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Douglass C. North, at 95; expanded study of economic history

NEW YORK — Douglass C. North, a Nobel laureate whose work in applying economic theory to history offered a new understanding of how societies coordinate people's behavior, died Monday at his home in Benzonia, Mich. He was 95.

The cause was esophageal cancer, his niece Julie Case said.

A native of Cambridge, Mass., and the son of a high school dropout, Dr. North traced an unlikely path to academic renown and the halls of government in China, Latin America, and Eastern Europe, where he was a consultant.

His teaching career spanned seven decades; in his many books and articles as an economics historian, he became known for challenging traditional methods of economic analysis, in which markets hold sway. He found that markets often fell short of explaining long-term economic growth.

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In casting his net wider, he took into account the economic impact of social and political institutions, of laws and customs regarding property rights, and of religious beliefs and human cognition.

He hypothesized, for example, that when various economic groups — farmers or bankers or railroad companies — find that institutions inhibit them from making bigger profits, they will come together to change the institutions.

"North's genius is figuring out what question to ask next, which often comes as an answer to the question 'What can't I explain with my current conceptual framework?'" John Joseph Wallis, a professor of economics at the University of Maryland and a North protégé and collaborator, wrote in a paper he delivered in celebration of Dr. North's 90th birthday. "To do this requires a very unusual combination of humility and confidence."

While at Washington University in St. Louis, where he taught for 33 years, Dr. North helped found a branch of inquiry called cliometrics, named for the muse of history, Clio, after he and others had concluded that traditional market-oriented economics faltered in measuring some aspects of economic performance quantitatively.

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Dr. North contended that traditional economics did not fully recognize that markets are embedded in institutions, which evolve slowly and can be understood only by studying the cultural phenomena behind them.

When he examined why the cost of ocean transportation had fallen sharply from 1750 to 1910, for example, he found that it was not because it had become cheaper to operate ships. Rather, the main reasons were an increase in trade, a decline in piracy and privateering, and an improvement of ports. The line of study came to be called "the new institutional economics."

His work was recognized in 1993 with a Nobel Memorial Prize in Economic Sciences, which he shared with Robert W. Fogel, who did similar work independently. (Fogel died in 2013.)

Dr. North came to this approach after applying traditional economic tools, fruitfully, in an analysis of US economic history, resulting in a seminal work, "The Economic Growth of the United States 1790 to 1860," published in 1961.

But when he turned his attention to Europe, as he did in "The Rise of the Western World" (1973), written with Robert Paul Thomas, he found the challenge unexpectedly severe and began rethinking his methods.

"Retooling turned out to change my life radically," he wrote in an autobiographical sketch for the Nobel ceremony, "since I quickly became convinced that the tools of neo-classical economic theory were not up to the task of explaining the kind of fundamental societal change that had characterized European economies from medieval times onward."

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In one instance he studied the economic effects of the Black Death, perhaps the most devastating pandemic in history. Peaking in the 14th century, it wiped out tens of millions of people in Europe and Asia and shriveled the labor force.

Dr. North found that classical theory could not account for the fact that wages rose in Western Europe after that scourge but not in Eastern Europe, much of which remained in serfdom. "We needed new tools, but they simply did not exist," he wrote.

So he and his fellow cliometricians began creating them, using vast amounts of quantitative data.

One of Dr. North's conclusions was that England and the Netherlands industrialized faster than other countries because guilds, with their strict workplace rules and hiring restrictions, were weaker there.

Dr. North's work led to another level of inquiry — not followed by other cliometricians — that drew on cognitive science to understand why people make the choices they do, often in the face of uncertainty and ambiguity. What, for instance, prompts people to give blood when there is no financial incentive to do so?

"Doug North has always challenged the adequacy of the current intellectual consensus about how history and social science explained long-term social change," Wallis said in an interview.

Barry R. Weingast, a former colleague who is now a professor of political science at Stanford, said Dr. North had been "at the forefront of several revolutions" in economic theory, involving the application of traditional economics and statistics to history, the importance of specifying and enforcing property rights and, most important, the crucial role of a culture's institutions in economic performance.

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When taking a consulting job overseas, Dr. North insisted on spending at least six months in a country, absorbing its belief systems and its organization and institutional framework before offering his advice.

Outside the classroom, Dr. North, a diminutive, effervescent bon vivant, indulged his interests in haute cuisine, photography, fast cars, flying his own plane, hunting, fishing, tennis, hiking, and swimming, pursuing some of them into advanced age.

At various times he owned two ranches. One, comprising 160 acres in a remote stretch of Northern California, was bought for $10 an acre. The money, he said, came from his winnings at poker.

Douglass Cecil North was born on Nov. 5, 1920. Though he grew up in the shadow of Harvard and the Massachusetts Institute of Technology, there was little in his background to suggest he would become a renowned economics historian. His father, he said, had left high school to work as an office boy, and Dr. North did not know if his mother had finished secondary school.

He himself had been an indifferent student, making only "slightly better than a C average," he said, as an undergraduate at the University of California Berkeley, where he became an avowed Marxist and a radical activist who did little classwork. For a time he refused to join his young Communist friends in shifting their support to the American war effort after the Japanese attacked Pearl Harbor in 1941.

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In 1944 he married Lois Hiester, with whom he had three sons. The marriage ended in divorce, and in 1972 he married Elisabeth W. Case. In addition to his wife, Dr. North leaves three sons, Douglass, Christopher, and Malcolm; a half sister, Sheila; and four grandchildren.

After graduating with a bachelor's degree, Dr. North, who was morally opposed to combat, joined the merchant marine as a deckhand.

Two years in the South Pacific and a year teaching navigation in California allowed for continuous reading that led him to decide to become an economist.

In his Nobel essay he wrote, "I went back to graduate school with the clear intention that what I wanted to do with my life was to improve societies, and the way to do that was to find out what made economies work the way they did — or fail to work."