Sveriges Riksbank Prize in Economic Sciences · 1987
Robert M. Solow
He showed that better ideas and skills, more than extra machines, are what make nations richer over time.
The Nobel citation: “for his contributions to the theory of economic growth”
- Born
- August 23, 1924, Brooklyn, NY, USA
- Died
- December 21, 2023, Lexington, MA, USA
- Affiliation at the time
- Massachusetts Institute of Technology (MIT), USA
Economics prize
1987
Awarded alone.
Age that year
63years
Born in 1924.
Sources cited
14
Fact-checked September 24, 2026.
- As a high-school senior in 1940 he was turned down for a Harvard Club scholarship, he believed because he was Jewish. He won a different scholarship and went to Harvard anyway.
- In World War II he spent two years in Italy intercepting and decoding German army radio messages from trucks close to the front line.
- His 1957 study found that about seven-eighths of the doubling of US output per hour of work from 1909 to 1949 came from technical progress, not more machinery.
- Four of his doctoral students, George Akerlof, Peter Diamond, William Nordhaus and Joseph Stiglitz, later won the Nobel Prize in economics themselves.
- He reckoned he could have written 25 percent more papers by neglecting his students, and said the choice was easy.
The breakthrough
Explaining where long-run economic growth comes from
Why do some countries keep getting richer? Before Solow, a popular answer was simple: save more and build more factories. In a 1956 paper he wrote a small mathematical model of an economy that saves part of its income, adds workers and builds up machines. Its key feature is diminishing returns. Think of a bakery. Adding a second oven for each baker boosts output a lot, a third oven helps less, and a tenth barely helps at all. So piling up machines cannot keep raising output per worker forever. Saving more gives a country a higher standard of living, but not a permanently faster growth rate. In the long run, only technical progress, meaning better methods, tools and skills, can keep incomes rising. The Australian economist Trevor Swan published a similar model independently the same year, so it is often called the Solow-Swan model. In 1957 he turned the model on real data. He subtracted the part of US growth explained by more workers and more machines, and treated what was left as technical progress. The leftover was huge: about seven-eighths of the doubling of output per hour of work between 1909 and 1949. Economists call it the Solow residual. His method, called growth accounting, was soon copied in many countries. In 1960 he added the idea that new technology often arrives built into new machines.[3],[4],[5],[9],[14]
“I would rather teach a really bright student than write a mildly interesting paper.”
What it meant for humanity
Solow changed how governments and economists think about raising living standards. His work showed that ideas, education and better methods, more than sheer saving and building, drive growth over the long run. The Nobel Foundation notes that from the 1960s his studies helped persuade governments to put money into research and development to spur growth. Economists in many countries ran similar studies, and his growth accounting is still used to split growth into the parts due to labor, capital and technology.
He also worked on policy directly. As senior economist on President Kennedy's Council of Economic Advisers in 1961 and 1962, he saw the ideas of his growth model, about choosing between consuming now and investing for the future, written into the 1962 Economic Report of the President. In 1974 he helped found MDRC, a nonprofit that pioneered randomized trials of programs meant to raise the jobs and earnings of disadvantaged people, such as high-school dropouts and mothers on welfare. He later chaired its board. His work on exhaustible resources helped lay the basis for a widely cited rule that countries should reinvest the income from oil and minerals in other kinds of capital.
Much of his influence ran through people. Over the decades he was principal adviser to more than 70 doctoral students. Four of them won Nobel Prizes, and many more became leading economists. With Paul Samuelson and other colleagues he helped turn MIT's economics department into one of the world's leading departments. It was also a place open to Jewish scholars at a time when many elite universities were not.
- His 1956 model and 1957 growth accounting became the framework on which much of modern macroeconomics is built, and similar studies were soon run in many other countries.[3]
- From the 1960s his work helped persuade governments to fund technological research and development as a path to faster growth.[1]
- He helped found MDRC in 1974. It became a leading source of rigorous, experimental evidence on which programs actually help low-income people find work and earn more.[2],[13]
- He advised more than 70 doctoral students at MIT. Four of them, George Akerlof, Peter Diamond, William Nordhaus and Joseph Stiglitz, went on to win the Nobel Prize.[5]
- His work on how an economy can keep living standards up while using up nonrenewable resources, by building up other capital fast enough, underpins what economist John Hartwick later set out as a rule: reinvest the income from resources.[12]
Impact in numbers
Solow's contribution was a way of thinking, and we do not attach a number to it. His growth model taught economists and policymakers that lasting prosperity depends on new knowledge, skills and better methods, not only on saving and building. His growth accounting gave statisticians a standard way to measure how much of a country's progress comes from technology. Those ideas helped steer public money toward research and education, but world growth has many causes, and crediting any share of it to one theory would be invented precision. His other legacies are practical and human: the experimental evidence MDRC has built on programs for low-income workers, the 1962 Economic Report he helped shape, and more than 70 doctoral students, four of them Nobel laureates. At MIT he helped build a leading department that welcomed Jewish scholars when many universities did not.
EconomyFundamental scienceEducation
No number is given here on purpose. Some contributions cannot be counted honestly, and we would rather describe them than invent a figure.
The double edge
No physical harm is tied to Solow's work, but parts of it remain contested. His 1960 paper with Paul Samuelson described a short-run menu of choices between inflation and unemployment. Some economists argue it nudged 1960s US policy toward the high inflation of the 1970s; others, including historian Kevin Hoover, reply that the authors warned the trade-off could shift and that its influence on policy is largely a myth. The ecological economist Nicholas Georgescu-Roegen attacked his view that human-made capital can largely stand in for natural resources, a position later labeled weak sustainability, arguing that physical laws make such substitution impossible for energy. He also spent years in the long Cambridge capital controversy over how to measure capital, which he later called a waste of time. No harm is quantified here.
- Moderate
The Phillips-curve menu and the Great Inflation
Samuelson and Solow's 1960 paper suggested policymakers could choose among short-run combinations of inflation and unemployment. Hall and Hart (2012) argue this gave 1960s US policy an inflationist bias. Historian of economics Kevin Hoover finds their case untenable, notes the authors warned the curve could shift, and calls its central role in policy largely a myth.[10]
- Moderate
Critics say his resource economics underrates nature's limits
Solow argued that human-made capital can substitute for natural resources, so worries about leaving future generations enough minerals could be eased. Nicholas Georgescu-Roegen replied that energy resources cannot be turned into capital, so this substitution is physically impossible. The position Solow helped shape is now called weak sustainability.[11],[12]
- Minor
The Cambridge capital controversy
In the 1960s and 1970s Solow took an active part in a long dispute, known as the Cambridge controversy, over whether a country's capital can be measured as one aggregate, a question that underlies growth accounting. In his Nobel lecture he looked back on the whole episode as a waste of time, driven more by ideology than by analysis.[3],[4]
Against the odds
Solow grew up in the United States during the Great Depression, far from the violence European Jews faced, but he met the quieter barriers of American antisemitism. His family was lower-middle class, and his parents had gone to work straight out of high school. In the 1920s Harvard had begun using interviews and judgments of character to cut the number of Jewish students. When Solow applied for a Harvard Club of Long Island scholarship in 1940, an interviewer asked him an unkind question, and he was turned down; he was fairly sure it was because he was Jewish. He won another scholarship, went to Harvard at 16, and paid his own way by working in a library and as a busboy. In 1942 he left college to join the Army, partly, he said, because Hitler had to be beaten, and served in North Africa, Sicily and Italy. Harvard's economics department had been led by Harold Burbank, who was known to dislike Jews, mathematical economics and Keynesian ideas. Solow later said this left his and Samuelson's futures at Harvard dim, and after the war Harvard showed little interest in him. MIT, unusually open to Jewish faculty, hired him in 1949. He never took another job.
1940
Discrimination
Turned down for a Harvard Club of Long Island scholarship after an interview that included an unkind question; he said it was pretty clear from the context that he was rejected because he was Jewish.[6]
1940
Quota
Entered Harvard in 1940, by which time the college had spent well over a decade using interviews and judgments of character to limit how many Jewish students it admitted.[8]
1942
War
Left college to join the US Army partly, he said, because Hitler had to be beaten; spent about three years overseas, including two years in Italy intercepting German radio traffic close to the front.[2],[6]
—
Discrimination
Harold Burbank, chairman of Harvard's economics department when Samuelson left for MIT in 1940, was known to dislike Jews and mathematical economics; Solow told historian Roy Weintraub this left his and Samuelson's futures at Harvard dim, and Harvard showed little interest in hiring him after the war.[6],[7]
Jewish background
Solow was born in Brooklyn into a Jewish family, the oldest of three children. His parents were themselves children of immigrants, and his father worked in the fur business. Neither parent could afford to go beyond high school, so Solow, his sisters and his cousins were the first in the family to attend university. He spoke of being Jewish mainly when describing the barriers of his youth: he believed a Harvard Club interview panel turned him down for a scholarship in 1940 because he was Jewish. Historians count him among the Jewish economists who built MIT's department when elite universities were still reluctant to hire Jewish faculty. No source consulted describes his religious practice.[2],[5],[6],[7],[8],[9]
Key dates
August 23, 1924
Born in Brooklyn, New York, the oldest of three children in a Jewish family.[1],[2],[9]
September 1940
Enters Harvard College at 16 on a scholarship after being refused another one he believed was denied because he was Jewish.[2],[6]
1942
Leaves Harvard to join the US Army; serves in North Africa, Sicily and Italy, intercepting German radio messages, until August 1945.[2],[5],[6]
August 19, 1945
Marries Barbara "Bobby" Lewis and returns to Harvard, where he studies economics under Wassily Leontief.[2],[5],[6]
1949
Joins MIT as an assistant professor; given the office next to Paul Samuelson's, beginning a partnership of nearly 40 years.[2]
February 1956
Publishes A Contribution to the Theory of Economic Growth, the neoclassical growth model.[3],[9]
1957
Publishes Technical Change and the Aggregate Production Function, founding growth accounting.[3],[4]
1960
With Samuelson, publishes an influential analysis of the Phillips curve; also introduces the vintage-capital model.[3],[10]
1961
Wins the John Bates Clark Medal and joins President Kennedy's Council of Economic Advisers as senior economist (1961-62).[5],[9]
1974
Helps found MDRC, a nonprofit that tests anti-poverty and job programs with randomized experiments; he later chairs its board.[2],[9],[13]
October 21, 1987
Awarded the Nobel Memorial Prize in Economic Sciences for his contributions to the theory of economic growth.[1],[3]
1995
Retires from teaching at MIT, remaining active as Institute Professor Emeritus.[2],[5]
2014
Receives the Presidential Medal of Freedom from President Barack Obama.[5]
December 21, 2023
Dies at his home in Lexington, Massachusetts, aged 99.[1],[9]
Sources
- 1.Robert M. Solow - Facts · NobelPrize.org
- 2.Robert M. Solow - Biographical (with May 2005 addendum) · NobelPrize.org, 1987
- 3.Press release: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1987 · Royal Swedish Academy of Sciences / NobelPrize.org, 1987
- 4.Growth Theory and After (Nobel Memorial Lecture, 8 December 1987) · NobelPrize.org, 1987
- 5.Institute Professor Emeritus Robert Solow, pathbreaking economist, dies at age 99 (Peter Dizikes) · MIT News, 2023
- 6.Robert M. Solow: MIT150 oral history interview (August 15, 2007), transcript · MIT Infinite History, 2007
- 7.MIT's Openness to Jewish Economists (E. Roy Weintraub), CHOPE Working Paper 2013-05 · Center for the History of Political Economy, Duke University, 2013
- 8.Long before Hillel, Jews found a home at MIT (Simson Garfinkel) · MIT Technology Review, 2023
- 9.Robert Solow · Wikipedia
- 10.The Genesis of Samuelson and Solow's Price-Inflation Phillips Curve (Kevin D. Hoover), History of Economics Review 61 · Duke University (author's copy), 2015
- 11.Nicholas Georgescu-Roegen · Wikipedia
- 12.Weak and strong sustainability · Wikipedia
- 13.About MDRC · MDRC
- 14.Robert Merton Solow 1924-2023 (David R. Henderson), The Concise Encyclopedia of Economics · Econlib / Liberty Fund, 2008
Fact-checked on September 24, 2026 by a separate AI fact-checking pass that re-opened the sources, with 8 corrections made. How we check
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