Irving Fisher

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Irving Fisher (1867-1947) was an American economist, statistician and commentator on public events. He made major contributions to economic theory, statistical methods and index construction, and was a leading conservative intellectual during the Progressive Era.



Fisher, a Yankee, was graduated from Yale College in 1888, and received his Ph.D. degree from Yale in 1891, then studied in Berlin and Paris. From 1890 onward he was at Yale as tutor, then becoming professor of political economy in 1898, and professor emeritus in 1935. He edited the Yale Review from 1896 to 1910. He was active in many learned societies, institutes, and welfare organizations, and was an outstanding proponent of econometrics in its historical development. Among his special interests were temperance, eugenics, public health, and world peace. He won a New York Medical Society prize for the invention of a tent for the treatment of tuberculosis victims. He strongly supported prohibition in the 1920s, and his optimistic predictions about the economy proved false with the Great Depression. He was, however, the only economist in 1928 predicting that a major recession would soon occur:

The quotations from me are not altogether correct. In particular I did predict that there would be a recession, and I think I was the only man that publicly 'called the turn'.[1]

According to Fisher, this debt-induced recession was unavoidable, but the Great Depression could had been avoided:

I believe some of the crash was inevitable because of over-indebtedness, but the depression was not inevitable. The reason is that the deflation which went with the over-indebtedness was not necessary.

Tobin (1985) argues the intellectual breakthroughs that mark the neoclassical revolution in economic analysis occurred in Europe around 1870. The next two decades witnessed lively debates in which the new theory more or less absorbed or was absorbed in the classical tradition that preceded and provoked it. In the 1890s, according to Joseph A. Schumpeter[2] there emerged "a large expanse of common ground and ... a feeling of repose, both of which created, in the superficial observer, an impression of finality -- the finality of a Greek temple that spreads its perfect lines against a cloudless sky." Of course, Tobin argues, the temple was by no means complete. Its building and decoration continue to this day, even while its faithful throngs worship within. American economists were not present at the creation. To a considerable extent they built their own edifice independently, designing some new architecture in the process. They participated actively in the international controversies and syntheses of the period 1870-1914. At least two Americans were prominent builders of the "temple," John Bates Clark and Irving Fisher. They and others brought neoclassical theory into American journals, classrooms, and textbooks, and its analytical tools into the kits of researchers and practitioners. Eventually, for better or worse, their paradigm would dominate economic science in this country.

As an economist, Fisher became famous for his contributions to monetary theory. He stressed the evils of unstable price levels and for some years campaigned vigorously for the adoption of a "compensated dollar" with a varying gold content, as a means of preventing extreme price-level changes. Fisher also advocated the adoption of the 100 percent money system, whereby banks are required to maintain a reserve of actual money of 100 percent of deposits subject to check. In addition, he made extensive investigations of problems relating to the definition and use of index numbers. Among his main technical achievements are the definition of interest as a time discount, and the creation of index numbers.

Irving Fisher was one of the earliest American economists using advanced mathematics. He made numerous important contributions to the Neoclassical Marginalist Revolution, including:

(1) his contributions to the Walrasian theory of equilibrium price [3]
(2) his volumes on the theory of capital and investment (1896, 1898, 1906, 1907, 1930) which brought the Austrian intertemporal theories into the English-speaking world.
(3) He introduced the famous distinction between "stocks" and flows", the Fisher Separation Theorem and the loanable funds theory of interest rates.
(4) He pioneered analysis of the Quantity Theory of Money (1911, 1932, 1935), which influenced the Chicago School of Economics.
(5) He created much of the modern theory of index numbers (1922)
(6) He introduced what became later known as the Phillips Curve.[4]
(7) He developed a debt-deflation theory of the Great Depression, emphasizing the growing burden of debts as prices fell(1933).

Fisher's many books include Mathematical Investigations in the Theory of Value, and Prices (1892), The Nature of Capital and Income (1906), The Rate of Interest (1907), The Purchasing Power of Money (1911), The Making of Index Numbers (1922), The Statistical Relation Between Unemployment and Price Changes (1926), The Money Illusion *(1928), The Theory of Interest: As determined by the impatience to spend income and opportunity to invest it (1930), Booms and Depressions (1932), The Debt-Deflation Theory of Great Depressions (Econometrica, 1933) and 100% Money (1935). He died in New York City, Apr. 30, 1947.


  • Robert W. Dimand. "Irving Fisher on the International Transmission of Booms and Depressions through Monetary Standards." Journal of Money, Credit & Banking. Vol: 35#1 2003. pp 49+. online edition
  • Dimand, Robert W. "The Dance of the Dollar: Irving Fisher's Monetary Theory of Economic Fluctuations," History of Economics Review (1993). 20, 161-172.
  • Dimand, Robert W. "Irving Fisher's Debt-Deflation Theory of Great Depressions," Review of Social Economy (1994). 52, 92-107
  • Dimand, Robert W. "The Fall and Rise of Irving Fisher's Macroeconomics," Journal of the History of Economic Thought (1998). 20, 191-201.
  • Allen, Robert Loring. Irving Fisher: A Biography (1993) online excerpt
  • Joseph Dorfman. The Economic Mind in American Civilization (1958) vol 3.
  • Fellner, William, ed. Ten Economic Studies in the Tradition of Irving Fisher (1967)
  • Geanakoplos, John and Dimand, Robert W., ed. Celebrating Irving Fisher: The Legacy of a Great Economist (2005)
  • Samuelson, Paul. "Irving Fisher and the Theory of Capital," in Fellner (1967)
  • Sasuly, Max. "Irving Fisher and Social Science," Econometrica (1947). 15, 255-278.
  • Tobin, James. "Neoclassical Theory in America: J. B. Clark and Fisher" American Economic Review (Dec 1985) vol 75#6 pp 28-38in JSTOR

Primary sources

  • Irving Fisher. The Works of Irving Fisher, 14 vols. ed. by William J. Barber assisted by Robert W. Dimand and Kevin Foster, consulting ed. James Tobin. London: Picketing & Chatto. (1997).
  • Irving Fisher. The Nature of Capital and Income (1906) 427 pages. online at
  • Irving Fisher. The rate of interest: Its Nature, Determination and Relation to Economic Phenomena (1907), 442 pages online at
  • Irving Fisher. Elementary Principles of Economics (1912) 531 pages, textbook; online at
  • Irving Fisher. America's Interest in World Peace, 1924 on the League Of Nations. online edition
  • Irving Fisher. Prohibition at Its Worst (1926) online edition
  • Irving Fisher. The "Noble Experiment" (1930). on prohibition online edition

External Links


  1. Irving Fisher, "Discussion by Professor Irving Fisher" (On the causes of the Great Depression), Annals of The American Academy, pp. 150-51.
  2. Schumpeter, A History of Economic Analysis (1954), p. 754
  3. The Walras-Cassel System
  4. Fisher, The Statistical Relation Between Unemployment and Price Changes, International Labor Review(1926)
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