January 28th, 2025, Dick Nelson passed away. It is a very sad news for many of us – he was an extraordinary contributor to our discipline; an impressive teacher and he was also a great support for us in many circumstances over many decades. He was the George Blumenthal Professor Emeritus of International and Public Affairs, Business, and Law, and the director of the Program on Science, Technology and Global Development at Columbia’s The Earth Institute.
Prof. Richard R. NELSON presents himself as an “economist by training”. He was not yet sure to be still an economist … or better, he thought that to be an economist you must be trained and like sportsmen, it takes time and effort, especially time.
He has been trained, he has taught in the most prestigious American universities from Yale to Columbia, Carnegie Mellon University to name the most important ones in his career. Each institution did benefit from one of his main qualities: his incredible ability to educate (and not only to train) students and young researchers. Dick Nelson has this rare ability to mobilize attention and energy towards the most precise and relevant intellectual challenges, not only as a mentor but also and mainly through a deep and intense collaboration. And, almost independently from his contributions to the discipline through publications, his most long-lasting impact is and will be in the long term his influence on the personal intellectual trajectory of many of our colleagues. Having myself be ‘under influence’ at distance (remotely), I can hardly imagine what it might be in his immediate proximity.
Dick Nelson was not only an extra-ordinary teacher, but he was also an efficient and remarkable “adviser’. From his participation in the RAND corporation to his collaboration with OECD, we have to remember that he served on the Council of Economic Advisors of the President of the United States, a mythical place for economists, during a mythical period, the 60s.
He was head of an influential program on Science, Technology, and Global Development, at the Columbia Earth Institute, and Professor of International and Public Affairs, Business, and Law, at Columbia University.
Of course his contribution to the discipline is crucial and moreover it is a contribution which since half a century has not yet demonstrated its full impact.
The domains to which he did contribute are numerous (and this is already a trait of his) and it will be difficult to list them all. Here is a non-representative sample.
His first major contribution to economics was published in one of the major journals of the discipline; it is about the critical question of the “low level equilibrium trap in developing countries”, and it was published more than 50 years ago, in 1956. Basically, he tackled, as one of his first research areas (as a young researcher) the key question of: why are some developing countries trapped into a stable situation of underdevelopment and others not? It is the first symptom to one of his research projects ‘leitmotivs’: why do individual behaviors or social entities differ? and moreover remain different… And very soon he found part of the answer in the mere observation that human beings are imaginative, they learn and create knowledge.
This first contribution was very soon followed by another one of an even more significant importance: he is one of the forerunners of what is nowadays called “Innovation and/or Knowledge economics”. In 1959, he published a fascinating article “The simple economics of basic scientific research – a theoretical analysis”. This paper became the cornerstone of wide fields of research in economics: from economics of information to strategic management.
The central question was: “What are the social benefits derived from the activity of science?”; interesting question isn’t it?
His answers are still illuminating, emphasizing the critical role of ‘basic research’ for the long-term development of knowledge and society, insisting on the fact that ‘by no means all scientific research is directed toward practical problem-solving’. He also developed the idea that ‘the loose defining of goals at the basic end of the spectrum is a very rational adaptation to the great uncertainties involved and permits a greater expected payoff…’ (Nelson, 1959). It is the second ‘leitmotiv’ of his research: social benefits from widely publicly available knowledge.
Less known, but certainly showing the breadth of his contributions, is his research in decision theory and more precisely on the value of flexibility; a precursor of our contemporary theory of option value, a field generously developed in contemporary finance.
More generally his central interest is in long-run economic change. Much of his research is directed toward understanding technological change, how economic institutions and public policies influence the evolution of technology, and how technological change in turn induces institutional and economic change more broadly. His work is both empirical and theoretical. His most well-known contribution, along with Sidney Winter, is their pioneer work in developing a formal evolutionary theory of economic change. Their joint book An Evolutionary Theory of Economic Change is widely recognized as a landmark in this field. It is widely recognized as the book which contributed most to the revival of a rapidly developing approach in economics: the evolutionary or the neo-Schumpeterian economics.
One specific should be particularly mentioned: he was fascinated by the two-way interaction between the evolution of technology on one side, and the evolution of understanding, in many cases scientific understanding, on the other. Universities have there a major role to play. With a group of colleagues, he has been carrying out detailed research on university-industry interactions in the development of technologies, in different industries, and in different countries. He has been concerned by the development of patenting by universities. One consequence is that an important portion of new scientific knowledge that used be public domain is now proprietary. Current conventional wisdom stresses the importance of strong intellectual property rights in inducing technological innovation. But it is much less well understood that in all fields where technological innovation has been rapid and sustained, the efforts of firms to develop innovation have rested on a deep and broad body of public scientific knowledge. A considerable portion of his work aims to provide evidence of the key role played by the scientific commons in the economic growth process.
He was also a strong advocate of “appreciative theory” combined with “formal models” and “empirical explorations”, as the “history-friendly modelling” or the “national innovation system” approaches are the main archetypes.
A few words about his local influence…,
Prof. Richard Nelson has been a strong support for the development of the field of economics of innovation at the University of Strasbourg. In particular, he has contributed to the international involvement of the BETA since many years: from his support to the European doctoral program in ETIC ‘Economics of Institutional and Technological Change” to the Network of Excellence DIME on ‘Dynamics of Institutions and Markets in Europe’, both coordinated from/by Strasbourg. He essentially influenced directly or indirectly at 3 generations of researchers in Strasbourg from our regretted Ehud Zuscovitch to today’s PhD students. He got the title of “Doctor Honoris Causae” of the University of Strasbourg, almost 20 years ago, in June 2006.
His great achievements in research, and his demanding but also kind attention to younger researchers was his most remarkable trait, making any meeting with him unforgettable, providing for long lasting impacts of his thought on future generations.
Patrick LLERENA (February 2d, 2025, Strasbourg)
Tributes to Dick Nelson
We’d like to share with you some of the tributes we’ll be receiving.
