Henry Schultz (1893–1938), American econometrician, was born in Russian Poland. After attending public schools in New York City and the College of the City of New York, he began his graduate studies at Columbia University in 1916. At Columbia he responded enthusiastically to the influence of Henry L. Moore, but his studies were interrupted by military service in World War I. After the war an army scholarship enabled him to spend the spring and summer terms of 1919 at the London School of Economics and Political Science and at the Galton Laboratory of University College. In London he attended lectures on statistics by A. L. Bowley and Karl Pearson and on economic theory by Edwin Cannan. Once back in the United States, he conducted statistical and economic investigations for, successively, the War Trade Board, the Bureau of the Census, the Bureau of Efficiency, the Institute of Economics, and the Children’s Bureau of the United States Department of Labor. His PH.D. thesis, “The Statistical Law of Demand as Illustrated by the Demand for Sugar,” was published in 1925, and in 1926 he joined the department of economics at the University of Chicago, where he remained until his death.
It was Moore’s early investigations into the statistical approximation of Marshallian demand curves (1914; 1917) that had a determining influence on Schultz’s career. Under Moore’s inspiration, Schultz made intensive studies of the works of those economists—Cournot, Walras, and Pareto—who had made the most explicit and sophisticated use of mathematics in formulating economic theory. Schultz also studied probability theory and statistics in considerable depth. His years in various statistical and economic research agencies in Washington, 1920 to 1926, no doubt contributed to his sophistication in the use and interpretation of published economic data.
When Moore ceased writing in 1929, Schultz was almost the only American economist who combined a mastery of the theoretical work of Walras and Pareto with an intense interest in empirical studies of demand. He was fully abreast of the revolution in value theory associated with the names of J. R. Hicks and R. G. D. Allen (1934); they also drew their inspiration from Walras and Pareto. Keynesian macroeconomic theory, however, was not of direct significance to Schultz’s work, and the lengthy BIBLIOGRAPHY of his most important book, The Theory and Measurement of Demand (1938, pp. 779–803), contains no reference to Keynes.
Schultz published a number of short notes on regression theory and methods and one major article (1930) on the derivation of standard errors of forecast for curves of various types. In Statistical Laws of Demand and Supply (1928), he thoroughly explored the literature on weighted regression—the estimation of a single line or plane of best fit when all variables are subject to error —and was probably the first to apply such methods to economic data. This book presented supply-and-demand curves for sugar, an internationally traded commodity, and led him to write three articles on methods of measuring the effectiveness of a tariff. His contributions to statistical theory must be regarded as by-products of his intense concern with statistical demand analysis, and the work on the tariff was similarly incidental to his main concern. Schultz also published a number of expository articles on the more general contributions of mathematics and statistics to economic research and in book reviews called attention to significant translations or interpretations of Walras and Pareto and to major works on mathematical economics and statistics.
Schultz’s lifework is essentially summed up in his monumental 817-page work The Theory and Measurement of Demand (1938). Chapters 1, 18, and 19 together provide an excellent statement of the theory of consumer demand, incorporating the Hicks-Allen and Slutsky extensions of Pareto’s basic formulation; Chapters 2 and 3 deal with the logical and theoretical validity of various proposed methods for deriving demand curves from time series and from family-budget data; Chapter 4 contains a statement of the assumptions, methods, and procedures to be used in the empirical section. The empirical section, Chapters 5–17, presents statistical demand analyses for ten major crops along with summary comparisons and interpretations of the results for the various commodities, time periods, and functional forms. Further empirical studies are included in Chapters 18 and 19, on related demands. A fifty-page appendix on elements of curve fitting and correlation provides an excellent guide to least-squares regression methods, and there is also an extensive BIBLIOGRAPHY.
In The Theory and Measurement of Demand Schultz emerges as the complete demand analyst of his generation. It would be difficult to point out any other econometric work of large scope written in the 1930s that achieved a better integration of economic theory and statistics with painstaking and realistic attention to institutions, markets, and data. Jan Tinbergen’s Statistical Testing of Business-cycle Theories (1938–1939) is one of the few econometric works of the 1930s which would bear comparison with Schultz’s masterpiece.
While Moore was the first economist in the United States to attempt a creative synthesis of economic theory and statistics as a basis for estimating economic relationships, Schultz achieved a similar creative synthesis at a much higher level of sophistication. Econometricians who have done large-scale empirical investigations, among them Tinbergen, Herman Wold, Richard Stone, Paul Douglas, and Lawrence Klein, have referred to The Theory and Measurement of Demand in terms of the highest respect.
Schultz participated in the organizational meeting of the Econometric Society on December 29, 1930, and was active in the affairs of the Society until his death. He was an untiring worker—"his own work day was a 12-hour one or longer, and his work week, 7 days” (H. Gregg Lewis, quoted in Hotelling 1939, p. 101). He appears to have been thoroughly constructive in his relationships with his graduate assistants and colleagues. Several of the students who came under his influence at the University of Chicago (Milton Friedman, Jacob Mosak, Martin Bronfenbrenner, Paul Samuelson, and others) subsequently made outstanding contributions to econometrics and economic theory.
Karl A. Fox
[For the historical context of Schultz’s work, see the biographies ofCournot; Moore, Henry L.; Pareto; Walras; for discussion of the subsequent development of Schultz’s ideas, seeDemand and supply; Econometrics.]
1924 The Statistical Measurement of the Elasticity of Demand for Beef. Journal of farm Economics 6:254278.
1925 The Statistical Law of Demand as Illustrated by the Demand for Sugar. Journal of Political Economy 33:481–504, 577–637.
1927a Cost of Production, Supply and Demand, and the Tariff. Journal of Farm Economics 9:192–209. 1927b Theoretical Considerations Relating to Supply. Journal of Political Economy 35:437–464.
1928 Statistical Laws of Demand and Supply With Special Application to Sugar. Univ. of Chicago Press.
1929 Marginal Productivity and the General Pricing Process. Journal of Political Economy 37:505–551.
1930 The Standard Error of a Forecast From a Curve. Journal of the American Statistical Association 25: 139–185.
1931a Henry L. Moore’s Contribution to the Statistical Law of Demand. Pages 645–661 in Social Science Reseach Council, Committee on Scientific Method in the Social Sciences, Methods in Social Science. Univ. of Chicago Press.
1931b The Italian School of Mathematical Economics. Journal of Political Economy 39:76–85.
1932 Marginal Productivity and the Lausanne School: A Reply [to J. R. Hicks]. Economica 12:285–296.
1933a Frisch on the Measurement of Utility. Journal of Political Economy 41:95–116.
1933b Interrelations of Demand. Journal of Political Economy 41:468–512.
1935 Interrelations of Demand, Price and Income. Journal of Political Economy 43:433–481.
1938 The Theory and Measurement of Demand. Univ. of Chicago Press.
1939 A Misunderstanding in Index number Theory: The True Konós Condition on Cost-of-living Index Numbers and Its Limitations. Econometrica 7:1–9.
Chicago, University OF, Department OF Economics 1942 Studies in Mathematical Economics and Econometrics: In Memory of Henry Schultz. Edited by Oskar Lange et al. Univ. of Chicago Press. → Includes a BIBLIOGRAPHY on pages 32–33.
Douglas, Paul H. 1939 Henry Schultz as Colleague. Econometrica 7:104–106.
Hicks, J. R.; and Allen, R. G. D. 1934 A Reconsideration of the Theory of Value. Economica New Series 1:52–76.
Hotelling, Harold 1939 The Work of Henry Schultz. Econometrica 7:97–103.→ Includes a BIBLIOGRAPHY of Schultz’s works.
Link, George K. 1942 Henry Schultz: Friend. Pages 3–10 in Chicago, University of, Department of Economics, Studies in Mathematical Economics and Econometrics: In Memory of Henry Schultz. Univ. of Chicago Press.
Moore, Henry L. 1914 Economic Cycles: Their Law and Cause. New York: Macmillan.
Moore, Henry L. 1917 Forecasting the Yield and the Price of Cotton. New York: Macmillan.
Tinbergen, Jan 1938–1939 Statistical Testing of Business-cycle Theories. 2 vols. Geneva: League of Nations, Economic Intelligence Service. → Volume 1: A Method and Its Application to Investment Activity. Volume 2: Business Cycles in the United States of America: 1919–1932.
Yntema, Theodore O. 1942 Henry Schultz: His Contributions to Economics and Statistics. Pages 11–17 in Chicago, University of, Department of Economics, Studies in Mathematical Economics and Econometrics: In Memory of Henry Schultz. Univ. of Chicago Press.