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Leonid Vitaliyevich Kantorovich & Tjalling C Koopmans

By: Shivani Darji

Background on Kantorovich• Born in Petersburg, Russia on January 19th, 1952 with only his

mother after his father died• His first interests in science began around 1920• On entering the Mathematical Department, he was mainly

interested in sciences• He was Educated at Leningrad State University and received his

doctorate in mathematics at the age of 18• He became a professor at Leningrad in 1934• Kantorovich was elected to the prestigious Academy of Sciences of

the Soviet Union (1964) and was awarded the Lenin Prize in 1965• His first major contribution to economics came in 1938 as a

consultant to the Soviet government’s Laboratory of the Plywood Trust. He realized that the problem of maximizing the distribution of raw materials could be solved in mathematical terms. He called this “Linear Programming”

• In his best-known book, The Best Use of Economic Resources (1959), Kantorovich demonstrated that even socialist economies much use process, based on resource scarcity, to allocate resources efficiently

Background on Koopmans• Born in Graveland, Netherland on August 28th 1910• Koopmans was educated in mathematics and physics at the universities

of Utrecht and Leinden• He got his PhD in economics at Leiden in 1936• He worked for the British Merchant Shipping Mission during WWII in

the United States• According to Britannica, “In that position he was concerned with the

selection of shipping routes that would minimize the total cost of transporting required quantities of goods, available at various locations in America, to specified destinations in England”

• He also made a general mathematical model of the problem to come up with the equations needed to solve the problem

• Koopmans joined the Cowles Commission for Research in Economics at the University of Chicago

• By 1955, Koopmans was a professor at Yale University• He and Kantorovich independently developed a rational method, called

activity analysis for allocating resources.

The Theory and its importance• Kantorovich and Koopmans received the noble prize “for their

contributions to the theory of optimum allocation of resources

• By definition, “resource allocation is a plan for using available

resources, for example human resources, especially in the near

term, to achieve goals for the future.”

• This theory is important and considered a great discovery because

not many people thought of it. They just wanted what they wanted.

• Though Kantorovich and Koopmans realized that there are only so

many resources and too many people to distribute to all of them,

hence coming up with the idea that they can be allocated to certain

groups of people.

• Basic allocation decision and contingency mechanisms: the

resources are allocated to some items, not to others

Tjalling C. Koopmans

Leonid Kantorovich