Economic Research

  • Prosperity
  • 1920

The same philanthropic impulse that produced a slew of private scientific organizations in the 1920s to improve American governance (see 1919 entry on Public-Policy list) also created new expertise to help keep the government honest and informed on the economic front. The National Bureau of Economic Research was created in 1920 with $35,000 provided by the Commonwealth Fund. It was erected as a “private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works,” with its independence guaranteed by a diverse board of economists, businessmen, and workplace experts. The Carnegie Corporation kicked in an additional $95,000 during 1921 and 1922. Today the bureau continues to do valuable work—officially designating the beginning and end of every national recession, for instance, and producing a rich diet of economic papers and books on timely topics. A third of the U.S. economists who have won the Nobel Prize have put in a stint as a researcher at NBER, and 13 alumni have chaired the President’s Council of Economic Advisers.

It wasn’t just foundations that strove to improve economic knowledge in the U.S. during the tumultuous early decades of the twentieth century. Individual donors like Alfred Cowles also got involved. Cowles was an investment adviser in Denver who decided to direct some of his wealth into supporting the most quantitatively gifted economists of his day, in the hope they could improve understanding of what was really happening in the American economy. Eventually he and some U.S. and European economists he had taken under his wing decided to make a systematic effort to encourage the application of advanced mathematics and statistics to the budding field of economics. Their Econometric Society was born in 1931, along with its research journal Econometrica—both funded by Cowles. The Guggenheim and Rockefeller foundations later chipped in as well, and scholars fueled by these donated funds earned nine Nobel Prizes in subsequent years.

  • Joel Fleishman, The Foundation (Public Affairs, 2007) pp. 110-112
  • Claire Gaudiani, The Greater Good (Times Books, 2003) pp. 122-123