Theodore W. Schultz, an economist at the University of Chicago whose research on agriculture and education was honored with a Nobel Memorial Prize in 1979, died Thursday at a nursing home in Evanston, Ill. The cause of death was an infection that did not respond to treatment, his family said. Mr. Schultz was 95. The eldest of eight children born on a farm near Arlington, S.D., Mr. Schultz never went to high school. Despite the opposition of his parents, he did attend South Dakota State College, earning bachelor's and master's degrees in agricultural economics in 1926. He went on to graduate school at the University of Wisconsin and, armed with a Ph.D., joined the faculty of Iowa State College in 1930. At Iowa State, then a land grant college with little tradition of scholarship, he organized what came to be one of the best economics departments in the country. Among the faculty he recruited was a young man with a freshly minted Ph.D. from the University of California named John Kenneth Galbraith. Mr. Schultz left Iowa State in 1943 after a bitter battle over academic freedom. One of his colleagues had written an essay comparing margarine favorably with butter as a way of economizing on resources for the war effort. Dairy interests protested -- the vegetable oil-based spread was viewed as a commercial threat -- and the college administration tried to prevent publication. While Mr. Schultz successfully led the charge against censorship, he left for the University of Chicago. ''That incident provoked some serious soul-searching,'' recalled D. Gale Johnson, a fellow agricultural economist, pushing land grant schools to broaden their mission to include truly independent research. At the University of Chicago, Mr. Schultz again showed his talent for organization. ''When he arrived,'' said James Heckman, an economist at the university, ''the economics department was a mess of bickering.'' By the early 1960's, under Mr. Schultz's leadership, it had emerged as a center of innovative economic thinking. But the Nobel Memorial Prize in Economic Science is not handed out for exceptional management skills. Mr. Schultz is widely credited for bringing agricultural economics into the mainstream, focusing on how education, technology and financial incentives have significantly raised productivity. ''He's a transitional figure who bridged the gap between the old-style study of institutions and modern economics'' that relies on theory and statistical analysis, Mr. Heckman said. Mr. Schultz's focus on education as a key to raising productivity led to the modern emphasis on ''human capital'' as a factor in production. Indeed, his work paved the way for the Nobelist Gary Becker's more celebrated analyses of human skills as a source of productivity growth. Perhaps Mr. Schultz's most important insight was that farmers could play a key role in economic development, provided they were given the right incentives. That may seem obvious today. Agricultural change was critical to American development in the 19th century. And development specialists now look to free-market agriculture to jump-start the badly lagging economies of Africa. But in the 1950's and 1960's, development planners had a Soviet model in mind -- one in which agriculture's only role was to feed the industrial labor force. Mr. Schultz formally retired in 1970 but remained an active researcher and colleague until he fractured his hip in 1990 and became bedridden. He is survived by two daughters, Elaine Glickman of Winnetka, Ill., and Margaret Schultz of Chicago, and a son, T. Paul Schultz of Madison, Conn. An obituary on March 2 about Theodore W. Schultz, an economist whose research on agriculture and education was honored with a Nobel Memorial Prize, referred incorrectly to his efforts, while on the faculty of Iowa State, to hire the economist John Kenneth Galbraith. Though he recruited Mr. Galbraith, Mr. Galbraith chose to go to Harvard.