Results for “nobel”
597 found

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.

Round-up

1. Short list for the Nobel Literature Prize; I am rooting for Orhan Pamuk.  Here are Booker Prize odds.

2. TV viewing habits for blacks and whites are converging.

3. How to achieve sustainable gains in happiness: work at happiness-related activities.  And maybe winning the lottery helps after all.

4. A journal issue of research inspired by Thomas Schelling.

5. The population of New Orleans is down to 187, 525.

6. Why no Industrial Revolution in China?

Albert Hirschman

Henry at CrookedTimber asks:

What do libertarians think about Hirschman’s arguments? Do they read him? Do they have a sophisticated response?

My take: Albert Hirschman deserves a Nobel Prize in economics.  His early work on the unbalanced nature of economic development was pathbreaking.  The Rhetoric of Reaction is a brilliant study in intellectual self-deception.  As a historian of thought he integrates wonderfully, such as in his study of how commerce shapes mores

But he would win the Prize for focusing the attention of economists and political scientists on the phenomenon of voice: the ability of consumer or voter complaints to induce improvements in supply.  Hirschman was the first modern social scientist to think about this mechanism systematically.

Hirschman first suggested voice gets stronger and more effective when exit is limited.  In his (earlier) vision, if you can leave you won’t complain.  Fidel Castro understood this and let many Cubans go, although of course they complained from Florida.  It is sometimes suggested that in a world of school vouchers fewer parents would show up at the school board meeting.  Don’t yap, just yank your kid.

In reality voice often works best when competitive pressures are strong.  HBO is more responsive than was East Germany.  You are not wasting your time to complain at Wegman’s, or for that matter at this blog.  Competition and voice are more likely complements than substitutes.  Hirschman admitted and indeed emphasized this point in his later writings.

As far as I know, no one has solved for the proper conditions for when voice is effective.  Here is one recent model.  The general problem is that the motives for voice are poorly understood.

Here is Paul Krugman on Hirschman.  Here is a paper on Hirschman and evolution.  Here is a book on Hirschman.

Addendum: Here is Alex on the topic of voice.  Sadly he and I will not be having a little spat over this one…

It is also Gerard Debreu’s birthday

Remember Theory of Value, that elegant 128 pp. book which summed up general equilibrium theory?  Here is a brief bio of Debreu, courtesy of Liberty Fund.  Here is Debreu’s own autobiography.  Here is Wikipedia

I recall Debreu once saying he took his inspiration from Proust.  To what extent is time a dimension just like space in its effects on human organization?  Debreu solved for those conditions, with of course assistance from Arrow, Hurwicz, Wald, and others.

And by the way, Yana just got her bag, so I feel Debreu’s model is just a little less unrealistic than it was appearing last night.

Open Letter – The Signatories

My Open Letter on Immigration has been officially released by the Independent Institute.  It has now been signed by over 500 economists including 5 Nobel Laureates – Thomas Schelling (University of Maryland), Robert
Lucas (University of Chicago), Daniel McFadden (University of
California, Berkeley), Vernon Smith (George Mason University), and
James Heckman (University of Chicago).  Many other prominent economists are also signatories including Eugene Fama, Robert Pindyck, Jeffrey Perloff, Barry Eichengreen, and Steven Salop to name just a few of many.

My personal thanks to everyone who signed and all who helped to make this a big success.  Thanks!

John List and the economics of charity

Here is my New York Times column today.  The focus is on how we often make bad charitable decisions.  Excerpt:

…before we can improve our charity, we must first understand it. John A. List, an economist at the University of Chicago,
is studying fund-raising campaigns toward this end. Professor List,
combining his career as a researcher with a role as part-time
consultant, introduces variations into real world fund-raising
campaigns and studies the results. This reflects his core method of the
"field experiment," which he has applied to topics as diverse as
competition between the genders, how contestants cooperate on
television game shows and how markets work in baseball card trading.
Steven D. Levitt, co-author of "Freakonomics" and a colleague at the
University of Chicago, refers to Professor List as the young economist
most likely to win a Nobel Prize.

Here is another bit:

For purposes of contrast, Professor List and his team then increased
the attractiveness of the woman who asked for the money. The more
attractive women (a "one standard deviation increase in
attractiveness," in statistical terms) had as big a positive impact on
giving – in the range of 50 to 100 percent – as moving from the least
successful fund-raising method to the most successful.

What is new and essential in economics?

By "new," restrict yourselves to 1990 and afterwards.  I see mid-1980s as the end of a great era in economic theorizing.  Take game theory, principal-agent theory, and the economics of information, and apply them to everything, for better or worse.  This was an exciting, indeed intoxicating, time to learn economics.  While applications continue, we have run out of new ideas on those fronts.  Experimental economics is completely Nobel-worthy, but it is now over forty years old.  What are the next breakthroughs or the breakthroughs which have just been made?  Comments are open…

Pramoedya Ananta Toer passes at 81

Here is one notice.  I regard his The Buru Quartet as, after Orwell, the great political novel of the twentieth century.  At a deeper level it concerns different notions of what a life consists of.  As you read each volume, your understanding of what has come before shifts radically.  Most of it he wrote while in prison.  Of the living writers he was my "no brainer" pick for a Nobel Prize.  Here are other notices of his death.

Where should you send your kid to college?

Attendance decisions are due May 1, so what should you do?  If parents (and their children) are loaded with biases, is behavioral economics useful? 

I suspect the core bias is parents wanting to feel they have done everything possible to help the kid, rather than maximizing the kid’s (or the world’s) expected return.  This will lead parents to ignore the upsides of risky courses of action.  Who wants to send the kid to the wrong school and feel guilty for the rest of your life?  But if the school works out especially well — your kid wins a Nobel Prize rather than your kid "merely" receiving tenure at an Ivy League school  — the parents are not so much happier.  "More pride" is only a little better than "pride," and most of your kid’s accomplishments you will overvalue and exaggerate anyway.  So parents put too much stress on the possible downside and not enough weight on the potential upside of a choice.

If your kid is very smart and takes plenty of initiative, maybe you should send him to a large school with lots of resources.  He will be able to hook up with the interesting people and they will have a better choice of peers.  If your kid has true intellectual upside, those extra resources will yield a very high return.  Even if Middlebury gives a better undergraduate education than Harvard, the best undergraduate senior economics major at Harvard will have a bigger head start in his or her career.

That being said, if you follow this advice you probably will regret it.  It is not geared toward the median case or the modal case.  Perhaps you already are upset at this blogger for suggesting that your kid should be a sacrificial lamb, offered up to the altar of scientific progress.  Or perhaps you (and your kid) feel flattered.

Another view is that most people overestimate the intelligence of their kids.  Too many parents obsess over Harvard when they should be wondering about Podunk U..  That point is well-taken, but being a fan of overoptimism, I find the first story more plausible.  So look at the total endowment of the school, not the per capita endowment.

Your thoughts?  Don’t focus on general advice for parents, tell us what you think the relevant behavioral bias is, how to correct for it, and distinguish between returns for students, parents, and the broader world. 

The Tyranny of the Alphabet

In economics there is a norm that authors are listed alphabetically.  The norm is surprisingly strong and deviations are punished.  On my first paper with Eric Helland we tossed for first authorship, I won, and we noted the names were listed in random order.  Believe it or not, Helland’s tenure committee grilled him on this point and as a result we switched to alphabetical ordering on all our subsequent papers.  Citation counts, however, are historically assigned only to the first listed author and later listed authors are often buried under the et al. monster. 

Do you think these effects are too tiny to matter?  Take a look at the Yellow Pages and see how many firms choose A-names, AA-names, and AAA-names.  Even more surprisingly, a new paper (free, working version, Winter 06, JEP) demonstrates that these effects have important consequences for careers in economics.  Faculty members in top departments with surnames beginning with letters earlier in the alphabet are substantially more likely to be tenured, be fellows of the Econometrics Society, and even win Nobel prizes (let’s see, Arrow, Buchanan Coase…hmmm).  No such effects are found in psychology where the alphabetical norm is not followed.

I’m delighted that my young co-author, Amanda Agan, has a great career ahead of her but if Helland wins the Nobel I am going to be very annoyed.

It’s time to end the tyranny of the alphabet!  The AER should announce a name randomization policy unless authors otherwise instruct.  Barring that, I wish henceforth be known as Alex Abarrok.

Why the War on Drugs is hard to win

Here is a summary of forthcoming work by Gary Becker, Michael Grossman, and Kevin Murphy:

In an important new study, world-renowned economists–including a Nobel
Prize winner and a MacArthur "genius"–argue that when demand for a
good is inelastic, the cost of making consumption illegal exceeds the
gain. Their forthcoming paper in the Journal of Political Economy is a
definitive explanation of the economics of illegal goods and a
thoughtful explication of the costs of enforcement.

The authors demonstrate how the elasticity of demand is crucial to
understanding the effects of punishment on suppliers. Enforcement
raises costs for suppliers, who must respond to the risk of
imprisonment and other punishments. This cost is passed on to the
consumer, which induces lower consumption when demand is relatively
elastic. However, in the case of illegal goods like drugs–where demand
seems inelastic–higher prices lead not to [TC: much?] less use, but to an increase
in total spending.

In the case of drugs, then, the authors argue that excise taxes and
persuasive techniques –such as advertising–are far more effective uses
of enforcement expenditures.

"This analysis…helps us understand why the War on Drugs has been so
difficult to win…why efforts to reduce the supply of drugs leads to
violence and greater power to street gangs and drug cartels," conclude
the authors. "The answer lies in the basic theory of enforcement
developed in this paper."

Here is an earlier version of the paper.