Results for “nordhaus”
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William Nordhaus and why he won the Nobel Prize in economics

These are excellent Nobel Prize selections, Romer for economic growth and Nordhaus for environmental economics.  The two picks are brought together by the emphasis on wealth, the true nature of wealth, and how nations and societies fare at the macro level.  These are two highly relevant picks.  Think of Romer as having outlined the logic behind how ideas leverage productivity into ongoing spurts of growth, as for instance we have seen in Silicon Valley.  Think of Nordhaus as explaining how economic growth interacts with the value of the environment.  Here is their language:

  • 2018 Sveriges Riksbank Prize in Economic Sciences is awarded jointly to William D Nordhaus “for integrating climate change into long-run macroeconomic analysis” and Paul M Romer “for integrating technological innovations into long-run macroeconomic analysis”.

Both are Americans, and both have highly innovative but also “within the mainstream” approaches.  So this is a macro prize, but not for cycles, rather for growth and long-term economic prospects.  Here is the Prize committee citation, always well done.

Both candidates were considered heavy favorites to win the Prize, sooner or later, and these selections cannot come as a surprise.  Perhaps it is slightly surprising that they won the Prize together, though the basic logic of such a combination makes good sense.  Here are previous MR mentions of Nordhaus, you can see we have been mentioning him for years in connection with the Prize.

Here is the home page of Nordhaus.  Here is Wikipedia.  Here is scholar.google.com.  Here is Joshua Gans on Nordhaus.

Nordhaus is professor at Yale, and most of all he is known for his work on climate change models, and his connection to various concepts of “green accounting.”  To the best of my knowledge, Nordhaus started working on green accounting in 1972, when he published with James Tobin (also a Laureate) “Is Growth Obsolete?“, which raised the key question of sustainability.  Green accounting attempts to outline how environmental degradation can be measured against economic growth.  This endeavor is not so easy, however, as environmental damage can be hard to measure and furthermore gdp is a “flow” and the environment is (often, not always) best thought of as a “stock.”

Nordhaus developed (with co-authors) the Dynamic Integrated Climate-Economy Model, a pioneering effort to develop a general approach to estimating the costs of climate change.  Subsequent efforts, such as the London IPCC group, have built directly on Nordhaus’s work in this area.  The EPA still uses a variant of this model.  The model was based on earlier work by Nordhaus himself in the 1970s, and he refined it over time in a series of books and articles, culminating in several books in the 1990s.  Here is his well-cited piece, with Mendelsohn and Shaw, on how climate change will affect global agriculture.

Nordhaus also was an early advocate of a carbon tax and furthermore note that his brother Bob wrote part of the Clean Air Act, the part that gave the government the right to regulate hitherto-unmentioned pollutants in the future.  The Obama administration, in its later attempts to regulate climate, cited this provision.

I would say that much of Nordhaus’s work has its impact through being “done,” rather than through being “read.”  Few economists have read through this model, which has computer programs and spreadsheets at its core.  But virtually all economists read about the results of such models and have a general sense of how they work.  The most common criticism of such models, by the way, is simply that their results are highly sensitive to the choice of discount rate.

In recent years, Nordhaus has shifted his emphasis to the risks from climate change, for instance in his book The Climate Casino: Risk, Uncertainty, and Economics for a Growing World.  Marty Weitzman offers a good review, as does Krugman.

Assorted pieces of information on Nordhaus:

Nordhaus was briefly Provost at Yale.  He also ended up being co-author on Paul Samuelson’s famous textbook in economics.

He co-authored a recent paper arguing we are not near the economic singularity; in this area his work intersects with Romer’s quite closely.

Here is a good NYT profile of Bill Nordhaus and his brother Bob, an environmental lawyer:

Bill Nordhaus, 72, a Yale economist who is seen as a leading contender for a Nobel Prize, came up with the idea of a carbon tax and effectively invented the economics of climate change. Bob, 77, a prominent Washington energy lawyer, wrote an obscure provision in the Clean Air Act of 1970 that is now the legal basis for a landmark climate change regulation, to be unveiled by the White House next month, that could close hundreds of coal-fired power plants and define President Obama’s environmental legacy.

Bob, Bill’s brother, once said: ““Growing up in New Mexico,” he said, “you’re aware of the very fragile ecosystem.””

Perhaps my personal favorite Nordhaus paper is on the returns to innovation.  Don Boudreaux summarized it well:

In a recent NBER working paper – “Schumpeterian Profits in the American Economy: Theory and Measurement” – Yale economist William Nordhaus estimates that innovators capture a mere 2.2% of the total “surplus” from innovation. (The total surplus of innovation is, roughly speaking, the total value to society of innovation above the cost of producing innovations.) Nordhaus’s data are from the post-WWII period.

The smallness of this figure is astounding. If it is anywhere close to being an accurate estimate, the implication is that “society” pays a paltry $2.20 for every $100 worth of welfare it enjoys from innovating activities.

There again you will see a complete intersection with the ideas of Romer.  Another splendid and still-underrated paper by Nordhaus is on the economics of light.  Nordhaus argues that gdp figures understate the true extent of growth, and shows that the relative price of bringing light to humans has fallen more rapidly than gdp growth figures alone might indicate.  Check out this diagram.  Here is a BBC summary of what Nordhaus did, in other words rates of price inflation have been lower than we thought and thus rates of real gdp growth higher.

Again, you will see Nordhaus and Romer intersecting on this key idea of economic growth.

Last but not least, Nordhaus was a pioneer on the theory of the political business cycle, namely the idea that politicians deliberately manipulate the economy, using monetary and fiscal policy, so as to boost their chances of reelection.  Dare I suggest that this idea might be making a comeback?

Addendum: From Margaret Collins by email: “I’d like to call your attention to Professor Nordhaus’ longstanding association with the International Institute for Applied Systems Analysis (IIASA), the international science and policy research institution located just outside Vienna.  He worked at IIASA shortly after the institute’s creation in 1972, and his work there is closely bound to the issues the Nobel Committee cites in the award  — he was employed for a year in 1974-75, doing pioneering work on climate as part of IIASA’s Energy Program, and producing a working paper entitled “Can We Control Carbon Dioxide?”.  That was perhaps the first economics treatment of of climate change — and Nordhaus dates his work on climate as having begun there.  He has visited IIASA numerous times in the intervening years, and remains a close collaborator, particularly with Nebojsa Nakicenovic, the Institute’s Deputy Director.”

And, from the comments: “Nordhaus also helped pioneer the use of satellite imagery of night time lights as a tool for measuring economic growth, where we’ve played around with some of the publicly available tools to support various analysis.”

The Nobel Prize in Economics Goes to William Nordhaus and Paul Romer!

Two excellent choices. Nordhaus for environmental economics and Paul Romer for economic growth. I did a video for MRUniversity that goes over Paul Romer’s contributions including not only economic growth and charter cities but also his entrepreneurship in developing tools to teach economics! The video was done when MRUniversity was in the early years so it doesn’t have a lot of bells and whistles. On the other hand, Romer told me he really liked this video so this year I don’t think I need to write more!

See Tyler’s posts for more on Nordhaus and also on Romer.

Nordhaus review of Stern on global warming

Here is Bill Nordhaus’s critique of the Stern report.  Nordhaus argues that Stern’s "new" results boil down to the choice of a lower discount rate.

I agree with Stern that the discount rate should be zero or near-zero for resources which will not be reinvested but rather represent alternative consumption streams across the generations.  If we are doing normative analysis, however, and considering alternatives to controlling global warming, a’ la Copenhagen Consensus, we are by definition considering other investments.  In that case the correct rate of discount is given by opportunity costs, which might be quite high, provided the alternative investments will in fact be undertaken.  (On this topic, there are a few really good comments here.)

Having pondered the report a bit more, my main question is what it would cost for China and India to cut back on carbon emissions, all relevant institutional changes included in the calculations.  In other words, that figure should count costs of persuasion, enforcement, and implementation, not just the cost of one technology rather than another in the abstract.  We do not have a good sense of these costs, and given how many basic tasks these economies fail at, I can imagine the cynic citing the figure of infinity.  (To consider one analogy, what is "the cost" of getting avian flu out of China?)  Furthermore China in particular has a high rate of savings, and both economies have high rates of return on capital.  Current compliance costs should thus be compounded, when considering their future importance, at rates considerably higher than zero. 

What I’ve been reading

1. David Thomson, A Light in the Dark: A History of Movie Directors.  One of the best attempts to make the auteur notion intelligible to the modern viewer, he surveys major directors such as Welles, Kubrick, Hitchcock, Godard and others.  Stephen Frears is the dark horse pick, and he recommends the Netflix show Ozark.  I always find Thomson worth reading.

2. Wenfei Tong, Bird Love: The Family Life of Birds.  Now this is a great book, wonderful photos, superb analytics and bottom-line approach throughout.  By the way, “Superb fairywrens are particularly adept at avoiding incest.”

3. William Deresiewicz, The Death of the Artist: How Creators are Struggling to Survive in the Age of Billionaires and Big Tech.  Ignore the subtitle (which itself illustrates a theme of the book), this is the best book on the economics of the arts — circa 2021 — in a long time.  “The good news is, you can do it yourself.  The bad news is, you have to.”  Every aspiring internet creator, whether “artist” or not, should read this book.  If you don’t think of your career itself as a creative product — bye-bye!

I very much enjoyed Richard Thompson (with Scott Timberg), Beeswing: Losing My Way and Finding My Voice, 1967-1975, still smarter than the competition and you don’t even have to know much about Thompson.

Dorothy Sue Cobble, For the Many: American Feminists and the Global Fight for Democratic Equality is a serious and thorough yet readable account of what the title promises, with a minimum of mood affiliation.

Joanne Meyerowitz, A War on Global Poverty: The Lost Promise of Redistribution and the Rise of Microcredit. A history of antipoverty efforts, with an emphasis on the shift toward “enterprise” in the 1980s, with the microcredit treatment being mostly pre-Yunus.

Mathilde Fasting has edited After the End of History: Conversations with Frank Fukuyama.

Julian Baggini’s The Great Guide: What David Hume Can Teach Us about Being Human and Living Well is not written for me, but it is a lively and useful introduction to one of humanity’s greatest minds.

Don’t forget Deirdre Nansen McCloskey, Bettering Humanomics: A New, and Old, Approach to Economic Science.

Arrived in my pile there is William D. Nordhaus, The Spirit of Green: The Economics of Collisions and Contagions in a Crowded World, and in September Adam Tooze is publishing Shutdown: How Covid Shook the World’s Economy, and also for September there is Gregg Easterbrook’s Blue Age: How the US Navy Created Global Prosperity — And Why We’re in Danger of Losing It.

Have you noticed there are lots of books coming out now?  How many were held over from the pandemic?

Every Stock is a Vaccine Stock

Barrons: General Electric stock was racing higher Tuesday, but not because of anything the company did or announced. Recent Covid-19 vaccine news is serving as a catalyst, and every stock these days feels like a vaccine stock.

Indeed, every stock is a vaccine stock. When vaccines or other treatments do well, all stocks do well which is why stock prices are now highly correlated:

Bloomberg: From beginning the year with a correlation of 0.19, the gauge of how closely the top stocks in the S&P 500 move in relation to one another spiked to 0.85 in mid-March, toward the peak of the coronavirus sell-off before leveling off around 0.8. A maximum possible correlation of 1.0 would signify all stocks are moving in lockstep.

It’s not surprising that when Moderna reports good vaccine results, Moderna does well. It’s more surprising that Boeing and GE not only do well they increase in value far more than Moderna. On May 18, for example, when Moderna announced very preliminary positive results on its vaccine it’s market capitalization rose by $5b. But GE’s market capitalization rose by $6.82 billion and Boeing increased in value by $8.73 billion.

A cure for COVID-19 would be worth trillions to the world but only billions to the creator. The stock market is illustrating the massive externalities created by innovation. Nordhaus estimated that only 2.2% of the value of innovation was captured by innovators. For vaccine manufacturers it’s probably closer to .2%.

Who can internalize the externalities? Moderna clearly can’t because if they could then on May 18 Moderna would have increased in value by $20.52b ($4.97b+$6.82b+$8.73b) and GE and Boeing wouldn’t have gone up at all. Massive externalities.

A clever institutional investor like Blackrock or Vanguard could internalize some of the externalities by encouraging Moderna to work even faster and invest even more, even to the extent of lowering Moderna’s profits. Blackrock would more than make up for the losses on Moderna by bigger gains on other firms in its portfolio. Blackrock does indeed understand the incentives, although its unclear how much beyond jawboning they can actually do, legally.

I’d like to see more innovation in mechanisms to internalize externalities–perhaps in a pandemic vaccine firms should be given stock options on the S&P 500. Until we develop those innovations, however, the government is the best bet at internalizing the externality by paying vaccine manufacturers to increase capacity and move more quickly than their own incentives would dictate. Billions in costs, trillions in benefits.

Who is Wealthy?

argues against comparing wealth over time:

The difficulty of measurement of wealth between different periods derives not only because of our lack of data for most of the past but from the inability to meaningfully compare wealth or consumption patterns in the past with those of today. Some economists believe that if people in the past did not have certain amenities that we have today they must have been infinitely poorer. This is what one finds in Nordhaus and DeLong’s view of historical progress as unfolfding through reduced cost of artificial lighting, the approach that Angus Maddison (in “Contours of the World Economy: 1-2030”) termed a “hallucigenic history”.

The logic of such authors is as follows. Take the example of artificial lighting or voice recording. For Julius Caesar to read a book overnight, easily move at night around his palace, or listen to the songs he liked would have required perhaps hundreds of workers (slaves) to hold the torches or sing his favorite arias all night. Even Caesar, if he were to do that night after night, might, after some time, have run out of resources (or might have provoked a rebellion among the singers). But for us the expense for a similar pleasure is very small, even trivial, say $2 per night. Consequently, some people come to the conclusion that Caesar must have had tiny wealth measured in today’s bundle of goods since a repeated small nightly expense of $2 (in today’s prices) would have eventually ruined him. Other people at Caesar’s time had obviously much less: ergo, the world today is incomparably richer than before, and people then must have felt horribly poor and deprived of all pleasurable things. (Even if you cannot feel deprived of the things you do not know exist.)

The logic seems at first reasonable even if somewhat extreme. But it is not reasonable. Let’s extend this logic, now in a different direction, from us today to the next 500 years. Suppose that in 500 years people are able to choose for their vacation between Mars, Venus, Pluto or perhaps even to go further than that. Suppose they can fly around our solar system, go to the bottom of the ocean, zip from one end of the Earth to another in a few minutes, or do lots of fun things that we cannot imagine today, no more than Caesar could have imagined that his singers’ voices could be recorded on a tiny chip and reproduced ad infinitum at almost no cost. And when we then look at Jeff Bezos’ wealth today using the consumption opportunities of the future, that wealth is likely to look to us –from the vantage point of 500 years hence- insignificant. Bezos might be rich in our own terms, but he cannot fly to Mars this weekend, no matter how much he tries.

So should we then absurdly turn around and claim that Jeff Bezos, Bill Gates et al. are poor? Clearly not.

I am baffled by the last two sentences. Bezos and Gates clearly are poor relative to people in the future who can choose to vacation on Mars. It seems absurd to me to think otherwise. Jeff Bezos has four children. Suppose one of them had cancer. If he could, do you think Bezos would hesitate for one minute to spend a billion dollars buying the medicine that will be available to an ordinary American in the year 2050? How much would Bezos pay for an extra 10 years of life? What about an extra 100? How much for a bionic eye, a dozen extra points of IQ, or freedom from Alzheimer’s disease?

Or put it the other way. How much wealthier would you have to be to want to live in 1950, 1900 or 1850? I can come up with numbers for 1950 and 1900 but I think I would prefer my income and lifestyle today to anyone’s income and lifestyle in 1850. Dentist anyone? I’d also prefer it if my wife didn’t die in childbirth.

Branko argues that comparisons of wealth across long time periods are impossible, meaningless, even “hallucinogenic.” I think he has it backwards. It’s quite difficult to compare wealth over fairly short periods. Am I wealthier than my father was at my age (he was also a professor). Maybe. Maybe not. We consume somewhat different bundles. I have Netflix and a nicer car. He had a nicer house. But am I wealthier than my grandfather? Absolutely. On either side.

The Top Ten Marginal Revolution Posts of 2018

As measured by page views the most popular MR post this year was my post on how there is one law for the police and another for the rest of us, Get Out of Jail Free Cards.

Second was Tyler Cowen’s 12 Rules for Life. Number seven on Tyler’s list, “Learn how to learn from those who offend you,” caught my eye today but there’s much wisdom throughout.

The third most popular post was by neither Tyler, myself, nor a guest blogger but rather by a MR commentator, One smart guy’s frank take on working in some of the major tech companies.

One of my favorite posts was fourth, Lessons from “The Profit”. The new season of The Profit has started and continues to be of interest. All IO economists should watch.

Number five was another one of my favorites Why Sexism and Racism Never Diminish–Even When Everyone Becomes Less Sexist and Racist.

Tyler’s excellent analysis of the North Korean deal shows why he is an important thinker in foreign policy, able to see beyond the headlines, The North Korean summit and deal.

A second MR commentator had another top post, Will truckers be automated? (from the comments).

Tyler doesn’t like to write the kind of post that came in at number 8 but these posts are always popular which is one reason Tyler doesn’t like to write them. The five most influential public intellectuals?

Number 9 was a useful post, Why are antiques now so cheap?

Coming in at number 10 was my video and Tyler’s post on Paul Romer’s Nobel Prize, Why Paul Romer Won the Nobel Prize in Economics.

Other notable posts from Tyler included:

Other notable posts from me included:

Overall, I’d say it was a notable year for MR commentators! Congratulations! What were your favorite, or least favorite, MR posts of 2018?

Assorted Tuesday links

1. Old Paul Romer talk, which even presents the Nordhaus graph on the price of light, see for instance 5:45.  Via Kari Kohn.

2. New criticism of charter cities, and Mark Lutter’s response.

3. Lambda School.

4. Larry Summers road trip.  Or try this link.

5. How Ray Fair is modeling running, and aging (NYT).

6. Why is the William Nordhaus optimal carbon tax so modest?  And A Fine Theorem on Romer and Nordhaus.

Why Paul Romer won the Nobel Prize in economics

It is hard to do better than Alex’s video on Romer, pretty much definitive and Romer liked it too.  Most importantly, Romer won the Prize for seeing how the non-rival nature of ideas can boost ongoing and indeed “endogenous” economic growth.  Romer also showed mathematically that this process of growth is bounded, namely that it does not explode without limit, and that the associated mathematical models were tractable.  Previously, economists had feared that increasing returns to scale models might be impossible to work with.  See the top two links here, for the 1989 and 1990 pieces, with the third piece listed, from 1994, being Romer’s easier to read summary of the work.

David Warsh’s Knowledge and the Wealth of Nations: A Story of Economic Discovery, is the book on Romer for the ages, a truly splendid creation on both the science and the person.  Romer, by the way, is the son of Roy Romer, former Colorado governor and famous builder of airports.  I believe this later influenced Paul’s interest in the importance of economic growth.

Over time, increasing returns models are seen as less descriptive of growth than perhaps they were in the 1990s.  The growth rates of many countries have been stagnant or even falling, rather than rising.  Nonetheless, for understanding how ideas boost growth, and in cumulative fashion, Romer’s work is essential.  If you are wondering “which economist has done the most to help us explain Silicon Valley,” you would turn first to Romer.

This Prize is not a surprise at all, and it has been expected, sooner or later, for many years.  (Though I did not think it would come this year. Trump talks so much about his role in boosting economic growth, I feared the Nobel Committee would not at this point in time wish to feed into that rhetoric.  I am glad to see they did not hesitate!)

Here is Romer on Twitter.  Here is Romer on Wikipedia.  Here is Paul’s blog.  He is now at NYU, but spent much of his career at Stanford.  Previous MR coverage of Romer is quite extensive.  Here is the Prize Committee citation, excellent as always.  Here are his three podcasts with Russ Roberts.  Here is Joshua Gans on Paul.  Here is a Sebastian Mallaby profile of Romer.

Romer also in 2000 started and ran a successful business, Aplia, which revolutionized on-line education.  In the context of economics, Aplia is most notable for enabling curve-shifting exercises and the like to be done through an electronic portal.  It was later purchased by Cengage.  So like Nordhaus, Romer also has been a doer, including in the private sector.  Yet Paul once tweeted to Ben Bernanke that “Rich is over-rated.”  It is too hard to convert money into satisfaction.

Romer recently served as Chief Economist at the World Bank, with a somewhat complicated tenure.  You can find numerous articles about this in the media.

Romer has been a central figure behind the notion of “charter cities,” namely an economic region but with external or possibly foreign governance, so as to enforce the rule of law and spur economic growth.  The charter cities idea comes rather naturally out of Romer’s work on the economics of growth.  Think of Romer as asking “which is the non-rival public good which can be extended at very low cost?”, and wondering if that might be law.  Here is his famous TED talk on charter cities.  Here is an interview with Romer on charter cities.  He was originally slated to work with the Honduran government on charter cities, though he dropped out of the project in 2012.  Here is Paul’s account of what happened.

Amihai Glazer and I once wrote a comment on Romer, on his article with Barro on ski-lift pricing, which Glazer and I saw as closely connected to Buchanan’s theory of clubs.  Romer later credited this comment with inducing him to rethink what the notion of rivalry really means in economics, and leading to his two best-known pieces on economic growth; see the David Warsh book for more detail.

Like myself, Romer is an avid fan of the guitarist Clarence White, and several times we have traded favorite Clarence White videos by email.  Romer believes (correctly) that the role of Clarence White in the success of the Byrds is very much underrated, and furthermore he is a big fan of White’s early work with the Kentucky Colonels.  Here is more on Romer’s excellent taste in music, recommended.

Romer also has a well-known survey piece on the importance of human capital for economic growth; human capital of course is where new ideas come from.

Here is a short Romer piece from 2016, suggesting his own work on growth implies “conditional optimism” on climate change, but not “complacent optimism.”  This ties together his work with that of Nordhaus.

Romer is also an advocate of regularizing the spelling of the English language, so as to make it more phonetic.  He believes this would boost the rate of economic growth, and it ties in with some of his work on economic integration and growth.  If English is an easier language to learn, the global economy as a whole in effect becomes larger, and we might expect the rate of ideas generation to rise.

Here is Romer on Jupyter vs. Mathematica.  Here is Romer on corruption in Greece, he has very broad interests.  Here is Romer on TARP and banking reform.  Here is Romer’s recent critique of macroeconomics.

Romer believes (and I concur) that the word “and” is used too much in writing, and in particular scholarly writing.  From the FT:

Circulating a draft of the upcoming World Development Report, Mr Romer warned against bank staff trying to pile their own pet projects and messages into the report. The tendency, he argued, had diluted the impact of past reports and led to a proliferation of “ands”.

“Because of this type of pressure to say that our message is ‘this, and this, and this too, and that …’ the word ‘and’ has become the most frequently used word in Bank prose,” he complained in an email.

“A WDR, like a knife, has to be narrow to penetrate deeply,” he added. “To drive home the importance of focus, I’ve told the authors that I will not clear the final report if the frequency of ‘and’ exceeds 2.6%.”

I have always found Romer to be extremely pleasant and open in my interactions with him, and I am very pleased to have interviewed him (no transcript or audio available) at a summer ideas festival (Kent Presents) the year before this one.  The crowd found him very open and engaging.

Who will win the Nobel Prize in economics this year?

I’ve never once gotten it right, at least not for exact timing, so my apologies to anyone I pick (sorry Bill Baumol!).  Nonetheless this year I am in for Esther Duflo and Abihijit Banerjee, possibly with Michael Kremer, for randomized control trials in development economics.

Maybe they are too young, as Tim Harford points out, so my back-up pick remains an environmental prize for Bill Nordhaus, Partha Dasgupta, and Marty Weitzman.

What do you all predict?

Who will win Monday’s Nobel Prize in economic science?

From the WSJ:

Clarivate Analytics, formerly a unit of Thomson Reuters, maintains a list of possible Nobel Prize winners based on research citations. New additions to its list this year were Colin Camerer of the California Institute of Technology and George Loewenstein of Carnegie Mellon University (“for pioneering research in behavioral economics and in neuroeconomics”); Robert Hall of Stanford University (“for his analysis of worker productivity and studies of recessions and unemployment”); and Michael Jensen of Harvard, Stewart Myers of MIT and Raghuram Rajan of the University of Chicago (“for their contributions illuminating the dimensions of decisions in corporate finance”).

Dozens of additional names appear on Clarivate’s list of possible future economics winners, including prominent figures on the American economics scene like Stanford’s John Taylor, a monetary-policy scholar who President Donald Trump is said to be considering for Federal Reserve chairman; Paul Romer of New York University, an expert on economic growth and the chief economist at the World Bank; Martin Feldstein of Harvard, who was chairman of the White House Council of Economic Advisers under President Ronald Reagan and has studied pensions, taxation and other topics in public finance; William Nordhaus of Yale University, who has studied climate change; Dale Jorgenson of Harvard, who has studied productivity; Robert Barro of Harvard, who has researched economic growth; Oliver Blanchard of the Peterson Institute for International Economics, the former top economist at the International Monetary Fund; and Richard Thaler of the University of Chicago, who has studied behavioral economics.

Former Fed chairman Ben Bernanke’s name has been floated in the past, given his academic work on the Great Depression, and his longtime collaborator Mark Gertler of NYU appears on the Clarivate list.  So does Richard Posner, the recently retired federal judge who has written on the intersection of law and economics.

I’ve never once been right, but this year I’ll predict William Nordhaus (“Green Accounting”) and Martin Weitzman (climate change and economics of risk).

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

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?