There is an old joke that is often told about economists: Three economists are hunting ducks. The first shoots 20 meters ahead of the ducks, the second shoots 20 meters behind the ducks, and the third says, "Great job! We got them!"
All kidding aside, many economists do incredible jobs, and some have made contributions to financial theory that crossed over into many aspects of social history. In this article, we'll show you ten of these economists and explain their impact on society.
- Throughout history, several economists have contributed greatly to the field of economics and in such a manner that changed society.
- Adam Smith was a political economist during the Scottish Enlightenment best known for The Theory of Moral Sentiments and The Wealth of Nations.
- David Ricardo, a member of the British Parliament and economist, argued that nations should specialize for their greater good.
- John Maynard Keynes, or the "giant economist," favored government spending and monetary policy to mitigate the adverse effects of major economic shifts.
- Abhijit Banerjee and Esther Duflo pioneered an experimental approach to developmental economics, allowing a precise evaluation of specific policies.
1. Adam Smith (1723-1790)
Adam Smith was a Scottish philosopher who became a political economist in the midst of the Scottish Enlightenment. He is best known for The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776). The latter, usually referred to as The Wealth of Nations, is one of the earliest and the most famous treatises on industry and commerce and one of the major contributors to modern academic-discipline economics.
Smith entered the University of Glasgow at the age of 15 and studied moral philosophy. His original interest in Christianity evolved into more of a Deist stance (although this has been challenged).
Smith's arguments against mercantilism and in favor of free trade were a stark challenge to much of the protectionism, tariffs, and gold-hoarding that prevailed in the mid-18th century; today, he's often called "the father of modern economics." In a world gone global, imagine how much slower life would be had free, open trade not been encouraged and if hoarding of hard assets (mercantilism) was the norm: Economic life would be fairly bleak.
At the end of his life, Smith had most of his manuscripts destroyed, and while some survived, the world never learned the extent of his final thoughts and theories.
2. David Ricardo (1772-1823)
A large family could have contributed to Ricardo's drive; he was the third child of 17 children from a Portuguese Jewish family. His contributions to the study of economics came from a more hands-on background than Adam Smith's. Ricardo joined his father to work on the London Stock Exchange at the age of 14 and quickly became successful at speculating in stocks and real estate. After reading Smith's The Wealth of Nations in 1799, he took an interest in economics; although his first economics article was published nearly 10 years later.
Ricardo became a member of the British Parliament, representing a borough of Ireland in 1819. His greatest work, "An Essay on the Influence of a Low Price of Corn on the Profits of Stock" (1815) argued to repeal the corn laws at the time to better spread the wealth, and he followed it with Principles of Political Economy and Taxation (1817).
Ricardo was best known for the belief that nations should specialize for the greater good. He was also vocal in carrying forward the argument against protectionism, but he may have made his greatest mark on rents, taxation, wages, and profits by showing that landlords seizing wealth at the expense of laborers was not beneficial for society.
Ricardo is one of the shorter-lived of the great economists, dying at age 51 in 1823.
3. Alfred Marshall (1842–1924)
Marshall was born in London, and while he originally wanted to be in the clergy, his success at Cambridge led him into academia. Marshall may be the least recognized of the great economists as he did not champion any radical theories. However, he is credited with attempting to apply rigorous mathematics to economics to turn economics into more of a science than a philosophy.
Despite his emphasis on math, Marshall strove to make his work accessible to regular people; his "Economics of Industry" (1879) became widely used in England as a curriculum. He also spent almost 10 years working on the more scientific "Principles of Economics" (1890), which proved to be his most important work. He is most credited with perpetuating supply and demand curves, marginal utility, and marginal production costs into a unified model.
4. John Maynard Keynes (1883-1946)
Historians sometimes refer to John Maynard Keynes as the "giant economist." The six-foot-six Brit accepted a lectureship at Cambridge that was personally funded by Alfred Marshall, whose supply and demand curves were the basis for much of Keynes' work. He is particularly remembered for advocating government spending and monetary policy to mitigate the adverse effects of economic recessions, depressions, and booms.
During World War I, Keynes worked on the credit terms between Britain and its allies and was a representative at the peace treaty signed in Versailles.
Keynes was almost bankrupted by the stock market crash of 1929, but he was able to rebuild his fortune. In 1936, Keynes wrote his seminal work, the "General Theory of Employment, Interest and Money," which advocated government intervention to promote consumption and investing; it also pushed to alleviate the global Great Depression that was raging at the time. This work has been deemed as the launch of modern macroeconomics.
Friedman and Keynes
John Keynes' work is often considered antithetical to the laissez-faire philosophy promoted by economists like Milton Friedman. While Keynes advocated government spending as a form of economic stimulus, Friedman opposed government interventions.
5. Milton Friedman (1912-2006)
Milton Friedman was the last of four children born to Jewish immigrants from Austria-Hungary. After getting his Bachelor of Arts degree at Rutgers and his Master's at the University of Chicago, he went to work for the New Deal, a series of programs designed by US President Franklin D. Roosevelt to provide relief to and recovery from the effects of the Great Depression. While Friedman was in favor of the New Deal overall, he was opposed to most government programs and price controls.
Compared to Keynes, Milton Friedman was more of a laissez-faire economist. He was for minimizing the role of government in a free market. These ideas formed the basis of his book "Capitalism and Freedom" (1962). He is perhaps best known for promoting free markets and credited with the concept of modern currency markets, unregulated and unpegged to precious metals standards (reflecting a mantra of "money is worth what people think it is worth").
Friedman believed that introducing capitalism to totalitarian countries would lead to the betterment of society and increased political freedom. A winner of the Nobel Memorial Prize in Economic Sciences in 1976, he was adamant about the link between money supply and inflation. His speech in 1988 to Chinese students and scholars in San Francisco, in which he referred to Hong Kong as the best example of laissez-faire policies, was deemed a direct influence on China's ensuing economic reforms.
6. and 7. Abhijit Banerjee and Esther Duflo
Abhjijit Banerjee was born in Mumbai to a family of economists. Both his parents were professors in Calcutta, and he received his own economics education in India before obtaining his Ph.D. from Harvard University. He now teaches at MIT, where he met his future wife, the French-born economist Esther Duflo. In 2003 they co-founded the Poverty Action Lab with Sendhil Mullainathan.
The Poverty Action Lab is most famous for its experimental approach to developmental economics. Rather than relying on mathematical models or observational data, Banerjee and Duflo created randomized trials to determine the effectiveness of government spending on teaching materials, vaccinations, and other policies.
For example, they measured the effects of a Universal Basic Income by giving unconditional payments to residents of poor Kenyan villages. Different villages received different types of payments, and some were selected as a control group. By measuring the economic improvements after those payments, the economists could accurately measure the effects of UBI as effectively as doctors conducting a drug trial.
Banerjee and Duflo were awarded the Nobel Prize for Economics in 2019, along with the University of Chicago's Michael Kremer. In their latest initiative, the Poverty Action Lab is funding projects to address the US Healthcare System.
8. Nouriel Roubini
Nouriel Roubini was born in Iran to an Orthodox Jewish family, which later emigrated to Israel. Since then, he has also lived in Turkey, Italy, and the United States, describing himself as a "global nomad." He earned his economics B.A. in Milan, before earning a PhD. at Harvard University. He now teaches at NYU's Stern School of Business.
In addition to research, Roubini has also contributed to economic policy-making at institutions like the World Bank, International Monetary Fund, and the Federal Reserve. He also served on the White House Council of Economic Advisors during the Clinton administration, as well as for the Treasury Department.
Roubini is most famous for accurately predicting the 2008 financial crisis. In a 2006 position paper for the IMF, he warned that the real estate bubble would soon crash, causing a major recession. This prophetic warning earned him the nickname "Dr. Doom."
Roubini is also known for his adverse position on bitcoin, which he has described as "the mother of all scams." He has also criticized "useless" blockchain technology, at a time when the market was still highly optimistic about distributed ledger offerings.
Nouriel Roubini was nicknamed "Dr. Doom" for his gloomy outlook in 2006, which was later confirmed by the Great Recession.
9. Hernando de Soto
Hernando de Soto was born in Peru, although he spent most of his childhood in Europe following that country's military coup. He is most famous as the architect of Peru's neoliberal economic reforms; however, his work has impacted the entire Western hemisphere.
In 1979, de Soto returned to Peru and founded the Institute for Liberty and Democracy, a neoliberal think tank heavily influenced by Friedrich Hayek and Milton Friedman. With generous funding from the U.S. government, the ILD promoted free-market policies and legislation to address the country's informal property relations and arbitration. De Soto was a key advisor to President Fujimori (1990-2000), whom he persuaded to adopt shock therapy.
While the ILD has lost popularity in Peru, de Soto has continued to argue for free-market reforms throughout the Western hemisphere. His work inspired the Washington Consensus and supported the creation of NAFTA. De Soto's contributions have been acknowledged by U.S Presidents Ronald Reagan and Bill Clinton.
10. Janet Yellen
Janet Yellen was born in Brooklyn to a family of Polish-descended Jews. She earned her bachelor's in economics at Brown, before earning an M.A. and Ph.D. at Yale University.
Much of Yellen's research career was spent studying labor markets and the effects of government policy. She has advocated in favor of a Keynesian economic philosophy, favoring economic stimulus and a moderate position on inflation, while also favoring reforms to certain government entitlements.
In 1994, she was appointed to the Federal Reserve Board of Governors, where served until she became Chair of the Council of Economic Advisors. Since then, she has served several other roles in the Federal Reserve, culminating in the Chair of the Federal Reserve from 2014 to 2018. She was appointed U.S. Treasury Secretary by President Biden in 2021.
Who Are the Most Famous Economists?
While there have been many famous economists, some of the most well-known names include Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, Friedrich Hayek, and Milton Friedman.
Which Famous Economists Were Taught by Keynes?
Although Keynes had many students, his influence reached far beyond Cambridge. Some of the young economists he worked with included Maurice Dobb, Austin Robinson, Joan Robinson, and Piero Sraffa.
The Bottom Line
All of these economists had a profound effect on the world, but only time will tell how they will impact future economic thinking—and where we head next.