What do prize committees maximize?

Corruption aside, which is certainly not the case in Sweden, a Nobel committee can:

a) promote a political agenda,

b) further its own reputation, the reputation of the associated prizes, and the reputation of the science under consideration, or

c) criticism minimization, which is close to b) but looks at the left-hand tail of the opinion distribution rather than the mean.

I favor a mix of b) and c), at least for the economics prize; for more detail see my book What Price Fame?

Factor c) decreases the chance of Paul Krugman and also, I am sorry to say, Gordon Tullock, who is more than willing to say what he thinks.  b) decreases the chance of Oliver Hart and many other theorists.  Wilson and Milgrom, whose work has been used to design auctions, stand a better chance.  The work of Hart and Tirole is of very high quality but I am not sure it would add luster to the prize.  How many people can understand it, and has it influenced policy?  And has the work of Paul Romer, and associated ideas of increasing returns, stood the test of time?  If we remove Africa from the data set, the world appears to exhibit growth convergence over time.

I’ve already picked Fama and Thaler as my prediction for this year.  I also think Oliver Williamson is more likely to get it than most top economists think.  Bhagwati fits the bill, but it brings up the awkward question of whether he should be bundled with Krugman (trade theory) or Tullock (rent-seeking).  Keep in mind that the Nobel Committee members are not Harvard-MIT insiders, and they have more of an outsider’s perspective on what is likely to endure.

Greg Mankiw considers what a prize committee should maximize.  Does the prize encourage swinging for "home runs" when more people should be hitting for "singles"?  I don’t think Nobel Prize prospects spur many great contributions to economics in the first place; the best scientists have strong internal and external motivations in any case.  Nobel Prizes do motivate lobbying trips to Sweden; one Harvard economist in particular is well-known for these "vacations." 

I see the welfare-maximizing use of the Nobel Prize as generating more publicity for economics, attracting more people to study the science, and giving the science greater credibility in the eyes of politicians, the public, and media.  That means the committee should give prizes to economists who are articulate, intelligible, scholarly, and work on topics of real world interest.  So far they have done a great job; let’s hope for another first-rate pick.


A plus of the Nobel Prize is that it gives publicity to the field, which presumably trickles down to other economists. A minus is that it probably creates more misery (among the people who do not get the prize) than happiness (among those who get it). One advantage of a prize that only goes to people under the age of 40 is that, if you don't get it by then, you're off the hook and can worry about something else.

How about maximize the incentive to change the world? I’m sure we can all agree that people ought to unearth valuable ideas and communicate path-breaking insights for the better of mankind. What people ought to do, however, isn’t necessarily what people actually do. I know, there may be a lot of fame and money in that already (via patents, cushy consulting and speaking fees, etc.) But, if I believe in an upward sloping supply curve with regard to ingenuity here, and if we up the payoff, won’t we see more of it supplied?

I agree with Tyler’s points, but maybe the committee should maximize the payoffs too? What is the (monetary) prize, a million bucks or so? Maybe they should hire the guy who drove up Harvard’s endowment this past decade or so to beef up their endowment.

I have heard the examples (I’m sure readers can name more than a few) of brilliant minds who choose lucrative business consulting positions or something that commands very high salaries over academic research positions. Perhaps the payoff to research is too low in some fields. I don’t want to speculate where it may be too low or why it may be too low, but perhaps if the Nobel committee maximized their payoff more would play their game.

...just a thought to nibble on.

Three remarks:

1) I agree that Williamson is higher on the list than
many think and also likely to get it by himself. I
suspect the committee is aware that he is the most
cited economist of all time. He is so far in front
that I think his aggregate cites now exceed those of
Adam Smith, Karl Marx, and John Maynard Keynes put together,
just to put things in perspective on this matter.

2) I would mostly agree with Tyler about a,b, and c,
except to note that sometimes a does seem to be a factor.
It is thought by some that when James Buchanan got it a
factor was his support of a balanced budget in the US at
a time when the US was running large budget deficits that
were seen as destabilizing the world economy. It also
looks like there was a political element in the awarding
to Robert Mundell, a signal of their support of the euro
and their hope that Sweden would adopt it, which it has
yet to do.

That would suggest that if the committee is bothered by
the collapse of the Doha trade talks, which very free market
and open economy Sweden probably pays more attention to than
media and politicians in the US, for whom it seems to be a
big humming who cares, that they might give it to Bhagwati
and some others for trade, which has never gotten a prize,
unless you count Gunnar Myrdal over 30 years ago, who shared
it with Hayek (not a trade guy particularly). I also doubt
that Krugman would share this one, if it is given, for reasons
that are too long to tell here, but have nothing to do with
his recent columnizing.

3) I could, but will not, name several economists not from
Harvard, who also seem to spend inordinate amounts of time in
Stockholm and who seem to be doing so out of obtaining hopes
that may or may not be eventually satisfied...

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