Sveriges Riksbank Prize in Economic Sciences · 1971
Simon Kuznets
He taught nations to measure their own economies, building the income figures behind GDP, and warned what those numbers cannot show.
The Nobel citation: “for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development”
- Born
- April 30, 1901, Pinsk, Russian Empire (now Belarus)
- Died
- July 8, 1985, Cambridge, MA, USA
- Affiliation at the time
- Harvard University, USA
Economics prize
1971
Awarded alone.
Age that year
70years
Born in 1901.
Sources cited
21
Fact-checked September 24, 2026.
- His 1934 report gave the US its first official national income figures and showed that income paid to Americans fell 40 percent from 1929 to 1932.
- In that same report he warned that national income is a poor guide to a nation's welfare, a caution often lost in today's focus on GDP.
- In 1942 he showed that the military's new production targets could not be met in time; his analysis became the basis for US wartime production goals.
- He reached the United States from Soviet Ukraine in 1922 and within four years had earned bachelor's, master's and doctoral degrees at Columbia.
- A secular Jew and committed Zionist, he chaired a project to build economic research in Israel and pioneered statistical studies of Jewish economic life.
The breakthrough
Measuring a nation's income, and showing what modern growth looks like
In the early 1930s, as the Great Depression deepened, the US government could not answer a basic question: how much was the whole country earning, and how fast was that shrinking? Presidents Hoover and Roosevelt had to steer by scraps such as stock prices and railroad freight loadings. Kuznets built the answer. Think of the country as one enormous household and imagine adding up every paycheck, business profit, rent and interest payment, while taking care to count each dollar only once. That total is national income. His 1934 report to the Senate gave the first official estimates for 1929 to 1932. He later pushed the figures back to 1869 and broke them down by industry and by use, and he measured how much people saved and how much income went to the richest households. His methods became the basis of gross national product and today's gross domestic product. His Nobel Prize mainly rewarded what he did next. He gathered long statistical records for more than a dozen countries and showed that modern economic growth, which began in the late 1700s, is a distinct era. Output per person and population both rise far faster than ever before, farming gives way to industry and cities, and science-based technology drives the change. He also found growth waves lasting about 20 years that are linked to population change, and he suggested that inequality may first rise and then fall as countries industrialize.[1],[3],[4],[5],[6],[7],[8],[14]
“The welfare of a nation can, therefore, scarcely be inferred from a measurement of national income as defined above.”
What it meant for humanity
Before Kuznets, governments fighting the Depression were steering half blind. His 1934 report gave the first official measure of how badly Americans were hurting: the income paid out to individuals had shrunk by 40 percent in three years. The national accounts that grew from his work gave leaders a running picture of the whole economy, and in 1999 the US Commerce Department singled them out as its top achievement of the twentieth century.
The accounts proved their worth in World War II. Kuznets and his former student Robert Nathan used them to work out how much the economy could produce. When the military set new targets after Pearl Harbor, Kuznets showed they could not be met in time without severe parts shortages and too much strain on the civilian economy, and his analysis became the basis for both military and civilian production goals. After the war he advised the governments of China, Japan, India, Korea, Taiwan and Israel on building their own economic statistics, and he helped found research bodies, at home and internationally, that brought government and university economists together. Today the United Nations System of National Accounts is meant for use by every country, and the US Bureau of Economic Analysis credits such data with helping make postwar downturns milder and shorter.
His other work keeps paying off. His estimates of top incomes from tax records are the starting point for today's research on inequality by Thomas Piketty and Emmanuel Saez. His book with Milton Friedman on professional incomes helped launch the idea of human capital, now central to labor economics. And his Nobel lecture examined why many poorer countries had not yet shared in modern growth, and argued that they deserved close study even though the data on them were still thin.
- His 1934 report to the US Senate gave the first official estimates of national income and showed that income paid to individuals shrank 40 percent from 1929 to 1932.[5],[6]
- In 1942 his analysis showed the military's post-Pearl Harbor production targets could not be met on time without severe shortages; it became the basis for both military and civilian targets.[5]
- He advised the governments of China, Japan, India, Korea, Taiwan and Israel on national economic statistics; today a UN standard, the System of National Accounts, is meant for use by every country.[5],[20]
- In 1999 the US Commerce Department named the national income and product accounts its top achievement of the century, crediting Kuznets. Britain's Richard Stone shares credit for developing such accounts.[7]
- His series of top US income shares from tax data, covering 1913 to 1948, became the model for today's long-run research on income inequality.[14]
- From 1953 he chaired the Falk Project for Economic Research in Israel, and he later served as a trustee of its successor, the Maurice Falk Institute.[2],[13]
Impact in numbers
Kuznets gave the world a way of seeing economies rather than a single product, so we record no number. National accounts now inform nearly every economic decision governments make, from budgets and interest rates to wartime mobilization. But their value cannot be separated from the choices made with them, and any dollar figure would be invented. The same is true of his theory of modern economic growth, which his biographer Robert Fogel judged to be confirmed knowledge, and of his inequality research, which gave a whole field its starting data. Honest accounting also means sharing credit: Richard Stone built national accounts in Britain, Robert Nathan and Commerce Department staff carried the US work forward, and generations of statisticians refined it. Kuznets himself insisted that these totals be read with their limits in mind, a warning that today's debate over GDP and well-being still echoes.
EconomyFundamental science
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
Kuznets's work caused little direct harm, but two of his best-known ideas have been misused or overtaken. First, GDP and related totals are often treated as a scorecard of national well-being. Kuznets warned against exactly this in his first report in 1934, and in the late 1940s he broke with the Commerce Department partly because it refused to count unpaid housework. Even so, a 2009 commission chaired by Joseph Stiglitz, with Amartya Sen and Jean-Paul Fitoussi, concluded that leaning on GDP can distort policy, because it leaves out environmental damage and can hide growing inequality. Second, his 1955 suggestion that inequality first rises and then falls as countries grow richer, later called the Kuznets curve, has not held up well. Economists Thomas Piketty and Emmanuel Saez argue that the mid-century fall in inequality came from wars, the Depression and government policy rather than from growth itself, and that inequality in the United States has surged since the 1970s. His wartime planning served the Allied military buildup against the Axis powers. We found no documented harm tied to his work, so no harm is quantified here.
- Moderate
GDP treated as a measure of well-being
Kuznets warned in 1934 that national income says little about a nation's welfare, and in the late 1940s he broke with the Commerce Department, which refused his wish to count unpaid housework. GDP still became a headline scorecard. The 2009 Stiglitz-Sen-Fitoussi commission found that relying on flawed measures can distort decisions, since GDP leaves out environmental damage and can mask rising inequality.[6],[8],[15]
- Moderate
An overly optimistic view of inequality
His 1955 idea that inequality rises and then falls with development became the Kuznets curve. Piketty and Saez (2014) call the theory overly optimistic, argue that its popularity owed much to the Cold War, and show that the mid-century decline in inequality came mainly from wars, the Depression and policy. US income inequality has surged since the 1970s.[14]
Against the odds
Kuznets was born in 1901 in Pinsk, in the western Russian Empire, a city where about three in four residents were Jewish. Since 1887 the Russian government had capped the share of Jewish students in secondary schools and universities: 10 percent in towns of the Pale of Settlement, 5 percent outside it and 3 percent in St. Petersburg and Moscow. His father left for the United States before the First World War. In 1915, as the Russian army expelled Jews from areas near the front, the family moved from Rovno to Kharkov, and Simon grew up through that war, the 1917 revolutions and the civil war that followed. He was studying at the Kharkov Institute of Commerce when the fighting disrupted its work. Between 1918 and 1920, Ukrainian nationalists, Polish officials and Red Army soldiers killed tens of thousands of Jews in pogroms in western Belarus, where Pinsk lies, and in Galicia; in April 1919 the Polish army executed 35 Jewish civilians in Pinsk itself. The White forces that held parts of the former empire in 1919 even brought back the school quotas the revolution had abolished. Kuznets worked briefly as a labor statistician for the new Soviet authorities in Ukraine, then in 1922 left to join his father in America, with his degree unfinished. He earned a Columbia bachelor's degree the next year. We found no record of antisemitic barriers in his American career.
—
Quota
He grew up under rules, in force since 1887, that limited Jewish enrollment in Russian secondary schools and universities to 10 percent in towns of the Pale of Settlement, 5 percent elsewhere and 3 percent in the capitals. The White forces revived them in 1919.[16]
1915
War
In 1915, during the Russian army's wartime expulsions of Jews from areas near the front, his family moved from Rovno to Kharkov, where he finished secondary school.[21]
1918
War
His studies at the Kharkov Institute of Commerce, begun in 1918, were disrupted by the Russian Civil War and the Soviet reorganization of the institute.[18],[21]
1919
Persecution
From 1918 to 1920, pogroms by Ukrainian nationalists, Polish officials and Red Army soldiers killed tens of thousands of Jews in western Belarus and Galicia. In April 1919 the Polish army executed 35 Jewish civilians in his hometown of Pinsk.[17],[19]
1922
Other
His father had emigrated to the United States before the First World War. Simon joined him only in 1922, after years of war and revolution, and finished his education at Columbia.[2],[13]
Jewish background
In his Nobel autobiography Kuznets wrote that he was born in Russia to Jewish parents. He was born in Pinsk, a city about three-quarters Jewish in 1897, and went to school in Rovno and Kharkov, where as a teenager he was drawn to the Bund, a Jewish socialist movement. In America he lived as a secular Jew and a committed Zionist. He chaired the Falk Project for Economic Research in Israel and wrote pioneering statistical studies of Jewish economic life and of Russian-Jewish migration to the United States. In 1973 he declined to circulate one such manuscript through Harvard, feeling it reflected his interests as a Jew and so was not fully objective.[2],[9],[10],[11],[12],[13],[18],[19],[21]
Key dates
April 30, 1901
Born in Pinsk, Russian Empire (now Belarus), to Jewish parents.[1],[2]
1918
Enters the Kharkov Institute of Commerce to study economics, statistics, history and mathematics.[18],[21]
1921
Works as a statistician in the labor department of the trade unions' South Bureau in Kharkov and publishes his first paper, on factory workers' wages in the city in 1920.[5],[18],[21]
1922
1926
Earns his PhD at Columbia University under Wesley C. Mitchell, after a bachelor's degree in 1923 and a master's in 1924.[2],[5]
1927
Joins the National Bureau of Economic Research, where he works for more than 30 years, mostly on national income.[2],[5]
January 4, 1934
His report National Income, 1929-32, the first official US national income estimates, is sent to the Senate.[5],[6]
1942
At the War Production Board, shows that post-Pearl Harbor military targets are unrealistic; his analysis sets wartime production goals.[5]
1953
Becomes chairman of the Falk Project for Economic Research in Israel.[2],[13]
1955
Publishes Economic Growth and Income Inequality, his American Economic Association presidential address and the origin of the Kuznets curve.[9],[14]
1960
Becomes professor of economics at Harvard University.[2]
1966
Publishes Modern Economic Growth: Rate, Structure, and Spread.[2],[5]
1971
Awarded the Nobel Memorial Prize in Economic Sciences for his empirical interpretation of economic growth; it was only the third economics prize awarded.[1],[4],[5]
July 8, 1985
Dies in Cambridge, Massachusetts, aged 84.[1]
Sources
- 1.Simon Kuznets - Facts · NobelPrize.org (Nobel Prize Outreach)
- 2.Simon Kuznets - Biographical · NobelPrize.org (from Les Prix Nobel 1971), 1971
- 3.Modern Economic Growth: Findings and Reflections (Prize Lecture, 11 December 1971) · NobelPrize.org, 1971
- 4.The Prize in Economic Sciences 1971 - Presentation Speech (Bertil Ohlin) · NobelPrize.org, 1971
- 5.Simon S. Kuznets: April 30, 1901-July 9, 1985 (Robert W. Fogel), NBER Working Paper 7787, prepared for the NAS Biographical Memoirs · National Bureau of Economic Research, 2000
- 6.National Income, 1929-32 (Senate Document No. 124, 73rd Congress, 2nd Session) · US Department of Commerce; digitized by FRASER, Federal Reserve Bank of St. Louis, 1934
- 7.GDP: One of the Great Inventions of the 20th Century, Survey of Current Business (January 2000) · US Bureau of Economic Analysis, 2000
- 8.Simon Kuznets, The Concise Encyclopedia of Economics · Library of Economics and Liberty (Liberty Fund)
- 9.Simon Kuznets [Ideological Profiles of the Economics Laureates] (Daniel B. Klein, Ryan Daza and Hannah Mead), Econ Journal Watch 10(3): 411-413 · Econ Journal Watch, 2013
- 10.Review of Jewish Economies: Development and Migration in America and Beyond, Volume I (Daniel A. Schiffman) · EH.Net (Economic History Association), 2012
- 11.Jewish Economies (Volume 1): Development and Migration in America and Beyond - The Economic Life of American Jewry (Simon Kuznets; ed. Stephanie Lo and E. Glen Weyl) · Routledge, 2012
- 12.Jewish Economies (Volume 2): Development and Migration in America and Beyond - Comparative Perspectives on Jewish Migration (Simon Kuznets) · Routledge
- 13.Simon Kuznets (entries from Encyclopaedia Judaica and Encyclopedia of Population) · Encyclopedia.com
- 14.Inequality in the long run (Thomas Piketty and Emmanuel Saez), Science 344(6186): 838-843 · Science (author copy hosted at UC Berkeley), 2014
- 15.Report by the Commission on the Measurement of Economic Performance and Social Progress (Stiglitz, Sen and Fitoussi) · Commission on the Measurement of Economic Performance and Social Progress (hosted by Eurostat), 2009
- 16.Numerus Clausus (from Encyclopaedia Judaica) · Jewish Virtual Library
- 17.Pogroms, Holocaust Encyclopedia · United States Holocaust Memorial Museum
- 18.Simon Kuznets · Wikipedia
- 19.Pinsk · Wikipedia
- 20.System of National Accounts · United Nations Statistics Division
- 21.Кузнец, Саймон (Simon Kuznets) · Wikipedia (Russian)
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