current comments” EUGENE GARFIELD INSTITUTE FOn SCIENTIFIC INFORMATION* 3501 MAR KETST PHILADELPHIA PA 191Ck4 Wassily Leontief: I Pioneer of Input-Output Analysis Number 37 September 15,1986 “It is a capital mistake,” observed that civilian honor in 1984. These are only master logician Sherlock Hohnes, “to two of the many awards he has received theorize before one has data.”1 for hk contributions to economics. With this working principle economist Over the years I have had relatively lit- Wassily Leontief would surely concur. tle professional contact with econa For Leontief, currently University mists. Fritz Machlup, a pioneer in the Professor at New York University’s In- economics of information and the idea stitute for Economic Analysis, explana- of intellectual capital, was one excep- tions of economic systems must be tion.z The work of Leontief, however, grounded in facts. Theory follows as an has been recommended tome frequent- instrument that helps explain facts. ly. Many colleagues in the social Leontief’s dedicated preference for what sciences, including the sociologist can be observed rather than what can be Robert K. Merton, Columbia Universi- imagined, coupled with an insistence on ty, urged me to make his acquaintance. practical applications, led him to his They alf rightly anticipated that Leon- greatest achievement—the invention tiefs input-output technique could have and elaboration of input-output analysis practical application in information (IOA). science, and so it has.~s Unaware that I In the hands of Leontief and his many was doing so, I have been using a type of students and followers, the tool of IOA input-output methodology in my cita- has shaped our knowledge of how and in tion analyses of journals and in ISP’s what measure the constituent parts, or annual Journal Citation ReportP. It was sectors, of an economy interact. More Merton in particular who saw the con- than a tool of analysis, it can also reveal nection between Leontiefs technique what combination of resources (raw and our analyses. We now plan to use material, labor, capital)—called in- Leontiefs matrix structure, in an essay puts—is required to achieve desired prm next year, to present data on the “stocks duction goals—called outputs. IOA, and flows” of citations in and among therefore, plays a central role in plan- economics journals. ning and even in prediction. Today, It was not until early May of thk year, more than 60 nations and countless however, that I met Professor Leontief. businesses construct input-output tables We met at one of his favorite restaurants to guide them in making economic deci- in New York, on the north side of Wash- sions. ington Square, not far from his office at In recognition of the importance of the institute. IOA, Leontief was awarded the Nobel “There is a great difference between Prize in economic sciences in 1973. evidence and inference,” he told me as Japan, the world leader in the use of we began lunch. “I have always looked IOA, presented Leontief with its highest for evidence.”b 272 hand, Leontief, then 22, joined the Insti- tute for World Economics at the Univer- sity of Kiel, where he was engaged in research on problems of supply and de- mand. Adventure intervened. Leontief spent the year 1929 in China as an economic consultant to the Ministry of Railroads. He organized an aerial survey to gather data on agricultural production. This in- formation showed the Chinese govern- ment where to build new rail lines. In an interview with Leonard Silk, Leontief recafled. I rode on trains that came under fire from bandhs; I remember lying down on the floor. There was fighting in the north with the Russians. The Russian WossilyLeontiej planes bombed the Chinese with wa- termelons. They threw watermelons down on them. This was an idyllic Early Yenrs, Travels, Adventures world, you see. 10 Wassily Leontief was born in Lenin- In 1930 Leontief returned to the insti- grad (then St. Petersburg) on August 5, tute in Kiel, but he was not to remain 1906. His father was a professor of labor there long. His publications, including economics at the University of St. Pe- two articles describing his thesis tersburg. His grandfather owned a suc- work, 11,12attracted attention in the US. cessful textile mill in the city. In 1931 Leontief accepted an offer of In 1921 Leontief entered the Universi- employment from the National Bureau ty of Leningrad and read the classics of of Economic Research in New York, an political economics, while alf around outstanding research institution organ- him the Russian Revolution was radical- ized by Wesley C. Mitchell. A lecture by ly transforming the economics and Leontief at Harvard University some few politics of the country. As a noncom- months later brought yet another offer, munist socialist [a Menshevik), he often with further support for his own research and bluntly criticized the new regime, project—a quantitative investigation of and for this he was often jailed. “Some intersectoral flows in the US economy. time in prison, some time at the Univer- He accepted and began KS 44-year sity—it was a good education,” he has tenure as a member of the Harvard remarked.T (p. 8S) faculty. Despite these troubles with the au- thorities, Leontief was graduated from What IsInput-Output Anaiysfs? the University of Leningrad in 1925. Within six months he departed the Sovi- Leontief published the first input-out- et Union for the University of Berlin, put table 50 years ago. is He began th~ where he studied for hk PhD in econom- work shortly after assuming hk new post ics. Leontief published his first article, at Harvard, but it was a difficult under- “The balance of the economy of Russia: taking, and Leontief and his assistant a methodological investigation, ” in needed nearly four years to complete 1925;s it, and his 1928 doctoral thesis, their work. The Economy as a CircularFlo w,~antic- An input-output table is a model of ipated his invention of IOA. Degree in the interindustry relationships in an 273 economy. 14The structure of the table is m 1:Exmde of m input-outputtable(in doflars). a matrix that lists economic sectors, in the same sequence, both vertically and horizontally. On the left-hand side of the table, each row is preceded by the name of a sector; the numbers appearing to the right show where and in what quanti- ty the sector’s output is dispersed. * Sector 2: Across the top of the table, each column Manufacturing I 70 30 150 250 is headed by a sector’s name; the num- Sector 3: - bers appearing below the column head- Households 80 lao403cm I ing show whence and in what quantity Totsd input 1200250300 that sector derives its inputs. Thus, any sector can be analyzed in terms of the di- (Frum“tn@Output Analysis” by WassilyLecmbef.h hter- &onal Ency&pedia of the Said Sciaxs. David S-. silts, rection and amount of its production or editor.Volume7, p. 346. CopyriS6fa 1%Sby CrowcllColk the origin and amount of its intake. snd Macmifh, fcc Reprintedby permissionof b publisbsr.) A greatly simplified example of an In a recent address before the US Cen- input-output table appears in Figure 1. sus Bureau Conference in Washington, In this example, the economy is defined DC, Leontief used a familiar metaphor in terms of three sectors: agriculture, to describe the special ability of IOA to manufacturing, and households. (Actual bring together micro- and macroec~ input-output tables are drawn up with nomics: hundreds of sectors—the more sectors, It has often been said that in econom- the more detailed the analysis or projec- ics one must make a choice between tion.) The numbers in the table are given detailed description of individual trees in units of currency (here it is dollars) or aggregative description of the en- but could also be expressed as actual tire forest. Input-output analysis is an units—for example, tons of steel or application of the modern systems ap- kilowatt hours of electricity. In Figure 1, proach that permits us to describe the of the $200 output of the agricultural forest in terms of individual trees. It provides the means for observing and sector, $50 is the intermediate output analyzing simultaneously the quan- that flows back into and is consumed by titative relationships between hun- the agricultural sector, $40 flows to dreds and even thousands of variables manufacturing, and $110 flows to the while preserving throughout all the household sector. On the input side, the operations the identity, the name and manufacturing sector, for example, address, of each of them. lb takes in $40 from the agricultural sector, The numbers for Leontiefs first table, $30 from its own sector, and $180 from with 42 sectors, were drawn from the the household sector (a total input of 1919 US Census of Manufactures (the $250) to produce its total output of $250. 1929 census was not yet available when From these actual numbers Leontief the project was begun in 1932). IS None derives coefficients, or ratios, of the knew better than Leontief the many re- quantitative relationship of one sector to finements needed for future input-out- another. The coefficients are fixed by put tables; nonetheless, the achieve- the current technology; by using these ment must have been satisfying: he had coefficients, it is possible to project how united hard data—real numbers-with a changes in input or output of individual theoretical structure and simultaneously sectors will affect all other sectors drawn the “big picture.” because of the strict proportionality as- The idea of constructing a network of sumption for input-output relationships.