Schultz, Theodore William, 1902-1998.
Business/Financial Desk | March 2, 1998, Monday
Theodore Schultz, 95, Winner Of a Key Prize in Economics
By PETER PASSELL (NYT) 603 words
Late Edition - Final , Section A , Page 15 , Column 5ABSTRACT - Theodore W Schultz, economist at University of Chicago who won Nobel Memorial Prize in 1979, dies at age 95; photo (M) Theodore W. Schultz, an economist at the University of Chicago whose research on agriculture and education was honored with a Nobel Memorial Prize in 1979, died Thursday at a nursing home in Evanston, Ill.
The cause of death was an infection that did not respond to treatment, his family said. Mr. Schultz was 95.
Schultz as Agricultural Economist
Theodore W. Schultz was an agricultural economist to start with, and in the thirties and forties, presented a series of studies on the crises in American agriculture, and then later took up agricultural questions in various developing countries throughout the world. His best known works from this period are Agriculture in an Unstable Economy (1945), and Production and Welfare of Agriculture (1949). His most trail-blazing book was Transforming Traditional Agriculture (1964). The main characteristic of Schultz's studies in agricultural economics is that he does not treat agricultural economy in isolation, but as an integral part of the entire economy. Schultz's analytical interest has been focused on the imbalance between relative poverty and underdevelopment in agriculture compared with the higher productivity and the higher income levels in industry and other urban economic activities - and this applies both to industrialized countries like the United States and to the many developing countries Schultz has studied.
Schultz has received many of the impulses for his notable analysis of the importance of human resources for economic and social development from his studies of the productivity problems in agriculture - in the United States as well as in the developing world.
Schultz's analysis of the development potential of agriculture is based on a disequilibrium approach. It is the gap between, on the one hand, traditional production methods, and on the other, the more effective methods now available which create the conditions necessary for a dynamic development. Using this approach, Schultz has, in various context, presented a detailed critique of the developing countries' industrialization policies and their neglect of agriculture. Schultz was the first to systematize the analysis of how investments in education can affect productivity in agriculture as well as in the economy as a whole. Well aware of the limitations of the method, Schultz has, as a first approximation, defined and measured the size of educational capital as a sum of accumulated investments in education. A large proportion of the costs of these education investments consist of a loss of earnings from employment during study periods. These are, therefore, a kind of alternative costs which can be seen both in the private and in the national context.
Schultz on the Human Factor
Schultz and his students have shown that, for a long time, there has been a considerably higher yield on "human capital" than on physical capital in the American economy, and that this tension has resulted in a much faster expansion of educational investments than of other investments.
Schultz has always kept close to economic reality in his work, both as an economic researcher, and as an adviser in various capacities. He has shown a great wisdom as an economist with a striking ability to define development factors which the model-building economists are inclined to neglect.
But the broadness of his approach is also manifest in a number of other factors and context which have to do with human resources (the human factor). Schultz has done research on subjects connected with health and disease as essential factors in economic development in the Third World, as well as on population issues in general. During his long career in research, he has shown an outstanding skill in asking the relevant questions and has opened up fruitful avenues of new research. Few economists have done so much to inspire colleagues and students to do worthwhile research.
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