Tjalling Charles Koopmans
Koopmans, Tjalling 1910-1985
Tjalling Charles Koopmans, who shared the 1975 Nobel Memorial Prize in Economic Sciences with Leonid Kantorovich (1912–1986), was born in Graveland, the Netherlands. Koopmans studied mathematics and physics at the University of Utrecht (MA, 1933, publishing a paper on quantum mechanics) and mathematical statistics at the University of Leiden (PhD, 1936). His pioneering dissertation introduced concepts developed by R. A. Fisher (1890–1962) and by Jerzy Neyman (1894–1981) and Egon Pearson (1895–1980) in probability theory and statistical inference into econometrics, which he published in English (Koopmans 1937). He studied economics and econometrics with Jan Tinbergen (1903–1994) at the University of Amsterdam in 1934 and for five months with Ragnar Frisch (1895–1973) in Oslo. At Frisch’s request, Koopmans lectured in Oslo about statistical inference, but Frisch did not accept the case for using probability models in econometrics put forward by Koopmans and by Frisch’s student Trygve Haavelmo (1911–1999). Koopmans took over Tinbergen’s classes at the Rotterdam School of Economics in 1937 when Tinbergen moved to Geneva to conduct his League of Nations study on statistical testing of business cycle theories. Koopmans then took Tinbergen’s place in Geneva upon Tinbergen’s return in 1939. Koopmans moved to the United States in 1940 (eventually taking U.S. citizenship), where he was employed as a research assistant at Princeton, an instructor in statistics at New York University, an economist with a Philadelphia insurance company, and from 1942 a statistician for the British Merchant Shipping Mission in Washington, D.C., analyzing optimal routing of ships.
In 1944 Koopmans became a research associate with the Cowles Commission for Research in Economics at the University of Chicago, where he was also associate professor of economics from 1946 (full professor from 1948). He succeeded Jacob Marschak (1898–1977) as Cowles research director in 1948 and became president of the Econometric Society in 1950. While in Chicago, building upon his and Haavelmo’s dissertations, Koopmans led the development of the Cowles Commission approach to the identification and estimation of simultaneous-equations econometric models, including full-information maximum likelihood (FIML) estimation, stressing that simultaneous-equations methods are better asymptotically (that is, as sample size approaches infinity) than single-equation least-squares estimation (Koopmans 1950; Koopmans and Hood 1953). Another pioneering Cowles monograph edited by Koopmans (1951) applied linear programming methods to the analysis of production and allocation. This work was the basis for his sharing the Nobel Prize with Kantorovich, who had conducted parallel research in the Soviet Union. George Dantzig (1914–2005), another pioneer of linear programming (and a contributor to Koopmans ), did not share the prize, presumably because he was a mathematician rather than an economist. Koopmans anonymously donated to a research institute associated with Dantzig what would have been Dantzig’s share of the prize money, a fact not revealed until after Koopmans died.
In 1947 Koopmans sharply criticized the empirical business cycle research of Arthur F. Burns (1904–1987) and Wesley Mitchell (1874–1948) of the National Bureau of Economic Research as “Measurement without Theory,” and he urged that empirical economists use formal economic theory as the starting point for explicit, structurally identified models (Hendry and Morgan  reprint Koopmans’s review article, together with his subsequent exchange with Rutledge Vining). This methodological controversy worsened relations between the Cowles Commission and other University of Chicago economists, especially Milton Friedman (1912–2006), once Burns’s doctoral student, who insisted that Mitchell’s approach was also a valid form of economic theorizing. When Koopmans was scheduled to go on sabbatical (to write his Three Essays on the State of Economic Science ), James Tobin (1918–2002) of Yale was invited to succeed him as Cowles research director. When Tobin declined to leave Yale, the Cowles Commission (including Koopmans) moved to Yale in 1955 as the Cowles Foundation for Research in Economics. Koopmans, a professor of economics at Yale from 1955 until his retirement in 1981, succeeded Tobin as director of the Cowles Foundation from 1961 to 1967.
Following his critique of NBER methodology, Koopmans’s Three Essays (1957), his most widely read work, offered a positive statement of his own methodology. The first essay argued that the use of more fundamental methodological tools reveals the common logical structure of economic theories of diverse origin. The second urged “a clearer separation, in the construction of economic knowledge, between reasoning and recognition of facts, for the better protection of both” (Koopmans 1957, p. viii). The concluding essay speculated on the future interaction between tools of analysis and choice of problems in economics. Koopmans’s later research concentrated on the normative analysis of optimal economic growth and on the incorporation of exhaustible natural resources into growth theory (Koopmans 1970–1985; Gordon et al. 1987; Werin and Jungenfelt 1976, Pt. II).
SEE ALSO Frisch, Ragnar; League of Nations; Linear Systems; Maximum Likelihood Regression; Mitchell, Wesley Clair; Programming, Linear and Non-Linear; Simultaneous Equation Bias; Tinbergen, Jan; Tobin, James
Koopmans, Tjalling C. 1937. Linear Regression Analysis of Economic Time Series. Haarlem, Netherlands: De Erven Bohn.
Koopmans, Tjalling C. 1947. Measurement without Theory. Review of Economic Statistics 29 (3): 161–172.
Koopmans, Tjalling C., ed. 1950. Statistical Inference in Dynamic Economic Models. New York: Wiley.
Koopmans, Tjalling C., ed. 1951. Activity Analysis of Production and Allocation. New York: Wiley.
Koopmans, Tjalling C. 1957. Three Essays on the State of Economic Science. New York: McGraw-Hill.
Koopmans, Tjalling C. 1970–1985. The Scientific Papers of Tjalling C. Koopmans. Vol. 1, Berlin: Springer-Verlag. Vol. 2, Cambridge, MA: MIT Press.
Koopmans, Tjalling C., and William C. Hoods, eds. 1953. Studies in Econometric Method. New York: Wiley.
Hendry, David, and Mary Morgan, eds. 1995. Foundations of Econometric Analysis. Cambridge, U.K.: Cambridge University Press.
Werin, Lars, and Karl G. Jungenfelt. 1976. Tjalling Koopmans’ Contribution to Economics. I: Activity Analysis, Methodology and Econometrics. II: Koopmans and the Recent Development of Growth Theory. Scandinavian Journal of Economics 78: 81–102.
Robert W. Dimand