Yoram Ben-Porath: The Economist, the Friend

by Reuben Gronau
Yoram Ben-Porath: The Economist, the Friend
Reuben Gronau
Journal of Labor Economics
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Yoram Ben-Porath: The Economist, the Friend

On October 18, 1992, Yoram Ben-Porath was killed in a terrible car accident. His wife, Yael, and his youngest son, Yaheli, died with him. With his death, the economics of human resources lost one of its senior researchers, and many in the field (and outside of it) lost a wonderful friend.

Several of Yoram's friends, colleagues, and students gathered one year later at a conference to commemorate his contribution to the field. This special issue of the Journal of Labor Economics contains the papers pre- sented at that conference. They deal with a wide range of topics, all of which intrigued Yoram in his research: investment in human capital, the economics of the family, the supply of labor, economic growth, and the business cycle. Many of the studies build on the foundations laid in Yoram's earlier work.

Yoram's 1967 Journal of Political Economy paper, "The Production of Human Capital and the Life Cycle of Earnings," is, by now, a classic. Its importance to the economics of human resources is discussed exten- sively in Jacob Mincer's and Zvi Griliches's papers in this issue. The elegance and insights of this early work sometimes overshadowed Yor- am's later contributions.

Yoram Ben-Porath was born in Tel Aviv in 1937. Entering the Hebrew University in 1957, he chose economics and Middle Eastern studies as his undergraduate fields of specialization. He combined these studies in his 1966 master's thesis on the Arab labor force in Israel, which was the first thorough economic study of the Arab sector in Israel.

Though his choice of economics was accidental (we hardly knew what economics was all about, and we did not have any calculation of the rate of return to guide us), Yoram immediately felt at home in his new field. The wide-ranging problems, the complexity of the interacting economic and social forces, and the sophistication of the analytic tools fascinated him. From Don Patinkin, the founder of modern economic teaching in Israel, he inherited the sense that economics is not merely a profession but a social mission. Serving as research assistant to the late Yehuda

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Gruefeld, he learned the importance of dialogue between theory and empirical research.

His study of the Arab sector led him to pursue his doctoral studies at Harvard. While there, he studied economic development with Simon Kuznets. It is typical of Yoram's independent mind that in a period replete with a new stream of glittering new growth models, Yoram preferred the old style of development economics-asking the "big" questions and trying to trace the answers in a maze of statistical data. His study of economic development brought him to the newly developing field of labor economics. It was typical that Yoram raised at Harvard the Chicago flag of the economics of human resources. Kuznets himself, though appre- ciative of the new discipline, was far from enthusiastic when Yoram bor- rowed the (newly rediscovered) Pontryagin optimal control analysis to analyze the investment of human capital over the life cycle.

His work on investment in human capital led to his work on fertility. Like many others, he went in search of the missing positive income effect on the number of children. At the first Economics of the Family Conference (1974), Yoram presented his paper on fertility patterns in Israel. He borrowed both from Gary Becker's theory of fertility and from Jacob Mincer's and Becker's theory of the allocation of time and tried to separate the income from the price effect while at the same time following Robert Willis by speculating on the interaction between quantity and quality. He did not regard the theory as complete. What intrigued him was "the ongoing dialogue between theory and facts where at each stage one of the two raises questions, poses challenges, and pro- vides guidance for the development of the others."

His work on fertility and the interaction between fertility and women's labor supply (Yoram called a later paper "Jewish Mother Goes to Work," [1985]) led him to risk the "big" questions-What determines the eco- nomic functions and social roles of families, compared with market firms and governments? How is this role transformed in the process of eco- nomic growth and what is the nature of the complex demographic eco- nomic interactions? Yoram tried to trace the factors affecting the change in the division of labor among families, markets, and government. To him, the theory was incomplete unless it explained also the rise and fall of institutions.

The drive for a richer theory led to his essay, "The F-connection: Families, Friends, and Firms and the Organization of Exchange." He tried (in his own words) to develop:

A story of the shifting border between the family and the market round the notion that, in a world of imperfect information and high transaction costs, transactions between mutually identified partners who expect to be connected for a long time are cheaper in terms of transaction costs, or they may be more efficient because the behavior

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of the partners is based on self-enforcement of implicit contracts.

This contrasts with our conventional view of exchange in efficient

markets with anonymous buyers and sellers. There is a trade-off

between the transactional advantage of trade within a small group

which can be described as specialization by identity, and the alloca-

tive advantage of full specialization in the conventional sense, with

its reliance on market trade. The traditional family is the epitome of

specialization by identity, based on our use of productive services

and mutual insurance and support.

Yoram tried to trace the changes in the role of the family in these different spheres to changes in this trade-off.

In 1979 Yoram became director of the Maurice Falk Institute for Eco- nomic Research in Israel. His models were Patinkin, who 20 years earlier provided the first comprehensive survey of Israel's first decade, and Kuz- nets, who served for years as the chairman of the Falk Institute's Board of Trustees, providing direction, encouragement, and criticism. Israel, at the time, was in the midst of an inflationary spiral, as the fast growth which characterized its first 25 years of existence had vanished. Yoram enlisted the help of 15 of the leading economists of the country to tell the drama of Israel's third decade.

By the time the book was published in 1986, the three-digit inflation had been halted. Some of the participants in the book devised the stabiliza- tion program. Yoram belonged to that select group. Yoram called this book The Israeli Economy: Maturing thvough Cvises.

In the opening paper of this volume, Yoram again tackled the question that had puzzled him throughout his career-the interaction between population and output growth. In a land that owes much of its population growth to immigration, is it output growth that encourages immigration (and discourages emigration) or is population growth the engine of out- put growth? The lesson that Yoram learned in the mid-1980s about the importance of demographic factors to growth is by now an integral part of the new growth theory. Israel relearned the importance of immigration during the past 5 years of exceptional growth. Since Yoram's paper on the subject is not widely known outside of Israel, it was chosen to open this issue.

In 1986 Yoram was called to help a foundering Hebrew University that was itself in a deep financial crisis. As deputy provost, and later provost, he helped stabilize the university's financial situation. In 1990 he was elected the university's president. His striving for the university's excellence was tragically cut off by the car crash.

In his last paper, "Simon Kuznets in Person and in Writing," Yoram paid a debt to his friend, teacher, and mentor-Kuznets. Yoram was very explicit about the bonds that drew him to Kuznets-"It is rare that our association with a person becomes a lifelong asset and that we bear this person's image with us as part of ourselves."

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Rereading this paper one cannot escape the feeling that he described the way in which so many of his friends will remember him.

This is where we see a singular combination-the synthesis-of broad grasp with precision, gestalt with detail, imagination with cir- cumspection. . . . His greatness as a scientist was in the combina- tion of a broad scope of vision, a cool and keen intellect, and respect for facts. Most amazing to me was his ability to grasp an economy in its entirety, as a living, breathing entity. One might have hoped that theorists would be more concerned to draw the motivation for their work and the questions they ask from direct observation and would sort out their "stylized facts" with greater discrimination. As for empirical research, one might ask, as Kuznets did, for projects on a more comprehensive scale, aiming at a longer-lasting contribu- tions and relating to a broad spectrum of issues..One might wish, as Kuznets did, that econometricians would approach their material with more respect for reality and a less voracious appetite for testing hypotheses derived from a narrow spectrum of conceptual possibili- ties and with greater willingness to examine explanations less dog- matically in view of the empirical findings. One might wish that Kuznets's skepticism was more widespread among economists at large.

Yoram ends the papers with the third F-the friend, "He was a scholar, a teacher, and he was our friend. A man with a wise heart."

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