The improbable econometric connection - Schumpeter and Frisch at the midnight of the century

When Joseph Schumpeter and Ragnar Frisch first met in the autumn of 1927 at Harvard, both the ensuing personal friendship and the intense academic and institutional cooperation were highly unlikely. Schumpeter, who was by then preparing to leave Germany for his American life-long exile, was twelve years older than Frisch and had a previous intense career as the most frequently quoted economist in the first decades of the century, only to be shadowed later by the glittering triumph of Keynes’s ‘General Theory’. Comparatively, Frisch was just a young economist with no publications. Furthermore, Frisch invited his colleague to the most daring adventure: to create econometrics as the tool to reconstruct economics as a mathematically based social science. Surprisingly, Schumpeter, who was totally innocent of mathematics, embarked and enthusiastically supported the construction and workings of the Econometric Society, which would become the Olympus of economics since those frightful years of what a novelist called the “midnight of the century”. This paper presents some evidence on this improbable econometric connection. Copyright Springer-Verlag Berlin Heidelberg 2015