The Concise Encyclopedia of Economics

John Richard Nicholas Stone

British economist Richard Stone won the Nobel Prize in 1984 for his work in national income accounting. Stone started his work during World War II while in the British government's War Cabinet Secretariat. Stone and colleagues David Champernowne and James Meade were asked to estimate funds and resources available for the war effort. They did so, and their work was an important step toward full-blown national income accounts. Stone was by no means the first economist to produce national income accounts. Simon Kuznets, for example, had already done so for the United States. But Stone's distinct contribution was to integrate national income into a double-entry bookkeeping format. That way, every income item on one side of the balance sheet had to be matched by an expenditure item on the other side. The result was that Stone's method ensured consistency. Stone's double-entry method has become the universally accepted way to measure national income.

Stone also did some important early work in measuring consumer behavior. He was the first person to use consumer expenditures, incomes, and prices to estimate consumers' utility functions.

Stone studied economics at Cambridge in the thirties. After leaving the government in 1945, he became director of the newly formed department of applied economics at Cambridge. He was a professor there until he retired in 1980. Stone was knighted in 1978.

Selected Works

"Balancing the National Accounts: The Adjustment of Initial Estimates." In Demand, Equilibrium and Trade, edited by A. Ingham and A. M. Ulph. 1984.

(With D. A. Rowe et al.) The Measurement of Consumers' Expenditure and Behaviour in the United Kingdom, 1920-1938, vol. 1. 1954.

(With David G. Champernowne and James E. Meade.) "The Precision of National Accounts Estimates." Review of Economic Studies 9 (1942): 111-25.

Quantity and Price Indexes in National Accounts. 1956.

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