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Maurice Allais, Nobel recipient warned of global economic crises; at 99

MAURICE ALLAIS MAURICE ALLAIS (AP/1998)
By Jamey Keaten
Associated Press / October 12, 2010

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PARIS — Maurice Allais, a Nobel laureate in economics and an early critic of shortcomings in the worldwide financial system that led to the latest crisis, died Saturday at his home in Saint-Cloud, near Paris. He was 99.

The office of President Nicolas Sarkozy hailed Dr. Allais’s writings on theories of well-being, market shortcomings, growth models, and decision-making in an uncertain environment known as the “Allais paradox.’’

Dr. Allais received the Nobel in economics in 1988, and the Royal Swedish Academy of Sciences cited him for “pioneering contributions to the theory of markets and efficient utilization of resources.’’

The son of Paris cheese makers, he was a prolific economic theorist with ideas about balancing supply and demand that helped rebuild France’s postwar economy. He also wrote books about history and physics.

Trained as an engineer, Dr. Allais turned to economics after seeing the poverty in the United States on a visit during the Great Depression.

His mathematical theories formed the basis for sorting out thousands of independent factors involved in marketing goods and services: How much should a train ticket cost, for example, or what is the right price for a kilowatt-hour of electricity?

He was said to believe the government’s role was to ensure fair competition. After he received his Nobel, Dr. Allais sought to defy labels: “I am not a monetarist and I am not a Keynesian. On certain points I agree with each.’’

Paul Samuelson, a Nobel laureate in economics from the Massachusetts Institute of Technology, was quoted as saying that a generation of theory would have taken a different course if Dr. Allais’s earliest writings had been in English.

In his autobiographical excerpts on the Nobel website, Dr. Allais said he would have become a physicist if the French National Center for Scientific Research had existed in 1938. In 1959, he experimented with a pendulum he had invented, conducting some 220,000 tests to demonstrate that the earth’s gravity is neither constant nor always oriented in the same direction.

A year after a financial crisis erupted in 1998, he wrote “The World Crisis Today’’ — a broadscale appeal for reform to global financial and monetary systems.