Skip to content
Nobel Jews
Portrait of Milton Friedman
Photo: Bachrach Studios, https://www.gettyimages.com/detail/news-photo/portrait-of-the-noted-american-economist-milton-friedman-news-photo/82645388 · Public domain via Wikimedia Commons

Sveriges Riksbank Prize in Economic Sciences · 1976

Milton Friedman

He traced the Great Depression to the Fed's mistakes, reshaped how central banks fight inflation and panics, and helped end the US draft.

The Nobel citation: “for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy”
Born
July 31, 1912, Brooklyn, NY, USA
Died
November 16, 2006, San Francisco, CA, USA
Affiliation at the time
University of Chicago, USA

Economics prize

1976

Awarded alone.

Age that year

64years

Born in 1912.

Headline credited impact

130,000–420,000people benefited

Americans lifted above the poverty line by the Earned Income Tax Credit, 2013-2025. How it was built

Sources cited

35

Fact-checked September 24, 2026.

  • As a boy he kept kosher so strictly that he ran away from a Boy Scout outing rather than eat non-kosher hot dogs. He later rejected religion altogether.
  • Working at the US Treasury during World War II, he helped create the system of withholding income tax from paychecks.
  • Police bodyguards shadowed him all week in Stockholm in 1976, and a protester shouting about Chile interrupted his prize ceremony.
  • In 2002 Fed governor Ben Bernanke publicly apologized to him and Anna Schwartz, conceding that their book was right to blame the Fed for the Great Depression.
  • He said that ending the military draft was almost the only issue on which he ever personally lobbied Congress.

The breakthrough

Why money matters: spending, the Great Depression and the limits of inflation

Friedman's prize honored three linked ideas. The first is about spending. Many economists assumed that families adjust their spending to each year's income. Friedman showed that people plan around their 'permanent income', what they expect to earn over several years, and save much of any temporary windfall. Think of a farmer after a bumper harvest: she does not double her spending, she puts some aside for leaner years. The second idea came from A Monetary History of the United States (1963), written with the economic historian Anna Schwartz. Tracing money and banking back to 1867, they argued that the Federal Reserve helped set off the Great Depression and then made it far worse by standing by while waves of bank failures shrank the money supply. Before them, the received view was that money had played only a passive part in the slump. The third idea, reached independently by Edmund Phelps at about the same time, overturned the belief that a country could permanently buy lower unemployment by accepting higher inflation. Once people come to expect inflation, Friedman argued, unemployment drifts back to its 'natural rate', and holding it lower requires ever-faster inflation. The 1970s, when inflation and unemployment rose together, bore this out. Because economic policy works with long and variable delays, he concluded that central banks should aim for steady, predictable growth in the money supply rather than constant fine-tuning.[3],[4],[6],[9],[12],[14]

“not only is there no free lunch, there is no free prize.”
Milton Friedman, Joking at the Nobel banquet on 10 December 1976 about the flood of media attention the prize had brought him.[5]

What it meant for humanity

Friedman changed lives not through an invention but by changing the rules that governments and central banks follow. His history of the Great Depression taught central bankers that in a panic their first job is to stop banks failing and money from collapsing. In 2002 Ben Bernanke, then a Fed governor, apologized to Friedman and Schwartz for the Fed's 1930s failures; the Richmond Fed notes that Friedman's view influenced the Fed's response to the 2008 crisis, which Bernanke led as chair. One 2010 model estimate projected that the financial-rescue policies of 2008-09 would save almost 5 million US jobs by 2011. His natural-rate argument helped end the 1970s belief that a little more inflation could buy lasting jobs. Paul Volcker and Margaret Thatcher drew on his work to fight inflation, and US inflation fell from over 14 percent in 1980 to under 5 percent by late 1982, followed by decades of relatively stable prices. Beyond money, he championed ideas that became policy. He was a leading voice on the Nixon-era commission that planned the end of conscription, and since 1973 the US Army has been an all-volunteer force. From the early 1950s he argued for floating exchange rates and explained why the fixed-rate Bretton Woods system would break down; floating rates were later widely adopted. His 'negative income tax' inspired government field experiments, and today's Earned Income Tax Credit for low-paid workers works in a similar way. Through columns, the bestselling book Free to Choose and a TV series watched by millions, he brought economic reasoning to a mass audience.

  • In 2002 Bernanke said Friedman and Schwartz's account of the 1929-33 collapse had become the most widely accepted and convincing explanation of how the Great Depression began.[12]
  • A 2010 Moody's Analytics model estimate by Alan Blinder and Mark Zandi projected that the 2008-09 financial-rescue policies, including the Fed's, would save almost 5 million US jobs by mid-2011.[16]
  • The Federal Reserve's own history of the Great Inflation concludes that Phelps and Friedman were right: the supposed stable trade-off between inflation and unemployment did not exist.[14]
  • The Gates Commission, with Friedman a leading voice, sent Nixon its all-volunteer plan in February 1970; the Army went all-volunteer in 1973. He said the draft was almost the only issue on which he lobbied Congress.[9],[18],[19]
  • His 1962 negative income tax idea led the US government to fund large trials of it in the 1960s and 1970s. The Earned Income Tax Credit, which reached 55 million people in 2000, works as a version of it.[26]
  • Free to Choose, written with his wife Rose to accompany their 1980 PBS series watched by millions, spent six weeks at No. 1 on the New York Times nonfiction list and was translated into more than 14 languages.[2],[13]

Impact in numbers

Friedman's impact runs through rules and institutions rather than products, so most of it resists counting. His history of the Great Depression changed what central banks do in a panic. His natural-rate theory helped end the idea that inflation buys lasting jobs. His advocacy helped end the US draft and spread floating exchange rates, school vouchers and the idea behind the Earned Income Tax Credit. We record one conservative, low-confidence number: US output protected by the Federal Reserve's response to the 2008 crisis, crediting Friedman with only 3 percent, because Anna Schwartz co-wrote the history, Bernanke and others built on it, and other people designed and carried out the rescue. We give no number for the end of the draft, for the conquest of inflation or for Chile, because the counterfactuals are too uncertain. His record also includes real harms and fierce disputes, above all his dealings with Pinochet's Chile, which we describe rather than count.

EconomyFundamental scienceHuman rights

Each number is the laureate’s credited share of a real-world outcome, cumulative to 2025. The whole outcome, the share of credit, and the reasoning are shown so you can check the arithmetic. Outcomes shared with other laureates are counted once on the impact page.

  • Low confidenceRippleModeledEconomy

    US output protected by the 2008-09 financial rescue (Fed lending and QE, FDIC guarantees, TARP, stress tests)

    $84–109.2

    billion in economic value, credited share

    That is 1.2% of $7–9.1 trillion in economic value since 2008.

    How this number was built

    Blinder & Zandi (2015, Moody's model) simulate 'No Financial Policy': no Fed lending or QE, FDIC debt guarantees, stress tests or TARP. Real GDP gaps vs actual (2009 $B): 19, 396, 778, 888, 920, 894, 769 in 2008-14, plus $312B in H1 2015: $4.98T. x1.416 (GDP deflator 88.56 in 2009, 125.43 in 2024) = $7.0T (low: the modeled window only). High: gap held at $592B for H2 2015, then fading linearly to zero by 2020 (+$1.48T): $6.46T x 1.416 = $9.1T. Effects abroad excluded; model estimates are contested. Their 'No Bank Bailout' run (no TARP capital or stress tests) gives ~61% of the gap, leaving ~39% to Fed lending, QE and FDIC guarantees. Share 0.012 = 0.03 of that Fed part: Friedman and Schwartz's Monetary History supplied the diagnosis Bernanke credited, but Schwartz, Bernanke, older doctrine and the officials who acted deserve most credit.[12],[13],[16],[17],[30]

    Sources: Board of Governors of the Federal Reserve System; Federal Reserve Bank of Richmond; Moody's Analytics; FRED, Federal Reserve Bank of St. Louis (source: US Bureau of Economic Analysis); Center on Budget and Policy Priorities

  • Low confidenceRippleModeledEconomy

    US jobs kept at the 2012 peak by the 2008-09 financial rescue

    54,000–58,800

    people benefited, credited share

    That is 1.2% of 4.5–4.9 million people benefited since 2009.

    How this number was built

    Blinder & Zandi (2015, Moody's model, ss30), Table 9, 'No Financial Policy' (no Fed lending or QE, FDIC guarantees, stress tests or TARP; fiscal stimulus kept): payroll jobs lower by 2.1M (2009), 4.5M (2010), 4.8M (2011), 4.9M (2012), 4.7M (2013) and 4.0M (2014). Their 2010 forecast (ss16) gave 'almost 5 million'. High 4.9M, the 2012 peak. Low 4.5M, the 2010 gap, allowing for workers who hold two jobs. This counts extra people employed at one time, not everyone spared a spell of unemployment, so it is a floor on people helped. Same outcome and scenario as the output claim, different metric; model estimates are contested; effects abroad excluded. Share 0.012, as on his output claim: 0.03 of the ~39% Fed part; the Friedman-Schwartz diagnosis shaped the response, but Schwartz, Bernanke and officials deserve most credit.[12],[13],[16],[30]

    Sources: Center on Budget and Policy Priorities; Moody's Analytics; Board of Governors of the Federal Reserve System; Federal Reserve Bank of Richmond

  • Low confidenceRippleModeledEconomy

    Americans lifted above the poverty line by the Earned Income Tax Credit, 2013-2025

    130,000–420,000

    people benefited, credited share

    That is 2% of 6.5–21 million people benefited since 2013.

    How this number was built

    CBPP, from Census SPM data: the EITC alone (not the child credit) lifted 6.2M people above the poverty line in 2013, 6.5M in 2015, 5.6M in 2018 and 4.4M in 2024 (2.3M of them children). Interpolating, and holding 2025 at 4.4M, gives ~70.5M person-years for 2013-25; earlier years are left out. Low 6.5M: the largest single year, a hard floor on distinct people. High 21M: 70.5M / 3.3 years each, our assumption from Dowd and Horowitz (61% of claimants use the credit 1-2 years, 20% more than 5); that spread allows an average as low as 2.4 years (29M), so 21M is cautious. Income effect only. Share 0.02: Moffitt (s26) traces the EITC to the negative-income-tax debate Friedman's 1962 proposal started (CRS confirms the NIT origin), but Senator Russell Long proposed it in 1972 as an alternative to a guaranteed income, it was enacted in 1975, and later lawmakers expanded it.[26],[31],[32],[33],[34],[35]

    Sources: Center on Budget and Policy Priorities (Internet Archive copy); Center on Budget and Policy Priorities (Internet Archive copy, 2014); Center on Budget and Policy Priorities (Internet Archive copy, 2020); SAGE; Congressional Research Service (via EveryCRSReport); American Economic Association (copy hosted by Stanford Center on Poverty and Inequality)

The double edge

His sharpest controversy is Chile. In 1975, 18 months after General Pinochet seized power, Friedman met the dictator and urged a rapid 'shock' program to end inflation. He insisted he was never an adviser to the junta and argued that economic freedom would lead to political freedom, but a later study found he said nothing about the regime's human rights abuses during that visit. The regime killed or disappeared more than 3,000 people and imprisoned or tortured tens of thousands. Chile's free-market program, run by economists trained at his university, ended in a deep crash in 1982 before decades of growth. At home he opposed the Civil Rights Bill of 1964, arguing that persuasion and market competition, not law, should end job discrimination. His 1970 essay saying a company's social responsibility is to increase its profits became a charter for shareholder-first management, which critics blame for short-termism and weaker protections for workers and the environment. And the tight-money cure he championed had costs: the US defeat of inflation came with a recession in which unemployment neared 11 percent, and central banks today target inflation rather than following his money-growth rule.

  • Major

    Advice to Pinochet's dictatorship in Chile

    In March 1975 Friedman spent six days in Chile, met General Pinochet for 45 minutes and then wrote to him urging sharp cuts in money growth and spending, a 'shock' approach. He said he never advised the junta. Economists Sebastian Edwards and Leonidas Montes conclude he was silent on that visit about politics and the regime's abuses. Official commissions count 3,065 killed or disappeared and tens of thousands tortured. Protests followed him to Stockholm.[20],[21],[23],[29]

  • Moderate

    Chile's painful 'Chicago Boys' experiment

    Chile's reforms were run by economists trained at the University of Chicago. By late 1975 a New York Times editorial put unemployment under the austerity program near 20 percent. In 1982 a fixed exchange rate and fast bank deregulation led to a crash in which output fell about 14 percent and unemployment passed 25 percent. From 1985 growth was strong and poverty fell from over 50 percent to 10 percent by 2015, so the verdict remains disputed.[21],[22]

  • Moderate

    Opposed the 1964 Civil Rights Bill

    Speaking at Harvard in 1964, Friedman called the Civil Rights Bill wrong in principle. He accepted that segregation hurt Black Americans but argued that people should be persuaded, not forced, and that competitive markets would penalize prejudiced employers. He also argued that a law barring race from hiring decisions left no principled ground to oppose a law requiring it.[24]

  • Moderate

    The shareholder-profit doctrine

    His 1970 New York Times essay argued that a company's one social responsibility is to increase its profits within the rules. The corporate lawyer Martin Lipton argues it became the doctrine behind short-termism, hostile takeovers and weaker safeguards for workers and the environment. In 2019 the Business Roundtable of big-company CEOs formally dropped its long support for shareholder primacy.[13],[25]

  • Moderate

    The costs and limits of monetarism

    The Fed's 1979-82 attack on inflation, which drew on his ideas, brought the 1981-82 recession, when US unemployment peaked near 11 percent, then the highest since World War II. His proposed rule of steady money growth was not adopted in the end: the Fed, like many central banks, targets an inflation rate instead.[13],[14],[15]

Against the odds

Friedman's story is less about persecution than about luck and hard work, and he said so himself. His parents emigrated to America as Jewish teenagers from Carpatho-Ruthenia; he noted that under the immigration laws of his later life they could never have come, and he called his fortune pure chance. The Jewish world they left was largely destroyed. Hungary annexed the region in 1938-39, and in 1944 its Jews were caught up in the deportations that sent about 437,000 Jews from Hungary, most to Auschwitz. In Rahway, New Jersey, the family lived off a small dry-goods store. His parents often sat up at night worrying about the next day's bills, and his father died during Milton's last year of high school. He paid his way through Rutgers with a scholarship, waiting tables and clerking, and graduated in 1932 in the depths of the Depression; he and Rose Director waited six years to marry until their fears about earning a living had passed. He said that growing up among about a hundred Jewish families he never met real antisemitism, and first grasped how serious it was through Jewish classmates from New York at Columbia. Antisemitism was widespread in America in those years. At the University of Wisconsin in 1940-41, a fight over his appointment involved, in his words, elements of antisemitism, along with his open support, unpopular with colleagues who sympathized with Germany, for joining the war on the Allied side, though he said antisemitism was not the key issue. He withdrew and left.

  • —

    Poverty

    His father died during Milton's last year of high school, leaving his mother and two older sisters to support the family on a small, uncertain income. He paid for college himself with a scholarship and jobs waiting tables and clerking in a store.[2],[7]

  • —

    Discrimination

    At the University of Wisconsin in 1940-41, amid widespread American antisemitism, a dispute over giving him a permanent post involved what he called elements of antisemitism, plus hostility to his support for entering the war. His hint that antisemitism lay behind the resistance soured relations, though he later called it a side issue; he withdrew and left.[7],[11],[27]

  • 1944

    Other

    The Jews of Carpatho-Ruthenia, the region his parents left, came under Hungarian rule in 1938-39. In 1944 they were caught up in the deportations that sent about 437,000 Jews from Hungary, most of them to Auschwitz.[2],[28]

Jewish background

Both parents JewishIdentified as Jewish, secular

Friedman was born in Brooklyn to Jewish immigrants from Carpatho-Ruthenia, then part of Austria-Hungary and now in Ukraine, who came to America as teenagers. His parents were Orthodox Jews who kept the dietary laws but were not zealous about religion. Between about ages 10 and 12 he was intensely observant, but he came to see religion as mostly myth and turned firmly against it. He still identified openly as Jewish: in a 1972 lecture, Capitalism and the Jews, he asked why so many Jews opposed the free markets he believed had helped them flourish, and wrote that Jewish free-market thinkers like himself were seen by some as traitors to their tradition.[1],[2],[7],[8],[9]

Key dates

  1. July 31, 1912

    Born in Brooklyn, New York, the fourth child and only son of Jewish immigrants from Carpatho-Ruthenia; the family soon moves to Rahway, New Jersey.[1],[2],[7]

  2. 1932

    Graduates from Rutgers, where teachers Arthur Burns and Homer Jones draw him from mathematics to economics, and begins graduate study at the University of Chicago.[2],[7]

  3. 1941

    After a bitter fight at the University of Wisconsin over his appointment, which he said involved elements of antisemitism, he joins the US Treasury and helps create paycheck tax withholding.[7],[11]

  4. 1946

    Receives his PhD from Columbia and joins the University of Chicago faculty, where he teaches until 1977.[2],[9],[10]

  5. 1957

    Publishes A Theory of the Consumption Function, introducing the permanent income hypothesis.[3],[9]

  6. 1962

    Publishes Capitalism and Freedom, arguing for a volunteer army, floating exchange rates, a negative income tax and school vouchers.[1],[9]

  7. 1963

    Publishes A Monetary History of the United States, 1867-1960, with Anna Schwartz, blaming Federal Reserve policy for deepening the Great Depression.[3],[12]

  8. 1968

    Publishes his natural-rate argument, reached independently by Edmund Phelps: there is no lasting trade-off between inflation and unemployment.[4],[14]

  9. February 21, 1970

    The Gates Commission, with Friedman as a leading voice, gives President Nixon its plan to end the draft; the Army becomes all-volunteer in July 1973.[18],[19]

  10. March 1975

    Spends six days in Chile lecturing on inflation and meets General Pinochet, a visit that shadows him for the rest of his life.[20],[21]

  11. October 14, 1976

    Named sole winner of the Nobel Memorial Prize in Economic Sciences; protests over Chile follow him to the Stockholm ceremony in December.[1],[3],[20]

  12. January 1980

    Free to Choose, a ten-part TV series made with his wife Rose, begins on PBS; the companion book tops the New York Times nonfiction bestseller list.[2],[13]

  13. 1988

    Receives the Presidential Medal of Freedom from Ronald Reagan and the National Medal of Science.[2]

  14. November 16, 2006

    Dies in San Francisco at 94.[1],[10]

Sources

  1. 1.Milton Friedman - Facts · NobelPrize.org (Nobel Prize Outreach)
  2. 2.Milton Friedman - Biographical (autobiography, with 2005 addendum) · NobelPrize.org (from Les Prix Nobel 1976), 1976
  3. 3.The Prize in Economic Sciences 1976 - Press release (14 October 1976) · NobelPrize.org (Royal Swedish Academy of Sciences), 1976
  4. 4.Inflation and Unemployment (Nobel Memorial Lecture, 13 December 1976) · NobelPrize.org, 1976
  5. 5.Milton Friedman - Banquet speech (10 December 1976) · NobelPrize.org, 1976
  6. 6.Award ceremony speech, Prize in Economic Sciences 1976 (Erik Lundberg) · NobelPrize.org, 1976
  7. 7.Milton Friedman, Ph.D.: Champion of Economic Freedom (interview, 31 January 1991, and biography) · American Academy of Achievement, 1991
  8. 8.Capitalism and the Jews (Milton Friedman; 1972 Mont Pelerin Society lecture) · Foundation for Economic Education (The Freeman), 1988
  9. 9.Milton Friedman, 1912-2006 (David R. Henderson), The Concise Encyclopedia of Economics · Econlib (Liberty Fund)
  10. 10.Milton Friedman, Nobel laureate, champion of free markets, dies at 94 · University of Chicago Chronicle, 2006
  11. 11.2 Who Got Away (John Allen) · On Wisconsin Magazine, University of Wisconsin-Madison alumni, 2017
  12. 12.On Milton Friedman's Ninetieth Birthday (remarks by Governor Ben S. Bernanke, 8 November 2002) · Board of Governors of the Federal Reserve System, 2002
  13. 13.Milton Friedman, Dissenter (Julian Kikuchi), Econ Focus, Third Quarter 2024 · Federal Reserve Bank of Richmond, 2024
  14. 14.The Great Inflation (Michael Bryan) · Federal Reserve History (Federal Reserve System), 2013
  15. 15.Recession of 1981-82 (Tim Sablik) · Federal Reserve History (Federal Reserve System), 2013
  16. 16.How the Great Recession Was Brought to an End (Alan S. Blinder and Mark Zandi) · Moody's Analytics, 2010
  17. 17.Gross Domestic Product: Implicit Price Deflator (GDPDEF), quarterly data · FRED, Federal Reserve Bank of St. Louis (source: US Bureau of Economic Analysis), 2026
  18. 18.45 Years Later: Nixon and the Gates Commission · Richard Nixon Foundation, 2015
  19. 19.The All-Volunteer Army at 50 - does Milton Friedman's case still make sense? (Col. Michael Mai) · U.S. Army, 2023
  20. 20.One Week in Stockholm (Milton and Rose D. Friedman, excerpt from Two Lucky People) · Hoover Digest, Hoover Institution, 1998
  21. 21.Milton Friedman in Chile: Shock Therapy, Economic Freedom, and Exchange Rates (Sebastian Edwards and Leonidas Montes), Journal of the History of Economic Thought, author manuscript · Centro de Estudios Publicos (hosted manuscript), 2019
  22. 22.Review of The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism (Andrew Zimbalist) · EH.Net (Economic History Association), 2023
  23. 23.Chile adds thousands to list of dictatorship-era victims · CNN, 2011
  24. 24.Friedman Cautions Against Rights Bill · The Harvard Crimson, 1964
  25. 25.The Friedman Essay and the True Purpose of the Business Corporation (Martin Lipton) · Harvard Law School Forum on Corporate Governance, 2020
  26. 26.The Negative Income Tax and the Evolution of U.S. Welfare Policy (Robert A. Moffitt), Journal of Economic Perspectives 17(3) · American Economic Association (copy hosted by Stanford Center on Poverty and Inequality), 2003
  27. 27.The United States and the Holocaust · United States Holocaust Memorial Museum, Holocaust Encyclopedia
  28. 28.Hungary after the German Occupation · United States Holocaust Memorial Museum, Holocaust Encyclopedia
  29. 29.Chile recognises 9,800 more victims of Pinochet's rule · BBC News, 2011
  30. 30.The Financial Crisis: Lessons for the Next One (Alan S. Blinder and Mark Zandi) · Center on Budget and Policy Priorities, 2015
  31. 31.Policy Basics: The Earned Income Tax Credit (2024 figures: 4.4 million lifted above the SPM poverty line) · Center on Budget and Policy Priorities (Internet Archive copy), 2025
  32. 32.The Earned Income Tax Credit (EITC): Legislative History (Congressional Research Service R44825) · Congressional Research Service (via EveryCRSReport), 2022
  33. 33.Income Mobility and the Earned Income Tax Credit (Tim Dowd and John B. Horowitz), Public Finance Review 39(5) · SAGE, 2011
  34. 34.Policy Basics: The Earned Income Tax Credit (2013 figures: 6.2 million lifted out of poverty) · Center on Budget and Policy Priorities (Internet Archive copy, 2014), 2014
  35. 35.Policy Basics: The Earned Income Tax Credit (2015 and 2018 figures: 6.5 million and 5.6 million lifted out of poverty) · Center on Budget and Policy Priorities (Internet Archive copy, 2020), 2020

Fact-checked on September 24, 2026 by a separate AI fact-checking pass that re-opened the sources, with 15 corrections made. How we check

Suggest a correction