Who Was Richard Stone?

Richard Stone was a Keynesian economist and pioneer in the development of systems of national accounting, for which he received the 1984 Nobel Prize in economics.

Stone is the author of Input-Output and National Accounts, and Mathematical Models of the Economy and Other Essays.

Richard Stone died on Dec. 6, 1991.

Key Takeaways

  • Richard Stone was a Keynesian economist known as the "father of national income accounting."
  • He earned the Nobel Prize in economics for standardizing national accounts based on double-entry accounting.
  • Sir Richard Stone was honored with a knighthood by Queen Elizabeth II in 1978.

Early Life and Education

Richard Stone was born on Aug. 30, 1913, in London, England. He earned a degree in economics from Cambridge University in 1935. As a member of the Political Economy Club at King's College, Stone studied with economist John Maynard Keynes.

During World War II, he served as an economist for the Central Economic Information Service of the Offices of the War Cabinet. In 1945, Stone was appointed director of the department of applied economics at Cambridge University, where he remained as a professor until 1980.

Double-Entry Accounting

Stone was the first economist to incorporate double-entry accounting into national accounts. Commonly referred to as balancing the books, this method requires every income item on a balance sheet to be offset by a corresponding expenditure. 

As a member of the Central Economic Information Service of the Offices of the War Cabinet in 1940, Richard Stone assisted future Nobel Laureate James Meade in surveying the economic situation of the United Kingdom during World War II.

The pair developed the United Kingdom's first national accounting of economic statistics, detailing all government income and consumption. Under the guidance of John Maynard Keynes, their white paper, entitled "An Analysis of the Sources of War Finance and an Estimate of the National Income and Expenditure in 1938 and 1940," provided a framework that marked the beginning of a national account.

Richard Stone's method of measuring investment, government spending, and consumption at the national level helped define the System of National Accounts (SNA), the international standard for measuring a nation's economic activity. Since 1947, the SNA has been implemented globally and used by international organizations like the United Nations.

Notable Accomplishments

In 1962, Richard Stone co-founded the Cambridge Growth Project with Alan Brown. Using economic statistics and econometrics, the team created a comprehensive study of the British economy in the years following World War II.

At the Cambridge Growth Project, Stone and Brown standardized the use of a social accounting matrix (SAM), which represents the flow of all economic transactions that take place within an economy. It is a matrix representation of the national accounts for a given country and can be extended to include non-national accounting flows for an entire region.

In 1970, Stone became the chair of the Faculty Board of Economics and Politics at Cambridge University. He served as president of the Royal Economic Society from 1978 to 1980.

How Did Richard Stone Influence Global Accounting Standards?

Richard Stone helped define the System of National Accounts. Intended for use by all countries at all stages of economic development, the SNA provides a framework for calculating economic statistics and a method for managing national accounts.

How Did Richard Stone's Statistical Work in the United Kingdom Influence Other Nations?

Richard Stone's Cambridge Growth Project studied the British economy using his Social Accounting Matrix (SAM), a matrix representation of the national accounts for the United Kingdom. However, this method translated globally and provided any nation with a snapshot of its economy using input-output analysis.

What Was Richard Stone's Publication "Trends?"

Richard Stone's first analyses of British economic conditions were detailed in Trends, a small London publication that Stone wrote regularly and early in his career. Stone covered topics like employment, output, consumption, retail trade, investment, and foreign trade.



The Bottom Line

Richard Stone's contribution to national income accounting reverberates globally today. His incorporation of the double-entry method created an international standard for nations and international businesses.

Article Sources
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  1. Brittanica. "Sir Richard Stone."

  2. Nobel Prize. "Richard Stone-Facts."

  3. United Nations. "System of National Accounts."

  4. Ebrary. "The Foundation of the Cambridge Growth Project."

  5. Nobel Prize. "Richard Stone."

  6. Nobel Prize. "Richard Stone-Biographical."

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