Remembering the Phillips Curve

It turns out that the man famous for concocting “the Phillips Curve” that a generation of economics students had to memorize didn’t believe in it himself.

As Investopedia explains the rise and fall of the curve, “The theory states that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment.”

Tim Harford, a columnist for the Financial Times, claims that the legacy of  A. W. H. Phillips has been tarnished by the notoriety of the Phillips curve.  Phillips himself felt “it was just correlation” and did not want to publish it, Harford claimed in an appearance at Cato on January 23rd.

Phillips was believed to have said that the Phillips curve was “always a rush job” and “was said to never have taken it seriously.” Harford suggested that Phillips’ colleagues published it on his behalf while he was on sabbatical in order to help him obtain tenure.

Phillips died in 1975 and could never provide this context when the theory fell out of favor due to circumstances beyond his control. “This really was a great man, a practical thinker…yet he’s irrevocably linked to an idea that was proven wrong, but he didn’t believe in,” Harford said.