Simon Kuznets




Simon Kuznets (1901~1985) was an American economist and statistician who is best known for his studies of national income and its components. Prior to World War I, measures of GNP were rough guesses, at best. No government agency collected data to compute GNP, and no private economic researcher did so systematically, either. Kuznets changed all that. With work that began in the 1930s and stretched over decades, Kuznets computed national income back to 1869. He broke it down by industry, by final product, and by use. He also measured the distribution of income between rich and poor. He has another best known works which is Kuznets curve, hypothesizing that industrializing nations experience a rise and subsequent decline in income inequality. He thought economic inequality would increase as rural labor migrated to the cities, keeping wages down as workers competed for jobs. However, since Kuznets postulated this theory in the 1970s, income inequality has increased in advanced developed countries.

Although Kuznets was not the first economist to try to compute national income back, his work was so comprehensive and meticulous that it set the standard for national income accounting in the field. His work was funded by the nonprofit National Bureau of Economic Research, which had been started in 1920. His measures of savings, consumption and investment helped advance Keynesian economics and advanced the study of econometrics. Kuznets later helped the U.S. Department of Commerce to standardize the measurement of GNP. In the late 1940s, however, he broke with the Commerce Department over its refusal to use GNP as a measure of economic well-being. He had wanted the department to measure the value of unpaid hdousework because this is an important component of production. The department refused, and still does.

Before ECON 490, I did not know Simon Kuznets and I am so glad that my alias was assigned to this inspiring and innovative person. It was very interesting to know economist, rather than economic theory because most classes tend to focus on the subjects, not the person. It was very creative of him to create Kuznets curve and standard for national income. I would love to explore his work and all other economist too!


Comments

  1. Professor ArvanSeptember 6, 2019 at 11:06 AM

    Measuring economic activity is actually quite a challenge. For example, if I mow my own lawn, is that economic activity? In contrast, if I hire someone else to mow my lawn there is a market transaction. Does that then make it economic activity. Even in the second case, however, if I pay in cash (not a check that clears through a bank) how can anyone else know about that transaction?

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    Replies
    1. Simon Kuznets Econ 490 fall 2019October 13, 2019 at 6:05 PM

      Measuring my own lawn is not economic activity but hiring someone else to mow my lawn would be economic activity. Because you hire someone and pay that person, you are buying mowing services. It would be hard to keep track on cash transaction.

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