Frank Plumpton Ramsey, 1903-1930, was an English mathematician who applied his knowledge and interest to the disciplines of philosophy and economics, resulting in remarkable contributions. Regarding his works on Economics, he produced three master pieces which were, however, disregarded for many years.
His first economic paper “Truth and Probability”, 1926, covers subjective probability and utility. Ramsey argues Keynes’ point of view on the importance of subjective probabilities. Keynes believed in the relation between knowledge and probability, being knowledge common and available for all individuals and thus implying that everybody would have the same probability distribution. Ramsey argued that each individual would have its own knowledge resulting in different probability distributions. For him there was a difference between the notions of probability in physics and logic.
In his second paper “A Contribution to the Theory of Taxation”, 1927, Ramsey centred in optimal taxation so that revenue and utility are maximised and produced the concept of Ramsey pricing used to calculate the price a monopolistic firm should set in order to maximise social welfare subject to profit constraint.
Finally, in his third paper “A Mathematical Theory of Savings”, 1928, Ramsey tries to determine the optimal amount of savings for an economy in order to maximise its future utility. This would result in the infinite horizon growth model. His mathematical background is strongly noticed due to the use of calculus of variations and he laid the bases for the development of optimal accumulation theory or theory of optimal path of accumulation. His model was later adapted by Tjalling C. Koopmans and David Cass to maximise household’s utility function.