Theodore Schultz

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Theodore Schultz
Theodore Schultz.jpg
Born(1902-04-30)April 30, 1902
Arlington, South Dakota, United States
Died26 February 1998(1998-02-26) (aged 95)
Evanston, Illinois, United States
NationalityAmerican
Institution
Field Agricultural economics
School or
tradition
Chicago school of economics
Alma mater
Awards Nobel Memorial Prize in Economic Sciences (1979)
Information at IDEAS / RePEc

Theodore William Schultz ( /ʃʊlts/ ; 30 April 1902 – 26 February 1998) was an American economist and chairman of the University of Chicago Department of Economics. Schultz rose to national prominence after winning the 1979 Nobel Memorial Prize in Economic Sciences.

The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field. The award's official name is The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Contents

Early life and education

Theodore William Schultz was born on April 30, 1902 ten miles northwest of Badger, South Dakota on a 560-acre farm. When Schultz was in the eighth grade, his father Henry decided to pull him out of school. His father's view was that if his eldest son continued to get an education he would be less inclined to continue working on the farm. Schultz subsequently did not have any formal post-secondary education. He eventually enrolled in the Agriculture College at South Dakota State, in a three-year program that met for four months a year during the winter. Schultz moved on to a bachelor's program later, earning his degree in 1928 in agriculture and economics. He also received an honorary doctorate of science degree from the College in 1959. He graduated in 1927, then entered the University of Wisconsin–Madison earning his doctorate in Agricultural Economics in 1930 under Benjamin H. Hibbard with a thesis, titled The Tariff in Relation to the Coarse-Feed Grains and a Development of Some of the Theoretical Aspects of Tariff Price Research. [1]

Badger, South Dakota Town in South Dakota, United States

Badger is a small town in Kingsbury County, South Dakota, United States. The population was 107 at the 2010 census.

South Dakota State University public research university located in Brookings, South Dakota

South Dakota State University is a public research university in Brookings, South Dakota, United States. Founded in 1881, it is the state's largest and most comprehensive university and is the oldest continually-operating university in South Dakota. The university is governed by the South Dakota Board of Regents, which governs the state's six public universities and two special schools.

University of Wisconsin–Madison Public university in Wisconsin, USA

The University of Wisconsin–Madison is a public research university in Madison, Wisconsin. Founded when Wisconsin achieved statehood in 1848, UW–Madison is the official state university of Wisconsin, and the flagship campus of the University of Wisconsin System. It was the first public university established in Wisconsin and remains the oldest and largest public university in the state. It became a land-grant institution in 1866. The 933-acre (378 ha) main campus, located on the shores of Lake Mendota, includes four National Historic Landmarks. The University also owns and operates a historic 1,200-acre (486 ha) arboretum established in 1932, located 4 miles (6.4 km) south of the main campus.

Schultz married Esther Florence Werth (1905–1991) in 1930. She was born and raised on a farm near Frankfort, South Dakota of German parents, who encouraged her to pursue schooling. Werth was the first in her family to attend college, receiving a bachelor's degree in commercial science from South Dakota State College in Brookings in 1927, [2] and subsequently worked as a school teacher in Waubay from 1927 to 1929 and then in Gregory from 1929 to 1930. Werth shared Schultz's background in agriculture and commitment to ideals of education and economic development, and throughout his career worked as a primary editor of his published works. In his Nobel Prize Lecture he acknowledged her contributions thus: "I am also indebted to my wife, Esther Schultz, for her insistence that what I thought was stated clearly was not clear enough." The couple was survived by two daughters and one son.

Frankfort, South Dakota City in South Dakota, United States

Frankfort is a city in Spink County, South Dakota, United States. The population was 149 at the 2010 census.

Brookings, South Dakota City in South Dakota, United States

Brookings is a city in Brookings County, South Dakota, United States. Brookings is the fourth largest city in South Dakota, with a population of 22,056 at the 2010 census. It is the county seat of Brookings County, and home to South Dakota State University, the largest institution of higher education in the state. Also found in Brookings are the South Dakota Art Museum, the Children's Museum of South Dakota, the annual Brookings Summer Arts Festival, and the headquarters of a number of manufacturing companies and agricultural operations.

Waubay, South Dakota City in South Dakota, United States

Waubay is a city in Day County, South Dakota, United States. The population was 576 at the 2010 census.

Academic career

Schultz taught at Iowa State College from 1930 to 1943. [3] He left Iowa State in the wake of the "oleomargarine controversy", [4] and he served as the chair of economics at the University of Chicago from 1946 to 1961. He became president of the American Economic Association in 1960. He retired in 1967 though he remained active at the University of Chicago into his 90s.

Iowa State University public research university in Ames, Iowa, United States

Iowa State University of Science and Technology, generally referred to as Iowa State, is a public land-grant and space-grant research university located in Ames, Iowa, United States. It is the largest university in the state of Iowa and the third largest university in the Big 12 athletic conference. Iowa State is classified as a research university with "highest research activity" by the Carnegie Foundation for the Advancement of Teaching. Iowa State is also a member of the Association of American Universities (AAU), which consists of 60 leading research universities in North America.

University of Chicago Private research university in Chicago, Illinois, United States

The University of Chicago is a private research university in Chicago, Illinois. The university is composed of an undergraduate college, various graduate programs and interdisciplinary committees organized into five academic research divisions and seven professional schools. Beyond the arts and sciences, Chicago is also well known for its professional schools, which include the Pritzker School of Medicine, the Booth School of Business, the Law School, the School of Social Service Administration, the Harris School of Public Policy Studies, the Divinity School and the Graham School of Continuing Liberal and Professional Studies. The university holds top-ten positions in various national and international rankings.

American Economic Association Learned society in the field of economics

The American Economic Association (AEA) is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review. The AEA was established in 1885 in Saratoga, New York by younger progressive economists trained in the German historical school, including Richard T. Ely, Edwin Robert Anderson Seligman and Katharine Coman, the only woman co-founder; since 1900 it has been under the control of academics.

Shortly after his move to Chicago, Schultz attracted his former student, D. Gale Johnson to the department. Their research in farm and agricultural economics was widely influential and attracted funding from the Rockefeller Foundation to the agricultural economics program at the University. Among the graduate students and faculty affiliated with the pair in the 1940s and 1950s were Clifford Hardin, Zvi Griliches, Marc Nerlove, and George S. Tolley. [5] In 1979, Schultz was awarded the Nobel Prize in Economics for his work in human capital theory and economic development.

David Gale Johnson was an American economist and an expert on Russia and China. Among other notable contributions to economics, Johnson concluded that the strength of an industry depends on how the market works and not so much on government actions. Johnson was Chairman of the department of economics at the University of Chicago and a member of the National Academy of Sciences. He was also a fellow of the American Agricultural Economics Association and the American Academy of Arts and Sciences. The New York Times called him "a pioneer in agricultural economics". The University of Chicago called him "one of the world’s most eminent researchers of agricultural and development economics". The National Academies Press called him "a scholar of exceptional breadth who made original and important contributions to economics and to public policy".

Agricultural economics is an applied field of economics concerned with the application of economic theory in optimizing the production and distribution of food and fiber. Agricultural economics began as a branch of economics that specifically dealt with land usage, it focused on maximizing the crop yield while maintaining a good soil ecosystem. Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader. Agricultural economics today includes a variety of applied areas, having considerable overlap with conventional economics. Agricultural economists have made substantial contributions to research in economics, econometrics, development economics, and environmental economics. Agricultural economics influences food policy, agricultural policy, and environmental policy.

The Rockefeller Foundation is a private foundation based at 420 Fifth Avenue, New York City. It was established by the six-generation Rockefeller family. The Foundation was started by Standard Oil owner John D. Rockefeller ("Senior"), along with his son John D. Rockefeller Jr. ("Junior"), and Senior's principal oil and gas business and philanthropic advisor, Frederick Taylor Gates, in New York State on May 14, 1913, when its charter was formally accepted by the New York State Legislature. Its stated mission is "promoting the well-being of humanity throughout the world."

Contribution to economic theory

Schultz receiving Nobel Prize from King of Sweden Carl XVI Gustaf in 1979. Theodore Schultz receiving the Nobel Prize.jpg
Schultz receiving Nobel Prize from King of Sweden Carl XVI Gustaf in 1979.

While he was chair of economics at Chicago he led research into why post-World War II Germany and Japan recovered, at almost miraculous speeds, from the widespread devastation. Contrast this with the United Kingdom which was still rationing food long after the war. His conclusion was that the speed of recovery was due to a healthy and highly educated population; education makes people productive and good health care keeps the education investment around and able to produce. One of his main contributions was later called Human Capital Theory, and inspired much work in international development in the 1980s, motivating investments in vocational and technical education by Bretton Woods system International Financial Institutions such as the International Monetary Fund and the World Bank. During his research Schultz got down to details and went out among the poor farming nations of Europe, talking to farmers and political leaders in small towns. He was "not afraid to get his shoes a little muddy." He noticed that the aid the United States sent in the form of food or money was not only of little help but actually harmful to such nations, as the farmers and agricultural producers within those nations were not able to compete with the free prices of the "aid" sent and therefore they were not able to sustain themselves or invest the money they made from crops back into the economy. He theorized that if the U.S. instead used its resources to help educate these rural producers and provide them with technology and innovations they would be more stable, productive and self sustaining in the long run. This was another key part of his work "Investment in Human Capital".

Germany Federal parliamentary republic in central-western Europe

Germany, officially the Federal Republic of Germany, is a country in Central and Western Europe, lying between the Baltic and North Seas to the north, and the Alps to the south. It borders Denmark to the north, Poland and the Czech Republic to the east, Austria and Switzerland to the south, France to the southwest, and Luxembourg, Belgium and the Netherlands to the west.

Japan Constitutional monarchy in East Asia

Japan is an island country in East Asia. Located in the Pacific Ocean, it lies off the eastern coast of the Asian continent and stretches from the Sea of Okhotsk in the north to the East China Sea and the Philippine Sea in the south.

United Kingdom Country in Europe

The United Kingdom, officially the United Kingdom of Great Britain and Northern Ireland but more commonly known as the UK or Britain, is a sovereign country lying off the north-western coast of the European mainland. The United Kingdom includes the island of Great Britain, the north-eastern part of the island of Ireland and many smaller islands. Northern Ireland is the only part of the United Kingdom that shares a land border with another sovereign state‍—‌the Republic of Ireland. Apart from this land border, the United Kingdom is surrounded by the Atlantic Ocean, with the North Sea to the east, the English Channel to the south and the Celtic Sea to the south-west, giving it the 12th-longest coastline in the world. The Irish Sea lies between Great Britain and Ireland. With an area of 242,500 square kilometres (93,600 sq mi), the United Kingdom is the 78th-largest sovereign state in the world. It is also the 22nd-most populous country, with an estimated 66.0 million inhabitants in 2017.

Nobel Memorial Prize in Economic Sciences

Schultz was awarded the Nobel Prize jointly with Sir William Arthur Lewis for his work in development economics, focusing on the economics of agriculture. He analyzed the role of agriculture within the economy, and his work has had far reaching implications for industrialization policy, both in developing and developed nations. Schultz also promulgated the idea of educational capital, an offshoot of the concept of human capital, relating specifically to the investments made in education. [6]

Legacy

Schultz received eight honorary degrees in his career. He had the distinction of being the first South Dakota State University graduate and the second South Dakotan to win a Nobel Prize after Ernest Lawrence winner of the 1939 Nobel Prize for Physics. Between 2012 and 2013, South Dakota State University built the Theodore W. Schultz Hall, a residence hall for students pursuing degrees in agriculture. [7]

Schultz died in Evanston, Illinois on February 26, 1998 at the age of 95. He is interred at Badger Cemetery in Badger, South Dakota.

Quotes

The dominant social thought shapes the institutionalized order of society...and the malfunctioning of established institutions in turn alters social thought.

Theodore W. Schultz (1977) [8]

Most people in the world are poor. If we knew the economy of being poor, we would know much of the economics that really matter. [9]

Articles

Schultz, Theodore W. (1956). "Reflections on Agricultural Production, Output and Supply". Journal of Farm Economics. 38 (3): 748–762. JSTOR   1234459.

Schultz, Theodore W. (1960). "Capital Formation by Education". Journal of Political Economy. 68 (6): 571–583. JSTOR   1829945.

Schultz, Theodore W. (1961). "Investment in Human Capital". The American Economic Review. 51 (1): 1–17. JSTOR   1818907.

Books authored

Books edited

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References

  1. Shaars, Marvin A. (1972). "The Story of The Department of Agricultural Economics: 1909–1972" (PDF). Retrieved 2009-09-17.
  2. "Archived copy". Archived from the original on 2015-02-02. Retrieved 2015-02-02.
  3. "the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1979Theodore W. Schultz, Sir Arthur Lewis". Nobelprize.org. Retrieved October 3, 2012.
  4. Burnett, Paul (2011). "Academic Freedom or Political Maneuvers: Theodore W. Schultz and the Oleomargarine Controversy Revisited". Agricultural History. 85 (3): 373–397. doi:10.3098/ah.2011.85.3.373.
  5. Sumner, Daniel A. Agricultural Economics at Chicago, in David Gale Johnson, John M. Antle. The Economics of Agriculture: Papers in honor of D. Gale Johnson. University of Chicago Press, 1996 p 14-29
  6. "Theodore Schultz, 95, Winner Of a Key Prize in Economics". The New York Times. Retrieved October 3, 2012.
  7. http://www.sdstate.edu/reslife/reshalls/northeast.cfm
  8. Justin Yifu Lin. "Cambridge University Marshall Lecture – Development and Transition: Idea, Strategy, and Viability" (PDF). Archived from the original (PDF) on 2011-07-26.
  9. Theodore W. Schultz, 1981.Investing in People. p. 3. University of California Press.
Awards
Preceded by
Herbert A. Simon
Laureate of the Nobel Memorial Prize in Economics
1979
Served alongside: Sir Arthur Lewis
Succeeded by
Lawrence Klein