Ragnar Frisch

Ragnar Anton Kittil Frisch (3 March 1895 – 31 January 1973) was a Norwegian economist and the co-winner with Jan Tinbergen of the first Nobel Memorial Prize in Economic Sciences in 1969. He is known for having founded the discipline of econometrics, and in 1933 to have created the widely used term pair macroeconomics/microeconomics.

1920

 * Intermediate between mathematics, statistics, and economics, we find a new discipline which, for lack of a better name, may be called econometrics. Econometrics has as its aim to subject abstract laws of theoretical political economy or "pure" economics to experimental and numerical verification, and thus to turn pure economics, as far as possible, into a science in the strict sense of the word.
 * Ragnar Frisch (1926) "On a Problem in Pure Eco­nomics: Translated by JS Chipman." Preferences, Utility, and Demand: A Minnesota Symposium. 1926."
 * Original in French: Intermediaire entre les mathematiques, la statistique et l'economie politique, nous trouvons une discipline nouvelle que ion peut, faute de mieux, designer sous le nom de reconometrie. L'econometrie se pose le but de soumettre les lois abstraites de l'economie politique theorique ou l'economie 'pure' A une verification experimentale et numeriques, et ainsi de constituer, autant que cela est possible, l'economie pure en une science dans le sens restreint de ce mot.


 * I believe that economic theory has arrived at a point in its development where the appeal to quantitative empirical data has become more necessary than ever. At the same time its analyses have reached a degree of complexity that require the application of a more refined scientific method than that employed by the classical economists.
 * Ragnar Frisch (1926); Quoted in: "Ragnar Frisch 1895-1995." O. Bjerkholt, 1994.


 * Two important features in the modern development of economics are the application of mathematics to abstract economic reasoning... and the attempt at placing economics on a numerical and experimental basis by an intensive study of economic statistics.
 * Both these developments have a common characteristic: they emphasize the quantitative character of economics. This quantitative movement in our estimation is one of the most promising developments in modern economics. We also consider it important that the two aspects of the quantitative method referred to should be furthered, developed, and studied jointly as two integrating parts of economics.
 * We therefore venture to propose the establishment of an international periodical devoted to the advancement of the quantitative study of economic phenomena, and especially to the development of a closer relation between pure economics and economic statistics.
 * We believe that the scope of the new journal would be happily suggested if it is called "Oekonometrika". Accordingly, the quantitative study of economic phenomena here considered may be termed econometrics.
 * Frisch (1927) as quoted in Divisia 1953, pp.24-25; Cited in: Bjerkholt, Olav. "Ragnar Frisch and the foundation of the Econometric Society and Econometrica." ECONOMETRIC SOCIETY MONOGRAPHS 31 (1998): 26-57.
 * Lead paragraph of a memorandum on the importance of establishing the journal "Oekonometrika"


 * An important object of the Journal should be the publication of papers dealing with attempts at statistical verification of the laws of economic theory, and further the publication of papers dealing with the purely abstract problems of quantitative economics, such as problems in the quantitative definition of the fundamental concepts of economics and problems in the theory of economic equilibrium. The term equilibrium theory is here interpreted as including both the classical equilibrium theory proceeding on the lines of Walras, Pareto, and Marshall, and the more general equilibrium theory which is now beginning to grow out of the classical equilibrium theory, partly through the influence of the modern study of economic statistics. Taken in this broad sense the equilibrium problems include virtually all those fundamental problems of production, circulation, distribution and consumption, which can be made the object of a quantitative study. More precisely: The equilibrium theory in the sense here used is a body of doctrines that treats all these problems from a certain point of view, which is contrasted on one side with the verbal treatment of economic problems and on the other side with the purely empirical-statistical approach to economic problems
 * Frisch (1927). as quoted in: Bjerkholt, Olav, and Duo Qin. A Dynamic Approach to Economic Theory: The Yale Lectures of Ragnar Frisch. Routledge, 2010: About "Oekonometrika"

1930s

 * In the last decade's intensive study of all sorts of social and economic time series, it has become clear, it seems to me, that the usual time series technique is not quite adequate for the purpose which the social investigator is pursuing... We want to find out on more or less empirical grounds what is actually present in the series at hand, that is to say, what sort of components the series contains.
 * Ragnar Frisch, "A method of decomposing an empirical series into its cyclical and progressive components." Journal of the American Statistical Association 26.173A (1931): 73-78.


 * I approached the problem of utility measurement in 1923 during a stay in Paris. There were three objects I had in view :
 * (I) To point out the choice axioms that are implied when we think of utility as a quantity, and to define utility in a rigorous way by starting from a set of such axioms;
 * (II) To develop a method of measuring utility statistically;
 * (III) To apply the method to actual data.
 * The results of my study along these lines are contained in a paper “Sur un Problème d’Économic Pure”, published in the Series Norsk Matematisk Forenings Skrifter, Serie I, Nr 16, 1926. In this paper, the axiomatics are worked out so far as the static utility concept is concerned. The method of measurement developed is the method of isoquants, which is also outlined in Section 4 below. The statistical data to which the method was applied were sales and price statistics collected by the “Union des Coopérateurs Parisien”. From these data I constructed what I believe can be considered the marginal utility curve of money for the “average” member of the group of people forming the customers of the union. To my knowledge, this is the first marginal utility curve of money ever published.
 * Frisch (1932) New Methods of Measuring Marginal Utility. Mohr, Tübingen. p. 2-3: Quoted in: Dagsvik, John K., Steinar Strøm, and Zhiyang Jia. "A stochastic model for the utility of income." (2003).


 * Econometrics is by no means the same as economic statistics. Nor is it identical with what we call general economic theory, although a considerable portion of this theory has a definitely quantitative character. Nor should econometrics be taken as synonymous with the application of mathematics to economics. Experience has shown that each of these three view-points, that of statistics, economic theory, and mathematics, is a necessary, but not by itself a sufficient, condition for a real understanding of the quantitative relations in modern economic life. It is the unification of all three that is powerful. And it is this unification that constitutes econometrics.
 * Ragnar Frisch in the first issue of Econometrica in 1933; Quoted in: United States. Bureau of Agricultural Economics. Library (1941) Agricultural economics literature, p. 705

Propagation problems and impulse problems in dynamic economics, 1933
Ragnar Frisch. "Propagation problems and impulse problems in dynamic economics." (1933).


 * The majority of the economic oscillations which we encounter seem to be explained most plausibly as free oscillations.
 * p. 1


 * [The] length of the cycles and the tendency towards dampening are determined by the intrinsic structure of the swinging system, while the intensity (the amplitude) of the fluctuations is determined primarily by the exterior impulse. An important consequence of this is that a more or less regular ﬂuctuation may be be produced by a cause which operates irregularly.
 * p. 1


 * The propagation problem is the problem of explaining by the structural properties of the swinging system what the character of the swings would be in case the system was started in some initial situation
 * p. 1


 * When we approach the study of business cycle with the intention of carrying through an analysis that is truly dynamic and determinate in the above sense, we are naturally led to distinguish between two types of analyses: the micro-dynamic and the macro-dynamic types. The micro-dynamic analysis is an analysis by which we try to explain in some detail the behaviour of a certain section of the huge economic mechanism, taking for granted that certain general parameters are given. Obviously it may well be that we obtain more or less cyclical fluctuations in such sub-systems, even though the general parameters are given. The essence of this type of analysis is to show the details of the evolution of a given specific market, the behaviour of a given type of consumers, and so on.
 * p. 2


 * There is also present another source of energy operating in a more continuous fashion and being more intimately connected with the permanent evolution in human societies.
 * p. 33


 * Certain exterior impulses hit the economic mechanism and thereby initiate more or less regular oscillations.
 * p. 173


 * We may perhaps start by throwing all kinds of production into one variable, all consumption into another, and so on, imagining that the notions 'production', 'consumption', and so on, can be measured by some sort of total indices. At present certain examples of micro-dynamic analyses have been worked out, but as far as I know no determinate macro-dynamic analysis is yet to be found in the literature.
 * p. 173


 * In reality the cycles we have the occasion to observe are generally not damped. How can the maintenance of the swings be explained? Have theses dynamic laws deduced from theory and showing damped oscillations no value in explaining the real phenomena, or in what respect do the dynamic laws need to be completed in order to explain the real happenings? They (dynamic laws) only form one element of the explanation: they solve the propagation problem. But the impulse problem remains.
 * p. 197

1940-60s

 * We may predict that the science of which we try to be the humble and devoted servants will in the future life of the nations be an important factor in eliminating maladjustments between fundamental economic sectors and assure a smooth and progressive utilization of resources... One wants men with a knowledge of the characteristic features of the economic and social structure of their country and with a fundamental theoretical knowledge along modern lines.
 * Frisch, (1946, p. 1), as quoted in: "Ragnar Frisch 1895-1995." O. Bjerkholt, 1994.


 * At present the national budget plays a very large role in the whole financial policy of our country.
 * Frisch, (1947); Quoted in: Steinar Strøm (1998) Econometrics and Economic Theory in the 20th Century. p. 542


 * Personally, I never met . I saw him once when he delivered a lecture in Oslo, but being an unassuming student at the time, I did not have the courage to talk to him. So my knowledge of his theory came only through his writings. That, however, was a very intense and absorbing form of making his acquaintance. Already from my early student days, I read his writings (in German and Swedish) avidly. And I continued to do so later. When I started my study on Wicksell, I found that his works were not easy reading. Often it was only at the third or fourth reading that I grasped his ideas. Invariably, each new reading made me more and more enthusiastic. Sometimes it happened that I thought I had finally caught him in an inconsistency or in unclear thinking. Every time this happened, it turned out, however, that the error was mine.
 * Frisch (1952) "Frish on Wicksell" p. 654


 * Usually it is easier to obtain estimates for budget proportions and Engel elasticities than for elasticities with respect to price. By making certain want independence assumptions, the elasticities with respect to price can be deduced from the knowledge of budget proportions and Engel elasticities. In this connection the concept of the flexibility of the marginal utility of money is essential. A system of formulae decribing these relations is given.
 * Ragnar Frisch. "A complete scheme for computing all direct and cross demand elasticities in a model with many sectors." Econometrica 27.2 (1959): 177-196.


 * To proceed from assumptions about an abstract theoretical set-up and from them to draw conclusions about the observable world and to test - by rough or more refined means - whether the conformity with observations is "good" enough, is indeed the time honoured procedure that all empirical sciences, including the natural sciences, have used. I shall therefore not plead guilty of heresy even if I do work with choice-theory concepts that are not invariant under a general monotonic transformation of the utility indicator.
 * Ragnar Frisch. "A complete scheme for computing all direct and cross demand elasticities in a model with many sectors." Econometrica 27.2 (1959), p. 178; Cited in: Chipman, John S. ".pdf The contributions of Ragnar Frisch to economics and econometrics]." ECONOMETRIC SOCIETY MONOGRAPHS 31 (1998): 58-110.


 * In this feverish world of ours, where one wants the economic analyses to produce easily understandable results quickly and at the least possible cost, some of us have fallen into the habit of assuming for simplicity that the hundreds sometimes thousands of variables that enter into the analyses are linked together by very simple relationships. Frequently we even go so far as to assume linear relationships. Only in this way have we been able to feed our problems into the electronic computers and get mechanical answers quickly and at low cost.
 * R. Frisch (1964), Theory of Production, p. v: Lead paragraph of preface

1970s and later

 * Questions of convergence under an infinite time horizon will depend so much on epsilontic refinements in the system of assumptions — and on the infinite constancy of these refinements — that we are humanly speaking absolutely certain of getting infinite time horizon results which have no relevance to concrete reality. And in particular we are absolutely certain of getting irrelevant results if such epsilontic exercises are made under the assumption of a constant technology. 'In the long run we are all dead.' These words by Keynes ought to be engraved in marble and put on the desk of all epsilontologists, in growth theory under an infinite horizon.
 * Ragnar Frisch (1970) "Econometrics in the World of Today." University of Oslo, Institute of Economics, 1971; As quoted in Robert Johnston, Graham Clark. Service Operations Management: Improving Service Delivery. Pearson Education, 2005. p. 347


 * I have insisted that econometrics must have relevance to concrete realities, otherwise it degenerates into something which is not worthy of the name econometrics, but ought rather to be called playometrics.
 * Quoted in: "Ragnar Frisch." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. 1 June 2014.


 * (Econometrics is) the unification of economic theory, statistics and mathematics.
 * Ragnar Frisch, quoted in: Warren Page (2013) Applications of Mathematics in Economics. p. 75

From Utopian Theory to Practical Applications, 1970
"From Utopian Theory to Practical Applications: The Case of Econometrics," Prize Lecture, June 17, 1970; Republished at Nobelprize.org.


 * In this essay on econometrics in its conception and its use in economic planning for the betterment of man’s fate, I will try to cover a very broad field. When talking about the methodology in the particular fields mentioned - about which I am supposed to have a little more than second hand knowledge - I have always found it utterly inadequate to focus attention only on these special fields without seeing them in a much broader perspective. Therefore it was inevitable that I should have to include in the field of vision of this paper also some branches of science where I can only speak as a layman, hopefully as a somewhat informed layman. For whatever blunders I may have made in these fields I must ask for the reader’s forgiveness
 * p. 9 : Lead paragraph


 * Deep in the human nature there is an almost irresistible tendency to concentrate physical and mental energy on attempts at solving problems that seem to be unsolvable.
 * p. 10


 * … in economic political discussions there is a nearly infinite number of specific questions that may be asked. Besides the ones mentioned in section 3 consider for instance these: "Should we build a road between points A and B in the country?", "Should we promote investments that will give employment to many people, or should we on the contrary promote such investment which will save labour?"… "Should we put more emphasis on things that have up to now not been included in the statistical concept of the gross national product? For instance, should we try to avoid air-pollution and all the kinds of intoxications that may be caused by refuse and waste (a problem that must be studied in its totality as a problem of circulation of matter in society, much in the same way as we study interindustry relations in an input-output table)?“, “Should we assess economic value to an undisturbed nature?” etc.
 * p. 29

Quotes about Ragnar Frisch

 * Ragnar Frisch was an ardent protagonist for more scientific economics in the interwar period and played an active role internationally through his scholarly contributions but also through his efforts for the and its journal, which may be regarded as landmarks both for the scientification and the internationalization of economics.  For many years Frisch was the only Norwegian economist of international renown and  became a father figure for Norwegian economics.
 * Ragnar Frisch at sv.uio.no, University of Oslo, 2014.