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“A fascinating, exciting story.”

– Sylvia Nasar, author of A Beautiful Mind

“Before he became an economist, Leo Hurwicz led a dramatic life worthy of a Hollywood movie. Michael Hurwicz tells this story with verve, and also succeeds in explaining to a lay readership the deep contributions his father made to economic science. Terrific reading.”

– Eric Maskin, Nobel laureate in Economics, Harvard University

“Kudos to Michael Hurwicz, who has written a paean to his late father, Leo Hurwicz, an extraordinary economist, teacher, polymath, and polyglot, whose genial personality and sense of humor endeared him to many in the profession. Especially for those of us who primarily knew Leo in an academic context, this book provides the background story of his life and times. It is meticulously researched and well-written.”

– Samiran Banerjee, Teaching Professor of Economics at Emory University

“Michael Hurwicz gives us a unique attempt to clarify, for all those who knew Leo Hurwicz, the complex history of his family. Many of us who knew Leo had only a fragmentary understanding of this story. Michael tells it with loving care. He then proceeds to interweave ideas from Leo’s work and to show, with tenderness, aspects of Leo as a father. A remarkable achievement.”

– Thomas Marschak, University of California, Berkeley, CA

While still in his early 20s, and under Hitler’s shadow, Leonid “Leo” Hurwicz (1917-2008) left his home in Warsaw, Poland, seeking safety and a degree at the London School of Economics. The following years, while challenging and potentially life-threatening, contained the seeds of a lifelong intellectual adventure. Leo’s story is personal (born a refugee, precarious war years for himself and his Polish-Jewish family, a new life in America), global (revolutions, wars, depressions), ideological (socialism, capitalism, economic planning, free markets), and professional (a sixty-year career as a professor of economics leading ultimately to a Nobel Prize). This book tells that story.

Leonid “Leo” Hurwicz was born on August 21, 1917, in Moscow, Russia. Leo’s father “Adek” and mother “Zina” (Sophie) had fled Warsaw to escape the instability and danger that World War I brought to Poland.

A family story has it that, while in Moscow, Adek’s father Max pronounced Leo a “chochem” (Hebrew or Yiddish for “a wise one”). Since Adek, Zina and Leo returned to Warsaw early in 1919 (probably February), Leo would have been less than a year and a half old when this statement was made.[1]

Max was right: Leo would go on to give the world novel concepts and frameworks still used today in fields from economics to social science to political science and even data networking (for problems like interdomain routing on the internet). These frameworks include incentive compatibility and mechanism design. In 2007, he received the Nobel Memorial Prize in Economic Sciences (along with Eric Maskin, and Roger Myerson) “for having laid the foundations of mechanism design theory“. (He was at the time the oldest person ever to receive a Nobel Prize in any category.) He was also among the first to recognize the value of game theory in economics, and pioneered its application in that field. One of his earlier contributions, presented in an article 1951, was the Hurwicz Criterion, which offers a formula for balancing optimism and pessimism when making decisions under uncertainty.

The picture below shows Leo with his parents. The fact that Leo’s brother Henry is not in the picture suggests that the photo was taken before 1922, when Henry was born. If so, Leo might have been four or five years old.

Education: Childhood to University in Warsaw (1917-1938)

Leo was tutored by his mother at home until he was nine (not an unusual practice at that time). After that he attended a Jewish school, conducted in Polish, possibly the same type of chinuch (חינוך) where Leo’s father, Adek, had taught history 10-15 years earlier.

Adek was a lawyer in Warsaw and encouraged his son to follow in his footsteps. Leo enrolled in the Faculty of Law at Warsaw University in October, 1934, and received his degree in June of 1938. (His student ID is shown elsewhere on this page.)

At the same time, he attended the Warsaw Conservatory as a piano student. (“I was running like mad,” he has been quoted as saying.) Music was an avocation that he continued to pursue throughout his life.

In order to get his law degree, Leo had to take some economics courses. The Great Depression, which had begun when Leo was just 12 years old, was still in full swing. So economics was, perhaps more than usual, at the forefront of current events.

“I had the belief that many troubles you could observe on the European continent were due to politicians not understanding economic phenomena,” Leo has been quoted as saying. “Even if they had good intentions, they didn’t have the skills to solve problems.”

One of the topics being passionately debated was the relative merits of free competition versus a centrally planned economy. Some observers, like Oskar Lange (and later Abba Lerner) believed that central planning, combined with elements of market pricing, was the solution. “Indeed, they suggested,” Eric Maskin noted in his Nobel lecture, “planning could correct serious ‘market failures’ – notably those on display in the Great Depression …”

Other economists, such as Ludwig von Mises (and later Friedrich Hayek), maintained that free markets were inherently superior to planned economies.

In February, 1936, John Maynard Keynes published “The General Theory of Employment, Interest and Money“, identifying “lower aggregate expenditures in the economy” as the key cause of declines in income and employment during the depression. [2]

Also debated was the potential for the gold standard to further contract the money supply: If citizens, fearing currency devaluation, redeemed gold certificates for gold bullion, the resulting reduction in a government’s bullion reserves precluded any increase in the money supply, because the government wouldn’t have the gold to back it up.

Leo, drawn to these questions, decided to go into economics rather than law.

Studies in Western Europe (1938-1940)

At least in part because of rising antisemitism in Poland (something that Leo had experienced at Warsaw University), Leo’s father encouraged him to apply to the London School of Economics as a PhD candidate.

Interestingly, Henry, in his Shoah Foundation testimony, explains that anti-semitism also played a role in allowing my father to leave Poland. Normally, a young man of his age could be drafted into the Polish infantry. However, high school graduates could not be drafted into the infantry but had to go to officer’s school. But instead (apparently because they didn’t like the idea of Jewish officers) they always counted Jews as supernumeraries. Thus, my father was excused from serving in the Polish Army.

He was accepted. His proposed thesis topic was “The Currency Devaluation with Special Reference to the Experience of the Gold Bloc Countries.” That thesis was never completed, however, as Leo was to remain in England for only one academic year. (Although, going to school at night as well as during the day, he completed two years’ work in that time. [3])

At the London School of Economics, he studied with with Nicholas Kaldor, a Keynesian who “had actually invented a fully coherent and highly realistic account of the business cycle in 1940” and reduced his understanding to mathematical equations. Kaldor was a Hungarian immigrant with a thick accent. Leo, whose English was “rudimentary” and also heavily accented, apparently found it easier to understand Kaldor than other professors, and so took all his classes. [4]

Another of his professors was Dennis Robertson, a former collaborator with Keynes who had just taken up a professorship at the LSE in 1938. [5]

Leo also studied with Friedrich Hayek, who years later (in 1974) was to share the Nobel Memorial Prize in Economic Sciences with Gunnar Myrdal for his “pioneering work in the theory of money and economic fluctuations and … penetrating analysis of the interdependence of economic, social and institutional phenomena.” [6]

“The ideas of Hayek (whose classes at the London School of Economics I attended during the academic year 1938-39) have played a major role in influencing my thinking and have been so acknowledged,” Leo wrote  in “Economic Planning and the Knowledge Problem” : A Comment” in Cato Journal Vol. 4, (Fall 1984), p. 419.

As Leo recounts, “I started out in the fall quarter of 1938 at the London School of Economics, and the war broke out a year later, roughly. When the academic year 1938-’39 was ending (so, roughly speaking, May or June) I asked the British to extend my visa, which was only for one academic year. But they said they couldn’t do it, because my passport was only valid up to the end [of the academic year]. They said I had to extend the passport, and then they could extend the visa. Well, the Poles were making difficulties with extending the passport. So I tried to get the British to permit me to stay a little longer. But they said that was not their custom. By that time I knew enough about the British, [to know that] when they say it’s not their custom, if you stand on your head, they won’t do it.

“What I did is, I pretended essentially to be trying to go back to Poland without actually going there.”

Henry describes how this pretending caused them some worry: “So here we are, Germany is attacking us, and we sort of shake our hands – that at least one of ours is out of here. And then what do we get? A telegram from my brother, something to the effect, ‘I’m coming home.’ Actually, I talked to my brother and I always forget, I actually have to do – he had to show to the Polish authorities in Switzerland that he tried to get back home. Because he was also you know, 22 years old, so he really should be in the army, too.”

Continuing Leo’s narrative: “So, I got transit visas through several countries, one of which was Switzerland. The first thing I did was to go to Paris. And I stayed in Paris for a couple of weeks, maybe a month, of the year 1939.

“And one day in August, close to my birthday, there was the big news, the Ribbentrop-Molotov pact, the agreement between Stalin and Hitler to divide up Poland. I was at that point in Paris. I took the first train to Bern. That was very good, because otherwise I would have been caught in France under the Nazis. I really, as usual, paid attention to the headlines. When I traveled from Paris to Bern, I remember the blue lights inside the train: They didn’t have any real light you could read in, because there was conviction that the war would break out without much delay.

“The first few days of the World War II, I was in Bern, which is the capital of Switzerland. And on the second or third day, but I think the second day of the war, the second of September, 1939, I got a telegram from my father. It said something like ‘We are OK.’ (Actually it was a lie, because there was bombing all over Warsaw, the Nazis were attacking.) But then what it gave was the address of the Kotzins in Chicago: 3605 Dickens Avenue.

“A few days later, I moved to Geneva from Bern. The reason that I didn’t stay in Bern was that the Swiss there have a Swiss-German dialect. Actually, many dialects. I thought, ‘I don’t want to start learning a Swiss dialect.’ The Swiss insisted on Swiss dialect to show that they were anti-Nazi. They weren’t using so-called ‘High German.’ Geneva speaks classical French.” [7]

In Geneva, he enrolled at the Graduate Institute of International Studies.

“I spent the academic year ’39-’40 in Bern [sic, but clearly means Geneva], until I got the U.S. visa to emigrate. The U.S. Consulate in Switzerland, which was in Zurich in Switzerland, said they must have certificates of good conduct from each of the countries I had occupied in the previous five years, which was Poland (which was occupied by the Nazis) and England and France. When I wrote the French, the French didn’t have any problem, the certificate was routine. The British said they were not in the custom of issuing certificates of good conduct. And the U.S. Consulate in Zurich insisted on that.”

Now, as Leo was well aware, the Swiss wanted to reduce the foreign population in their country. In fact, the authorities had refused to extend his permis de séjour (residence permit) in December due to surpopulation étrangère (excess foreign population). He had appealed to the Director of the Institute for help (see his letter elsewhere on this page), apparently successfuly, since he managed to remain until June.

A minor aside: Assuming Leo composed this letter himself, his English now seems to be excellent. One hint that he may have indeed composed it on his own is the strikeover near the end of the fourth line. He seems to have initially started to write “you are the only person which can help me” but amended it to “who can help me”.

In any case, he now he made use of this known desire to get rid of him:

“I went to the office of the chief of police in Geneva, and I said if I don’t get something like that from the British, I will not be able to emigrate to the U.S., and I’ll be a burden on the Swiss taxpayer.

“He said, ‘How do you expect me to do anything about it?’

“I said, and I think it was a good idea, ‘Write to the police in London, as if one policeman to another wants to know if a suspect has a bad record, asking if they have anything against me.’

“He said, ‘All right, I’ll try it.’

“And he wrote to the police in London, and they said they had nothing against me. He got it very quickly, because it was a collegial relationship between the police in Western European countries.” [It took about three weeks, from February 28 until March 18. Scotland Yard’s letter]

Once he had his visas, it would seem that Leo departed with all due haste. He did not wait to get most of the paper certificates that would provide proof of the courses he took. Instead, he asked the Graduate Institute to mail them to him in the United States. They were indeed sent on June 20, care of an American he had no doubt met in Geneva, Miss Eleanor K. Taft in Cinccinnati, Ohio.

Leo flew from Switzerland to Barcelona, and then went by train, first to Madrid, then to Lisbon, Portugal. The scariest part of this journey, Leo said [7], was taking off from a mountainous location in eastern Switzerland, most likely Locarno.

On a little shuttle bus after landing in Barcelona, he was chatting with a Portuguese businessman who was sitting next to him. Leo looked out the window and saw planes with swastikas. He commented that he didn’t know that there were Nazi planes in Barcelona. The businessman replied very emphatically, “Here, we don’t notice these things.” (Spain at that time was “a nationalist dictatorship, led by Francisco Franco.“)

Continuing Leo’s narrative: “At some point the Kotzins sent me some money, after I lost my wallet in this post office. And I bought passage on an Italian boat. I already had the visa. This was early June. And just at that time, Italy joined Germany as partner in the war. [8] So, of course, they couldn’t operate ships between Europe and the United States. So I was stuck again without money. I couldn’t ask Kotzins for money a second time.

“So I essentially used a similar technique. I was in Lisbon already by that time. I got that far. First I went to the Italian shipping lines and I asked for my money back. They just laughed at me. They said, ‘Yes, you are an enemy, and come back after the war.’ That was not a good solution. Then I went to the harbor police, and essentially I used a variant of my trick in Geneva. I explained to them, that if I cannot go to America, I cannot work in Lisbon, I’ll be a public burden.

“So he said, ‘What do you expect me to do?’

“I knew that Portugal was a dictatorship. (The dictator was an economist.) And the police could do anything they wanted. So I told them, ‘Just tell them you’ll take away their license.’

“And within two days I got my money back.”

1940 – 1941: Early Days In the United States

Leo booked passage on a Greek ship, the Nea Hellas, departing from Lisbon on August 2, 1940, arriving in New York, apparently on August 11, though it had been scheduled for the 10th. (The name of the boat somehow got changed to Nea Agllas in an article that came out when Leo received the Nobel Prize. The mistake has been corrected in the original article, but some “echoes” remain online.) At that point, Greece was neutral in the war. Because of the Italian invasion of Greece on October, 28, 1940, subsequent scheduled trips of the Nea Hellas from Lisbon to the U.S. were cancelled. (Locations and voyages of the ship “Nea Hellas” in 1940)

Leo stayed in New York for a week or so, then continued to Chicago, where he slept on the couch at Helen Frydland‘s apartment. Helen was the sister of Sara Lea, wife of Max. Helen and her husband Moritz had emigrated from Poland around World War I, initially to Canada. (Moritz went to Canada initially in 1912, returning to Poland  for his family in 1920.)  Moritz died in 1927, but Helen lived until 1953. By the time Leo arrived, she had moved from Canada to the United States. Leo gave Rhoda Kotzin, Helen’s granddaughter, piano lessons. She was about seven at the time.

He also began attending classes at the University of Chicago, most importantly those of Oskar Lange, who provided a counterpoint to the anti-socialist arguments of Hayek and Mises.

(Leo’s Nobel biography says that he also audited courses at the University of Chicago with Mises. [9] I haven’t been able to confirm this. As far as I know, Mises was in New York at this time. In commenting on a paper by Israel Kirzner, Leo specifically mentions studying with Lange in Chicago and Mises in Geneva. He does not say anything about studying with Mises in Chicago.)

“Some of the early roots of the theories of mechanism design and implementation can be traced to the Barone, Mises, von Hayek, Lange and Lerner debates over the feasibility of a centralized socialist economy,” notes Matthew O. Jackson. [10]

Finally, Leo got an offer of a job at the Massachusetts Institute of Technology “from someone who is very well known: Paul Samuelson. The job was as a teaching and research assistant for only one semester [from January to June, 1941] − a term no self-respecting graduate student would accept. But I had no other offers. In fact, it was a miracle I had this one.” [9]Samuelson hired Leo on the basis of a recommendation from Oskar Lange, at the University of Chicago. Lange provided four names but recommended Leo as follows:

He has an excellent mind, and is in my opinion, the best of the candidates on this list. He has quite a background in mathematical statistics, and has quite extensive knowledge of analysis. Before becoming an economist he was a theoretical physicist. He also did numerical work in experimental physics. He is really one of the very best I have had among students. In addition, he needs a job very badly, because he has no income at all. [11]

It is interesting that Lange referred to Hurwicz as “an economist” though he had not received any economics degree. (In fact, somewhat astonishingly, Leo never did receive any degree other than the LL.M. from the University of Warsaw in 1938, and a number of honorary degrees received in 1980 and thereafter.[12]) Lange also apparently had the impression that Leo had been a theoretical physicist when in fact, as far as formal training went, he had only minored in physics while studying law. [13] (Though it has been said that he was more interested in astrophysics than law.)

Samuelson was known for his “conviction that … economics had much to learn from physics and the laws of thermodynamics.” [14] So touting Leo as a “theoretical physicist” was probably a good move from a marketing perspective.

Apparently, there is some disagreement about exactly what Leo did during this short tenure at MIT. His Nobel biography says that he “tested a hypothesis about how businesses arrive at prices for their goods and services.” That was Leo’s memory, according to Samuelson biographer Roger Backhouse, but “Samuelson remembered Hurwicz as having worked explicitly on the business cycle: ‘We did early spectral analysis of Frickey’s aggregate U.S. output for the time slot 1865 – 1935.’ Samuelson wrote.” [15] Backhouse also wrote about what now seems a somewhat humorous incident, though at the time it seemed it could threaten both Leo’s and Samuelson’s futures! It involved a modification to the grading system, apparently at Leo’s suggestion, in which a difficult question was added to the exam, which could only raise, but never lower a student’s grade. However, students apparently were competitive with one another to such an extent that any student’s raised grade effectively lowered everyone else’s (at least in their estimation). The new system was very unpopular, as were those who were held responsible for it (Leo and Samuelson).

Leo returned to Chicago in mid-June, 1941, with improved prospects now that he had worked for Samuelson.

1941 – 1961: The Cowles Commission

In July, 1941, Leo was hired as a research associate at the Cowles Commission. He continued in this position until June, 1946. [16] He continued serving as a consultant to the Commission until 1961.

The Cowles Commission was instrumental in pioneering an analytical, mathematical approach to economics.

It was also around this time, probably in August or September, 1941, that Leo got a postcard from Henry and Zina in Kutaisi, Georgia, and a telegram from Adek in Fergana, Uzbekistan, and was able to help them reunite in Georgia.

1942 – 1950: Early Teaching Career

From 1942 to 1944, at the University of Chicago’s Institute of Meteorology (or, after 1943, the Department of Meteorology), Leo contributed to the war effort by teaching prospective Army and Navy inductees the statistics, mathematics and physics needed to analyze weather data generated by the newly-invented radar.

Sight unseen, he hired economics undergraduate Evelyn Jensen as an assistant for the meteorology course. They fell in love and were married on July 19, 1944, in a traditional Jewish ceremony.

They had four children: Sarah (1946), Michael (1949), Ruth (1951) and Maxim (1953). The picture below shows the family, probably in around 1952, judging from the fact that Maxim is not in the picture yet.

Above: Leo and Evelyn, 2007 (Nobel Prize week!)

(Click for larger version.)

Photo by Craig Lassig, used by permission