GLOBAL – Economist Franco Modigliani, who won a Nobel Prize for his work on savings behaviour, has died aged 85.

Professor Modigliani, of the Massachusetts Institute of Technology, won the Sveriges Riksbank prize in economic sciences in 1985 for his “pioneering studies of savings and financial markets”.

He was awarded the prize for his work on constructing and developing the life-cycle hypothesis of household saving. The Nobel committee said that life cycle hypothesis “proved an ideal tool for analyses of the effects of different pension systems”.

“Most of these analyses have indicated that the introduction of a general pension system leads to a decline in private saving, a conclusion in full agreement with the Modigliani-Brumberg hypothesis.”

It said that though the idea was not new, Modigliani's achievement lay in the rationalization of the idea into a formal model.

Modigliani was born in Rome in 1918, the son of a paediatrician and volunteer social worker. He emigrated to the US in 1939.

He had been due to speak at the PensMart forum in Frankfurt next month.