Wassily Leontief

Wassily Leontief Sr. belonged to a family of Russian old-believer merchants living in St. Petersburg since 1741.

Evgenia (Genya) Becker belonged to a wealthy Jewish family from Odessa.

Wassily Wassilyevich Leontief (Васи́лий Васи́льевич Лео́нтьев; August 5, 1905 – February 5, 1999), was a Soviet-American economist known for his research on input–output analysis and how changes in one economic sector may affect other sectors.

Wassily Leontief was born on August 5, 1905, in Munich, German Empire, the son of Wassily W. Leontief (professor of Economics) and Zlata (German spelling Slata; later Evgenia) Leontief (née Becker).

At 15 in 1921, Wassily Jr. entered University of Leningrad in present-day St. Petersburg.

He earned his Learned Economist degree (equivalent to Master of Arts) in 1925 at the age of 19.

Leontief sided with campaigners for academic autonomy, freedom of speech and in support of Pitirim Sorokin.

As a consequence, he was detained several times by the Cheka.

In 1925, he was allowed to leave the USSR, mostly because the Cheka believed that he was mortally ill with a sarcoma, a diagnosis that later proved false.

From 1927 to 1930, he worked at the Institute for the World Economy of the University of Kiel.

There he researched the derivation of statistical demand and supply curves.

He continued his studies at the Friedrich Wilhelm University in Berlin and, in 1928, earned a Ph.D. degree in economics under the direction of Werner Sombart, writing his dissertation on The Economy as Circular Flow (original German title: Die Wirtschaft als Kreislauf).

In 1929, he traveled to China to assist its ministry of railroads as an advisor.

In 1931, he went to the United States and was employed by the National Bureau of Economic Research.

During World War II, Leontief served as consultant at the U. S. Office of Strategic Services.

Leontief joined Harvard University's department of economics in 1932 and in 1946 became professor of economics there.

In 1932, Leontief married the poet Estelle Marks (1908-2005).

Their only child, Svetlana Leontief Alpers, was born in 1936.

Estelle wrote a memoir, Genia and Wassily, of their relations with his parents after they came to the US as émigrés.

As hobbies Leontief enjoyed fly fishing, ballet, and fine wines.

Leontief set up the Harvard Economic Research Project in 1948 and remained its director until 1973.

In 1949, Leontief used an early computer at Harvard and data from the U.S. Bureau of Labor Statistics to divide the U.S. economy into 500 sectors.

Leontief modeled each sector with a linear equation based on the data and used the computer, the Harvard Mark II, to solve the system, one of the first significant uses of computers for mathematical modeling, along with George W. Snedecor's usage of the Atanasoff–Berry computer.

Starting in 1965, he chaired the Harvard Society of Fellows.

He vacationed for years at his farm in West Burke, Vermont, but after moving to New York in the 1970s moved his summer residence to Lakeville, Connecticut.

Leontief won the Nobel Memorial Prize in Economic Sciences in 1973, and four of his doctoral students have also been awarded the prize (Paul Samuelson 1970, Robert Solow 1987, Vernon L. Smith 2002, Thomas Schelling 2005).

In 1975, Leontief joined New York University and founded and directed the Institute for Economic Analysis.

He taught graduate and undergraduate classes.

Leontief died in New York City on Friday, February 5, 1999, at the age of 93.

Leontief is credited with developing early contributions to input–output analysis and earned the Nobel Prize in Economics for his development of its associated theory.

He has also made contributions in other areas of economics, such as international trade where he documented the Leontief paradox.

He was also one of the first to establish the composite commodity theorem.

Leontief earned the Nobel Prize in economics for his work on input–output tables.

Input–output tables analyze the process by which inputs from one industry produce outputs for consumption or for inputs for another industry.

With the input–output table, one can estimate the change in demand for inputs resulting from a change in production of the final good.

The analysis assumes that input proportions are fixed; thus the use of input–output analysis is limited to rough approximations rather than prediction.

Input–output was novel and inspired large-scale empirical work; in 2010 its iterative method was recognized as an early intellectual precursor to Google's PageRank.

Leontief used input–output analysis to study the characteristics of trade flow between the U.S. and other countries, and found what has been named Leontief's paradox; "this country resorts to foreign trade in order to economize its capital and dispose of its surplus labor, rather than vice versa", i.e., U.S. exports were relatively labor-intensive when compared to U.S. imports.

This is the opposite of what one would expect, considering the fact that the U.S.'s comparative advantage was in capital-intensive goods.

According to some economists, this paradox has since been explained as due to the fact that when a country produces "more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of imports."