Heterodox Irving Fisher (February 27, 1867 – April 29, 1947)[1] was an American economist, statistician, inventor, eugenicist and progressive social campaigner.

[2] Joseph Schumpeter described him as "the greatest economist the United States has ever produced",[3] an assessment later repeated by James Tobin[4] and Milton Friedman.

Fisher was perhaps the first celebrity economist, but his reputation during his lifetime was irreparably harmed by his public statement, just nine days before the Wall Street Crash of 1929, that the stock market had reached "a permanently high plateau".

His subsequent theory of debt deflation as an explanation of the Great Depression, as well as his advocacy of full-reserve banking and alternative currencies, were largely ignored in favor of the work of John Maynard Keynes.

[11] Fisher was one of the foremost proponents of the full-reserve banking, which he advocated as one of the authors of A Program for Monetary Reform where the general proposal is outlined.

As a student, Fisher had shown particular talent and inclination for mathematics, but he found that economics offered greater scope for his ambition and social concerns.

[18][19][20] When he began writing the thesis, Fisher had not been aware that Léon Walras and his continental European disciples had already covered similar ground.

Nonetheless, Fisher's work was a very significant contribution and was immediately recognized and praised as first-rate by such European masters as Francis Edgeworth.

Fisher was a prolific writer, producing journalism as well as technical books and articles, and addressing various social issues surrounding World War I, the prosperous 1920s and the depressed 1930s.

In particular Clark and Irving Fisher "brought neoclassical theory into American journals, classrooms, and textbooks, and its analytical tools into the kits of researchers and practitioners."

Already in his doctoral thesis, "Fisher expounds thoroughly the mathematics of utility functions and their maximization, and he is careful to allow for corner solutions."

"[7] While his published work exhibited an unusual degree of mathematical sophistication for an economist of his day, Fisher always sought to bring his analysis to life and to present his theories as lucidly as possible.

For instance, to complement the arguments in his doctoral thesis, he built an elaborate hydraulic machine with pumps and levers, allowing him to demonstrate visually how the equilibrium prices in the market adjusted in response to changes in supply or demand.

Fisher saw that subjective economic value is not only a function of the amount of goods and services owned or exchanged, but also of the moment in time when they are purchased with money.

[32] Fisher's research into the basic theory of prices and interest rates did not touch directly on the great social issues of the day.

He was one of the first to subject macroeconomic data, including the money stock, interest rates, and the price level, to statistical analyses and tests.

In 1973, the Journal of Political Economy posthumously reprinted his 1926 paper on the statistical relation between unemployment and inflation, retitling it as "I discovered the Phillips curve".

Fisher espoused a more succinct explanation of the quantity theory of money, resting it almost exclusively on long run prices.

Initially, during the upswing over-confident economic agents are lured by the prospect of high profits to increase their debt in order to leverage their gains.

[37] This theory was largely ignored in favor of Keynesian economics, in part because of the damage to Fisher's reputation caused by his public optimism about the stock market, just prior to the crash.

[11] The stock market crash of 1929 and the subsequent Great Depression cost Fisher much of his personal wealth and academic reputation.

"[38] Irving Fisher stated on October 21 that the market was "only shaking out of the lunatic fringe" and went on to explain why he felt the prices still had not caught up with their real value and should go much higher.

In 1924, Fisher wrote an anti-smoking article for the Reader's Digest, which argued that "tobacco lowers the whole tone of the body and decreases its vital power and resistance ... [it] acts like a narcotic poison, like opium and like alcohol, though usually in a less degree".

[42] When his daughter Margaret was diagnosed with schizophrenia, Fisher had her treated at the New Jersey State Hospital at Trenton, whose director was the psychiatrist Henry Cotton.

Cotton believed in a "focal sepsis" theory, according to which mental illness resulted from infectious material in the roots of teeth, bowel recesses, and other places in the body.