MIT'S SOLOW WINS ECONOMICS NOBEL

Author: By David Warsh, Globe Staff

Date: Thursday, October 22, 1987
Page: 1
Section: METRO

Solow, 63, an unrepentant Keynesian with strong views of the desirability for government leadership in the economic sphere, immediately obliged reporters at a crowded morning press conference at MIT, criticizing President Reagan, drinking champagne and making jokes.

A man whose wit and clarity of expression are well known, who nevertheless declined repeated pleas by publishers to write a popular book, was finally in the spotlight.

"If this is what it means to be famous, I want to go back to being just plain old Professor Solow," he said. "I had trouble getting my underwear on for the telephone ringing."

The MIT community was delighted; so was Harvard, where Solow went to
college and did his graduate work; so were economists generally. Solow is an institute professor at MIT and a former president of the American Economic Association. He is the third MIT professor, the second in three years, to receive a Nobel Award in Economics. Solow's long-term research partner, Paul Samuelson, and Franco Modigliani are the others.

The citation by the Swedish Academy of Sciences zeroed in on Solow's contribution to growth theory, a highly mathematized branch of technical economics that had a vogue after Solow published a pair of nearly impenetrable technical papers in 1956 and 1957.

Solow said yesterday: "It is easy to list things that might contribute to economic growth. The problem is, as we say, to make a model, to understand how these things interreact, and to do it in such a way that you might have a prayer of measuring it. . . . The surprising conclusion was that technological change looms much larger than capital investment. . . . Silicon Valley is the sort of thing I'm talking about."

Robert Lucas, a University of Chicago theorist, said: "He influenced my whole generation . . . with a kind of rough-and-ready style, not high statistical theory. It is a knack for choosing what kinds of economic theory you expect to be useful."

David Colander, a professor of economics at Middlebury College, said: "He is the most thoroughly reasonable of all economists. He exudes sensibility, and nobody better understands economics, both its limits and its possibilities."

"After he made a fundamental contribution to the literature on growth," recalled Hendrik Houthakker, a Harvard professor, "he went to Washington and persuaded the Kennedy administration to set growth targets through the Organization for Economic Cooperation and Development. Then he served on the National Commission on Employment, which helped persuade labor, especially George Meany, to accept technical change rather than to resist it."

A leading Keynesian, Solow is a proponent of a school that had failed to persuade younger technical economists of its relevance. A central tenet with which he is associated, the tradeoff between inflation and unemployment, has been eclipsed.

And his basic theoretical insight -- that pure university learning and basic and applied research has in some sense been more instrumental in fueling the upward climb of American industry than the capital supplied by Wall Street and the banks -- has been hijacked by supply siders who have all but ignored the analytic tradition in which Solow has stood fast.

"The best thing you can say about Reaganomics is that it probably happened in a fit of inattention," he said. "I would like to see the president stop this nonsense about how 'I will never raise taxes over my dead body.' "

The Keynesians' time may come again, but the exuberance of yesterday's press conference was undercut by the consciousness of the failure of later generations to carry through on the promises of the New Frontier.

Deprived of a central place in the current consensus of economic theorizing, Solow instead has served to his colleagues as a model of good citizenship. James Poterba, a junior colleague, said, "He sets an impeccable example in every realm you can name."

Certainly nobody ever went more assiduously about the housekeeping tasks of the community of technical economics. "He's the softest touch there is for committees and commissions," said Princeton economist Alan Blinder, a former student.

Moreover, Solow has become a quiet Boston institution over the years. He lives with his wife, Barbara, who is also an economist, in a converted wharf on Boston's waterfront during the school year and in Martha's Vineyard in the summer. He sails avidly.

A former junior fellow at Harvard, Solow is said to have been on a short list for candidates for the presidency of the university before Derek Bok was selected. He is a former member of the President's Council of Economic Advisers and served for three years as chairman of the board of directors of the Federal Reserve Bank in Boston.

Frank Morris, the Boston bank's president, said yesterday: "He can operate on almost any level of abstraction that the situation requires. If you have a bunch of econometricians, throwing around algebraic equations, he can talk to them. But when it came to explaining something technical to our board, he was sensational."

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