Irving Fisher was born in upstate New York and he earned the first doctorate in economics ever awarded at Yale. He was a professor at Yale. At the age of thirty-one, he developed tuberculosis and as a result, he became very health concious. In fact , he wrote the national bestseller,"How to Live: Rules for Healthful Living Based on Modern Science". He is probably best known for his expertise in price indexes, which are used to measure changes in the prices of various baskets of goods over t ime. There are two main price indexes: 1)Laspeyres index, in which prices of goods are weighted according to the frequency of purchase of goods in some base year. 2)Paasche index, In contrast to Laspeyres index, prices of goods are weighted according to the frequency of purchase of the goods in the year under consideration.
Fisher is also known for his Theory of Interest, which states that the level of interest is due to the interaction between people's impatience to consume now rather than invest in capital, and the opportunities that exist for people to receive higher or l ower net productivities of capital. His theory is very similar to Eugen von Böhm-Bawerk's work in this area, with the exception of Böhm-Bawerk's idea regarding "roundaboutness". According to Fisher, the length of the period does not in itself increase productivity. Fisher's principles on money and prices also became the foundation in the development of monetarism.
Fisher was also in favor of a consumption tax versus an income tax, due to the fact that an income tax penalizes the saver by taxing him twice. As he saw it, people will use their savings to invest in capital goods that yield income at a later date. The income used to buy the capital goods will be taxed and the income generated by the capital will be taxed.
Though Fisher did some damage to his reputation as an economist by proclaiming throughout the Great Depression that recovery was just around the corner, much of the work he did is still used by economists today.
Works by Irving Fisher:
Click on the icon to return to the
list of economists.
Click on Léon Walras to
return to the Walrasiad.
