Arnold Zellner, Physicist Turned Economist and Statistician

Kathy Morrissey

Arnold Zellner was born on January 2, 1927, in Brooklyn, New York, to Ukranian immigrants Dora Kleiman Zellner and Israel (Sam) Zellner. With the help of his loving grandmother, Arnold’s parents raised him and his older brother, Norman, with great appreciation for the American freedoms and opportunities denied to citizens of their native country.

Arnold attended Harvard University on scholarship, earning a bachelor’s degree in physics in 1949. Upon completing his tour of duty in the Army, he used his GI Bill benefits to attend the University of California, Berkley, where he earned a PhD in economics in 1957. He held appointments in the Department of Economics at the University of Washington (1955–1960) and the University of Wisconsin (1961–1966) before accepting an appointment as the H.G.B. Alexander Professor of Economics and Statistics at the University of Chicago, Graduate School of Business (1966–1996). Since retiring in 1996 from the University of Chicago, he has been a frequent lecturer throughout the world and a visiting professor in the Department of Agricultural and Resource Economics at the University of California, Berkley.

My aim in interviewing Arnold was to learn more about him as a person: his childhood, early career, and interests. This is what I found.

Early Life and Career

M: Would you tell me a little bit about your childhood?

Z: I was very lucky during my childhood years. I had very caring parents, a wonderful grandmother, and a loving brother. My parents came to the United States in about 1906 from the Ukraine, as immigrants. They both were in business and gave us a great upbringing.

I was active in almost all the sports—baseball, basketball, football, golf, tennis. Then too, I liked to read—particularly Mark Twain, Leo Tolstoy, and the works of other famous authors. And, of course, I tried my hand at playing musical instruments. I was a violinist in our junior and senior high school orchestras and played piccolo for a year in the high school band.

M: What was high school like?

Z: We were very lucky in high school. The town I grew up in was Long Branch, New Jersey, about 50 miles south of New York, right on the Atlantic coast. Long Branch had one of the best school systems, I would say, in the country. Long Branch High School was outstanding. We had great courses in English. Ms. Davis taught us English courses that were on par with college courses I took later. Mr. Seeley taught physics, and Mr. Tobey taught math. These fine courses—along with courses in history, biology, chemistry—were first-rate.

I was active in the high school drama club and played on the junior high school basketball team as a substitute. We were undefeated for three years. Also, I played on sand-lot football and baseball teams. In high school, I was a substitute on the baseball team. I really enjoyed sports quite a bit, but had to cut my sports career short in order to help my parents in their retail grocery business from about 11th grade on. I did learn a lot about business from this experience.

M: Why did you choose to study physics? Did you have a particular reason for choosing Harvard?

Z: What attracted me to math and physics was the beauty of the subjects, the ability to solve problems, and to check answers with data and real-life outcomes. As regards Harvard, Long Branch High School had a tradition of funneling their best students to Harvard. I went to Harvard mainly because of that tradition and because I received a scholarship. As you know, there was a lot of discrimination against minorities—blacks, Jews, and others. This was just the period of time when higher education was softening its discriminatory policies.

M: Do you have any fond memories from that time you’d be willing to share?

Z: One that is very fond is the outcome of the compulsory freshman English examination. After passing the exam, I was asked why I did so well. Of course, I mentioned the wonderful English courses I took in high school with Ms. Davis.

M: After Harvard, you were a physicist at Naval Ordinance Test Station in China Lake, California. Would you tell me a little bit about that job?

Z: After I finished my undergraduate studies at Harvard, I wanted to see a different part of the country and noticed that there were summer openings at the Naval Ordinance Test Station at Inyokern, California, right on the Mojave Desert. I said, “That would be different!” I spent the summer there doing two projects. One involved working on how to calculate, or determine, the orientation of a missile in space from photographs taken at spatially separated telescopic photographic stations. The idea, provided by the head of the unit to which I was attached, was to take photographs at the same instant in time from a couple of photographic stations and use them in equipment that I built to determine the orientation of the missile in space. Next, photographs, taken later in time, were employed and again used to determine the orientation of the missile. I was able to determine the orientation of the missile at various points in time in its flight from photographs taken at different sighting stations.

M: After starting your graduate studies in physics at Berkley, you joined the Army. What did you do in the Army, and where were you stationed?

Z: Well, I was drafted into the Army and took my basic training in Fort Ord, California, down the coast between San Francisco and Los Angeles. After basic training, given my technical background, I was assigned to the Special Professional Program (SPP) and assigned to Fort Detrick, Maryland—the chemical warfare center of the United States Army. And of all people, guess who was there? Don Marquardt, the statistician who was to become a president of the ASA! Then, even though I had an offer to go to Harvard as an assistant to Professor Oncley or to stay on at the lab as a civilian, I decided to go back to UC Berkeley to finish my doctorate in economics.

M: You’ve had a successful career in economics and statistics. Were you confident at the time that this change from physics was absolutely the thing to do?

Z: With respect to life, nothing is absolutely certain. We have to deal with uncertainty, and there statistics comes in very importantly—especially Bayesian statistics. I think, looking back, that it turned out very well, and I’ve enjoyed working on the problems I’ve encountered. I think I really realized my ambitions in making the change at that time. I think if I had remained in physics, I’d be working on much narrower problems, rather than the big problems I’ve been working on in economics, statistics, and econometrics—a very important range of problems, in my opinion.

Family

M: I’d like to ask you how you met your wife, Agnes, and whether she shares your interest in economics and statistics.

Z: We met when I was a graduate student at Berkeley and got married when I was in the midst of my graduate studies. She’s been very loving and supportive over the years, a very wonderful wife. While she has an interest in certain parts of economics and statistics, her interests are mainly centered on other areas (e.g., our family (five sons), social problems, art, and literature)

M: You have five sons, and I’m wondering how they feet about growing up with a well-known professor and researcher as a father. Do any of them share your interests?

Z: Well, I was never a stuffy old professor! I kept everything very informal, and we got along just splendidly, I’m happy to say. My wife is just wonderful with children, and we made a great effort to make sure they grew up well and developed wholesome attitudes toward the important things in life. We are very lucky that they all developed well and are enjoying good careers. Our oldest son, David, is active in the computer area. Our second son, Philip—who has a master’s in business administration from Chicago—is an economic consultant in the Washington, DC, area. The third, Samuel, has an engineering degree from Northwestern and a master’s in business administration from Chicago and is an industrial engineer and executive with Bell South in Atlanta. Our fourth son, Daniel—with a master’s degree in drama from UCLA—is a playwright who has combined drama and computing techniques in several of his plays. Our fifth son, Michael, majored in economics, with special emphasis on economic development, and now is the publisher, co-owner, and former editor-in-chief of Latin Trade, a monthly magazine dealing with economic and business issues in Latin America. It’s a tribute to our country that our sons, and others, have had such great opportunities.

Influences

M: Colleagues have described you as persistent and having strong convictions. Have your persistence and strong convictions ever gotten you into trouble or resulted in an amusing story you’d be willing to share?

Z: I like to keep things simple. If I’m ever accused of being, as you say, persistent, it’s a belief in sophisticated simplicity. If it’s too complicated, it’s probably wrong! Sometimes I do get into arguments with respect to this issue, and I particularly remember one with Larry Klein that is rather humorous.

He lectured to a large group assembled by the NSF to appraise the performance of macro-econometric models at the University of Michigan at Ann Arbor. He made the following statement at the beginning of his lecture: The world is complicated, therefore we need complicated models. Thinking I was at a Chicago workshop, I immediately commented: How do you know? How do you know the world is complicated? Maybe you don’t understand it, and that’s why it’s complicated. And even if it is complicated, it doesn’t follow logically or practically that we need complicated models. Maybe starting simply is a better strategy. He’s a very good friend, and replied, “Arnold, let’s agree to disagree and I shall go on.” I don’t think we’ve ever reconciled that difference.

M: You have received many awards and honors throughout your career. Are there any that mean the most to you?

Z: There are two. One was being elected president of the American Statistical Association. It is an organization I’d always admired and delighted in participating in over the years. It’s an open, constructive organization in contrast to some other organizations. Everybody is free to do what they want, and it’s democratically run and achieving its objectives. To be elected president of that organization was a delight; it made me very happy! I was so proud. I went to Atlanta in 1991 for the meeting at which I was appointed president formally. It was a pleasure I never thought I’d experience. That was really a highlight of my life, there’s no question about it.

The second honor that I cherish is being the first elected president of ISBA, the International Society for Bayesian Analysis. To have my friends and colleagues express their support and appreciation for what I did by electing me president and giving me a Founder’s Award is something I shall cherish always.

M: What have been the major influences on your career? Have there been crucial events that caused you to rethink your priorities, goals, or research?

Z: No, I think I should be perfectly frank. When I was in high school, I wanted to be a university professor in physics and play baseball in the summer. I was not good enough at baseball! However, teaching and research turned out to be, you might say, my cup of tea. I really enjoy doing both, and to have the freedom to do research in whatever I want, to travel and do all these things without restrictions…that’s really a miracle! I often wonder what I did to deserve all this. It turned out much better than I expected.

M: What do you do when you are not working? Do have a favorite hobby or pastime?

Z: I still enjoy all kinds of sporting activities. It’s a nice, lovely change from doing all the work at the desk. I, along with many others, have had a life-long fascination with how the mind and the body interact and how to make the interaction more productive, say, in lowering my golf score or in upping the rate at which I get new ideas.

I also read a lot; reading on the philosophy of science interests me quite a bit. We travel a lot. I have a great love of the beauty of nature. Sometimes, for example, in view of a beautiful landscape or seascape, I feel at one with nature—a wonderful experience that I enjoy with many others.

And, there are different art institutes in Chicago. My wife is a volunteer at the Smart Art Museum, our university art museum, and we go to art exhibits there and at the Art Institute downtown. We also go to plays at various theatres. There’s so much going on in Chicago, there’s never a dull moment.

M: Do you enjoy traveling?

Z: Oh yes. My wife particularly enjoys traveling, so we travel at the drop of a hat. One of the best trips we ever had was in 1978. I was invited to give a talk in Japan. It dawned on me that it was our 25th wedding anniversary, thus why not take a trip around the world? We went from Chicago to Los Angeles to Hawaii (celebrated our 25th anniversary on the beach there), and then went on to Japan, Hong Kong, Taiwan, back to Hong Kong, India, Tehran, Israel, Turkey, Germany, England, and back to Chicago. Forty days! It was a wonderful trip, the best we ever had.

Final Thoughts

M: There has been extensive coverage in the media about the loss of American jobs—workers laid off in America and the jobs sent overseas to countries with lower wages. Some people advocate reform in our educational system—particularly primary and secondary education—and shifting focus from technical subjects to language skills in order to prepare America for this shift to globalization. You were a beneficiary of the GI Bill and have taught foreign students to try and improve their economies. Do you agree the American educational system needs to be overhauled, and is a focus on language the right emphasis?

Z: The issues of educational reform and globalization are indeed very important. With respect to education, you mentioned how successful the GI bill was after WWII. One important reason that it was successful was that it gave individuals the freedom to finance their educations at institutions of their own choice. No one told GIs which university or college to attend or what educational specialty to pick. The choices were left for individuals to make with guidance from parents, advisors, etc. Also, universities and colleges had to compete strenuously to attract students to their programs. And since the enrollees were spending their own GI funds, they appeared to be highly motivated to make good educational investments and work hard to make them successful. In my opinion, this GI bill experience is a good guide for future educational policymaking at all levels.

Getting more competition in our educational system, broader choices for students, better management policies, and competitive educational pricing systems would do much to improve our educational system.

Technical Contributions

3SLS – Three Stage Least Squares estimation of structural coefficients (joint with H. Theil)
BA – Bayesian Analysis (text, review articles, speeches)
BIP – Bayesian Information Processing (information theoretic derivations of Bayes’ theorem and other learning models that are 100% efficient)
BLF – Balanced Loss Functions
BMOM – Bayesian Method of Moments to do inverse inference without a prior and a likelihood function
BPA – Bayesian Portfolio Analysis (joint with V. K. Chetty)
DRM – Dynamic Resource Model (joint with J. A. Crutchfield)
g-priors – Great priors for multivariate analyses
GPF – Generalized Production Function (joint with N. Revamkar)
MDIP – Maximal Data Information Priors
MELO – Minimum Expected Loss estimation of structural coefficients and functions of parameters (e.g., reciprocals and ratios)
MMM – Marshallian Macroeconomic Model (disaggregated model of national economy)
SEMTSA – Structural Econometric Modeling, a time series approach for building and checking dynamic statistical and econometric models (joint with F. C. Palm)
SUR – Seemingly Unrelated Regression model and inference techniques

Honorary Degrees

1986: Universidad Autonoma de Madrid, Spain
1991: Universidade Técnia de Lisboa, Lisbon, Portugal
1998: University of Kiel, Kiel, Germany

Professional Memberships

Econometric Society (Fellow and former member of council)
American Economic Association (Distinguished Fellow, 2002)
American Statistical Association (Fellow, president, Section chair, Board member)
International Society for Bayesian Analysis (founder and acting president, 1993; president, 1994–1995)
International Institute of Forecasters (Honorary Fellow, 2002)
American Association for the Advancement of Science (Fellow)
International Statistical Institute
American Academy of Arts and Sciences (Fellow)
Institute of Mathematical Statistics

Awards and Honors

1959: National Science Foundation Fellowship to do research at the Cowles Foundation for Research in Economics, Yale University

1960–1961: Visiting Fulbright Professor, Netherlands School of Economics and Econometric Institute, Rotterdam, on leave from University of Wisconsin

1964–2001: Continuing NSF grants for research on econometric and statistical methods and applications

1980–1981: Visiting Fellowship, NBER and Hoover Institution, Stanford University

1981–1982: John R. Commons Award; named “Outstanding Statistician of the Year” by ASA Chicago Chapter

1982–1983: U.S. Bureau of Census Certificate of Appreciation for chairing and service to AEA Census Advisory Committee

1983: McKinsey Award for Excellence in Teaching

1984: Distinguished Service Professor, University of Chicago

1986: ASA Award for founding and editing the Journal of Business and Economic Statistics

1993: Establishment of the Zellner Thesis Award in Business and Economic Statistics by the Business and Economics Statistics Section of the American Statistical Association

1994: Erskine Fellowship to visit Departments of Economics and Statistics, University of Canterbury, Christchurch, New Zealand

1996: D.A. Berry, K.M. Chaloner, and J.K. Geweke (eds.) Bayesian Analysis in Statistics and Econometrics: Essays in Honor of Arnold Zellner, John Wiley & Co.

1998: Founders Award, International Society for Bayesian Analysis; CDC Investment Management Corporation Research Award to University of Chicago, Graduate School of Business, in Honor of Arnold Zellner; Honorary Guest of South African Statistical Association on visit to South Africa to present lectures

1999: Sanford Grossman Graduate School of Business PhD Fellowship Award in Honor of Arnold Zellner

2001: Establishment of Journal of Econometrics Arnold Zellner Award for Outstanding Paper in Theoretical Econometrics; Designated first Sir Richard Stone Lecturer by the National Institute for Economic and Social Research and the Bank of England; Established Professor B. Peter Pashigian Lecture Fund and Lecture Series

2003: A Conference in Honor of Arnold Zellner: Recent Developments in the Theory, Method, and Applications of Information and Entropy Econometrics, American University, Washington, DC