Category: M.I.T.

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M.I.T. Industrial Economics Syllabus. Bishop. 1957

Robert Lyle Bishop was born June 4, 1916 in St. Louis, Missouri. He graduated summa cum laude from Harvard in 1937.  He was awarded a Sheldon Travelling Fellowship that financed a ten month study tour in Europe. He then went to Princeton for the following year (1938-9), but returned to Harvard where he received an appointment as instructor in economics and tutor in the Division of History, Government and Economics. Bishop moved to M.I.T. in September 1942. Robert Bishop received his Ph.D. in economics from Harvard in 1950. The title of his doctoral dissertation was “The Mechanization of the Glass-Container Industry: a Study in the Economics of Technological Change.”  Besides having served as department chairman (1958-1965) and as dean of the School of Humanities and Social Science (1964-73),  his biggest mark in the education of economists at M.I.T. is to be found in his mimeographed notes for 14.121, the graduate-level introduction to microeconomic theory. Bishop died February 7, 2013.

This reading list for Robert L. Bishop’s first term in a two-term sequence is found filed in a folder of reading lists in Robert Solow’s papers at Duke.

Fun fact: A future president of the United States, an undergraduate named John F. Kennedy, lived in the suite directly below Bishop’s tutorial quarters in F entry of Winthrop House.

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Course Enrollment

“Problems in Industrial Economics” (14.271) in the Fall term of 1957 was taught by Professor Robert L. Bishop. The course met three hours per week. Seven students were enrolled.

Source: MIT Libraries, Institute Archives. MIT Department of Economics Records, Box 3, Folder “Teaching Responsibility”.

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Brief Course Description

The prerequisite for the course was the intermediate microeconomics course “Prices and Production” (14.03).

Small and large enterprises in the American economy; market structures; degrees of monopoly and competition; requisites of public policy.

Source: Course Catalogue of the Massachusetts Institute of Technology, 1957-1958, p. 234.

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14.271 Reading List
Fall, 1957

  1. General

  1. P.W.S. Andrews, “Industrial Economics as a Specialist Subject,” Journal of Industrial Economics, Nov. 1952.
  2. W. Leontief, “Input-Output Economics,” Scientific American, Oct. 1951.
  3. Bureau of the Census, 1952 Annual Survey of Manufactures, pp. 1-12, 201-06.
  4. Conklin and Goldstein, “Census Principles of Industry and Product Classification”, Universities: National Bureau of Economic Research, in Business Concentration and Price Policy, pp. 15-55.
  5. J.S. Bain, “Price and Production Policies,” in Ellis (ed.), Survey of Contemporary Economics, Vol. I., pp. 129-73.
  6. J.K. Galbraith, “Monopoly and the Concentration of Economic Power,” in Ellis (ed.), Survey of Contemporary Economics, Vol. I. pp. 99-128.
  7. E.A.G. Robinson, The Structure of Competitive Industry.
  8. Foss and Churchill, “The Size Distribution of the postwar Business Population,” Survey of Current Business, May 1950, pp. 12-20.
  9. Survey of Current Business, National Income Supplement, July 1954, Tables 7, 12, 13, 14, 15, 18, 19, 20, 25, 27, 29.

  1. Big Business Concentration, and the “Monopoly Problem”

  1. A. A. Berle, The 20th Century Capitalist Revolution, pp. 1-60.
  2. Joel Dean, Managerial Economics, pp. 97-109.
  3. A. Papandreou, “Problems in the Theory of the Firm, “ in Haley (ed.) Survey of Contemporary Economics, Vol. II, pp. 183-222.
  4. Kaplan and Kahn, “Big Business in a Competitive Society,” Fortune, Feb. 1953, pp. 1-14.
  5. Corwin Edwards, “Conglomerate Bigness as a Source of Power,” in National Bureau of Economic Research, Business Concentration and Price Policy, pp. 331-60.
  6. T.N.E.C. Monograph No. 27, Part I, pp. 1-18, 54-57; Part V, 273-96, 407-12; Part VI, pp. 581-91, 660-71.
  7. Stocking and Watkins, Monopoly and Free Enterprise, pp. 53-84.
  8. National Bureau of Economic Research, Cost Behavior and Price Policy, pp. 219-66.
  9. A. N. Burns, The Decline of Competition, pp. 1-42.
  10. E.S. Mason, “Industrial Concentration and the Decline of Competition,” in Explorations in Economics, pp. 434-43; also available in Mason, Economic Concentration and the Monopoly Problem, pp. 16-43.
  11. J.M. Clark, The Economics of Overhead Cost, pp. 434-50.
  12. Butters, Lintner, and Cary, The Effects of Taxation: Corporate Mergers, Chs. IX, X.
  13. M.A. Adelman, “The Measurement of Industrial Concentration,” Review of Economics and Statistics, Nov. 1951, pp. 269-96.
  14. Edwards, Stocking, George, and Berle, “Four Comments on ‘The Measurement of Industrial Concentration,’ with a Rejoinder by Professor Adelman,” Review of Economics and Statistics, May 1952, pp. 156-78.
  15. J.M. Blair, “The Measurement of Industrial Concentration: A Reply,” M.A. Adelman, “Rejoinder,” Lintner and Butters, “Further Rejoinder,” Review of Economics and Statistics, Nov. 1952, pp. 343-67.

  1. General Motors and the Automobile Industry

  1. Joel Dean, Managerial Economics, pp. 397-403, 427-57.
  2. Donaldson Brown, “Pricing Policy in Relation to Financial Control,” Management and Administration, Feb., Mar., and Apr., 1924.
  3. Albert Bradley, “Financial Control Policies of General Motors,” paper read to American Management Association, 1926, revised 1928.
  4. H.B. Vanderblue, “Pricing Policies in the Automobile Industry,” Harvard Business Review, (1939), Vol. 18, pp. 385-401, and Vol. 19, pp. 64-81.
  5. Wall Street Journal, “How Auto Firms Figure Their Costs to Reckon The Price Dealers Pay”, December 10, 1957.
  6. General Motors Corporation, The Dynamics of Automobile Demand, articles by Horner and S.M. Du Brul, pp. 3-18, 124-139.
  7. D.A. Moore, “The Automobile Industry,” in Adams (ed.), The Structure of American Industry, 2nd ed., pp. 274-325.

  1. Competition in the Steel Industry

  1. Walter Adams, “The Steel Industry,” in Adams (ed.), The Structure of American Industry, 2nd ed.
  2. R.L. Bishop, “Price Stability v. Flexibility,” manuscript.
  3. U.S. Steel Corporation, Business, Big and Small, Built America, articles by D. Austin and B.B. Smith, pp. 69-111.
  4. Synopses and Excerpts from Affidavits in U.S. v. Bethlehem Steel and Youngstown Sheet and Tube, 1957.
  5. R.L. Bishop, “On the Definition of Markets,” manuscript.
  6. Fritz Machlup, The Basing-Point System, Chs. 1, 3, 5.
  7. J.M. Clark, “Basing Point Methods of Price Quoting,” Canadian Journal of Economics and Political Science, 1938, pp. 477-89.
  8. Carl Kaysen, “Basing Point Pricing and Public Policy,” Quarterly Journal of Economics, Aug. 1949.

  1. Cost Determination and Analysis

  1. J. M. Clark, The Economics of Overhead Costs, pp. 17-69, 201-03, 459-79.
  2. National Bureau of Economic Research, Cost Behavior and Price Policy, pp. 1-32, 51-218.
  3. Caleb Smith, “Survey of the Empirical Evidence on Economies of Scale,” in Universities, National Bureau of Economic Research, Business Concentration and Price Policy, pp. 213-38.
  4. J.S. Bain, “Economies of Scale, Concentration, and Condition of Entry in Twenty Manufacturing Industries,” Economic Review, 1954, pp. 15-39.
  5. Leonard J. Doyle, “Most Profitable Product Volume,” N.A.C.A. Bulletin No. 30 (Feb. 1, 1949), pp. 643-52.
  6. James Earley, “Marginal Policies of ‘Excellently Managed’ Companies,” American Economic Review, Mar. 1956, pp. 44-70.
  7. Joel Dean, Managerial Economics, pp. 247-347.

 

Source: Duke University. Rubenstein Library. Papers of Robert M. Solow, Box 68, Folder “Reading lists”.

Image Source:   Robert Lyle Bishop. MIT Museum.

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Carnegie Institute of Technology Chicago Economists Harvard Johns Hopkins M.I.T. Michigan

Harvard. Evsey Domar’s Ph.D. Thesis story. 1947

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This post is the second in the series dedicated to the economists who trained me (the first post about John Michael Montias is here). In the Evsey Domar papers archived at Duke University I found the following two-page, undated typed note about my Doktorvater’s own experience with his dissertation. Let us just say that his thesis committee fell rather short of any reasonable standard of due diligence. 

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M.I.T. Obituary

Professor Emeritus of Economics Evsey D. Domar died on April 1 [1997] in Emerson Hospital in Concord. He was 82.

Domar came to MIT in 1957 as a visiting professor from Johns Hopkins University; he received tenure a year later. In 1972, Domar became one of seven professors endowed by the Ford Foundation. He retired in 1984.

Among Domar’s pupils in macroeconomics was Robert William Fogel, winner of the 1993 Nobel Memorial Prize in Economics.

Domar was an expert on Soviet economics during the Cold War and an early proponent of Keynesian economic theory.

In recent years, Domar remained politically active in his field. Along with 1,100 other economists, he signed an Economic Policy Institute statement opposing the proposed balanced budget amendment.

Domar served as a consultant for the RAND Corp., the Ford Foundation, the Brookings Institution, the National Science Foundation, the Batelle Memorial Institute, and the Institute for Defense Analysis.

Domar was born in Lodz, Poland in 1914. He was raised in Manchuria and emigrated to the United States in 1936.

He received his bachelor of arts from UCLA in 1939, a master of science from University of Michigan in 1940, another MS from Harvard University in 1943, and his doctorate from Harvard in 1947.

Before coming to MIT, Domar taught at the Carnegie Institute of Technology, the University of Chicago, and Johns Hopkins.

Domar was a fellow of the American Academy of Arts and Sciences, the Econometric Society, and the Center for Advanced Study in the Behavioral Sciences.

He was on the executive committee of the American Economic Association from 1964—65, and became the organization’s vice president in 1970, when he was also president of the Association for Comparative Economics.

Domar is survived by his wife, Carola, of Concord, two daughters, Alice D. Domar, of Sudbury, and Erica D. Banderob, of Milton, and three granddaughters.

Source: MIT, The Tech, Vol. 117, No. 19 Tuesday, April 15, 1997.

Image Source: Joshua Domashevitsky (Evsey Domar). 1939 UCLA Yearbook Southern Campus portrait.

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THE STORY OF MY THESIS

When I entered graduate school I knew that someday I would have to write a thesis but I did not have the slightest idea what it would be on. Once, browsing in the Harper Library at the University of Chicago I stumbled into Bronfennbrenner’s thesis. Its mathematics was overwhelming. I was in a panic: surely I would never be able to write anything like it.

Originally, I was supposed to write a thesis on post-war taxation, but as time went on I was finding the subject less and less interesting. In the meantime, I began to publish papers on growth models. Harvard rules permit the submission of several related articles instead of one book-like study. It took me several years to accumulate four papers, of which three, I believe, had been published. (A full time job, whether at the Federal Reserve or in teaching is not the best environment to write a dissertation.) Finally, the last paper was finished and all four were sent to Hansen at Harvard.

I needed the degree very badly. I was very unhappy at Carnegie Tech and anxious to find another job. Prospective employers appeared to lose all interest when informed that I had not yet received my degree. So in the letter accompanying the thesis I besieged (sic) Hansen to render his decision as soon as possible.

Weeks went by with no word from him. Finally I called him on the phone. (In those days long-distance phone calls were regarded as an exotic luxury particularly for an underpaid assistant professor.) “Thesis,” said he, in his gruff voice, “what thesis?” I explained. “Wait a moment, let me find it.” I heard the sound of an envelope torn open. “Fine,” he said, “Fine. Send it in.” And that was all the supervision I was to get.

When I arrived in Cambridge a day before my final examination, I noticed that the secretary of another member of the committee was just bringing my thesis to him. (She tried to hide it behind her back.) At least he had one day to take a look at it.

Schumpeter, who was the third member, never bothered to look at it at all. He invited me to lunch, and said: “You are coming up tomorrow, aren’t you? What shall we talk about?” I told him what I was working on. “Fine,” he said. When the committee met he turned to Hansen, the chairman: “Instead of talking about the thesis, why don’t we ask the candidate to tell us about his current work.” His suggestion was accepted at once, I thought, even with a sense of relief: as I was to find out repeatedly in my time, doctoral examinations can be quite boring for the examiners. And that was my doctoral examination.

Were our teachers guilty of neglect or were they sufficiently brave to pay no attention to rules? Would we have the courage to disregard them under similar circumstances?

 

Source:   Duke University, Rubenstein Library. Evsey Domar Papers. Box 18, Folder “Miscellaneous: Biographical “The Story of My Thesis.”

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Economists Funny Business M.I.T.

M.I.T. Faculty Skit with Peter Diamond as Sir Lancelot, 1967

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Today’s post is an excerpt from a script for a department faculty skit performed at the MIT Graduate Economics Association’s “Shawmut Follies” of 1967. The “skitwrights” were Duncan Foley and Peter Temin who adapted the lyrics from tunes taken from the popular musical Camelot (based on the legend of King Arthur and his Knights of the Round-Table) to departmental happenings.

The backstory of this scene is that the future 2010 Nobel prize winner Peter Diamond left the University of California (Berkeley) to join the M.I.T. economics faculty in 1966. I suppose one could imagine the scene opening with the two long-haired peasants as West coast hippies speaking in a Greenwich Village beatnik-ese dialect. The casting problem for having a “chick” in a faculty solely made up of men was solved by employing the departmental administrator Del Tapley rather than by an Elizabethan substitution of male actors in female roles (We are talking Cambridge Massachusetts in the 1960’s and not Berlin in the early 1930’s!).

For those not familiar with the show-tune “C’est moi!” from Camelot, here the Robert Goulet version in the original Broadway Cast Recording at YouTube.

 

 

Dramatis Personae of Scene 2

Herald: Richard Eckaus

First Peasant: E. Cary Brown

Second Peasant: Del Tapley

Lancelot: Peter Diamond

Scene 2
(A provincial city named after an English philosopher)

A Herald: Hear ye, hear ye. Come one, come all to hearken to the Grand Proclamation of King Arthur.

First Peasant: Man, what’s his bag?

Second Peasant: Something about King Arthur.

First Peasant: Who’s this King Arthur cat?

Second Peasant: It’s some weird kick they got out East.

First Peasant: Do you know I hear there aren’t any chicks at all out there?

Second Peasant: Groovy.

First Peasant: Groovy? What’s your bag, man?

Second Peasant: I am a chick, man. No shut up and listen to the proclamation.

Herald: If you’re ready.

First Peasant: Oh, we’re ready. Don’t stand on your fancy Eastern ways out here.

Herald: King Arthur of M.I.T. offers to all young knights of intellectual errantry the opportunity to join the select long Corridor of economists sworn to uphold true theory, to rescue theorems from rape and pillage at the brutal hands of Midwestern Ph.D.’s, to form a fellowship of intellectual excellence and as much good cheer as can coexist with it.

Second Peasant: “With it” is a pretty weak way to end a sentence, if you ask me.

Herald: Admission to the Long Corridor will be by open combat in a faculty seminar, jousting with mathematical, graphical, and verbal reasoning. Come one, come all. That’s it. Break it up.

First Peasant: Gee whiz.

Second Peasant: What’s that slang jargon you’re talking, man?

First Peasant: Who’s going to go and compete with those fierce Eastern minds?

Second Peasant: Not me, man.

First Peasant: I hope somebody goes out here.

Lancelot: I will.

Second Peasant: You? Who are you?

Lancelot: I am Lancelot du Bay, academic fencer par excellence. I will go.

First Peasant: To M.I.T.? Think twice, man.

Lancelot: (sings)

M.I.T….
M.I.T….
On the West Coast I heard your call.
M.I.T….
M.I.T….
And here am I to give my all.
I know in my soul
What you expect of me
And all that and more I shall be.

A prof of the Corridor Long should be unstoppable
A mind on which less fantastic minds can lean:
Teach a class no one else can teach
Prove a theorem that’s out of reach
Run regressions without the help of a machine.

His logic and argument should be unstoppable
His papers of course always beyond compare.
But where in the world
Is there in the world
A man so extraordinaire?

C’est moi, c’est moi
I’m forced to admit
‘Tis I, I humbly reply
That Ph.D. who
These marvels can do
C’est moi, c’est moi, ‘tis I.

The students say
My lectures are keen
My proofs are fit for a king.
I’ll show a way
Through Pontryagin
To prove most any thing.
C’est moi, c’est moi
My colleagues have fits
Because I never am wrong.
Where will they find brains better than mine
Theoretically wise
Empirically fine
To serve in the Corridor Long? C’est moi.

 

Source: MIT Libraries, Institute Archives and Special Collections, Department of Economics Records, Box 2, Folder “GEA 1961-67”.

Image Source: Robert Goulet as Lancelot in the 1960 Broadway Musical Camelot at Fanpix.net. [A google search did not find an image of Peter Diamond in chain mail and a tunic]

 

 

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Economists Exam Questions M.I.T. Suggested Reading Syllabus

MIT. Robert Solow’s Advanced Economic Theory Course, 1962

Robert Solow taught the course Advanced Economic Theory at MIT in the Spring of the 1961/62 academic year. Of the dozen graduate students who took the course for credit were a future Nobel prize winner (Peter Diamond), a future Princeton professor and later member of Jimmy Carter’s Council of Economic Advisers (Stephen Goldfeld), a future professor at University of Pennsylvania/Washington University (Robert Pollak), a future professor and later chairman of Hebrew University (David Levhari), and a professor of economics and the first woman to head an MIT academic department, economics! 1984-1990 and MIT’s first female academic dean, School of Humanities and Social Science (Ann Friedlaender).

The three A’s awarded in the course went to Diamond, Levhari and Goldfeld.

The comprehensive exam questions for advanced economic theory from May 1962 were transcribed in the previous post.

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14.123—Advanced Economic Theory
Spring 1962—Professor Solow

FIRST READING LIST: LINEAR PROGRAMMING AND RELATED SUBJECTS

This should occupy 6-9 weeks. Most of the reading is in Gale: The Theory of Linear Economic Models and Dorfman, Samuelson, Solow: Linear Programming and Econmic Analysis, referred to below as G and D respectively.

  1. Mathematical background: I hope to avoid spending any time on this. Mainly elements of matrix algebra—14.102 should be enough. For review, see D (Appendix B) and G (Ch. 2, more difficult).
  2. Elements of Linear Programming; D (Ch. 2,3), G (Ch. 1,3).
  3. Algebra and Geometry of Linear Programming, Simplex Method; D (Ch. 4, Sec. 1-11), G (Ch. 4).
  4. Applications; D (Ch. 5-7), Manne: Economic Analysis for Business Decisions (Ch. 4,5).
  5. Two-person zero-sum games; D (Ch. 15), G (Ch. 6,7).
  6. Leontief and similar systems; G (Ch. 8, 9 Sec. 1-3), D (Ch. 9, 10).
  7. Activity analysis; G (Ch. 9, Sec. 4), Koopmans: Three Essays on the State of Economic Science (pp. 66-104).
  8. Von Neumann’s model; D (Ch. 13, Sec. 6), G (Ch. 9, Sec. 5-7).
  9. Sraffa: Production of Commodities by Means of Commodities.
    Robinson: “Prelude to a Critique of Economic Theory”, Oxford Economic Papers, February 1961, 53-58.
  10. If time permits, the turnpike theorem; D (Ch. 12), Hicks: “Prices and the Turnpike”, Review of Economic Studies, February 1961, 77-88.
    Radner: “Paths of Economic Growth that are Optimal, etc.”, Review of Economic Studies, February 1961, 98-104.

(Further references may follow.)

 

SECOND READING LIST: PUBLIC INVESTMENT CRITERIA

  1. Hirshleifer: “On the Theory of Optimal Investment Decision”, Journal of Political Economy, August 1958, pp. 329-352.
  2. Graaff: Theoretical Welfare Economics, Chs. 6-8.
  3. Eckstein: “A Survey of the Theory of Public Expenditure Criteria”, in Public Finances: Needs, Sources and Utilization, with “Comments” by Hirshleifer.
  4. Margolis: “The Economic Evaluation of Federal Water Resource Development”, AER, March 1959, pp. 96-111.
  5. Steiner: “Choosing Among Alternative Public Investments”, AER, Dec. 1959, pp. 898-916.
  6. Maass, al.: Design of Water-Resource Systems, Chs. 2, 13 (and passim).
  7. Eckstein: Water Resource Development, Ch. 1-4.

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April 11, 1962

14.123—Exam

Answer all questions.

  1. A function f of vectors x,y,… is called subadditive if f(x+y) ≤ f(x) + f(y) for all vectors x, y, and called superadditive if the inequality is reversed.
    Consider the LP problem of maximizing C′x subject to Ax ≤ b. The value of the maximum is a function of C, b, and A. Show that it is a subadditive function of C and a superadditive function of b.
  2. A firm can produce n commodities with a linear technology involving one activity for each commodity. Production involves only fixed factors, m in number, m<n, of which specified amounts are available. The output is sold at market prices p, and the firm chooses non-negative vector x of outputs to maximize p′x subject to the fixed-factor limitations.
    (a) Prove that the supply curve is not negatively sloped; that is, prove that if p1 increases, other prices constant, the optimal x1 must increase or remain unchanged, but cannot decrease. (Hint: a straightforward procedure is to consider closely the final simplex tableau, the signs of various elements, and what can happen to require further iteration if p1 There is a much simpler proof, comparing the before-and-after optima.)
    (b) State and interpret the dual to the theorem just proved.
  3. Consider a simple linear model of production, with 2 goods, and with 2 fixed factors, land and labor, available in specified amounts.
    (a) Sketch possible shapes for the set of feasible net outputs, or net production-possibility curve.
    (b) Suppose demand conditions are such that consumption expenditures on the two commodities are always equal. Give a complete analysis of the determination of the prices of the two goods and also the rent of land and the wage of labor. Graphical methods will help. (Hint: at one key point the construction of an isosceles triangle is very useful.)

 

Source: Duke University. Rosenstein Library. Robert M. Solow Papers, Box 67, Folder “14.123 Final Exam Fall-1969[sic|”.

Image Source: Robert Merton Solow at the M.I.T. Museum website.

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Exam Questions M.I.T.

MIT. Advanced Economic Theory Exam, 1962

Coming up will be the reading list(s) and exam for the course Economics 14.123 (Advanced Economic Theory) taught by Robert Solow in the Spring semester of the 1961-62 academic year at M.I.T. 

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May, 1962

GENERAL EXAMINATION—ADVANCED THEORY

Answer question 1 and 3 others.

  1. Make a catalog of the kinds of situations in which resource allocation through the price system is likely to give non-optimal results. Indicate the nature of the non-optimality, and for at least some of the situations describe the analytic reason why non-optimality results.

 

  1. A consumer can buy n goods, x1 … xn, at prices p1, … pn. For each unit of xi he purchases (for cash), he receives ai trading stamps. He may then purchase further commodities for trading stamps at fixed trading-stamp prices w1 … wn.

Analyze his equilibrium in each of the following cases, interpreting your results in words and explaining how the equilibrium differs (if at all) from the no-trading-stamp equilibrium where all ai = 0.

(a) ai = k pi; wi = c pi

(b) ai = k pi; wi ≠ c pi

(c) ai ≠ k pi; wi = c pi

(d) ai ≠ k pi; wi ≠ c pi

 

  1. Let A be a non-singular, indecomposable constant Leontief matrix. If this period’s outputs are immediately and exactly plowed back as inputs for next period and there is no capital or consumption:

(a) Set up the implied difference equation system.

(b) Is that system capable of balanced growth?

(c) Under what conditions will it be balanced growth rather than balanced decay?

(d) Is the balanced growth ray unique?

(e) What optimality properties, if any, does balanced growth have?

(f) Is the balanced growth ray stable?

 

  1. There are k countries, each with a fixed supply of a single scarce primary factor of production. In country i, it takes ai units of the factor to produce a unit of wine and bi units to product a unit of cloth.

(a) Formulate this k-country Ricardian comparative advantage setup as a linear programming problem for world efficiency, and show how the Ricardian results emerge.

(b) State and interpret the dual of the world-efficiency problem.

 

  1. An investor has open to him all two-period investment options with net cash flows N0 and N1 such that  N02 + N12 =1. He can lend unlimited amounts at an interest rate of 4 percent per period and borrow unlimited amounts at a rate of 6 percent per period. His preference for consumption in the two periods C0 and C1 are described by the utility function U = C0 +(C1)½. Find the investor’s best plan of action.

 

  1. A system uses primary labor and produced capital good(s) to produce consumption output and gross capital formation(s). Labor grows exponentially at the rate of g per annum. Suppose everything else matches that rate of growth. Show that consumption per capita is maximized where the interest rate, r, equals the growth rate, g. (Use any specific model, however simple or complex, to give your proof.)

 

Source: Duke University. Rubenstein Library. Edwin Burmeister Papers. Box 23.

Image Source: MIT beaver from the cover of the 1949 yearbook Technique.

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Economic History Exam Questions M.I.T.

MIT. Final Examinations for European Economic History. Kindleberger, 1970/74

The M.I.T. graduate economics program of my day (mid-1970s) still offered three courses in economic history: Peter Temin‘s American Economic History, Evsey Domar‘s Russian Economic History and Charles Kindleberger‘s European Economic History. I will confess here that little value-added from his lectures has survived the intervening decades for me  (I did read plenty!). That said, my personal take-away from Kindleberger’s class was that he represented the ideal balance of scholar-gentleman-economist. I suspect he felt as much a dinosaur when he taught us in the mid-1970s as I certainly do now when I eavesdrop on the conversation of graduate students when they mimic their elders, who are now sometimes a full generation younger than me. 

I posted a few of his favorite stories from his days at Columbia University. Here an outline biography of Charles Kindleberger at the MIT economics department.

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December 12, 1974
8:30-10:30

Informal Final Examination
14.733
European Economic History

 

Answer any three questions (forty minutes each), but be certain that not all your answers refer exclusively to Great Britain or the Continent of Europe.

 

  1. It was said that the Holy Roman Empire was neither Holy, Roman nor an Empire.
    to what extent was the Industrial Revolution a) Industrial? b) a Revolution?
    Explain at some length, and indicate which Industrial Revolution, if there are more than one, you are referring to.
  1. Compare and contrast one pair, at least twenty-five years apart, from the following list:
    1. financial crises in Europe
    2. economic booms
    3. recoveries from war
    4. reparation transfers
  1. Evaluate the role of tariff policy in the economic growth or the economic development of one or more countries of Europe over some period of time which you specify.
  1. Compare the profiles of economic development over the nineteenth century of one of the pairs of countries below, and account for the major differences:
    1. Netherlands — Britain
    2. Britain — Germany
    3. France — Germany
    4. Italy — other country of your choice

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14.733 FINAL EXAMINATION
December 23, 1970 9AM
Three hours

 

Answer any four questions […illegible…] but at least one from each group.

 

Group I

  1. Describe the course and causes of the Industrial revolution in one country in Europe.
  2. Compare and contrast Rostow’s Stages and Gerschenkron’s discontinuity in economic growth, illustrating your answer with material from European history.
  3. Discuss the role in the early industrialization of one country of Europe of a) labor; b) capital; or c) technology.

 

Group II

  1. To what do you ascribe the business cycle in the 19th century Europe? Explain.
  2. Argue for or against the advantage of backwardness and the penalty of the head start, illustrating your argument with 19th century economic data from Europe.
  3. How do you account for the limited movement toward free trade in Europe after 1869. what did it accomplish, and why did it end?

 

Group III

  1. Did Europe grow rich on imperialistic exploitation of the rest of the world in the last quarter of the 19th century? Support your answer fully.
  2. Compare German recoveries after World War I and after World War II.
  3. Discuss the role of Europe in the 1929 depression.
  4. Compare and contrast the role of London in world finance before and after 1913.

 

Source: Personal copies of Irwin Collier.

 

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Chicago Economists Funny Business M.I.T. Undergraduate

Chicago. Paul Samuelson’s 50th Class Reunion Questionnaire, 1985

For his 50th class reunion Paul A. Samuelson filled out the following one page questionnaire. Besides revealing the youthful musical taste of this Chicago educated Wunderkind, Samuelson’s responses sometimes even illustrate his writing style (e.g. 7 8/9 grandchildren). I was most struck by his declared favorite professor during these formative years. Guess, then read.

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CLASS OF 1935 SURVEY

Your former classmates are interested in what you’re doing.

 

Name Paul A. Samuelson                Maiden Name [blank]

Address MIT E52-383

City/State/Zip Code Cambridge, MA 02139

Your past and present occupation and employer Professor of Economics, Massachusetts Institute of Technology

Anything you wish to mention about your job Overpaid/underworked

Spouse’s name and occupation Risha Samuelson, Painter

No. of children 6       No. of grandchildren 7 8/9            No. of great-grandchildren [blank]

Degrees received and institutions attended AB U of C 1935; AM 1936, Ph.D. Harvard 1941, 2 dozen honorary degrees, including Chicago

Favorite class and professor at the University, and why Henry Simons, Economics! Great economist, great person.

Most rewarding, exciting, or unusual experience as a student Being reborn as a scientist-scholar

Most memorable moments since graduation Nobel Prize, 1970; birth of triplets, 1953; first-born, 1946

Favorite song or band of the ‘30s Wayne King, Hal Kemp, Paul Whiteman

Other affiliations (clubs, professional associations, political parities) [blank]

Have you received any civic, community, or academic honors? Yes

Accomplishments, interests, hobbies that you find especially significant Tennis

Future plans Economic writing

Please share any other information that your classmates may find interest I was given a great education, in the Midway’s golden age

 

Please return this form by April 15, 1985. You may attach an additional sheet if needed. Mail to: Reunion ’85 Network, 5757 S. Woodlawn Avenue, Chicago, IL 60637

[pencil note: Sent 2/22-85]

 

Source: David M. Rubenstein Rare Book & Manuscript Library, Duke University. Paul A. Samuelson Papers, Box 4, Folder “Personal”.

Image Source:  Henry Calvert Simons. University of Chicago Photographic Archive, apf1-07614, Special Collections Research Center, University of Chicago Library.

Categories
Exam Questions M.I.T.

MIT. Final Examination in 2nd Core Microeconomics. Martin Weitzman, 1974

The theory core at MIT in the mid-1970s consisted of four half-semester courses in microeconomics and four half-semester courses in macroeconomics. For reasons unknown to me, Microeconomic Theory I (A) taught by Martin Weitzman was scheduled to follow Microeconomic Theory II (A) taught by Robert Bishop for the First Term of 1974-75. I guess I should really say, there was no good reason not to simply reverse the numbering of the courses since Weitzman’s course was in most respects the more advanced of the two. The course featured the economic intuition behind some “quick and dirty bankers’ calculations”, an introduction to linear models, and the first essay of Koopmans’ Three Essays on the State of Economic Science.

_______________________

Microeconomic Theory I (A)

14.121 December 1974                 Final Exam                M. Weitzman

Instructions:

  1. Be sure you have picked a number and identify yourself by that number only on each blue book you use.
  2. Try to answer any three out of the following six questions.
  3. Complete answers on all three questions are not required for passing. Two well answered questions would easily be enough to pass, for example.
  4. Total time: one and a half hours.
  5. Answer each question in a separate blue book.
  6. Try to be concise and to the point. Wordiness is not going to help anyone.

 

  1. Explain carefully why the following three features of the American economy lead to productive inefficiency. Say what might be done to rectify the inefficiency.
    1. water pollution
    2. existence of “free” fishing grounds.
    3. the fact that the price of certain raw materials (Like natural gas) is artificially suppressed.
  1. Suppose there are a total of I tasks to be accomplished. A limited number of labor saving machines are available to help out. Task i can be performed by using ai units of labor alone, or bi (< ai) units of labor along with ei machines, or the appropriate combination. There are a total of M machines available.
    1. Formulate the problem of using the available machines to minimize the amount of labor required to perform the tasks.
    2. Describe the optimal solution.
    3. What is the value or shadow price of an extra machine? Show directly that minimizing shadow costs at shadow prices yields the right answer.
  1. A particular “two-armed” model of a drill-press can be worked by either one or two operators. With one operator it produces U units of output per unit time; with two operators it produces V units per unit time.
    1. With L laborers and M machines available, describe precisely how to calculate how many machines should be operated by one worker and how many by two in order to maximize output. What is the marginal rate of substitution between machines and laborers? (Hint: Try to get an answer using “common sense.” If that doesn’t work, draw isoquants.)
    2. Suppose total output is fixed in the long run. As many machines can be rented and workers hired as desired at the going rates. How do you decide whether it is better to operate machines with one or with two laborers?
    3. In the short run the number of machines is fixed but as many workers as desired can be hired at the going wage rate. The output is variable. How is the short run supply of output schedule determined?
  1. There are two farm plots, A and B. Both have identical production functions. If x units of labor is applied to A (or to B) it results in f(x) units of output. A total of L units of labor is available for application to both farm plots.
    1. Formulate the planning problem of allocating labor to A and to B so as to maximize total output from both farms when a total of L units of labor are available.
    2. Assuming f’(x) > 0, f”(x) < 0, characterize exactly the solution to problem (a) above and show why it is optimal.
    3. Show directly that there is an efficiency price of labor relative to output which supports the optimal solution of (b).
    4. Assuming f’(x) > 0, f” > 0, characterize exactly the solution to problem (a) above. Does (c) hold now? Why or why not?
  1. A firm or economy consists of a number of divisions or subsectors. There are no externalities. From first principles, prove rigorously the following result: If each subsector is maximizing profits at the same positive prices, the firm’s overall mixture of inputs and outputs is being efficiently produced.
  1. Suppose modern low-cost shell housing is made according to the following production formula:

H = (A + T)αL1-α

A,T,L ≥ 0

Where H is housing, A is aluminum, T is tin, and L is labor. Tin is produced by a perfect competitor, so there is free entry into the tin industry. One unit of labor produces a unit of tin. Aluminum, on the other hand, is a monopolistic industry which can charge any price it wants to, and can restrict entry. One unit of labor produces b > 1 units of aluminum. The aluminum, tin, and housebuilding industries have competitive labor supplies. For simplicity, suppose that the total budget of all the housebuilders is fixed and aluminum has no other uses.

a. What will be the competitive price of tin? The monopoly price of aluminum? Why?

b. What input mix will the home builders select and why?

c. Referring to question (b), are houses being produced efficiently? Why or why not? Give as precise an answer as you can. If you find that houses are produced inefficiently, give the efficient way to produce them.

 

Source: Personal copy of Irwin Collier.

Image Source: Detail from 1976 MIT economics department group picture.

Categories
Chicago Economic History M.I.T.

MIT. Search for an Economic Historian. 1942

In this 1942 letter from the head of the Industrial Relations Section of the M.I.T. Department of Economics and Social Science, W. Rupert Maclaurin, to the economic historian Earl J. Hamilton of Duke University, we see that hiring a young economic historian was part of the plan “to build one of the leading departments in the country”. Professor Davis Rich Dewey retired in 1940. Courses in economic history were taught in the late 1940s by Karl Deutsch and then by Walt Rostow beginning in 1950. (See Peter Temin, The Rise and Fall of Economic History at MIT, History of Political Economy, Volume 46, Number suppl. 1: 337-350. Earlier and downloadable at MIT Economics Working Paper 13-11, June 5, 2013.)

____________________________

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY
INDUSTRIAL RELATIONS SECTION

Department of Economics and Social Science
CAMBRIDGE, MASSACHUSETTS

APRIL 8, 1942

W. Rupert Maclaurin
Douglas McGregor
Barbara Klingen Hagen
Beatrice A. Rogers

Douglass V. Brown
Dwight L. Palmer
Charles A. Myers
Paul Pigors

Professor Earl J. Hamilton
Department of Economics
Duke University
Durham, North Carolina

Dear Professor Hamilton:

            At the suggestion of Dr. Arthur Cole I am writing to ask if you know a really promising young man in the field of economic history who might be eligible for an opening that we have here at M. I. T.

            Various members of our Department of Economics are initiating a series of studies which are designed to be of assistance in post-war reconstruction in the United States. These studies are being undertaken with the cooperation of industry and the government, as part of a larger program designed to analyze some of the basic, longer-range problems facing this country. Our group at M. I. T. will be concerned particularly with analyses of the opportunities for industrial development in the post-war world and some of the hindrances and restrictions which have been inhibiting development in the past.

            As part of this general research program, and also of our plans for developing this Department, we would like very much to bring in a promising young economic historian who would be interested in making some historical studies in the general field of industrial development. We should like someone who would co-operate with the “Committee on Research in Economic History” of which Dr. Cole is chairman.

            The administration at M. I. T. is anxious to build up the Departments of Economics and History. These two departments now come under Dr. Robert Caldwell, professor of history and dean of humanities. Whoever we brought in would divide his time to some extent between the Department of History and the Department of Economics.

            Our Economics Department is undergoing substantial change and expansion at the present time, and we are attempting to build one of the leading departments in the country. There should therefore be significant opportunities for professional advancement for promising young men. We started last year a graduate program leading to a Ph.D. degree in industrial economics, and by next year we shall have a group of about twenty graduate students in this Department, primarily on a fellowship basis, from all over the country.

            I know this is a hard time to find talent. We should only be interested in some young man who has an attractive personality, energy, and creative imagination. For this particular position here there is no point in our considering anybody who is not A. We are thinking of a young man under thirty-five who would come to us as an instructor or an assistant professor. The teaching load would be light, and we could arrange for travelling expenses and other research facilities.

            The whole problem of selective service is a very difficult one to deal with under present conditions. As an engineering school with a research program in economics that is closely associated with a number of the leading government agencies in Washington, there is at least a good [chance that the local*] draft boards would grant deferment to a promising instructor in economic history here.

            If you have any suggestions to make, I should greatly appreciate hearing from you.

Yours sincerely,

[signed]
W. Rupert Maclaurin

[*A fold in the letter here covers all but the very top (sometimes bottoms) of the first four words so that I have suggested an interpolation consistent with what I see.]

 

Source: Duke University, Rubenstein Library, Earl J. Hamilton Papers, Box 2, Folder “Correspondence—Misc, 1930’s-1960s and n.d.”.

Image Source: (left) W. Rupert Maclaurin, from MIT Technique, 1944.; (right) Earl J. Hamilton (1937) from John Simon Guggenheim Memorial Foundation website.

Categories
Economists M.I.T.

MIT. Suggestions for New Fields. Domar, Kuh, Solow, Adelman, 1967

The following set of memoranda from the MIT economics department is found in a folder marked “Correspondence: Peter Temin” in Evsey Domar’s papers. The bulk of the material in the folder are letters of support that Domar solicited for the committee he chaired (which consisted of Domar, Charles Kindleberger and Frank Fisher) to review Peter Temin for tenure. It thus appears that Domar’s proposal to strengthen economic history at MIT in February 1967 was seen (at least by him) to have led later to granting Peter Temin tenure at MIT. See Peter Temin’s reflections on “The Rise and Fall of Economic History at MIT.”

In response to a request by the Head of the department, E. Cary Brown, for input to a long-range plan (1967-1975), we have here not only Evsey Domar’s response but also memos from Edwin Kuh (more econometrics!), Robert Solow (“poverty-manpower” or “a really high-class macro-numbers man”) and M. A. Adelman (energy economics).

Even Robert Solow’s intradepartmental memos sparkle with wit!

_________________________________

February 7, 1967

MEMORANDUM

 

To: Members of the Economics Department
From: E. Cary Brown
Subject: Long-Range Departmental Plans

President H. Johnson has asked that Departments submit long-range plans – by two-year intervals through the academic year 1974-5. The basic constraints, other than budgetary, are that the undergraduate student body is to remain fixed at its present level and that graduate students at M.I.T. Grow at only a 3% rate per year. The projection desired is of the expansion in existing fields, into new fields, the population of the department – faculty, staff, students, post-doctorals, and administration and supporting staff.

In order to get a dialogue started, I suggest that each of you send me a note on the need for new fields, the expansion of existing ones, and your views about our undergraduate and graduate size. I can then prepare an agenda for a meeting or two on this matter.

_________________________________

 

[Evsey Domar response]

  1. New Fields, etc.
    1. Economic History. Could tie in very well with our economic developers. Also help to create a better balance in the Department.
    2. Economics and Technology (Mansfield, etc.) MIT should be just the place for it.
    3. I hope Max continues to be interested in South-East Asia. The US will be involved there for a long time. Any chances for a South-east. Asia Center or something?
  2. Number of Students
    No strong feelings. A larger number of both faculty and students allows us to offer a greater variety of courses.

As you know, Economic History is my main concern.

_________________________________

 

[Edwin Kuh response]

February 13, 1967

MEMORANDUM

TO:                 Professor E. Cary Brown
FROM:          Professor Edwin Kuh
SUBJECT:     Some Economics Department Needs in the Long Run

Let me first grind my own econometric axe. We need additional support in two econometric areas. The first pertains to support for quantitative theses; Frank Fisher, Bob Solow and I carry a heavy load in this connection, which is unlikely to diminish. Second, we ought to have more strength than we do in econometric time series analysis, an important topic not covered by existing faculty. Marc Nerlove, for instance, ranks high on both counts. Less senior individuals include David Grether who combines both aspects (Stanford Ph.D. going to Yale this fall) and possibly Joseph Kadane also at Yale, who is more the statistician. Jim Durbin and Bill Phillips would be fine, too, qua statisticians contributing to econometrics.

Next, suppose we are fortunate enough to attract both Ken Arrow and C. V. Wiesacker [sic] ; the net balance in favor of theory would then become heavy indeed. There will be no need to panic and for instance, proceed instantly to hire Arthur Burns. But even so, it will behoove the department to push relentlessly on expanding the more empirical side. Since all tenure slots by then will have been sewed up, I don’t see how this can readily be done.

Finally, the department ought to raise more finance for computation. The burden has been disproportionately assumed by the Sloan School, even though several Economics Department research projects have made highly welcome and substantial contributions to the installation downstairs. In this connection, the department should seriously consider acquiring the long run services of someone with a major interest [in] computer systems; very different and high qualified individuals such as Mark Eisner or Don Carroll come to mind. The department will lag behind seriously unless it expands in this direction.

This has not been a balanced presentation of needs. I shall leave that to more balanced individuals.

 

_________________________________

 

[Robert M. Solow response]

MEMORANDUM TO: E. Cary Brown, Head
FROM: Robert M. Solow
SUBJECT: Yours of February 7

 

  1. Undergraduate program. I suppose basically we just passively accept as many majors as come along. We might attract more by improving the teaching and brightening up the course offering. So far we have got along just fine with a pretty dreary undergraduate program, and previous attempts to Do Something have petered out. Is history trying to tell us something? The only reason I can think of for trying again is this: if the department faculty is going to state bigger, especially among assistant professors, then we probably need some decent undergraduate teaching for them to do. (Not only them – I would volunteer to do some too.) Why not let the assistant professors do the planning – they probably have more ideas. Suggestions: new undergraduate subjects in mathematical economics, econometrics, “poverty”, transportation (or public investment); cancel one of the current Labor subjects (or convert to “poverty”), maybe cancel 14.06, 14.09; organize research seminar on one-big-project basis; keep 3 or 4 of the best seniors on as PhD candidates as a matter of course.
  1. Graduate program. Does it have to expand to justify slightly enlarged faculty? If so, then accept universe, but fight like hell for adequate space, scholarships, research funds. If not, think carefully. If faculty enlarges and improves, we should be able to do better on admissions. There will always be some lemons admitted; but it is a question whether one would not prefer current size of enrollment with improved bottom half to enlarged enrollment with current quality. If we get Arrow and Weizsäcker, and keep half-dozen assistant professors, some growth of graduate student body probably inevitable. But I’d keep it slow, and in line with admission quality, space, scholarships, research money. Aim for entering class of 40 by 1975? Certainly no more.
  1. New fields. If MIT goes into Urban Studies, I think we ought to move too. This means some joint research, perhaps offering a few fellowships specifically in urban economics, some new appointments (transportation, poverty, local finance), probably young guys. (I’d like to see Mike Piore and Frank Levy free to start something.) (Would Bill Pounds like to hire Joe Kershaw?) Maybe we ought to start looking next fall. This complex could be a major counterweight to theory. We could make a senior appointment, but I doubt we could find a good enough man. We also lack a really high-class macro-numbers man – like Art Okun or Otto Eckstein or George Perry. Should we try Les Thurow? Or try eventually for Steve Goldfeld? Goldfeld would help with Money, but Thurow would fit into poverty-manpower bit. I think I might seriously favor going for Thurow now if we can afford it.

_________________________________

 

[M. A. Adelman response]

March 16, 1967

Memorandum to:     Professor E. Cary Brown
From:                         M.A. Adelman
Subject:  President H. W. Johnson’s request to submit long-range plans: industrial organization field

  1. Enrollment in the graduate course has declined to the point where it is best given in alternate years. Theses written have not decreased, and there are six now in preparation. I wish to use the time made available to teach the course on energy economics when Paul Rodan retires. The remaining time is best devoted to undergraduate teaching (see below).
  2. Undergraduate enrollment seems to be on the increase in 14.02, 14.04, and 14.22. With the appointment of Robert Crandall, we are fully staffed. I would wish to have 14.02 taught exclusively by lecture and sections (teaching assistants) except where the undergraduates’ program will not permit it. Where we are compelled to fill in with three-recitation sections, I strongly urge that they should not be taught by teaching assistants. Since the transfer to lectures economizes manpower, these two changes should be offsetting, but will take more of my own time.
  3. I have given a joint seminar with Harvard (Economics Department and Middle East Center) on Eastern Hemisphere Oil, and will repeat it next year. It is still an uncertain venture, however, in a sensitive area, and the fuss about CIA influence in academic research may kill it.
  4. I join in concern over our weakness in economic history. East European economics might best be treated as an expansion of our current offering in Soviet economics, since there is sufficient unity of geography and practice. I wish some encouragement could be given to East Asian especially Japanese studies, where English sometimes suffices, but would not care to have it as a field of specialization.

 

Source: Duke University, Rubenstein Library. Evsey D. Domar papers, Box 7, Folder “Peter Temin” [apparently misfiled].

Image Source: MIT 1959 Technique (Yearbook).