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Who Was Lawrence Klein? What Is Econometrics?

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Updated October 08, 2023
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Lawrence R. Klein was an American economist who won the Nobel Memorial Prize in Economic Sciences in 1980 for his work building statistical models, eventually dubbed the Wharton models, that more accurately forecast economic activity such as gross national product, exports, investment, and consumption.

Key Takeaways

  • Lawrence Klein was an American economist who won the Nobel Prize in Economic Sciences for his pioneering work creating statistical models to predict economic cycles.
  • Klein first gained renown by accurately predicting that an economic boom would follow the end of World War II.
  • Klein said his experience growing up during the Great Depression made him want to understand how the economy works.
  • Klein's contributions to economics include incorporating public data into statistical models, pioneering econometrics, which led to the development of many models used today.
  • Klein spent much of his career working internationally, in places such as Israel, Japan, and Mexico. He also lectured in Europe and focused some of his work on China.

Early Life and Education

Klein was born in Omaha, Nebraska, in 1920, and said his experience growing up during the Great Depression had a profound impact on his life and career, fueling a fascination with economics from an early age. He said he entered the field of economics because of a desire to understand why the Great Depression occurred.

After attending public high school in Omaha, Klein graduated from the University of California, Berkeley, where he studied both economics and mathematics. Klein earned his Ph.D. at the Massachusetts Institute of Technology (MIT), where he studied under economist and fellow Nobel laureate Paul A. Samuelson, a trailblazer in theoretical economics.

The United States has the highest number of Nobel Prize winners in Economics Sciences; 58 as of 2021. After the U.S., it is the U.K., with nine.

Klein credited Samuelson with giving him a "good grasp of economics and mathematical ways of dealing with significant problems of the subject."

Klein also earned a master's degree at Oxford University and served as a professor in the economics department at the University of Pennsylvania for more than three decades and was an economic adviser to President Jimmy Carter during Carter's first campaign. At times, he was also affiliated with the University of Chicago, Oxford, and the National Bureau of Economic Research.

Klein died in 2013 at the age of 93.

Notable Accomplishments

Klein first gained renown by predicting that an economic boom would follow the end of World War II. At the time, most economists were predicting that the war's end would bring another depression. But Klein accurately forecast that pent-up demand for consumer goods and the purchasing power of returning American soldiers would fuel growth.

Klein became a pioneer in using public survey data to build statistical models, or econometrics, to predict economic activity. His work became the foundation of the Michigan Model and the Wharton Models, renowned econometric models. The Wharton Models were widely used to forecast national output, exports, and consumption.

Klein also founded Wharton Econometric Forecasting Associates Inc., a forecasting and consulting firm. He traveled widely, working on economic models for multiple other countries. These included Japan, Israel, and Mexico.

Who Got the First Nobel Prize in Economics?

The first Nobel Prize in Economics was awarded to Jan Tinbergen and Ragar Frisch in 1969 "for having developed and applied dynamic models for the analysis of economic processes."

How Many Nobel Prize Winners in Economic Sciences Have There Been?

From 1969 to 2022, there have been 92 laureates of the Nobel Prize in Economic Sciences. The prize has been awarded 54 times, with multiple winners sharing the prize many times.

Who Is the Father of Economics?

Adam Smith is considered to be the father of economics. He was an 18th-century economist that promoted laissez-faire and was against mercantilism. He is famous for his theory of the invisible hand, which states that market forces will regulate themselves and efficiently allocate resources.

The Bottom Line

Lawrence Klein was an economist who won the Noble Prize in Economic Sciences. His work on using public data to build statistical models pioneered the field of econometrics and became the foundation for very important models in economics; primarily the Wharton Models.

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  1. University of Pennsylvania, Wharton. "Lawrence Klein: Honoring and Remembering a Model Economist."

  2. The Nobel Prize. "Lawrence Klein, Biographical."

  3. The Nobel Prize. "Lawrence Klein, Facts."

  4. The Nobel Prize. "Jan Tinbergen, Facts."

  5. The Nobel Prize. "All Prizes in Economic Sciences."

  6. International Monetary Fund. "Micro and Macro The Economic Divide."