Zvi Griliches, 69, an Authority On Analysis of Economic Data
By MICHAEL M. WEINSTEIN
Published: November 5, 1999
Zvi Griliches, who spent part of his youth hiding from the Nazis in his native Lithuania, survived Dachau, taught himself English in seven months at a British internment camp and went on to become one of the world's leading authorities on the statistical analysis of economic data, died yesterday at his home in Cambridge, Mass. He was 69.
The cause was complications from pancreatic cancer, his wife, Diane Asseo Griliches, said.
Mr. Griliches (pronounced GRILL-i-kus), who was the Paul M. Warburg Professor of Economics at Harvard University, solved knotty statistical problems with profound policy implications. Prof. Dale Jorgenson, a Harvard colleague and collaborator, said Mr. Griliches's work in the late 1950's showed that publicly financed research and development could produce large benefits for the economy, extending well beyond the individual company or industry that came up with an innovative product or production technique.
In the case of hybrid corn, Mr. Griliches estimated, national income rose by perhaps 40 cents a year for every dollar invested in its research and development. His research developed methods for analyzing the impact of economic factors on the speed with which new technologies spread across the economy.
Other economists, building on Mr. Griliches's techniques, showed that research and development in manufacturing also generated huge economic benefits. In a recent review of Mr. Griliches's work on the impact of research on productivity, Prof. James Heckman of the University of Chicago wrote that the analysis ''has stood up to the test of time.''
Mr. Griliches helped improve the government's measure of inflation. Consider, as did Mr. Griliches, the case of automobiles. One reason that prices of new cars rise is inflation -- the rise in price over time of cars with identical features. But car prices also rise because new cars offer better features.
To isolate the impact of inflation, Mr. Griliches and colleagues pioneered the use of the technique, called hedonics, for measuring the value to consumers of specific features, like style, size and speed. That way, he could compare the value of new and old cars by comparing the value of their separate features, isolating how much of the rise in price was attributable to inflation alone.
Mr. Griliches influenced the way the government measures prices of products whose quality changes over time, like pharmaceutical drugs, computers and housing. His work therefore influenced the government's measure of inflation, which affects the calculation of tax brackets, Social Security benefits and many other federal expenditures.
Mr. Griliches served on the Boskin Commission, which was appointed by Congress to review possible biases in measures of inflation and reported in 1996 that the government's index overstated inflation by 1.1 percentage points a year.
His research also refuted prevailing arguments about the impact of education on lifetime earnings. Economists observed that students who attended school for more years earned higher income -- about 7 percent more for each additional year of schooling. The question was why.
The straightforward reason was that students who stayed in school longer acquired skills that employers were willing to pay for. But economists also thought that cause-and-effect ran in the opposite direction: students with more skills chose to stay in school longer because they could most effectively take advantage of further schooling. If this was true, encouraging less-skilled students to stay in school longer might not do much to lift their earnings.
Mr. Griliches's work powerfully put this anxiety to rest. By designing careful measures of skills, he was able to show that more schooling would raise wage offers even for less-skilled students who would ordinarily not choose to stay in school longer. His findings buttressed arguments of those who called for government programs to help high school graduates attend college.
Mr. Griliches also helped develop techniques of statistical estimation, including methods for analyzing ''panel'' data that trace the behavior of many individuals or companies over time. Social scientists could tackle these large data sets only after the 1960's, when powerful computers became widely available.
The common thread through Mr. Griliches's work was the pursuit of accurate measurement. He helped devise techniques for measuring productivity -- output per hour of work -- and the benefits of research and development that spill over from one sector to another. Before Mr. Griliches, economists had trouble identifying the reasons behind the historical increases in productivity.
By devising better measures of the quality of educated and uneducated workers and of the quality of different types of equipment, Mr. Griliches and Mr. Jorgenson, writing together, provided explanations for some of the previously unexplained trends in productivity. Mr. Griliches wrote that his work showed ''that education, investment in research and economies of scale were the important sources of productivity growth in the long run.''