BELMONT, Mass. Nobel Prize-winning economist Paul Samuelson died Sunday at his home in Belmont. He was 94.
Samuelson won the Nobel in 1970 for his revolutionary application of mathematical analysis to economics. He was the first American to win the medal.
He was also a life-long liberal economist and a professor at MIT for decades. Though his groundbreaking work helped usher in an era of economic analysis, earlier this year Samuelson lamented that the financial industry’s blind faith in numbers helped cause the current recession.
“Fiendish, Frankenstein monsters of financial engineering had been created,” he said at a forum at Boston University. “A lot of them at MIT. Some of them by people like me.”
Samuelson, along with famed economist John Kenneth Galbraith, helped shape fiscal policy in the Kennedy administration.
He was among the advisers who led Kennedy to recommend the historic income tax cut that Congress eventually passed in early 1964, three months after the president was assassinated.
“A temporary reduction in tax rates on individual incomes can be a powerful weapon against recession,” Samuelson had written in a report to Kennedy in early 1961.
The cut was widely credited with helping foster the 1960s economic boom.
Samuelson’s nephew, former Harvard president Lawrence Summers, currently serves as President Obama’s chief economic advisor.
Samuelson most lasting influence, however, may be in the classroom. He is the author of “Economics,” one of the most popular college textbooks ever printed. Students have been reading the text since the 1940s. “Economics” has sold more than four million copies in more than 40 languages.
“I knew it was a good book, but what I didn’t realize would be its lasting power,” Samuelson said in a 1998 Associated Press interview. He said his aim was to make economics “understandable and enjoyable.”
“I think economics – and this is what I’ve tried to impart – has a tremendous amount of human interest in it,” he said.
MIT President Susan Hockfield remembered Samuelson’s efforts to bring a human perspective to economics, the so-called dismal science.
“Paul Samuelson transformed everything he touched: the theoretical foundations of his field, the way economics was taught around the world, the ethos and stature of his department, the investment practices of MIT, and the lives of his colleagues and students,” Hockfield said in a statement.
MIT plans to hold a public memorial service at a date to be announced. Samuelson’s family will hold a private funeral.
The legacy of his impact on economic policy will be debated. Samuelson himself acknowledged that the center of gravity in American economics had shifted strongly to conservative, free market theory in the early 1980s.
“The economics profession — the guys I have lunch with and love — generally speaking have moved rightward,” Sameulson said in a PBS interview earlier this year.
He remained a believer in regulation, and said that even modest regulation may have averted the recent market crash.
“I’m speaking in favor of a centrist use of the market, which involves a considerable degree of the use of regulation,” he said. “Markets, by themselves, will get themselves inevitably into inequality and their own destruction. It will happen again and again.”
Samuelson also reserved a special critique for the CEOs of many of America’s largest companies. Most CEOs, he believed, didn’t understand derivatives and other exotic financial instruments they were using.
Which led the father of modern economic mathematical analysis, to ask: “I say, if you’re so rich, how come you’re so dumb?”
The Associated Press contributed to this report.