Who will win the Nobel Prize in Economics this coming Monday?

by on October 4, 2016 at 11:26 am in Uncategorized | Permalink

I’ve never once nailed the timing, but I have two predictions.

The first is William Baumol, who is I believe ninety-four years old.  His cost-disease hypothesis is very important for understanding the productivity slowdown, see this recent empirical update.  Oddly, the hypothesis is most likely false for the sector where Baumol pushed it hardest — music and the arts.

Baumol has many other contributions, but the next most significant is probably his theory of contestable markets, plus his writings on entrepreneurship.

The other option is a joint prize for environmental economics, perhaps to William Nordhaus, Partha Dasgupta, and Martin Weitzman.  A prize in that direction is long overdue.

The “Web of Science” predicts Lazear, Blanchard, or Marc Melitz, based on citation counts.  Other reasonable possibilities include Robert Barro, Paul Romer, Banerjee and Duflo and Kremer (joint?), David Hendry, Diamond and Dybvig, and Bernanke, Woodford, and Svensson, arguably joint.  I still am of the opinion that Martin Feldstein is deserving, don’t forget he did empirical public finance, was a pioneer in health care economics, and built the NBER.  For a dark horse pick, how about Joseph Newhouse (RCTs and the Rand health care study)?

There are other options — what is your prediction?

1 Anon. October 4, 2016 at 11:35 am

inb4 that guy who always goes on about how it’s not a nobel

2 dearieme October 4, 2016 at 12:25 pm

It is a counterfeit Nobel, and that’s good enough for government work.

3 prior_test2 October 4, 2016 at 1:47 pm

A couple of other figures that apparently have had a problem with the prize –

‘Some critics argue that the prestige of the Prize in Economics derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandson of Ludvig Nobel. Nobel criticizes the awarding institution of misusing his family’s name, and states that no member of the Nobel family has ever had the intention of establishing a prize in economics.

According to Samuel Brittan of the Financial Times, both of the former Swedish ministers of finance, Kjell-Olof Feldt and Gunnar Myrdal, wanted the prize abolished, saying, “Myrdal rather less graciously wanted the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman).”
In his speech at the 1974 Nobel Prize banquet Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would “have decidedly advised against it” primarily because, “The Nobel Prize confers on an individual an authority which in economics no man ought to possess…. This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.”‘

But then, really who takes Hayek’s opinion on such things seriously anyways, right? Apart from him being a Nobel Prize winner, of course.

4 dearieme October 4, 2016 at 2:24 pm

Hayek’s opinions are always worth engaging with even if it’s only to argue against them. I’m not sure you could say that of many economists, even of the very clever Maynard Keynes.

5 rossle October 4, 2016 at 11:42 am

Baumol’s work on trade with Ralph Gomory doesn’t get enough attention. . . Tyler’s thoughts?

6 The Other Jim October 4, 2016 at 11:49 am

Prediction? It’s a political award, and given the season, it’s going to go to someone who is alarmist about either income inequality or the high cost of not having the perfect climate 24/7/365.

7 Jay October 4, 2016 at 12:43 pm
8 Troll me October 4, 2016 at 1:13 pm

Yeah, discussing things that affect a billion or more people is “alarmist”. We could be discussing ways to reduce ingrown fingernails of a billion people, at it would already more relevant overall than most things that occupy the minds of some parts of the American electorate.

9 TMC October 4, 2016 at 4:30 pm

So far the only effect is the draining of pocketbooks. And will be for quite some time.

10 Luis Enrique October 4, 2016 at 11:58 am

Rodrik

11 Garrett M. Petersen October 7, 2016 at 2:03 pm

They don’t usually give it to people under 60. I figure he wins by 2025, but I’m not so sure about this year.

12 Toby October 4, 2016 at 12:06 pm

Richard Posner seems like a good and not very controversial candidate for his contributions to the field of Law & Economics. Perhaps jointly with Guido Calabresi?

13 Ignacio October 4, 2016 at 12:14 pm

I am a lawyer and have always wondered of Posner’s chances. He is certainly very important for the law and policy, but I am not sure how this is assessed by economists.

14 Toby October 4, 2016 at 3:17 pm

I think that (some) economists didn’t like Ostrom and some of the other choices by the Nobel Prize committee either due to the supposed lack of rigor. Or so I’ve heard. By that same logic though Becker should probably not have received the Prize (and in the beginning what he was doing was not seen as economics by many anyway).

Posner, in my opinion, should be a candidate for expanding the scope of economics as a science. Though perhaps not by himself as a good part of what he did was following Becker. He just went farther than Becker did into law. He should be awarded the Prize with at least one other individual. I’m not a professional historian though, so I might be wrong in my assessment of Posner.

15 Ted Craig October 4, 2016 at 12:22 pm

I’ve come to the conclusion that Barro is the Philip Roth of economics – deserving of the prize, but he’ll never get it.

16 rayward October 4, 2016 at 12:41 pm

Cowen’s favorites are a diverse list, reflective of the diverse reading list he provides for readers of this blog (reason enough to read this blog).

17 Martin October 4, 2016 at 12:49 pm

There is no such thing as a Nobel Prize in economics. The economics prize was created by Sweden’s Central Bank in 1969 and is called the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.” It was not established by Nobel, but supposedly in memory of Nobel. It was done completely against the wishes of the Nobel family.

18 londenio October 4, 2016 at 12:57 pm

Is this like one of this jokes when someone parodies the commenters that go on an on about a petty objection that nobody cares?

19 Someone October 4, 2016 at 1:04 pm

No, I think he is deadly serous. FWIW, “The Official Web Site of the Nobel Prize” (https://www.nobelprize.org/) does treat it as a prize equal to the others.

20 prior_test2 October 4, 2016 at 1:50 pm

Hayek didn’t, to highlight his quote concerning the matter – ‘In his speech at the 1974 Nobel Prize banquet Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would “have decidedly advised against it” primarily because, “The Nobel Prize confers on an individual an authority which in economics no man ought to possess…. This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.”‘

21 prior_disapproval October 5, 2016 at 11:46 pm

+1

22 dano755 October 4, 2016 at 1:08 pm

“The Official Web site of the Nobel Prize” includes it.

23 Simon October 4, 2016 at 6:26 pm

Structural model: The foundations are not prestigious when compared to the traditional Nobel.
Autoregressive: Everyone who has won the Nobel Prize in Econ is a genius. It’s probably important and no one cares about its origin.

24 freethinker October 4, 2016 at 8:41 pm

Tyler invited predictions about who may win what is popularly called the Nobel Prize in economics. He did not invite comments on whether it is really a “Nobel” Prize.

25 Some Guy October 4, 2016 at 1:05 pm

They should just toss the thing into a crowd and let whoever catches it be the winner. Economics is just the modern version of astrology anyway so letting chance decide the award would be appropriate.

26 prior_test2 October 4, 2016 at 1:51 pm

Hayek might have approved of this suggestion.

27 dearieme October 4, 2016 at 2:28 pm

Like a bride’s posy? What a good idea.

28 Marius Solem Johansen October 4, 2016 at 1:06 pm

If I am not mistaken, the thing with the Nobel family was that they “despised businessmen”, or something along those lines. Economists cannot be lumped in with “businessmen”.

29 The Do-Operator October 4, 2016 at 1:22 pm

This is not a prediction – I think this outcome is unlikely – but I think Judea Pearl, Jamie Robins and Don Rubin should share the prize for the foundations of causal inference.

30 Eric October 4, 2016 at 1:44 pm

Pearl is a bizarre choice–economists have pretty much uniformly ignored his framework altogether and focused on the Rubin model.

31 The Do-Operator October 4, 2016 at 2:09 pm

I don’t disagree – hence the sentence “I think this outcome is unlikely” in the original comment – but this says more about what is wrong with economics as a field than it does about the importance of Pearl’s framework.

32 i got out October 4, 2016 at 9:38 pm

as jim heckman has pointed out roughly 10,000 times, the rubin causal model is just a reparameterization of roy. and besides, what did heckman get the prize for if not for causal inference?

33 The Do-Operator October 5, 2016 at 2:55 pm

See discussion on Heckman’s views on Roy at http://andrewgelman.com/2013/07/30/the-roy-causal-model/

Yes, Jim Heckman got his prize for work on causal inference in econometrics. But I predict that if you attend any specialized conference on causal inference, and ask randomly selected participants the following question: “If three people are to share a prize for the theoretical foundations of causal inference, which three researchers should get a share”, then an overwhelming majority of respondents will answer Pearl, Robins and Rubin, and next to no one will suggest Heckman.

34 mkt42 October 5, 2016 at 8:55 pm

That was an excellent discussion, thanks for the link. I think that the commenters there have the correct explanation: Roy was explicitly talking about how economic agents’ choices affect the outcomes, and economists will insist on modelling those choices. A causal model that lacks a model of the choice-making decision is one that will be of less value to econometricians. The comment about the insularity of disciplines also has merit, although yet another commenter pointed out that the practitioners in these fields actually are aware of each others’ work.

But they will put different values on aspects of that work.

A good example of this is Judea Pearl’s observation about how econometricians will tackle a given problem:

“Second, economists wrote their models in terms of realized, not potential, outcomes because they did not need to; the counterfactual information (read: assumptions)
is already encapsulated in the structural equations (which were not available to statisticians) so there was no need to invent “non-realized” variables to carry those assumptions.”

And K? O’Rourke also notes the difference in approach:

‘I’ll speculate that Rubin sees “A big loss was the abandonment of economic choice theory” as a big gain, given a concern that people take their conceptual models too seriously’

So in regard to the hypothetical causal inference conference, you might be right about the vote if the conference excluded economists, but a conference that had mainly econometricians in it might vote for Heckman.

35 Larry Siegel October 6, 2016 at 2:26 am

Heckman doesn’t need their vote. He already has a Nobel.

36 Barkley Rosser October 4, 2016 at 1:46 pm

Baumol and environmental are both long overdue, but it might be macro, Blanchard or Romer or Barro or some combo.

Here is my surprise pick nobody is talking about, probably not going to get it but might, especially as Swedes are into his sort of stuff, Richard Easterlin (and maybe others) for happiness economics.

37 Todd Kreider October 4, 2016 at 2:13 pm

I’d like to see Baumol, but I’ve never met a Swede who pays attention to what I say. Then again, I’ve only met one Swede.

38 Dan Coleman October 4, 2016 at 1:47 pm

The problem isn’t the application of cost disease to the arts. Rather it is Baumel & Bowen’s definition(s) or preconceptions of “music & the arts” but it is easy to infer that from their 1960s viewpoint, the product *isn’t* changing.

And if you limit the argument to “museum culture,” then recording technology compounds the problem of cost disease: a contemporary string quartet must compete with countless previous recordings of the same work, which have cumulatively raised the bar. So it takes *longer* to rehearse Mozart today than in Mozart’s time, especially when you factor in the hours spent in conservatory practice rooms prior to even joining a string quartet.

39 Donald Pretari October 4, 2016 at 2:14 pm

As a casual reader of economics, I’d like to see it go to John Taylor or Barro. Taylor’s monetary work and Barro’s multiplier work do seem to qualify as basic groundwork for further study from my reading.

40 Simonini October 4, 2016 at 2:18 pm

I can see Diamond, but Dybvig would be lucky to get lumped in there.

41 DT October 4, 2016 at 2:24 pm

Peter Navarro

42 zztop October 4, 2016 at 10:29 pm

Wink wink.

43 Paul October 4, 2016 at 2:37 pm

Baumol is long overdue.

And if you’re gonna mock the Economics Prize how about that Peace prize going to Obama? And Krugman getting a solo prize? Why do people pile on Hayek? Don’t get so snooty.

44 prior_test2 October 4, 2016 at 2:45 pm

I seem to recall that Obama being awarded the Peace Prize was seen at the time as an award for not being George W. Bush – and it was well mocked by many.

But let us be honest – Obama being awarded the Peace Prize does not come close to matching the most mockery worthy awarding of that prize to an American – ‘The 1973 prize went to North Vietnamese leader Lê Đức Thọ and United States Secretary of State Henry A. Kissinger “for the 1973 Paris Peace Accords intended to bring about a cease-fire in the Vietnam War and a withdrawal of the American forces”. Thọ later declined the prize, on grounds that the Paris Peace Accords were not being adhered to in full. North Vietnam invaded South Vietnam in April 1975 and reunified the country whilst Lê Đức Thọ was still in government. Kissinger’s history included the secret 1969–1975 bombing campaign against Khmer Rouge and North Vietnamese Army troops in Cambodia, the alleged U.S. complicity in Operation Condor—a mid-1970s campaign of kidnapping and murder coordinated among the intelligence and security services of Argentina, Bolivia, Brazil, Chile (see details), Paraguay, and Uruguay—as well as the death of French nationals under the Chilean junta. He also supported the Turkish Intervention in Cyprus resulting in the de facto partition of the island. According to Irwin Abrams, this prize was the most controversial to date. Two Norwegian Nobel Committee members resigned in protest. The well-known comedian and political satirist Tom Lehrer said: “Political satire became obsolete when Henry Kissinger was awarded the Nobel peace prize.” When the award was announced, hostilities were continuing. The selection of Lê Đức Thọ was also controversial.’ https://en.wikipedia.org/wiki/Nobel_Prize_controversies#Peace

45 prior_test2 October 4, 2016 at 2:49 pm

‘Why do people pile on Hayek?’

Just to emphasize the point, the quote casting aspersions on the economics award compared to prizes in the natural sciences was made by Hayek himself. In other words, a winner of that economics award found it something worth preventing from being created, if he had had the opportunity to block it.

46 Richard October 4, 2016 at 3:05 pm

What’s with all the comma splices, Tyler? You’re a better writer than that.

47 I read, I forget October 4, 2016 at 5:26 pm

Baumol also wrote an excellent piece on Say’s Law, although not as long as Tyler’s.

48 Ryan October 4, 2016 at 7:16 pm

I do not understand why David Hendry is put forward before many other econometricians. Phillips and Andrews spring to mind.

49 dsp October 4, 2016 at 8:37 pm

How about an economic historian as a dark horse. Joel Mokyr, maybe?

50 Larry October 5, 2016 at 2:12 am

Not this year, but eventually: Scott Sumner. He’s the one who figured out the Great Recession.

51 Larry Siegel October 5, 2016 at 2:54 am

Mokyr would be a great choice, as would Posner; a prize to each would greatly expand the reach of economics as recognized by the Nobel. (Yes, it’s a real Nobel prize; the Nobel Foundation said so, and they get to decide.) But first things first. Baumol.

52 Don Boudreaux October 5, 2016 at 7:17 am

I very much wish – although I do not predict – that the winner will be Harold Demsetz. No living economist is more deserving of this Prize than he.

53 William October 5, 2016 at 9:58 am

Alesina

54 Alexander J Demitraszek October 5, 2016 at 10:01 am

Alesina, Easterly and Acemoglu would be great. Also Ernst Fehr, Kevin McCabe and Bruno Frey for neuroeconomics.

55 Jonathan Alevy October 5, 2016 at 4:43 pm

John List and Ernst Fehr

56 B. October 5, 2016 at 10:12 pm
57 B October 6, 2016 at 7:41 am

Here is an archive. It is an announcement for a press conference with Nobel Prize winner Paul Romer for this coming Monday.

https://web.archive.org/web/20161006030357/http://www.stern.nyu.edu/experience-stern/news-events/press-conference-romer-2016

58 Jonathan Carmel October 5, 2016 at 11:02 pm

I don’t think any of the following will win it this year but all are quite deserving:
Paul Milgrom (repeated games, contract theory, no-trade theorem, bid-ask spread, supermodularity, auctions and the beat goes on…)
Steve Ross (risk-neutral pricing, first applications of signaling to finance, first moral hazard model back in early 70’s)
Kreps (martingale measure)
Perhaps it should be joint Ross, Harrison and Kreps for risk-neutral pricing theory.
But I don’t think this will be the year for any of them.

59 Ritwik Priya October 6, 2016 at 4:58 am

This is macro year. Woodford + (Bernanke + Svensson) but Svensson is contentious for the Bank of Sweden. So if Bernanke still gets it, it may be Woodford + Bernanke + Gertler. If they steer clear of policymakers completely, it may be Woodford + Kiyotaki. I’d really like Kiyotaki to win, but his chances are low.

60 DR. CHANDRAHAS DESHPANDE October 6, 2016 at 6:09 am

Baumol…of course long overdue….my own preferences

RODRIK / ACEMOGLU (INSTITUTIONS-related research)

J Bhagwati

Avinash Dixit

61 Kusumaatmadja October 6, 2016 at 7:36 am

Acemoglu

62 Neel October 7, 2016 at 12:30 am

I’ll post the same thing I did last year:

– my deep wish: Israel Kirzner, William Baumol, and Mark Casson for their contribution to the theory of entrepreneurship;

– my predictions: a) William Nordhaus and others for their contribution to environmental economics (especially with the close ratification of COP 21), and

b) Samuel Bowles, Ernst Fehr, and Herbert Gintis.

63 kevin quinn October 7, 2016 at 2:45 pm

Jonathan; if you’re going to go with Milgrom and Kreps, better add Roberts and Wilson and get the whole Gang of Four.

64 Arnold October 7, 2016 at 6:18 pm

James Andreoni, for his research on altruism, warm-glow feelings and contributing to public goods.

Comments on this entry are closed.

Previous post:

Next post: