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For years econometric models were largely ignored by Establishment economists, who preferred to predict business trends on the basis of their own intuition and a few blackboard calculations. But in 1946 Klein used an early model of the U.S. economy to forecast that the U.S. would not slip back into the Depression when the wartime buildup ended, as most economists then believed. Klein was right, of course, and econometric models began to win respectability. During the past three decades he has honed his forecasting tools through elaborate models of the U.S. economy. In 1969 he began Project LINK, a model that attempts to tie together the economies of the industrialized and developing nations of the world.
Ironically, the Nobel Prize was awarded to Klein just as econometric models are coming under attack for spewing out a series of wrong numbers over the past three or four years. The models, for example, have generally underestimated both inflation and the steep rise in interest rates. Quipped one of Klein's colleagues last week: "We are happy that they are giving the award to Larry this year because if they had waited, they would have had to give him the Nobel Prize for mythology."
Klein ventured out of academia and into politics during the 1976 campaign, when he became the chief economic adviser to Candidate Jimmy Carter. When the Carter Administration was being formed, however, Klein took himself out of the running for a top position to continue teaching, although some associates thought he feared that his fleeting affiliation with the Communist Party as a young man in the 1940s would cause too many problems. Klein now considers himself a "friendly critic" of the Carter Administration, and he grades its economic performance as only "fair," mainly because he thinks the President has bent too easily to political pressure.
Klein, incidentally, did not make that 10:30 class after all; he was besieged by reporters. At 1:30 sharp, though, he was on the podium at Penn's Dietrich Hall, ready to begin his usual Wednesday afternoon class in econometrics.
PHYSICS: ASYMMETRICAL WORLD.
"It's really quite arcane," sighed Princeton's Val Fitch, 57, when he was asked by reporters last week to explain the work that brought him and his former colleague, James Cronin, 49, now of the University of Chicago, the 1980 prize for physics. "I find it difficult to convey to my family just what it is I've been doing."
What Fitch and Cronin have been doing is to help overturn the so-called laws of symmetry. By these rules, physicists try to understand the behavior of matter at its most basic level, where nuclear particles are created and destroyed. The two scientists' work may also help explain how the universe could have survived its fiery birth in the Big Bang some 15 billion years ago.