Handicapping the 2012 Nobel

by on October 12, 2012 at 9:26 am in Economics, Uncategorized | Permalink

This article mentions Alvin Roth, Bob Shiller, Richard Thaler, Robert Barro, Lars Hansen, Anthony Atkinson, Angus Deaton, Jean Tirole, Stephen Ross, and William Nordhaus.

I’ll predict a triple prize to Shiller, Thaler, and Eugene Fama.  Fama clearly deserves it, can’t win it solo (too strongly EMH in an age of financial crisis), but can be bundled with two people from behavioral finance and irrational exuberance theories.

Barro will get it, but not in an election year.  Hansen and Ross are good picks but I don’t see them getting it before Fama does.  Paul Romer deserves mention but this is probably not his year because of politics in Honduras.

William Baumol cannot be ruled out.  A neat idea — but unlikely — is Martin Feldstein and Joseph Newhouse for their pioneering work in health care economics, plus for Feldstein there is public finance too.

Tirole and Nordhaus are deserving perennials, with various bundlings (e.g., Oliver Hart, or for Nordhaus other names in environmental).  I hope the Krueger-Tullock idea is not dead but I would bet against it, same with Armen Alchian and Albert Hirschman.  Dale Jorgensen has a shot.

I believe Duflo and Banerjee (and possibly Michael Kremer too, maybe even Robert Townsend) will get it sooner than people are expecting, though not this year as they just presented in Stockholm.  Next year I think.

Not once in the past have I been right about this.

Addendum: Here is the talk from Northwestern.

RM October 12, 2012 at 9:58 am

What ever happened to Karl Shell? And if Romer gets it at some point, should Shell not share it for his earlier work on endogenous growth theory (although this is not by any means his only contribution).

Ted Craig October 12, 2012 at 10:12 am

Is Hal Varian ever going to be a contender?

Tyler October 12, 2012 at 11:20 am

This.

Ben_A October 12, 2012 at 10:17 am

Shouldn’t the EU win this one too?

Claudia October 12, 2012 at 10:45 am

austerity isn’t cuddly enough for the econ prize…it’ll going to NGDP.

Tom T. October 12, 2012 at 2:26 pm

Only if the Nobels have an equivalent to the “Razzies.”

david October 12, 2012 at 10:32 am

What do the prediction markets say!

PK October 12, 2012 at 10:36 am

Oh, Fama. His EMH is to finance what theory of world ether was to physics. You can’t prove it and you basically don’t need it.

Jacob October 12, 2012 at 1:05 pm

Perhaps the reason Tyler doesn’t get the prediction right is that he thinks Fama deserves an award.

Mark Thorson October 12, 2012 at 10:37 am

Mario Monti doesn’t have a chance? Too soon, or is there a bias favoring theoretical over applied?

no name October 12, 2012 at 11:26 am

There really is–the Nobel favors deep theoretical work leagues above applied work. The Clark Medal, ironically, seems to be the opposite.

Easily Offended October 12, 2012 at 10:40 am

Ernst Fehr? @_@

AbeFroman October 12, 2012 at 10:44 am

A joint Thaler/Fama award would produce possibly the most interesting Nobel lecture ever…

I badly want to believe that Paul Romer will win this one day – But then again, maybe I want Romer to win the Nobel Peace Prize instead. We just need one charter city… just one.

The Anti-Gnostic October 12, 2012 at 11:56 am

Why does everybody think Romer has come up with some novel breakthrough? This has already been done: Hong Kong, Rhodesia, the Hudson Bay Company, the British East India Company, the Dutch East India Company.

The difference between Paul Romer and the men who ran those organizations is the latter had a far better understanding of human nature. Does Romer even know how to sight a rifle on target? Does he know people who do and hired a lot of them?

Bill October 12, 2012 at 10:46 am

If probability of A is .1, and probability of B is .1 and probability of C is .1, and you bundle,

you can later say: I was right because I predicted A as going to get it.

I predict all persons listed as probable contenders as a group, and bet that I will get one of them.

You heard it here first.

JCE October 12, 2012 at 11:09 am

aren’t thaler’s and shiller’s theories in direct opposition to fama’s how could they possibly win it together??

Millian October 12, 2012 at 12:07 pm

Same way Myrdal won his?

prior_approval October 12, 2012 at 11:11 am

To somewhat quote from a Buffy episode – ‘Tullock should get a Nobel and beat James Buchanan over the head with it!’

Not a prediction or suggestion, of course. However, when GMU pulled the Center for the Study of Public Choice to its bosom in 1983, in a not exactly expansive house off Roberts Road (at least that is my admittedly decades old memory – with notably poor carpeting, even by the GMU standards of the time), it was assumed that GMU would be picking up two winners of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for the price of one. Well, such was the public choice calculus that led to a somewhat unannounced yet suprisingly signficiant portion of the university budget being directed to buying reflected prestige. And as one can see, it seems to have worked out quite well in the framework of those making the decisions at the time.

And sadly, as an American, though I was one of the People of the Year in 2006 according to Time, I can’t share in the reflected glory of all the Nobel Peace Prize winning EU citizens around me.

The Anti-Gnostic October 12, 2012 at 11:40 am

“And sadly, as an American, though I was one of the People of the Year in 2006 according to Time, I can’t share in the reflected glory of all the Nobel Peace Prize winning EU citizens around me.”

+1

Speaking of that, if they wanted to award the Peace Prize to some organization for keeping Britain, France, Russia and Germany from killing several millions of each other since 1945, why didn’t they give it to the US military?

Konrad Christiansen October 12, 2012 at 6:31 pm

Perhaps because that wouldn’t have made any sense?

maguro October 12, 2012 at 6:53 pm

And giving it to the EU does?

Dismalist October 12, 2012 at 7:39 pm

Maybe they just got tired of all the premature deaths. That’s surely worth a Peace Prize to all the named countries, plus Japan, I guess.

The Anti-Gnostic October 13, 2012 at 12:35 pm

I can’t think of any organization more directly responsible for keeping Britons, French, Germans, Slavs and Russians from their periodic mass slaughters of each other post-1945 than the US military. Did you think all those garrisons and air bases we built over there were for show?

Anyhoo, since the EU is all grown up and ready for the challenges of the next century, it looks like we can leave.

Chuck Ross October 12, 2012 at 11:33 am

They’re running out of names of legitimate contenders. They should start handing out these Nobels every four years instead of annually.

Rahul October 12, 2012 at 11:53 am

I’d hate it if Duflo / Banerjee got it. They seem flavor of the month; ok, maybe a bit longer.

no name October 12, 2012 at 11:44 am

Definitely Tirole for IO. It’s been a long time coming. The Thomson-Reuters predictions are pretty unbelievable for exactly the reason Sandeep Baliga says they are.

Andrei October 14, 2012 at 1:30 pm

Completelly agree, nobel to Tirole!!!!!
Duflo and banerjee do not deserve it for sure!

Ritwik October 12, 2012 at 11:45 am

If Tirole wins it, so should Holmstrom, with him, for sure. They’ll also win it eventually (I hope) but the New Institutional Eco got one very recently.

Angus Deaton is a good choice. Tremendous work on consumption,poverty & inequality. Romer only other ‘suitable’ contender.

A Fama/Thaler/Shiller prize is too American. Maybe next year.

Scoop October 12, 2012 at 11:46 am

Is the prize always far separated from the work that earns it?

If some 25-year-old published a PhD thesis that was obviously the most important single work of economic thinking since Riccardo saw comparative advantage, could he pocket a Nobel at 28 or would they wait three decades to give it to him because it’s unseemly to give a lifetime achievement award to a kid?

Rahul October 12, 2012 at 11:51 am

If you wait long enough you’re less likely to make a mistake.

DocMerlin October 12, 2012 at 3:09 pm

Louis de Broglie got his 5 years after publishing his Thesis.
However, science was a lot less stagnant at the time. A lot of young people got a lot of recognition in physics back then. Nowadays, physics is tightly controlled by the old through the funding channels. This is largely due to the drop off in the birth rate, IMO.

Will October 12, 2012 at 12:01 pm

“Not once in the past have I been right about this.”

All prognosticators should be as forthright.

B.B. October 12, 2012 at 12:20 pm

I am still rooting for an Alchian-Demsetz combo for the economics of property rights. Given Alchian’s age and health, this is his last chance. Not a good bet.

I will bet on Jeffrey Sachs. That award, like the one to Krugman, would give the Nobel committee a platform to interfere in US elections. The press would be be all over Sachs, who would blast Romney.

Euripides October 12, 2012 at 1:15 pm

I think List would have to get it with Banerjee and Duflo–but it will be years from now.

CBBB October 12, 2012 at 2:27 pm

Any possibilities of a 2nd Nobel for Krugman?

Jiri October 14, 2012 at 1:33 pm

Hahhahaah what a fool!

Orange14 October 12, 2012 at 2:31 pm

I don’t think they would ever give it to Fama for a hypothesis that has clearly been proven wrong on numerous occasions (EMH). I do think Brad DeLong will win so that everyone save me who contributes to this blog will be outraged!

Brian Donohue October 12, 2012 at 3:16 pm

Delong wins a Nobel and Fama doesn’t? This is not the universe you are looking for.

I’d love all the EMH skeptics to regale me with stories of the easy fortunes they made trading on stock market inefficiencies.

Jacob October 12, 2012 at 7:45 pm

Uh, how about every value investor ever? A lot of them wrote books regaling you with the tales of the fortunes they made by doing fundamental research and trading on stock market inefficiencies. Not really easy as there’s a lot of hard work and due diligence required, but it’s not as mysterious as financial theory would have you believe. Go read Graham and Dodd or Buffett’s letters or Greenblatt or Einhorn’s books with case studies on investments they made. Investing, done properly, is a skill.

For what it’s worth, weak form efficiency might actually exist, although the existence and continued profitability of Renaissance Technologies and the entire discipline of stat arb would call that into question. And how do you think semi-strong efficiency, if it did exist, would come about? Who do you think is in the market, buying undervalued securities and selling overvalued ones? Do you think they could possibly all act instantaneously? If you’ve ever bought or sold a stock at all that should be clearly wrong to you. There’s plenty of HFT to go around, but even a moment’s consideration should lead you to realize that the change in the value of a company from a material event takes time and nuance to analyze. And the strong form is just bollocks. Malarkey, in the word of the day. It’s simply untrue to suggest that a market price is always and everywhere an accurate reflection of all the available information, both for obvious technical reasons like the flash crash and because prices frequently make dramatic moves without changes in the underlying business.

Brian Donohue October 13, 2012 at 11:56 am

Yeah, I did all that, and I agree with virtually all of what you say. I would add that investing skill requires practice, learning about yourself, discipline, taming impulses, patience. Nothing like doing it with real money to keep you focused. I read Graham decades ago, but I’m a much better investor today than I was then.

This is not an argument against efficient markets- it’s a simple story of compensation for deploying hard-won skills. No free lunch.

Jeff R. October 12, 2012 at 3:25 pm

There is still no such thing as a Nobel Prize in Economics. Calling a tail a leg doesn’t make a dog a quintaped, either.

Norman October 12, 2012 at 10:05 pm
prior_approval October 13, 2012 at 3:37 am

Or we could just name it by its offical name – the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (though the first two, and last five words can be dropped for brevity).

Partially, because names actually mean something. To take a current example, George Mason University has a faculty and students, and is a physical place where thousands of people interact with each other in a setting which, at least to an extent in an ongoing quest, is the one of the finest the human race has found to preserve, share, and increase knowlege.

Or we could call something with a web site and a Youtube channel a university.

Some people would object to the absurdity, some people will just snicker at the presumption on the part of anyone who thinks sitting in front of a screen replaces the reality of a true university (a perspective the author of the Infovore shares fully, though without snickering), and other people will be glad to co-opt a term to increase their own sense of prestige.

But then, when I was paid to, I had no official problems with the term ‘Nobel Prize in Economics’. I would venture to guess that the same not exactly written, but fairly firmly enforced policy is still in place among certain parts of the GMU community. Let’s call it political correctness, just for fun, though with a special university exception – even in the economics department, very occasionally, the official name of the award is used – after all, Prof. Buchanan was not actually awarded the ‘Nobel Prize’ in anything, except in the common vernacular. Sometimes, the old university habit, and stuffy enforcement, of accuracy in citation rears its head.

Which can even be seen at the Nobel Foundation itself, like this tiny snippet – ‘More on the Nobel Medals and the Medal for the Prize in Economic Sciences’ at http://www.nobelprize.org/nobel_prizes/physics/medal.html It seems as if awarders and maintainers of the originally established prizes have yet to accept the 1968 version as a true equal, probably based on the fact that Nobel did not actually create it.

Brian Donohue October 13, 2012 at 12:02 pm

dude, I think it’s time for you to strike out and start your own blog.

Jiri October 14, 2012 at 1:39 pm

Hahahah agree, this prior-approval guy talks too much sh…please be more concrete….and say more interesting things….

Jiri October 14, 2012 at 1:35 pm

What do you mean , there is not a still a nobel prizein econ?….doesn’t it just a names issue?

M October 12, 2012 at 3:39 pm

Aren’t Tony Atkinson and Deaton likely to win the prize? They are both established and were influential for decades. Inequality became a very relevant topic recently. And it is a topic that would be of importance before the US elections (and politically loaded obviously).

scott cunningham October 12, 2012 at 7:40 pm

I’d at least like to see David Card, Josh Angrist and Alan Krueger making the short list. No other three applied microeconomists have been as influential as they have been in developing practical methods for causal inference with observational data. Giving it to people for rigorous identification seems as important as giving it for field experimentalists, anyway, and arguably as much as the lab experimentalists who’ve already won.

fallibilist October 12, 2012 at 10:45 pm

They let Angus Maddison die without one. Bad, naughty Nobel committee.

Neel October 13, 2012 at 1:50 pm

Like someone above, I believe Ernst Fehr deserves the prize – this year or in years to come.

Duflo/Banerjee? I respect their work, but do not think that they deserve the Nobel Prize. Among younger scholars, I’d prefer Daren Acemoglu.

Douglas Levene October 15, 2012 at 1:42 am

I vote for Fama. The EMH is not perfect, but it’s better than any of the alternatives, most of the time, in particular for big, publicly traded securities with lots of analysts following them. And there is no denying the huge impact the EMH has had on law and economics. And for those of you who think you can predict where markets are going, tell me this: what will the Fed. 3-month rate be twelve months from now?

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