Biography of Trygve Haavelmo

The field of econometrics is concerned with estimating economic relations and testing whether postulated relations conform fully with reality. In an article in Econometrica in 1943 and in his doctoral thesis entitled, The Probability Approach in Econometrics (1944), Haavelmo showed that the results of many of the methods used thus far had been misleading. Earlier methods did not sufficiently account for the fact that real economic development is determined by interaction of a multitude of economic relations and that economic laws are not strictly rigorous.