Modigliani, Franco (1918-2003), an Italian-born American economist, pioneered theories on personal savings and financial markets. Modigliani developed his work on individual saving and financial markets in the 1940’s and 1950’s. His theory of personal savings is called the life-cycle theory. It states that the reason individuals save is to protect themselves in old age, rather than to pass their wealth on to their children. This idea has proved useful for predicting the effects of pension plans and taxes. He took an active part in public debates on economic policy in both Italy and the United States. Modigliani was awarded the Nobel Prize for economic sciences in 1985.
Born in Rome on June 18, 1918, Modigliani obtained a degree from the University of Rome. He moved to the United States in 1939 and became a U.S. citizen in 1946. He received a doctorate in economics from the New School for Social Research in New York City in 1944. Modigliani taught at several universities including the Carnegie Institute of Technology (now the Carnegie Mellon University). From 1962 to 1988, Modigliani was a professor of economics at the Massachusetts Institute of Technology (MIT). In 1988, he became an emeritus professor—that is, he retired from full-time teaching but remained associated with MIT. In the late 1960’s, he designed a large-scale model of the U.S. economy that is still used today by the Federal Reserve Bank to assess the expected effects of economic policies. Modigliani died on Sept. 25, 2003.
See Economics ; Investment ; Money (Money and the economy) .
