January
Zvi Griliches, –
Zvi Griliches and His Contributions to Economic Measurement
, Zvi Griliches opened the Conference in the early post-World War II period. He cataloged on Research in Income and Wealth’s meeting on “New data problems that ranged from those affecting price Directions in Productivity Analysis” by remembering statistics and national accounts estimates to those with three economists—Theodore Schultz, Edwin Mans- the measurement of and with the lack of ade- field, and Edward Denison—who had recently died quate responses to government surveys. He then went and who were important in the development of the on to speculate why the data were not better in spite topic and to his own career. Sadly, we now add of studies by prestigious commissions and committees Griliches’ name to his list of important contributors every decade or so since : Really hard measure- to economic measurement who are no longer with us. ment problems, underfunding of statistical agencies Griliches was born in Kaunas, Lithuania. In , who have little clout in Washington, and insufficient the Nazis forced his family to resettle in a Jewish “emphasis on the value of data and data collection in our training of graduate students and in the reward ghetto, and in June , the Griliches family was sent to a concentration camp, where his parents died. Edu- structure of our profession.” Even when addressing cated at Hebrew University in Israel, in , Griliches econometricians, as in his essay “Economic Data Is- sues” in the Handbook of Econometrics, he stressed the won a scholarship in agricultural economics to the University of California at Berkeley. After earning importance of data. an M.S., he moved to the University of Chicago in Through his research, his participation on var- ; there, as a pupil of Theodore Schultz, he earned ious committees and commissions concerned with an M.A. and an Ph.D. in economics and became a measurement, and his direct interaction with other tenured faculty member. In ,hewontheJohn scholars and with staff, Griliches had a significant Bates Clark Medal of the American Economic Asso- influence on ’s estimates and programs. ciation, an award to “that economist under the age As an economist who recognized the importance of of forty who is adjudged to have made a significant measurement, he studied the methodologies that un- contribution to economic thought and knowledge.” derlie the estimates of technical change, real output, In , he moved to Harvard University, where he and productivity. At the macro level, he partnered remained for the rest of his career. In ,heserved with Dale Jorgenson to publish estimates of total as the president of the Econometric Society and was output, input, and productivity for the U.S. private elected to the National Academy of Sciences. From domestic economy. These estimates were primar- until recently, he was Director of the National ily based on such national accounts estimates as Bureau of Economic Research’s (’s) Productivity real gross domestic product (), investment, capital and Technical Change Program. In ,heservedas stocks, property income, and persons engaged in pro- the president of the American Economic Association. duction. This article led to a debate on productivity Griliches, an econometrician par excellence, cared measurement concepts and methodology with Edward deeply about, investigated critically, and devoted much Denison, who had worked for some years at time to assembling large data sets for his economet- and who later returned to become ’s Associate Di- ric models. Data sources and data methodologies rector for National Economic Accounts. Although were as important to him as econometric techniques. does not publish estimates of productivity, recog- He devoted his presidential address to the January nized the important ramifications of the debate for the meeting of the American Economic Association underlying national accounts data. This debate stim- to measurement issues. In this address, he worried ulated ongoing work at and the Bureau of Labor that measurement problems have become more se- Statistics () on the measurement of capital stocks, vere, positing that “the fraction of the economy for depreciation, inventories, prices, and the number and which the productivity numbers are half reasonable compensation of persons engaged in production. had fallen to below one-third” from about one-half . See “Productivity, , and the Data Constraint” in the selected . See “Comments”in New Developments in Productivity Analysis in the bibliography. selected bibliography. . Griliches, “Productivity”, . . “John Bates Clark Award, Citation on the Occasion of the Presentation . See the introduction “Data and econometricians—the uneasy alliance” of the Medal to Zvi Griliches, December , ,”American Economic Review to “Economic Data Issues” in the selected bibliography. (May ): . . See with Dale W. Jorgenson, “The Explanation of Productivity Change” in the selected bibliography. . For a reprint of the debate and additional comments by the partici- N .—This tribute was prepared by Barbara M. pants, see with Dale W. Jorgenson, “The Explanation of Productivity Change” Fraumeni. and “Issues in Growth Accounting” in the selected bibliography. • January
At the micro level, Griliches’ research focused on additional industries and expects to examine the meas- hedonic price indexes and quality change, output of urement of activities in other service industries, such hard-to-measure sectors, and the problem of correctly as insurance. accounting for the introduction of new goods. His Most recently, Griliches, along with Ernst Berndt, pioneering paper on hedonic prices indexes for was researching the measurement problems arising automobiles for the Stigler Commission was the cat- from the introduction of new goods. This research, alyst for the subsequent extensive literature on the partly funded by , emphasized the introduction of subject. Throughout his career Griliches continued to computers that embody new technologies and of other be a major force in the field of hedonics, which allow new products such as pharmaceuticals. the use of “regression techniques to relate the prices of different ‘models’ or versions of a commodity to differ- Griliches’ work on various committees is a ma- ences in their characteristics, ‘qualities,’ and discover jor part of his legacy to economic measurement. In thereby the relative valuation of such qualities...” –, the most recent of his frequent involvements now uses hedonic-type price indexes to deflate a in reviews of measurement problems, he served on the U.S. Senate Finance Committee’s Advisory Com- variety of key components of . Of these, the most widely known is the index for computers and other pe- mission to Study the Consumer Price Index. Earlier, ripheral equipment, which was originally constructed Griliches had served on several National Academy Sci- by a and consortium and is now constructed ences committees: The Committee on Ability Testing by and embedded in their consumer price indexes in –, the Committee on National Statistics in (’s) and producer price indexes (’s). also –, and the Committee on Science, Engineer- uses hedonic price indexes for other high-tech prod- ing, and Public Policy in –.FortheAmerican ucts, such as semiconductors, prepackaged software, Economic Association, he was a member of the U.S. and telecommunications equipment. The compo- Census Advisory Committee in – and in – nents of personal consumption expenditures (’s) and a member of the Committee on the Quality of are primarily deflated using ’s, which are adjusted Economic Statistics in –. In addition, he served for quality change using a combination of hedonics on the Secretary of Commerce’s Advisory Committee and other methods. For ,hedonic’s include on Industrial Innovation in –,ontheStatistics those for televisions, apparel, rent, and used cars. Canada Price Measurement Advisory Committee in Hedonics are also used by the Census Bureau in calcu- , and on the Executive Committee of the Confer- lating price indexes for single-family and multifamily ence on Research in Income and Wealth beginning in structures that are used by in the preparation of . Most recently, he was asked to serve on the new estimates of real gross private domestic investment. Advisory Committee, which is now being formed. Without the introduction of hedonics that was cham- The full extent of Griliches’ impact on economic pioned by Griliches, ’s measure of real would measurement may be difficult to assess because many be significantly different. ffi economists have been influenced by his research and In addition, Griliches also worried about di cult- by direct interaction with him. For example, Griliches to-measure sectors, particularly the service sectors. was an omnipresent force at the Productivity He highlighted the importance of focusing on these Meetings. He could be depended upon to astutely sectors, prompting to help sponsor a Brookings assess the strengths and weaknesses of any paper or Institution workshop series on measurement in these research proposal, including his own. Typically, he sectors. As part of the recent comprehensive revi- would smile broadly and then offer comments that sion of the national income and product accounts, would spark critical debate. Arguably, it was through introduced improved estimates of the real value ff these meetings that he exerted the greatest e ect on of unpriced bank services. is currently devel- the research programs and agendas undertaken by oping estimates of gross output for a number of those from both within and outside the Harvard community. . See “Hedonic Price Indexes for Automobiles: An Econometric Analysis of Quality Change” in the selected bibliography. Griliches’ presence and his advice will be sorely . See “Hedonic Price Indexes and the Measurement of Capital and missed, but his influence on economic measurement Productivity: Some Historical Reflections” in the selected bibliography. . Rosanne Cole, Y.C. Chen, Joan A. Barquin-Stolleman, Ellen Dulberger, will continue through the researchers he has trained Nurhan Helvacian, and James H. Hodge, “Quality-Adjusted Price Indexes to value data and measurement methodology. for Computer Processors and Selected Peripheral Equipment,” S (January ): –. . Bruce T. Grimm, “Price Indexes for Selected Semiconductors, –,” S (February ): –; for software, see Brent R. Moulton, Robert P. Parker, and Eugene P. Seskin, “A Preview of the . Brent R. Moulton and Eugene P. Seskin, “A Preview of the Com- Comprehensive Revision of the National Income and Product Accounts: prehensive Revision of the National Income and Product Accounts: Statistical Definitional and Classificational Changes,” S (August ): –. Changes,” S (October ): –. . Kenneth J. Stewart and Stephen B. Reed, “ Research Series Using . Michael Boskin, Ellen Dulberger, Robert Gordon, and Dale W. Jor- Current Methods, –,” Monthly Labor Review (June ): –. genson, Final Report of the Advisory Commission to Study the Consumer Price . Frank de Leeuw, “A Price Index for New Multifamily Housing,” S Index (Washington, : U.S. Government Printing Office, December ): (February ): –. –. January •
Selected Bibliography of Zvi Griliches “Productivity, and the Data Constraint.” American Economic Review (): –. “Comments.” In New Developments in Produc- “Returns to Research and Development Expendi- tivity Analysis. Studies in Income and Wealth, tures in the Private Sector.” In New Developments edited by Edwin Dean, Michael Harper, and Charles in Productivity Measurement. Studies in Income and Hulten. Chicago: University of Chicago Press, Wealth, vol. , edited by John W. Kendrick and for the National Bureau of Economic Research, Beatrice N. Vaccara, –. Chicago: University of forthcoming. Chicago Press, for the National Bureau of Economic “Data and econometricians—the uneasy alliance” in Research, . “Economic Data Issues.” In Handbook of Economet- With Ernst R. Berndt and Neal Rappaport. “Econo- rics,vol. . Amsterdam: North-Holland Publishing metric Estimates of Prices Indexes for Personal Com- Company, . puters in the ’s.” Journal of Econometrics ( ): –. “Hedonic Price Indexes for Automobiles: An With Iain Cockburn. “Generics and New Goods Econometric Analysis of Quality Change.” In The in Pharmaceutical Price Indexes.” American Economic Price Statistics of the Federal Government.National Review (): –. Bureau of Economic Research General Series, no. . With Dale W. Jorgenson. “The Explanation of Pro- New York: National Bureau of Economic Research, ductivity Change.” Review of Economic Studies (July . ): –. Reprinted in the S C “Hedonic Price Indexes and the Measurement B ,Part (May )andintheS of Capital and Productivity: Some Historical Re- ,Part (May ). flections.” In Fifty Years of Economic Measure- With Dale W. Jorgenson. “Issues in Growth Ac- ment. Studies in Income and Wealth, vol. , counting: A Reply to Edward F. Denison” and “Final edited by Ernst R. Berndt and Jack E. Triplett, Reply.” In The Measurement of Productivity.S – . Chicago: University of Chicago Press, C B ,Part (May ). for the National Bureau of Economic Research, Editor. Output Measurement in the Service Sectors. . Studies in Income and Wealth, vol. . Chicago: “Hybrid Corn: An Exploration in the Economics University of Chicago Press, for the National Bureau of Technological Change.” Econometrica (October of Economic Research, . ): –. Editor. Price Indexes and Quality Change. “Notes on the Measurement of Price and Quality Cambridge, : Harvard University Press, . Changes,” In Models of Income Determination.Studies Editor. , Patents, and Productivity. Chicago: in Income and Wealth, vol. , –.Princeton: University of Chicago Press, for the National Bureau Princeton University Press, . of Economic Research, .