On the Reception of Haavelmo’s Econometric Thought

Abstract

The significance of Haavelmo’s “The Probability Approach in Econometrics” (1944), the foundational document of modern econometrics, has been interpreted in widely different ways. Some regard it as a blueprint for a provocative (but ultimately unsuccessful) program dominated by the need for a priori theoretical identification of econometric models. Others focus more on statistical adequacy than on theoretical identification. They see its deepest insights as unduly neglected. The present article uses bibliometric techniques and a close reading of econometrics articles and textbooks to trace the way in which the economics profession received, interpreted, and transmitted Haavelmo’s ideas. A key irony is that the first group calls for a reform of econometric thinking that goes several steps beyond Haavelmo’s initial vision; the second group argues that essentially what the first group advocates was already in Haavelmo’s “Probability Approach” from the beginning.