Two share Economics “Nobel Prize” (and a poll)

October 12, 2020 • 6:00 am

The Economics Nobel Prize isn’t really a Nobel Prize as originally established by Alfred Nobel (there were five of those: three science prizes, Literature, and Peace). Rather, it was established only in 1969, and is formally called “The Sveriges Riksbank Prize in Economic Sciences”.  I don’t count it as a real Nobel Prize. Given that, though, the University of Chicago is crawling with Economics-Prize laureates.

My school missed out this year: the prize was awarded this morning to American economists Paul Milgrom and Robert Wilson, both at Stanford University “for improvements to auction theory and inventions of new auction formats.”

Shoot me if I’m wrong, but I don’t think Economics Nobels have improved the lot of humanity as much as the other prizes, and, after all, improvement of human welfare is what the Prizes are supposed to go for (some may denigrate the Literature Prize here). I know some reader will come over here and argue that improvements in auction theory are as useful as establishing the structure of DNA or devising the CRISPR/Cas9 system, but they would be wrong.

Do you think the Economics “Nobels” should be awarded at all? Here’s a poll.

19 thoughts on “Two share Economics “Nobel Prize” (and a poll)

  1. I voted yes.

    I drove from Massachusetts to Florida this weekend and voted in all 11 states along the way for Biden.

  2. It raises awareness and points to interesting economics work.

    The *name* is dubious. But, the name is what makes us all aware of it.

    1. It just goes to show how the importance attributed to the 119 year old Nobel prize themselves seems incommensurate with the importance of intellectual activity in modern times, activity which is recognized with newer awards.

  3. I wouldnt mind if it highlighted diverse and interesting work, but historically it has been mainly a prize for American mainstream economists. I see the literature prize is taking the same route.

  4. “… the interest on which is to be distributed annually as prizes to those who, during the preceding year, have conferred the greatest benefit to humankind. The interest is to be divided into five equal parts and distributed as follows: one part to the person who made the most important discovery or invention in the field of physics; one part to the person who made the most important chemical discovery or improvement; one part to the person who made the most important discovery within the domain of physiology or medicine; …”

    Source :

    Inventions count, as do improvements. I hadn’t thought of that.

    But the phrase “the greatest benefit to humankind.” seems 19th century prose to me – was it meant literally?

    The economics prize was established from a donation from the Nobel foundation to that bank (source : Wikipedia)

  5. Memorably, Alex Rosenberg calls the prize in economics ‘ersatz.’ And when I hear the word ‘ersatz’ I always think of the old man in Wright Morris’ ‘The Home Place.’ While desultorily carrying a deflated inner tube around his Nebraska barnyard, he mutters ‘airsuds.’ Someone asks him What? He repeats, ‘airsuds’. . . and adds, ‘that’s what it is when it ain’t rubber.’

  6. I don’t know how much this has been the case in practice, but surely it’s possible for improvements to our understanding of the creation and distribution of wealth and prosperity, how we can make those processes more efficient, and how we can make them fairer, more productive, and so on have the capacity – in principle – to improve greatly, and in the relative short term, the quality of life for everyone on Earth. Principles of economics can overlap with, and both draw from and give insight to, such disciplines as mathematics, ecology, and even thermodynamics. Daniel Kahneman’s work, which was in psychology, was awarded the economics “Nobel Prize” because a better understanding of human decision making leads to better understanding of markets, and of the things that can make them work and not work, to the benefit (or detriment) of potentially everyone. John Nash’s Economics “Nobel Prize” was for his game theory work, which explained, among other things, how markets (and other such systems) can come to stable but not necessarily efficient equilibria that resist change. These insights have powerful potential to help correct – or at least explain – economic disparities, how they resist correction, and perhaps provide improvement in our strategies for correcting them.

    I’m a huge lover of physics, and a long-time fan of Roger Penrose, but it’s probably going to be centuries at least before our understanding of black holes, specifically, improves the welfare of humanity, beyond the incalculable benefit of our increased understanding of the nature of the universe. Of course, that knowledge could surprise us and change things much more quickly, in ways that we cannot predict, for that’s the nature of innovation and discovery. Still, it’s unlikely to have as immediate an impact as truly useful advances in economics.

    As for literature and poetry, these things are improvements to humanity in and of themselves. No excuses need be made for them to receive Nobel Prizes.

    1. “… it’s probably going to be centuries at least before our understanding of black holes, specifically, improves the welfare of humanity“

      That is why I am settling on the 19th century prose “the greatest benefit to humankind” as being largely figurative. It is an admirable spirit, but great discoveries can have, as they say, immeasurable benefits, yet still be worth drawing the entire world’s attention to.

    2. A real understanding of quantum physics is yet to occur. But an uncanny ability to calculate what a somewhat inconsistent ‘stab at the theory’ came into existence between 1925 and 1950. This is what?–IIRC about 30% or 40% of the west’s economy now.

      So I think “..centuries…” for ‘practical’ effect is somewhat overly pessimistic.

      1. Well, I do tend to be a bit of a pessimist, so it’s a fair cop. But with quantum gravity, for instance, just because of the energy scale difference with “ordinary” quantum mechanics, it is quite difficult to investigate possible claims and test them experimentally. And given that the time scale for the predicated decay of “solar mass” black holes from Hawking Radiation is on the order of a googol years, we’re going to have to find some workaround rather than just to wait and see.

        But people are clever, and it’s certainly possible that Penrose’s research may lay the ground work for revolutionary technologies, from worm-holes to the creation of “baby universes” to who knows what. And that barrier could fall with amazing rapidity. But it’s probably not a great bet that it’ll happen in our lifetimes.

  7. Formally, the prize is not a “Nobel Prize.”

    It is not clear whether these high profile prizes benefit science and literature, but I think they do: they affirm that the pursuit of knowledge and artistic achievements are worthy aims, in societies that reward very conspicuously getting rich. They reward little known poets, not NYT top blockbuster authors.

    Economics tries to use Mathematics to explain human behavior in markets. This is a very worthwhile pursuit, and a very difficult one, as validation of models may be hard or impossible. So a high profile prize in Social Sciences makes a lot of sense. In fact, many of the prizes — in particular the current one — have been awarded for work which is mostly mathematical.

    A historical note: the Economics prize was established at a time when it seemed that economists had finally achieved good enough theories to end major economic crashes and instabilities…

    1. “It is not clear whether these high profile prizes benefit science …”

      While there is a committee for each science Nobel, it must be noted that Nobel laureates themselves, in addition to top-ranked scientists in those categories, make nominations and otherwise influence the outcome every October. Indeed, they talk and interact all year – the Nobel prize is not like a smoke signal from the Vatican.

      So another view of the value of the Nobel would be for asking the question “what is the biggest discovery” – the answer is as good as one can get – from the scientists themselves who either do the work or run research programs.

  8. A nice story in the news about how Paul Milgrom found out that he had won. His phone is set up to not ring when it gets calls from numbers it doesn’t recognise, so he missed the call from the Nobel committee. It was only when his co-awardee, who lives across the street, banged on his front door that he heard that they had won.

  9. Unless the inventor of Modern Monetary Theory gets a prize, there is no valid argument that any of the recipients of that prize benefited humanity in any way. Check out “The Deficit Myth” by Stephanie Kelton for details. If anything, prior Economics prize winners have justified the ideology of deregulation and unrestrained robber baron freedom which has destroyed the US middle class and threatens the same fate for those in the rest of The West.

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