's interests and then asked for professors who could act as references.

Klein called the professors to talk about Zandi as Zandi sat in his office. "I was sweating it," Zandi said.

"You are not stretching it if you say that he is the father of statistical modeling for economic forecasting," said Lee McPheters, an economics professor at Arizona State University who helps administer the annual Lawrence R. Klein Award for Blue Chip Forecast Accuracy.

McPheters said that Dr. Klein traveled to Arizona to present the award to the winner until 2011, when he was unable to make the trip. Even in his 90s, Dr. Klein remained curious about the economy and was considering the economic consequences of the rise of China as a consumer nation, McPheters said.

Having first published a research paper in 1950, Dr. Klein established a body of recognized work that in 1980 earned the coveted Nobel Prize.

"Thanks to Klein's contributions, the building of econometric models has attained a widespread, not to say universal, use. It is now to be found all through the world, not only at scientific institutions but also in public administration, political organizations and large enterprises," the Royal Swedish Academy of Sciences said in announcing the award in October 1980.

He also was awarded the John Bates Clark Medal in 1959, one of the field's most prestigious awards, and was elected a member of the National Academy of Sciences.

In an autobiography submitted to the Nobel committee in 1980, and later published in Nobel Lectures, Dr. Klein told of being born in Omaha, Neb., where he attended public schools.

"Although I was not aware of it at the time, the experience of growing up during the Great Depression was to have a profound impact on my intellectual and professional career," he wrote. College, he said, gave him the analytical tools to begin quantifying the economic aspects of the World War II era, and postwar reconstruction.

An early fascination with higher mathematics and economics honed at Los Angeles City College and the University of California, Berkeley, pointed Dr. Klein towards the field of econometrics - putting economic information into equations to predict trends.

He went on to the Massachusetts Institute of Technology, where in 1944 he completed his doctoral dissertation in two years under the economist Paul A. Samuelson, then a rising star. "It was an unforgettable experience," Dr. Klein wrote.

At the University of Chicago, he built the first in a series of macroeconometric models of the American economy designed to forecast business fluctuations and study the effects of government economic-political policy.

He correctly predicted that after World War II there would be an economic upturn, and that a mild recession would follow the end of the Korean War.

In 1954, Dr. Klein, who had been a member of the Communist Party in 1944 and 1946, moved to England to avoid Sen. Joseph McCarthy's anticommunist crusade. Dr. Klein later said he had become a Communist due to youthful naivete.

He returned to the United States in 1958 and joined the Department of Economics at the University of Pennsylvania. A decade later, he was named Benjamin Franklin Professor of Economics and Finance at Penn's Wharton School of Business. He became professor emeritus in his 70s.

In the 1960s, Dr. Klein created the Brookings-SSRC Project to forecast short-term trends in the American economy. He followed that with the Wharton Econometric Forecasting Model, which analyzed business conditions.

"Few, if any, research workers in the empirical field of economic science have had so many successors and such a large impact as Lawrence Klein," his Nobel citation reads in part.

In 1976, Dr. Klein was part of presidential candidate Jimmy Carter's economic advisory team, but he declined an appointment to the Carter administration.

He met and married his wife, the former Sonia Adelson, while studying in Chicago. He was previously married and divorced.

His daughter, Hannah, said her father's friendships extended around the globe. "He was greatly loved by all his students and colleagues," she said.

Dr. Klein also was an avid baseball fan.

Surviving besides his wife and daughter are a son, Jonathan; two other daughters, Rebecca Kennedy and Rachel; seven grandchildren; and four great-grandchildren.

Services are private. Friends may call at the home of Sonia Klein on Wednesday, Oct. 23, and Saturday, Oct. 26, from 2 to 4 p.m.


bcook@phillynews.com

610-313-8102

comments powered by Disqus
|
|
|
|
|