A History of Econometric Values
Ragnar Frisch (1895-1973) (Bjerkholt 1995) coined the term (in French) econometrics in his very first paper in economics, “Sur un probleme d’economique pure” (1926); the term signified the unification of economic theory, statistics, and mathematics (Bjerkholt and Dupont 2010):
Intermediate between mathematics, statistics, and economics, we find a new discipline which, for the lack of a better name, may be called econometrics.
Econometrics has as its aim to subject abstract laws of theoretical political or “pure” economics to experimental and numerical verification, and thus to turn pure economics, as far as possible, into a science in the strict sense of the word. (Frisch 1971: 386)Frisch was also the initiator of the foundation of the Econometric Society on 29 December 1930. The 16 founding members were: Frisch, Charles F. Roos, Joseph A. Schumpeter, Harold Hotelling, Henry Schultz, Karl Menger, Edwin B. Wilson, Frederick C. Mills, William F. Ogburn, J. Harvey Rogers, Malcolm C. Rorty, Carl Snyder, Walter A. Shewhart, 0ystein Ore, Ingvar Wedervang and Norbert Wiener. The first president was Irving Fisher (Divisia 1953; Christ 1983; Bjerkholt and Qin 2011). The Econometric Society sponsors the academic journal Econometrica, the first issue of which was published in 1933. Frisch was its first editor, from 1933 to 1954.
In his first “Editorial” of Econometrica, Frisch gave an explanation of the term econometrics:
Its definition is implied in the statement of the scope of the Econometric Society, in Section I of the Constitution, which reads: “The Econometric Society is an international society for the advancement of economic theory in its relation to statistics and mathematics. The Society shall operate as a completely disinterested, scientific organization without political, social, financial, or nationalistic bias. Its main object shall be to promote studies that aim at a unification of the theoretical-quantitative and the empirical-quantitative approach to economic problems and that are penetrated by constructive and rigorous thinking similar to what has come to dominate in the natural sciences”. (Frisch 1933: 1)
While today, econometrics is often seen as something which “began as an offshoot of the classical discipline of Mathematical Statistics” (Granger 2006: xi), it is of interest to see that Frisch’s original idea was the unification of statistics, economic theory and mathematics:
Experience has shown that each of these three view-points, that of statistics, economic theory, and mathematics, is a necessary, but not by itself a sufficient, condition for a real understanding of the quantitative relations in modern economic life.
It is the unification of all three that is powerful. And it is this unification that constitutes econometrics. (Frisch 1933: 2, original emphasis)It is apparent that the underlying motivation for this “new discipline,” from its beginning, was to turn economics “into a science,” that is, to penetrate economics by the “constructive and rigorous thinking” dominant in the natural sciences.
It appeared that the term itself - though having a different meaning - was used previously in relation to accounting. In Grundriss einer Oekonometrie und die auf der Nationaloekonomie aufgebaute naturliche Theorie der Buchhaltung by Pawel Ciompa (1910), “oekonometrie” was described as a geometrical representation of the values, a natural theory of bookkeeping based on macroeconomics (Mattessich 2003). According to Frisch (1936), Ciompa emphasized too much the descriptive side of what Frisch himself meant by econometrics (see also Tintner 1953).
Subsequent debates shaped the ideas of what econometrics entails, or is supposed to entail. It should be noted that these debates also reflected the then contemporary notions of what it meant for econometrics to be a science.