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Maurice Allais, who won Nobel in economics, dies at 99

October 11, 2010 | 10:24 am

Allais Nobel economics winner Maurice Allais, an early critic of shortcomings in the worldwide financial system that led to the latest crisis, has died. He was 99.

Allais, the only Frenchman to win the economics prize, died of natural causes Saturday at his home in Saint-Cloud southwest of Paris, said Yvon Gattaz, a fellow member of France's Academy of Moral and Political Sciences.

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

Allais won 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."

Born May 31, 1911, the son of Paris cheese makers, Allais was a prolific economic theorist with ideas about balancing supply and demand that helped rebuild France's postwar economy. He also wrote about history and physics among the dozens of books he authored.

Trained as an engineer, Allais turned to economics after seeing the poverty and unemployment in the United States on a visit during the Great Depression of the 1930s.

His complex 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?

Allais was said to believe the government's role was to ensure fair competition.

U.S. Nobel economic laureate Paul Samuelson was once quoted as saying that a generation of economic theory would have taken a different course if Allais' earliest writings had been in English.

In his autobiographical excerpts on the Nobel website, 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 Earth's gravity is neither constant nor always oriented in the same direction.

A year after a financial crisis erupted in 1998, Allais wrote a book whose French title translates as "The World Crisis Today" — a broad-scale appeal for reform of global financial and monetary systems.

"This book was prophetic," said Gattaz, a former head of France's leading employers' union. "He explained, 'If we don't follow my theories, if we continue this neo-liberal laissez faire — this financial speculation without severe controls — we're going to fall back onto the same phenomena of 1929 and 1998."

-- Associated Press

Photo: Maurice Allais in 1988. Credit: Associated Press