New Haven Register, June 4, 1983

ECONOMIC RESEARCHERS REVIEW PROGRESS

By Jennifer Kaylin, Staff Reporter

Tjalling Koopmans

Herbert Scarf

James Tobin

Paul Samuelson

Kenneth Arrow

There is no other example of a private citizen having so profound an influence on the development of a discipline such as economics for such a prolonged period of time — Herb Scarf

From the era of the Great Depression to the days of Reaganomics, a cadre of economy experts has sought to shed light on the conditions that influence the nation’s fiscal well-being.

Known as the Cowles Foundation for Research in Economics, these economists, mathematicians and statisticians have revolutionized the way modern economics is applied to practical problems -- an achievement that has required a rewriting of virtually all economics textbooks.

Friday and today the foundation celebrated its 50th Anniversary at Yale University. More than 75 of the nation’s leading economists, including five Nobel laureates, gathered at the School of Organization and Management to review the accomplishments of the foundation over the last half-century.

According to Director Herbert Scarf, the foundation was started by Chicago Investment Counselor Alfred Cowles in 1932. Cowles had witnessed the ravages of the Great Depression of 1929 and decided scientific methods should be applied to understand what had happened. He wanted to change stock market forecasting from a "guessing game" into a study based on mathematical and statistical facts, Scarf said.

"There is no other example of a private citizen having so profound an influence on the development of a discipline such as economics for such a prolonged period of time," he said.

The foundation was originally called the Cowles Commission and was located in Colorado Springs. It later moved to the University of Chicago and then to Yale, where it has been based since 1955.

The current group at Yale consists of 18 members, who are invited to become either lifetime or temporary members. Cowles, who has been the driving force behind the foundation since its inception, was prevented from attending the anniversary because of poor health.

Six American winners of the Nobel Memorial Prize in Economic Science have been associated with the Cowles Foundation, and five attended the anniversary celebration. They were: Professor Kenneth Arrow of Stanford, Professors Tjalling Koopmans and James Tobin of Yale, Professor Lawrence Klein of the University of Pennsylvania and Professor Paul Samuelson of the Massachusetts Institute of Technology. The sixth, Professor Herbert Simon of Carnegie-Mellon University, was unable to be present.

Speeches delivered at the anniversary conference will be compiled and published in a book issued by the Yale University Press sometime next fall.

According to Scarf, the foundation’s early work focused on the development of formal models of the national economy. The models were used to make predictions on the state of the economy for the next six months to a year. Klein’s Nobel prize was awarded for his work in the area of economic forecasting.

Only early scientific breakthroughs involved the development of linear programming methods for solving problems relating to the allocation of scarce resources, for which Kublan received a Nobel prize, and advances in macroeconomics on the theoretical and practical level, for which Tobin was honored.

Cowles researchers also developed the theory of social and political choices affecting economic policy and formulated the concept of "game theory" to study the economic problems that arise when two or more organizations with different interests come into conflict. This theory is applicable to situations such as strategic weapons considerations.

Further issues that undoubtedly will be studied by the foundation, according to Scarf, will focus on the scarcity of certain minerals and resources.