Lawrence R. Klein, an American economist known as the father of economic "models" used worldwide to forecast trends and analyze business activity, won the 1980 Nobel Prize for economics yesterday.
A mild-mannered, shy man of 60 who headed Jimmy Carter's economic task force in 1976, Klein -- a professor at the University of Pennsylvania's Wharton School of Economics -- reacted to the $215,000 award with characteristic modesty.
"I have a class at 10:30," he told a reporter who got him out of bed with the news. "I don't think this will be an occasion for missing class. I have two classes, one in the morning and one in the afternoon, and I don't intend to miss either one."
In fact, Klein had to turn over his morning class to another professor, while a standing-room-only audience of graduate students greeted him with a five-minute ovation. In an ebullient mood, Klein released multicolored balloons, saying: "That's course No. 1 in economics. Inflation in general goes up."
"Klein is just a prince of a guy," said Brookings Institution Research Director Joseph A. Pechman yesterday. "There never was a more gentle fellow. He's the sort of guy who actually does worry about his students."
His host of friends and colleagues in the economics profession also suggested that Klein's recognition by the Nobel Committee is the ultimate triumph of good sense over prejudice. In the early 1950s, Klein was one of the victims of the late senator Joseph McCarthy's anti-communist drive, ultimately losing tenure at the University of Michigan after McCarthy charged that Klein had been a member of the American Communist Party while a researcher at the University of Chicago from 1946 to 1947.
Klein spent some years at Oxford after the bitter episode at Michigan. In 1958, he joined the University of Pennsylvania, where he is now the Benjamin Franklin Professor of Economics.
In Stockholm, the Nobel committee cited Klein for three decades of research "in the field of economic science which deals with the construction of empirical models of business fluctuations."
Klein pioneered in a field of economics called econometrics. The econometric specialist tries to show a relationship among the various sectors of the economy through a series of mathematical equations.
Using these equations, he "builds" a model of the economy into which new factors can be cranked. For example, a proposed new government spending program can be introduced, and the model is then expected to predict its impact on inflation, unemployment and so on.
Klein began the work which brought him yesterday's Nobel award during the early 1960s at Brookings, working with economists Gary Fromm, James Duesenberry, and Otto Eckstein. His work was not only the forerunner of the famous Wharton model which he continues to administer, but of the whole host of commercial econometric models on which big business now relies for market analysis and investment.
Klein yesterday gave credit for his inspiration to Jan Tinbergen of Holland, who shared the first Nobel economics prize in 1969 with Ragner Frisch of Norway. "Everything in scholarly research is collective. I participated in the early development" of econometric models, Klein said.
Economist Gardner Ackley, who as chairman of the Department of Economics at Michigan had recommended Klein's promotion to full professor, praised Klein in a telephone interview yesterday, saying he is "a national resource." Klein combines "a high level of technical competence with an enormous amount of good, common sense," Ackley said.
Klein has never said so, but some of his friends think that he decided not to take a high post in the Carter administration because of the near certainty that someone would dredge up the old episode in a new burst of McCarthyism.
Klein is the ninth American to win the Nobel economics prize, set up 12 years ago. Other Americans to be so honored in recent years include Paul Samuelson of the Massachusetts Institute of Technology, who was Klein's teacher when he got his Ph. D. degree with a mathematical interpretation of John Maynard Keynes' "General Theory." That thesis, written when Klein was 24, still stands as the definitive work on the subject.
During the last Carter campaign, Klein was recruited by John Bowles, a vice president at Kidder Peabody & Co. when Bowles -- then a Carter volunteer -- could not stir up enthusiasm for the ex-Georgia governor among better-known Democratic economists.
To most of the big names among Democrats, Carter was still "Jimmy Who?" But at the suggestion of a friend at Wharton, where Bowles had gotten a degree, he approached Klein, who agreed to assemble a task force of professional economists for Carter. Once Carter got the nomination, Klein said during an earlier interview, "lots of economists wanted to get into the act."
Klein and his associates undertook the task of an economic education for Carter during the summer of 1975, with a series of papers prepared under Klein's guidance. Carter had showed that he badly needed advise. In one widely circulated interview, Carter had said that he saw no reason why inflation, interest rates, and unemployment all could not be held to 2 percent.
Klein has been in only intermittent touch with Carter since the last campaign, although he is in close contact, like many other academics, with Carter's own current crop of advisers. Klein said yesterday that he had advised Carter in 1976 "to run a steady economic program," but that he did not think his advice had been followed.
But he gave plus marks to the Carter economic proposals beginning last August, saying that his energy program, investment tax credit, and plans to help distressed areas are all "very sensible." He added that in his view, Carter has had more success dealing with unemployment than with inflation. As for Republican candidate Ronald Reagan, Klein said that after starting out with "rather crude" economic policies, the GOP standard-bearer "has had more sensible advice."
A native of Omaha, Neb., Klein went to the University of California before getting his doctorate at M.I.T. He soon came to be regarded as preeminent in his chosen field of econometrics. In awarding the prize, the Nobel Committee referred to his pioneering work in the field of business fluctuations, saying that his studies in this area will help in making forecasts of international trade and capital movements.
In recent years, Klein has concentrated to some extent on international economic problems, and the committee cited as one distinguished example of his work a study of how oil price increases have influenced inflation, employment and trade balances in different countries.
The essential details of the event that brought McCarthy's wrath down on Klein are as follows: McCarthy accused Klein of teaching a class while a research assistant at the University of Chicago, and signing a paper which made him a member of the Communist Party.
Unlike some others, Klein accepted a subpoena, and testified before the McCarthy committee, saying that it was the result of youthful naivete and did not represent his mature views. McCarthy dropped the matter, but the agitation was revived by groups outside the university when Klein later came up for a promotion.
The question surfaced briefly during the 1976 campaign. Carter at the time reaffirmed his support of Klein.