Franco modigliani biography

1. Biography of Franco Modigliani
2. Early Life and Education
3. Academic Career
4. Contributions and Later Years

Biography of Franco Modigliani

Franco Modigliani, an American economist, was a professor at the MIT Sloan School of Management and the MIT Department of Economics. He earned the Nobel Prize in Economics in 1985 for his analysis of financial markets and people's behavior towards savings.

Early Life and Education

Franco Modigliani was born on June 18, 1918, in Rome, Italy. He left Italy in 1939 due to his Jewish heritage and anti-fascist views. Initially, he moved to Paris with his then-girlfriend Serena, who later became his wife in 1939. Modigliani then settled in the United States.

Academic Career

From 1942 to 1944, Modigliani taught economics and statistics at Columbia University and Bard College. In 1944, he obtained a doctorate in social science from the New School for Social Research under the supervision of Jacob Marschak. In 1946, Modigliani became a naturalized citizen of the United States and in 1948, he joined the University of Illinois, Urbana-Champaign.

During the 1950s and early 1960s, Modigliani was a professor at the Graduate School of Industrial Administration, Carnegie Mellon University, where he made significant contributions to the field of economics. Alongside Merton Miller, he formulated the important Modigliani-Miller theorem in corporate finance in 1958. This theorem showed that under certain assumptions, the value of a firm is independent of its capital structure (issuing stocks) or debt (raising borrowed money).

Modigliani also pioneered the life-cycle hypothesis, which seeks to explain the patterns of personal savings and accumulation. He proposed that individuals are driven by the desire to maintain their "standard of living," and savings systematically increase from an initial and relatively low level to the maximum possible, and then decrease again upon retirement.

In 1962, Modigliani began working at the Massachusetts Institute of Technology (MIT), where he eventually became a professor. He remained at MIT until his death. In 1985, Modigliani received the James R. Killian Faculty Achievement Award from MIT.

Contributions and Later Years

Modigliani co-authored textbooks, such as "Foundations of Financial Markets and Institutions" and "Capital Markets: Institutions and Instruments," with Frank J. Fabozzi from the Yale School of Management. In the 1990s, he collaborated with Francis Vitagliano to work on creating a new credit card.

Modigliani also played a role in opposing changes in patent legislation that would have been detrimental to inventors. He co-authored the work "Rethinking Pension Reform" in 2004, where he criticized social security reforms proposed by the World Bank in the 1990s and President Bush in the early 2000s, offering a better alternative for worldwide social security system reform.

For many years, Modigliani lived in Belmont, Massachusetts. He passed away on September 25, 2003, in Cambridge, Massachusetts.