British economist Richard Stone received the Nobel Prize in 1984 “for having made fundamental contributions to the development of systems of national accounts and hence greatly improved the basis for empirical economic analysis.” Stone started his work during World War II while in the British government’s War Cabinet Secretariat. Stone and his 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. Stone’s distinctive contribution was to integrate national income into a double-entry bookkeeping format. Every income item on one side of the balance sheet had to be matched by an expenditure item on the other side, thus ensuring 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 1930s. 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.

About the Author

David R. Henderson is the editor of The Concise Encyclopedia of Economics. He is also an emeritus professor of economics with the Naval Postgraduate School and a research fellow with the Hoover Institution at Stanford University. He earned his Ph.D. in economics at UCLA.

Selected Works

1942 (with David G. Champernowne and James E. Meade). “The Precision of National Accounts Estimates.” Review of Economic Studies 9: 111–125.
1954 (with D. A. Rowe et al.). The Measurement of Consumers’ Expenditure and Behaviour in the United Kingdom, 1920–1938. Vol. 1. Cambridge: Cambridge University Press.
1956. Quantity and Price Indexes in National Accounts. Paris: OECD.
1984. “Balancing the National Accounts: The Adjustment of Initial Estimates.” In A. Ingham and A. M. Ulph, eds., Demand, Equilibrium and Trade. London: Macmillan.