Who was Richard Stone

Richard Stone (1913 to 1991) was a British economist who made significant contributions to the method of double-entry accounting for national income. He was awarded the 1984 Nobel Memorial Prize in Economic Sciences for his work.

Breaking Down Richard Stone

Richard Stone was raised during the Great Depression, which fueled his interest in studying economics at Cambridge. While a student at Cambridge, Stone learned statistics from Colin Clarke  a professor who greatly influenced Stone and brought his attention to the subject of national accounts, the subject that would one day earn him the Nobel Prize. Following his graduation from Cambridge in 1936, Stone began working for Lloyd’s of London until World War Two. During the war, Stone worked as an economist for the British government. The government was interested in better understanding the national economy in terms of available wartime resources. This work led to the UK’s first national accounting of a variety of important economic statistics.

National accounts in the UK measures the sum of income, consumption and other wealth factors in providing an overall picture of the economy’s health. Much of this analysis involves an in-depth understanding of statistics. Stone’s work during World War Two in the area of national accounts led to him being called “the father of national income accounting” later in life.

Following the war, Stone pursued an academic career at Cambridge where he focused his research interests on economic theory using statistical methodology. Many notable students attended Cambridge while Stone was there, including Alan Prest, whose work in the field of demand analysis made lasting contributions. Following Stone’s time at Cambridge, he started the Cambridge Growth Project with J.A.C. Brown. While there they developed the Cambridge Multisectoral Dynamic Model of the British Economy (MDM) and Social Accounting Matrices (SAM), both of which were precursors to work subsequently advanced with the advent of computational statistics.

In 1970, Stone received the appointment of Chairman of the Faculty Board of Economics and Politics at Cambridge. He retired in 1980 after also serving as President of the Royal Economic Society from 1978 to 1980.

Richard Stone and Double-Entry Accounting

Stone was the first economist working in his field to make use of double-entry accounting. Double-entry accounting requires every income item on a balance sheet to be offset by a corresponding expenditure. This is widely known in modern times as balancing the books. Stone’s usage of double-entry accounting in the national accounts was especially important as the global economy expanded, due to the accounting uniformity it brought to international business.