Franco Modigliani
Massachusetts Institute of Technology
June 16, 1918 - September 25, 2003
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Scientific Discipline: Economic Sciences Membership Type:
Member
(elected 1973)
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Franco Modigliani was truly a significant figure in contemporary economics. Though he conducted research on a wide range of topics, he is certainly best known for his expansion on Keynes’s General Theory referred to as Modigliani’s life-cycle hypothesis, and his collaboration with Merton Miller, which led to the development of the Modigliani-Miller Theorem. He was awarded the Nobel Memorial Prize in Economics for these two works in 1985. The life-cycle hypothesis concluded that individuals aim to consume a consistent amount throughout their lives, and thus endure periods of borrowing, saving, and spending, consistent with their age and financial status. The Modigliani-Miller Theorem contends that the corporate leverage or value of a firm is essentially unrelated to the method by which it is financed.
Modigliani earned his doctor of jurisprudence degree from the University of Rome in 1939. As Italy’s fascist regime placed restrictions on Jews, Modigliani, who had Jewish ancestry, relocated from Italy to New York in 1939. There he earned his doctorate in social science from the New School for Social Research in 1944. He began his career in academia by teaching at the New School and Bard College briefly before assuming a position at the Massachusetts Institute of Technology (MIT) in 1960; he remained at MIT until retiring to emeritus status nearly thirty years later. Modigliani gained a number of honors for his many accomplishments, including the Nobel Prize, membership to the National Academy of Sciences, and membership and presidency of the American Economic Association, the Economic Society, and the International Economic Association.
