Margaret Gilpin Reid

Honored by:The Economics Department
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Margaret G. Reid was an economic scholar whose solid empirical analysis and insight into the economics of household and consumer behavior produced the foundation of many important theoretical advances in economics. Her pioneering work on the economics of household production and use of time the concept and measurement of permanent income and the statistical analysis of demand for housing were major contributions to the development of economic science and survey work. She was named a Distinguished Fellow of the American Economics Association in 1980. Her death in late 1991 at the age of 96 marked the end of a long and distinguished career.

A Canadian by birth, Margaret Reid received a B.S. in Home Economics from the University of Manitoba in 1921 and a Ph.D. from the University of Chicago in 1931 under the direction of Dr. Hazel Kyrk. She taught briefly at Connecticut College before moving to Iowa State College (Iowa State University) to teach from 1930-45.

As did many economists of the era, she spent time in Washington, D.C., as an economic advisor (Division of Statistical Standards Office of the President 1943-44; Head Family Economics USDA 1945-48). Here she continued her work on prices in the analysis of family budget data. She was particularly concerned with the issues of food prices and household adjustments to rising prices in budget allocations.

Reid returned to academics in 1948 as a Professor of Economics at the University of Illinois and in 1951 she moved to the University of Chicago. Professor T. W. Schultz, who had known her as a colleague at Iowa State College, had strong interest in attracting her to Chicago to continue her work. She was Professor of Home Economics and Economics at the University of Chicago until 1961 when she "retired" and was Emeritus Professor of Economics and an active researcher until her death.

Reid's integrity and dedication to identifying and verifying economic relationships through empirical analysis marked her scholarly work. Her first major contribution to economics was in the area of the economics of household production. Her first book Economics of Household Production was published in 1934 as a study of the household "our most important economic resource." She included evidence from a large number of household studies, relying on work from agricultural experiment stations of the time. Reid identified labor costs and productive activities within the household in order to interpret home-related problems correctly and the develop appropriate education and policies. She also determined the important role of changing labor skills and new technologies applied in the home with implications for labor resources both within and outside the home. Her empirical studies and 1934 book were antecedents to the later more structured work by Gary Becker on The New Theory of Consumer Behavior (1973) and the Theory of Allocation of Time (1965).

Her curiosity and intuition applied in the study of household budgets contributed significantly to identifying and measuring the concept of permanent income. Her early studies of budgets and income appeared in a series of contributions to Studies in Income and Wealth published by the National Bureau of Economic Research from 1948 through 1952. Her 1952 paper on the effect of income on expenditures among farm families for whom the transitory income component is large is particularly important work on permanent income. This is just another example of how her empirical analysis and work contributed to the development of economic theory.

Reid's 1962 book on Housing and Income shows how her scholarly work evolved. As before, the study is a comprehensive analysis of empirical evidence, here focused on the "mysterious income variable. " The role of transitory short-run changes in income effects associated with age and income effects associated with other socio-demographic factors are identified in the analysis of census data. The important finding was that as normal income increases, the value of housing (services) rises relatively faster, in contrast to the prior assumption that the housing share declines.

Her work in progress during her later years was a study of the conflicting evidence of the relationship between health and income. She was particularly interested in the health-age income interaction confounded by effects of migration and human capital investment when state-level data were used. The pursuit of the evidence in the library and computer center by a scholar in her mid-80's is a clear statement of her devotion to the science and art of applying critical thinking to the evidence. As reported in the 1980 AER Distinguished Fellow citation, "her reputation as a truly tireless colleague and her felicitous sense of humor are less widely known but always cherished by those who worked with her. " 7/1/96

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