2011 Nobel Prize in Economics

October 10, 2011 • 4:42 am

And in other boring news, the 2011 “Nobel Prize” in Economics (it’s not really a Nobel, it’s “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” goes to  Thomas J. Sargent and Christopher A. Sims “for their empirical research on cause and effect in the macroeconomy”.

I’ve always thought this Johnny-come-lately prize was somewhat of a travesty.  Economics is not a hard science, but a social science, and they’ve already run out of famous economists to give it to. It’s not like economics advances so rapidly that they can even give a prize of this type on a yearly basis. (Apologies to Paul Krugman.)


57 thoughts on “2011 Nobel Prize in Economics

  1. The apologies to Paul Krugman are in order. Not for his NYT blog: for that, he deserves the Medal of Freedom and about any independent thinker’s award there is, if any. No, for his contributions to Economic Geography, which are a milestone. If properly developed, Krugman’s insights (and those of his co-workers Venables and Fujita) could explain a lot about why the settled world looks the way it looks. (I’m adapting a simplified version of his theory to model Iron Age settlements in Europe, and it works beautifully. So do preliminary calculations on the Classical Mediterranean.)

    For many other economists thus distinguished (with notable exceptions like Joseph Stieglitz, Thomas Schelling or Daniel Kahneman) one should bear in mind J. K. Galbraith’s wry comment: that they are most closely associated with longevity. And a special Myron-Scholes-and-Robert-C.-Merton-Fund should be created for any stray widows and orphans still smarting from gambling according to the precepts of those Nobelised luminaries. Which illustrates the dismal effect of predominant ideology upon economic theory. After all, not even in the heyday of Nazism or Stalinism were Trofim Lysenko or H.F.K. Günther awarded a Nobel for Medicine.

        1. We wrote to the U of Chicago alum mag about this marketing scam, as an alum. Of course, they prefer to ignore the facts. It’s much more profitable for the school but leads to doubts about their integrity.

  2. Yes, jokes about the supposed fuzziness of economics are as easy as meteorology jokes. But I’m not sure that the “it’s not a hard science” crack is very useful. That’s what a lot of physicists and chemists think about biology…

    1. Yeah but those physicists and chemists are dead wrong. Is finding that DNA is a double helix composed of four nucleotide bases “soft science”? I DON’T THINK SO.

      1. As a chemist, I have absolutely no problem with Nobels in biology – it is just that most of those get labeled as “medicine”. I am also unable to find any convincing border separating chemistry and biology (or physics/crystallography) in the example you cited.

        1. The medicine tag is because the names of the awards are stipulated in Alfred’s will – “Chemistry” and “Physiology or Medicine”.

        2. There are no Nobels in biology. They’re in medicine or physiology– a much narrower definition. That’s why a great biologist will not get a Nobel unless their work is regarded as having medical applications. The only organismal/evolutionary biologists ever to get the Nobel were Lorenz, Tinbergen, and von Frisch for their work on animal behavior, and I’m not sure why the Nobel committee stretched its usual criteria to include them.

          1. In the case of Karl von Frisch, a conceivable justification (though certainly not the Nobel Committee’s) might be that he helped, through his work on Nosema apis during WW II, preventing the starvation of the German people. A “Mischling zweiten Grades” according to Nuremberg laws (Jewish grandmother), von Frisch was hounded and practically thrown out by the Nazis. His expertise on honey bees saved him: the Nosema outbreak in the early ’40s frightened the Nazi hierarchy, including a number of biologists working for one of Himmler’s cuckoo outfits, to the point that he was re-instated and left alone until the end of the war. He also helped with freeing the survivors among the 183 Polish professors from Cracow who had been sent to Dachau concentration camp by the Gestapo after the invasion of Poland. Typically, he never mentioned the period in his autobiography. A nice contrast to Konrad Lorenz.

      1. As I recall, Krugman made a similar claim in one of his columns. There’s certainly a lot of overlap in the mathematics. Game theory is crucial to both economics and evolutionary biology.

        1. Game theory is important in the evolutionary biology of animal behavior, but not so much in evolutionary biology writ large, I think.

          1. That’s where chemistry comes in.

            And it has been said without the theory of evolution biology is just stamp collecting.

  3. I think questionable aspect of economics as a “science” lies in the link between “theory” (which can be quite mathematical and seemingly “hard”) and experiment/observation. I am leery (but too ignorant to be a “denier”) about the extent to which that link is established in the work that has been awarded “Nobels” in economics.

  4. It’s been well established that I haven’t been right since 2005, but I always understood that there is an economics Nobel (an afterthought, as it were) instead of a maths Nobel because Alfred hated math.

    Quoting Barbie, “Math is hard!” (of course, Barbie meant that this is only true for girls.)

    1. “I haven’t been right since 2005” – we have a dilemma here Marella – we take you at your word which means that this statement is not right as it is post 2005, or you are wrong about that & right about other things!

    2. Not sure how Alfred felt about math, but as Jerry noted in his post, there really isn’t a Nobel prize in economics. Nobel had nothing to do with it (he was long dead when Sweden’s central bank created the prize).

    1. And then there’s toe old one that if you laid all the economists in the world end to end they would still fail to reach a conclusion.

  5. These are not real Nobel Prizes but prize awarded by the Swedish Central Bank, a commercial entity. Big deal.

    This is a marketing scam pretending that econ has any resemblance to an evidence-based and truly scientific knowledge and predictability. Econ is all about ideology.

    Even U of Chicago is guilty of furthering this fraud.

  6. Of course economics has to be shoehorned in. Economists are charged with the difficult task of legitimising whatever economic policies best benefit the elites, and explaining away the damage they do to everyone else. They need all the legitimacy they can get, and inventing an award that you then name confusingly to make it sound like a nobel is just the kind of thing that allows their claptrap to be dressed as actual science.

  7. What exactly differentiates “hard” from “soft” science? I’m starting to think it’s nothing more than the width of the error bars.

  8. they’ve already run out of famous economists to give it to

    They’ll eventually run out of economists to give it to. A Nobel Prize-winning economist is one who’s been right once in his life.

  9. Anybody can give any prize to whomever they want to.
    A better question is: why are economists elected to the National Academy of Sciences?

  10. The question is less about whether economics is a science than whether it is a discipline that can and should be studied scientifically. As an economics PhD student, my main criticism of the field is that economists do not go far enough in applying scientific principles to their work.

    Economic theory is overly deductive, with mathematical models stemming from first principles. These principles, however, are simply assumptions, not stylized facts about the world. Many of these principles (particularly related to choice and preferences) are not supported by empirical work. Unfortunately, we too often keep the assumptions in spite of the lack of empirical support.

    I would like to see an economics that is more empirically-based and in which falsified theories were supplanted by newer, more sound theories. It is an indictment to think that most macroeconomic models preclude, by assumption, the very sort of economic crisis we have just experienced.

    With this in mind, I think it’s worth mentioning that Christopher Sims, one of this years prize recipients, won for his work on a class of statistical models (vector autoregressions or VAR) that are used to test macroeconomic theory. VAR models have improved the predictive ability of such models and are an advance over previous work. I would argue that Sims’s work is the sort of scientific progress in economics that we should celebrate.

    Progress in economics will always be hampered by our limited ability to perform experiments and by the complexity of economic systems. But I think the main obstacle to the progression of economics as a science is the fields’ unwillingness to do what other sciences do: discard theories that are incompatible with evidence.

    1. Daniel I think that economics has great explanatory power ~ after the fact. But what predictive power is economics capable of ?

      It reminds me of advertising ~ everyone knows that advertising is essential to maximising the profits of a business, but no one knows what profitable advertising looks like. One just has to throw stuff at the wall until some of it sticks. Poor analogy ~ sorry.

      1. Maybe I should clarify that I don’t know _how_ predictive economics is. But it isn’t quite “just so” stories either, it seems to me.

        1. There are specific instances in which it’s not ‘just so stories’, and they tend to be when people actually do their market research rather than making things up. Will Policy X have it’s intended effects? If you interview samples of the groups expected to be affected and find out beforehand how they will react, then you do have a decent handle on things. If you make things up and quote coincidences as ‘proof’ of how right you are – well, that seems to be pretty much every ‘expert’ interviewed on the news programs.

      1. Scorn. Isn’t that the same anti-knowledge dismissive attitude that no-nothing fundamentalist types take toward evolution, rather than learning?

      2. Scorn is just a word until it’s given a context ~ so yes it could be as you describe it. The idea of economists being envied by academics in other disciplines is laughable though. I will go with scorn, mockery or indifference as more likely 🙂

  11. I’ll contribute to the prize of a person who exposes the myriad delusions of the market and convinces the population at large to ditch those delusions. That’ll really be something – after all we’ve had almost 4 years of virtually no growth and yet still hear the same mantra about how it’s all a good investment in the long run and we’re just having a little glitch or ‘long-needed correction’ and what not.

  12. Are you referring to the list of laureates which suggests they’ll claim you as one of their own if you’ve ever had lunch on campus? Heisenberg is listed but I can’t see any connection, at least from the bio they publish?

  13. For Immediate Release

    It was announced today at the University of Lethbridge (Lethbridge,
    Alberta, Canada) that Dr. John R. Vokey is this year’s recipient of the
    Psychology prize in honour of Alfred Nobel for his work on backward
    messages in rock music. When contacted at his busy microcognition
    laboratory in the Behaviour and Evolution Research Group in the Department
    of Psychology, he feigned excitement, saying “Again?”. Like the Economics
    prize in honour of Alfred Nobel, the Psychology Nobel in not a real Nobel
    prize, but one just made up. Unlike the Economics Nobel, which was made up
    and funded by a bunch of banks, though, the Psychology Nobel, was made up
    and funded by a real psychologist, Dr. John R. Vokey, who also serves as
    the committee vetting the nominees, well, nominee (him). Also unlike the
    Economics Nobel, the Psychology Nobel celebrates a real science, not a
    silly, incoherent discipline populated by wankers and misfits who couldn’t
    predict the biggest economic disaster of all time. When asked what he
    would do with the winnings, Dr. Vokey replied, “I’ll probably plug a
    parking meter and really make someone’s day, which is more than I can say
    for any economist.”
    – 30 –

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