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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?

Who will win the economics Nobel Prize this year?

Diane Coyle mentions some possible picks:

Environmental economics: Partha Dasgupta, William Nordhaus

Update: Twitter folks strongly recommend adding Martin Weitzman in this category.

Growth: Paul Romer, Robert Barro

Inequality: Anthony Atkinson, Angus Deaton

Innovation (and much else): Will Baumol (now 93!)

Econometrics: David Hendry

All good guesses.  I’ll add Diamond and Dybvig for banking, and possibly an early grant to Banerjee, Duflo, and Kremer for development and RCTs.  That would make economics look scientific, for a year at least.  I expect Bernanke, Woodford, and Svensson to get a prize as well for monetary economics, although probably not right now.  It is too close to Bernanke’s memoir and Svensson’s tenure at the Swedish central bank.

Here is a WSJ list.  What do you think?  Since I’ve never once been right about a particular year, trying to pick someone would only curse them.  The award will come this Monday of course.

Friday assorted links

1. William Nordhaus tells us “…the Singularity is not near.

2. Joel Mokyr wins the Balzan Prize.  And is the smart money on East African economic growth?

3. Which colleges and universities have produced the greatest advances in science?

4. Data manipulation is a bigger problem than data theft.

5. Felix Salmon on effective altruism, and also finance.

6. Syrians in Erfurt.  Not just anyone is allowed to teach them German.

Assorted links

1. An impressive display of, um…Big Data (pdf), addressing how suppliers discriminate against customers in Singapore.  There is also an NBER version, but I don’t see it on their site at this moment.

2. The religion that is Iceland.

3. “…the greatest work of journalism from the nineteenth century.

4. The Hospital is no Place for a Heart Attack.  And few from the EU side like the Greek debt swap idea.

5. Best films of the decadeWinter Sleep should be added to the list immediately, it is Ceylan’s masterpiece.  That, along with Uncle Boonmee, should be very close to the top.

6. Weitzman reviews Nordhaus.

7. Timothy Taylor on the new corporate income tax proposals.

Is stopping climate change a free lunch?

We’re again seeing the return of magical thinking in the economics profession and elsewhere.  Limiting climate change is indeed worth doing, but it is not close to a free lunch.  Eduardo Porter makes the relevant point quite nicely:

“If the Chinese and the Indians found it much more economically efficient to build out solar, nuclear and wind, why are they still building all these coal plants?” asked Ted Nordhaus, chairman of the Breakthrough Institute, a think tank focused on development and the environment.

China’s CO2 emissions increased 4.2 percent last year, according to the Global Carbon Project, helping drive a global increase of 2.3 percent. China now accounts for 28 percent of the world’s total emissions, more than the United States and the European Union combined.

“I don’t think the Chinese and the Indians are stupid,” Mr. Nordhaus told me. “They are looking at their indigenous energy resources and energy demand and making fairly reasonable decisions.”

For them, combating climate change does not look at all like a free lunch.

Note that doing something about air pollution and doing something about carbon emissions are two distinct issues.  America did a great deal to clean up its air, for instance when it comes to the dangerous Total Particulate Matter, but has done much less to lower its carbon emissions.  It is no accident that the former is a national public good, the latter is mainly a global public good.  China, India, and other developing nations may well go a similar route and simply keep emitting carbon at high and perhaps even growing rates.   If you lump everything together into a general “the benefits of getting rid of air pollution,” you will be missing that nations can and probably will make targeted clean-up attempts that leave carbon emissions largely intact.

By the way, here is yesterday’s report from India:

“India’s first task is eradication of poverty,” Mr. Javadekar said, speaking in a New York hotel suite a day after a United Nations climate summit. “Twenty percent of our population doesn’t have access to electricity, and that’s our top priority. We will grow faster, and our emissions will rise.”

India is the world’s third-largest carbon polluter, behind China and the United States, and Mr. Javadekar’s comments are a first indication of the direction of the environmental policies of the new prime minister, Narendra Modi…

In coming decades, as India works to provide access to electricity to more than 300 million people, its emissions are projected to double, surpassing those of the United States and China.

If you haven’t tried crossing the street in India, you don’t know much about how hard it is to fix the problem of carbon emissions.

Handicapping the 2012 Nobel

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.

Economics Nobel odds at iPredict

iPredict is running contracts on who will win this year's Nobel Prize in Economics. As I write Oliver Hart heads the field with a 25% chance, Robert Schiller, Richard Thaler, Martin Weitzman come next, all with an 18% chance of winning.

Also listed are William Nordhaus, Jean Tirole, Angus Deaton, Richard Posner, Gene Grossman, Ernst Fehr, Gordon Tullock, Avinash Dixit, Sam Peltzman, Eugene Fama and Robert Barro.

It does seem to be a market based on real money payments, though I am not sure how much liquidity is there.  The direct link to the contracts is here and right now Thaler is leading.  The link cited above is here and for the pointer I thank Eric Crampton.

Who will win the Nobel Prize in economics this year?

I see a few prime candidates:

1. Richard Thaler joint with Robert Schiller.  

2. Martin Weitzman and William Nordhaus, for their work on environmental economics.

3. Three prominent econometricians of your choice, bundled.

4. Jean Tirole, possibly bundled with Oliver Hart and other game theorists/principle agent theorists.  But last year the prize was in a similar field so the chances here have gone down for the time being.

5. Doug Diamond, bundled with another theorist or two of financial intermediation, such as John Geanakopolos.  Bernanke probably has to wait, although that may militate against the entire idea of such a prize right now.

6. Dale Jorgenson plus ???? (Baumol?) for a productivity prize.

I see #1 or #2 as most likely, with Al Roth and Ernst Fehr also in the running.  Sadly, it seems it is too late for the deserving Tullock.

In general I think Robert Barro has a good chance but I don't see him being picked so close to a financial crisis; the pick would be seen as an endorsement of Barro's negative attitude toward fiscal stimulus and I don't expect that from the Swedes.  The financial crisis is a problem for Fama especially, though he is arguably the most deserving of the non-recipients.  Paul Romer is another likely winner, although they may wait until rates of growth pick up in the Western world.  He is still young.  The Thomson-Reuters picks seem too young and for Alesina the political timing probably is not right for the same reasons as Barro.

Here is a blog post on the betting odds for the literature prize; NgŠ©gÄ© wa Thiong'o is rising on the list.  Not long ago the absolute favorite was Tomas Tranströmer, who perhaps should start his own line of toys or have his name put on a school of engineering.

Nobel Prize picks

The WSJ offers up some predictions, although not for economics.

For this year (NB: I've never been right in the past) I am predicting a joint prize for Oliver Williamson and Jean Tirole.  Williamson is by some accounts the most cited living economist, Tirole is European, the pick would not look "political," and yet agency problems have proven to be pretty important as of late.  The selection would look relevant.  I used to pick Fama each year but the time is no longer right for him, whether that is fair or not (I would say not).

My dark horse pick is a joint prize to environmental economists, including William Nordhaus for the concept of "green accounting."

I thank Akshay for the pointer.  What do you all predict?

Carbon tax splat

A few of you asked me for more commentary on this linked articleWill is on board but I think it is provocative but unconvincing.  Here are a few points: oddly, the author doesn’t mention the strongest argument against such a tax, namely that the Chinese and others may not follow suit.  I don’t worry much about one-time compliance costs if energy improvements bring a sounder long-run state of affairs; admittedly a big if.  The side deals from a tax will be bad and I expect an inefficient version of whatever happens; that said this does not disfavor reform vs. the status quo since the status quo has very bad side deals too; whether those side deals get worse, or by how much, depends on how the counterfactual is specified.  Under some scenarios the side deals in fact get better.  Uncertainty alone does not favor inaction, rather it favors action as a kind of insurance policy against very bad outcomes.  And uncertainty about long chains of causation most definitely does not, per se, favor reliance on market prices, rather it favors agnosticism about market vs. government.  Waiting does seem very costly to me; read Six Degrees.  I am far from convinced that the Nordhaus model is the best way to think about the costs of warming.  The author of the post is at his best when arguing: "a tax is unlikely to work," at his weakest when arguing "this means the best course of action is no tax at all."

The bottom line is that the whole thing is likely to end very badly for at least one billion of the world’s people, no matter what we do within the feasible set.  In the meantime we can tell them they ought to get richer, and of course they should, but that’s hardly a solution either.