ABSTRACT
For over 30 years—to be exact, since 1928—whenever a working economist was called on to describe in numbers or to interpret in analytical terms the relationship between the inputs of capital and labor and the final product of a plant, an industry, or a national economy as a whole, he was more likely than not to reach out for the Cobb-Douglas production function. Theorists questioned the arbitrariness of its form and statisticians the validity of procedures used in fitting it to given sets of data, but despite all criticism the familiar exponential equation was used over and over again, essentially, I think, because of its convenient simplicity. But now this remarkable career is apparently coming to an end. The old formula is being rapidly replaced by a new, improved recipe: the constant elasticity of substitution production function. In quantitative empirical analysis, the CES function can perform essentially the same role that the Cobb-Douglas function played up until now, but, owing to its less restrictive shape, it offers at the same time the indisputable advantage of greater flexibility.
