Nobel Memorial Prize in Economic Sciences

Nobel Memorial Prize in Economic Sciences

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The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, but officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel , is an award for outstanding contributions to the field of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

, generally regarded as one of the most prestigious awards for that field. While not one of the Prizes
Nobel Prize
The Nobel Prizes are annual international awards bestowed by Scandinavian committees in recognition of cultural and scientific advances. The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895...

 established by the will of Alfred Nobel
Alfred Nobel
Alfred Bernhard Nobel was a Swedish chemist, engineer, innovator, and armaments manufacturer. He is the inventor of dynamite. Nobel also owned Bofors, which he had redirected from its previous role as primarily an iron and steel producer to a major manufacturer of cannon and other armaments...

 in 1895, it is consistently identified with them. The Prize in Economics, as it is referred to by the Nobel Foundation
Nobel Foundation
The Nobel Foundation is a private institution founded on 29 June 1900 to manage the finances and administration of the Nobel Prizes. The Foundation is based on the last will of Alfred Nobel, the inventor of dynamite....

, was established and endowed by Sweden's central bank Sveriges Riksbank
Sveriges Riksbank
Sveriges Riksbank, or simply Riksbanken, is the central bank of Sweden and the world's oldest central bank. It is sometimes called the Swedish National Bank or the Bank of Sweden .-History:...

, in 1968 on the occasion of the bank's 300th anniversary, in memory of Alfred Nobel.
Like the Nobel Laureates in Chemistry and Physics, Laureates in Economics are selected by the Royal Swedish Academy of Sciences
Royal Swedish Academy of Sciences
The Royal Swedish Academy of Sciences or Kungliga Vetenskapsakademien is one of the Royal Academies of Sweden. The Academy is an independent, non-governmental scientific organization which acts to promote the sciences, primarily the natural sciences and mathematics.The Academy was founded on 2...

, and a Prize Committee
Committee for the Prize in Economic Sciences in Memory of Alfred Nobel
The Committee for the Prize in Economic Sciences in Memory of Alfred Nobel is the prize committee for the Alfred Nobel Memorial Prize in Economic Sciences, and fills the same role as the Nobel Committees does for the Nobel Prizes. This means that the Committee is responsible for proposing laureates...

 similar to the Nobel Committee
Nobel Committee
A Nobel Committee is the working body responsible for the most of the work involved in selecting Nobel Prize laureates. There are five Nobel Committees, one for each Nobel Prize....

s is used.
It was first awarded in 1969 to the Dutch and Norwegian economists Jan Tinbergen
Jan Tinbergen
Jan Tinbergen , was a Dutch economist. He was awarded the first Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1969, which he shared with Ragnar Frisch for having developed and applied dynamic models for the analysis of economic processes...

 and Ragnar Frisch, "for having developed and applied dynamic models for the analysis of economic processes."

Funding of the Prize


An endowment "in perpetuity" from Sveriges Riksbank pays the Nobel Foundation's administrative expenses associated with the prize and funds the monetary component of the award.
Since 2001, the monetary portion of the Prize in Economics has totalled 10 million Swedish kronor
Swedish krona
The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...

 (during January 2008, approx. US$1.6 million; 1.1 million Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

). This is equivalent to the amount given for the Nobel Prizes themselves.
Since 2006, Sveriges Riksbank has given the Nobel Foundation an annual grant of 6.5 million Swedish kronor (in January 2008, approx. US$1 million; 0.7 million Euro) for its administrative expenses associated with the prize as well as 1 million Swedish kronor (until the end of 2008) to include information about the prize in the Nobel Foundation's internet webpage.

Relation to the Nobel Prizes


The nomination process, selection criteria, and awards presentation of the Prize in Economic Sciences are performed in a manner similar to that of the Nobel Prizes. The Prize is awarded by the Royal Swedish Academy of Sciences "in accordance with the rules governing the award of the Nobel Prizes instituted through his [Alfred Nobel's] will", which stipulates that the prize be awarded annually to "those who ... shall have conferred the greatest benefit on mankind".
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is the only non-Nobel prize that has ever been associated officially with the Nobel Foundation.

Award nomination and selection process



According to its official website, the Royal Swedish Academy of Sciences "administers a researcher exchange with academies in other countries and publishes six scientific journals. Every year the Academy awards the Nobel Prizes in Physics and Chemistry, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, the Crafoord Prize
Crafoord Prize
The Crafoord Prize is an annual science prize established in 1980 by Holger Crafoord, a Swedish industrialist, and his wife Anna-Greta Crafoord...

 and a number of other large prizes".

Each September the Academy's Economics Prize Committee, which consists of five elected members, "sends invitations to thousands of scientists, members of academies and university professors in numerous countries, asking them to nominate candidates for the Prize in Economics for the coming year. Members of the Academy and former laureates are also authorised to nominate candidates." All proposals and their supporting evidence must be received before February 1. The proposals are reviewed by the Prize Committee and specially appointed experts. Before the end of September, the committee chooses potential laureates. If there is a tie, the chairman of the committee casts the deciding vote. Next, the potential laureates must be approved by the Royal Swedish Academy of Sciences. Members of the Ninth Class (the social sciences division) of the Academy vote in mid-October to determine the next laureate or laureates of the Prize in Economics. As with the Nobel Prizes, no more than three people can share the prize for a given year; they must still be living at the time of the Prize announcement in October; and information about Prize nominations cannot be disclosed publicly for 50 years.

As with the Nobel Laureates in Physics
Nobel Prize in Physics
The Nobel Prize in Physics is awarded once a year by the Royal Swedish Academy of Sciences. It is one of the five Nobel Prizes established by the will of Alfred Nobel in 1895 and awarded since 1901; the others are the Nobel Prize in Chemistry, Nobel Prize in Literature, Nobel Peace Prize, and...

, Chemistry
Nobel Prize in Chemistry
The Nobel Prize in Chemistry is awarded annually by the Royal Swedish Academy of Sciences to scientists in the various fields of chemistry. It is one of the five Nobel Prizes established by the will of Alfred Nobel in 1895, awarded for outstanding contributions in chemistry, physics, literature,...

, Physiology or Medicine
Nobel Prize in Physiology or Medicine
The Nobel Prize in Physiology or Medicine administered by the Nobel Foundation, is awarded once a year for outstanding discoveries in the field of life science and medicine. It is one of five Nobel Prizes established in 1895 by Swedish chemist Alfred Nobel, the inventor of dynamite, in his will...

, and Literature
Nobel Prize in Literature
Since 1901, the Nobel Prize in Literature has been awarded annually to an author from any country who has, in the words from the will of Alfred Nobel, produced "in the field of literature the most outstanding work in an ideal direction"...

, each Laureate in Economics receives a diploma, gold medal, and monetary grant award document from the King of Sweden
Monarch of Sweden
The monarchy of Sweden is the constitutional monarchy of the Kingdom of Sweden. The present monarch, Carl XVI Gustaf, has reigned since 15 September 1973. He and his immediate family undertake various official, ceremonial and representational duties...

 at the annual Nobel Prize Award Ceremony in Stockholm
Stockholm
Stockholm is the capital and the largest city of Sweden and constitutes the most populated urban area in Scandinavia. Stockholm is the most populous city in Sweden, with a population of 851,155 in the municipality , 1.37 million in the urban area , and around 2.1 million in the metropolitan area...

, on December 10—the anniversary of Nobel's death.

Changes to the prize


Sylvia Nasar
Sylvia Nasar
Sylvia Nasar is a German-born American economist and author, best known for her biography of John Forbes Nash, A Beautiful Mind.- Early life and history :...

 wrote in her book A Beautiful Mind
A Beautiful Mind (book)
A Beautiful Mind is an unauthorized biography of Nobel Prize-winning economist and mathematician John Forbes Nash, Jr. by Sylvia Nasar, professor of journalism at Columbia University...

that in February 1995, after acrimony pertaining to the awarding of the 1994 Prize in Economics to John Forbes Nash
John Forbes Nash
John Forbes Nash, Jr. is an American mathematician whose works in game theory, differential geometry, and partial differential equations have provided insight into the forces that govern chance and events inside complex systems in daily life...

, the Prize in Economics was redefined as a prize in social science. This makes it available to researchers in such topics as political science, psychology, and sociology. Moreover, the composition of the Economics Prize Committee changed to include two non-economists. This has not been confirmed by the Economics Prize Committee. The members of the 2007 Economics Prize Committee contradict Nasar's claim since the secretary and 4 of the 5 members are professors of economics. Herbert Simon
Herbert Simon
Herbert Alexander Simon was an American political scientist, economist, sociologist, and psychologist, and professor—most notably at Carnegie Mellon University—whose research ranged across the fields of cognitive psychology, cognitive science, computer science, public administration, economics,...

, whose PhD
PHD
PHD may refer to:*Ph.D., a doctorate of philosophy*Ph.D. , a 1980s British group*PHD finger, a protein sequence*PHD Mountain Software, an outdoor clothing and equipment company*PhD Docbook renderer, an XML renderer...

 was in political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...

, was the first non-economist to win the prize in 1978.

Controversies and criticisms


Some critics argue that the prestige of the Prize in Economics derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandnephew of Alfred Nobel.

According to Samuel Brittan
Samuel Brittan
Sir Samuel Brittan is a British columnist for the Financial Times and an author.At Cambridge he was taught by Peter Bauer and Milton Friedman...

 of the Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....

, both former Swedish minister of finance Kjell-Olof Feldt
Kjell-Olof Feldt
Kjell-Olof Feldt is a Swedish Social Democratic politician, born 18 August 1931 in Holmsund, since 1974 a part of Umeå Municipality, Västerbottens län. Feldt was Minister of Trade 1970-1975, and assistant Minister of Finance 1975-1976...

 and Gunnar Myrdal
Gunnar Myrdal
Karl Gunnar Myrdal was a Swedish Nobel Laureate economist, sociologist, and politician. In 1974, he received the Nobel Memorial Prize in Economic Sciences with Friedrich Hayek for "their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the...

 wanted the prize abolished, saying "Myrdal rather less graciously wanted the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman)."

In his speech at the 1974 Nobel Banquet Friedrich Hayek stated that if he had been consulted whether to establish a Nobel Prize in economics he would "have decidedly advised against it" primarily because "the Nobel Prize confers on an individual an authority which in economics no man ought to possess... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally."

Critics cite the apparent snub of Joan Robinson
Joan Robinson
Joan Violet Robinson FBA was a post-Keynesian economist who was well known for her knowledge of monetary economics and wide-ranging contributions to economic theory...

 as evidence of the Committee
Committee for the Prize in Economic Sciences in Memory of Alfred Nobel
The Committee for the Prize in Economic Sciences in Memory of Alfred Nobel is the prize committee for the Alfred Nobel Memorial Prize in Economic Sciences, and fills the same role as the Nobel Committees does for the Nobel Prizes. This means that the Committee is responsible for proposing laureates...

's bias towards mainstream economics
Mainstream economics
Mainstream economics is a loose term used to refer to widely-accepted economics as taught in prominent universities and in contrast to heterodox economics...

, though heterodox economists
Heterodox economics
"Heterodox economics" refers to approaches or to schools of economic thought that are considered outside of "mainstream economics". Mainstream economists sometimes assert that it has little or no influence on the vast majority of academic economists in the English speaking world. "Mainstream...

 like Friedrich Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...

 (Austrian School
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...

) and Ronald Coase
Ronald Coase
Ronald Harry Coase is a British-born, American-based economist and the Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School. After studying with the University of London External Programme in 1927–29, Coase entered the London School of Economics, where he took...

 (associated with New institutional economics
New institutional economics
New institutional economics is an economic perspective that attempts to extend economics by focusing on the social and legal norms and rules that underlie economic activity.-Overview:...

) have won. The University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...

 has garnered nine of these Prizes—more than any other university—interpreted by some as a bias against candidates with alternative views.

Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...

 was awarded the 1976 prize in part for his work on monetarism
Monetarism
Monetarism is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over...

. Awarding the prize to Friedman caused international protests by the left, Friedman was accused of supporting the military dictatorship in Chile, because of the relation of economists of the University of Chicago to Pinochet and a controversial six-day trip he took to Chile during March 1975 (less than two years after the coup which deposed the democratically elected president Salvador Allende
Salvador Allende
Salvador Allende Gossens was a Chilean physician and politician who is generally considered the first democratically elected Marxist to become president of a country in Latin America....

). Friedman himself answered, that he never was an adviser of the dictatorship, only gave some lectures and seminars on inflation and met with many officials including the dictator Augusto Pinochet
Augusto Pinochet
Augusto José Ramón Pinochet Ugarte, more commonly known as Augusto Pinochet , was a Chilean army general and dictator who assumed power in a coup d'état on 11 September 1973...

 in Chile.
Four Nobel Prize laureates George Wald
George Wald
George Wald was an American scientist who is best known for his work with pigments in the retina. He won a share of the 1967 Nobel Prize in Physiology or Medicine with Haldan Keffer Hartline and Ragnar Granit.- Research :...

, Linus Pauling
Linus Pauling
Linus Carl Pauling was an American chemist, biochemist, peace activist, author, and educator. He was one of the most influential chemists in history and ranks among the most important scientists of the 20th century...

, David Baltimore
David Baltimore
David Baltimore is an American biologist, university administrator, and Nobel laureate in Physiology or Medicine. He served as president of the California Institute of Technology from 1997 to 2006, and is currently the Robert A. Millikan Professor of Biology at Caltech...

 and Salvador Luria wrote letters to the New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...

protesting the award in October 1976.

The 1994 prize to John Forbes Nash
John Forbes Nash
John Forbes Nash, Jr. is an American mathematician whose works in game theory, differential geometry, and partial differential equations have provided insight into the forces that govern chance and events inside complex systems in daily life...

 caused controversy within the prize's selection committee because of his history of mental illness
Schizophrenia
Schizophrenia is a mental disorder characterized by a disintegration of thought processes and of emotional responsiveness. It most commonly manifests itself as auditory hallucinations, paranoid or bizarre delusions, or disorganized speech and thinking, and it is accompanied by significant social...

 and alleged anti-Semitism
Anti-Semitism
Antisemitism is suspicion of, hatred toward, or discrimination against Jews for reasons connected to their Jewish heritage. According to a 2005 U.S...

.
The controversy resulted in a change to the rules governing the committee during 1994. Previously, members of the Economics Prize Committee members did not have any limit to their term of service; they now serve for three years.

The 2005 prize to Robert Aumann
Robert Aumann
Robert John Aumann is an Israeli-American mathematician and a member of the United States National Academy of Sciences. He is a professor at the Center for the Study of Rationality in the Hebrew University of Jerusalem in Israel...

 was criticized by European press due to his alleged use of his research of game theory to justify his stance against the dismantling of Israeli settlements from occupied territories.

The 2008 prize to Paul Krugman
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...

, a well-known critic of George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

, raised questions about the partiality of the committee. When questioned about the matter, the committee secretary Peter Englund responded "I don't think the committee has ever taken a political stance."

Alternative names


The official Swedish name of the Prize is Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne. The Nobel Foundation's translations of the Swedish name into English have varied since 1969:
Years Official name in English
1969–1970 Prize in Economic Science dedicated to the memory of Alfred Nobel
1971 Prize in Economic Science
1972 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel
1973–1975 Prize in Economic Science in Memory of Alfred Nobel
1976–1977 Prize in Economic Sciences in Memory of Alfred Nobel
1978–1981 Alfred Nobel Memorial Prize in Economic Sciences
1982 Alfred Nobel Memorial Prize in Economic Science
1983 Prize in Economic Sciences in Memory of Alfred Nobel
1984–1990 Alfred Nobel Memorial Prize in Economic Sciences
1991 Sveriges Riksbank (Bank of Sweden) Prize in Economic Sciences in Memory of Alfred Nobel
1992–2005 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel
2006–present The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

Laureates


Until 2009, all laureates in economics had been men. In 2009, Elinor Ostrom
Elinor Ostrom
Elinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...

 became the first woman to be awarded the prize. All five Nobel Prizes had previously been awarded at some time to a woman.

As of 2008, about 60% of laureates have been US citizens (by birth or by naturalisation), with only four laureates being from outside the US or Western Europe (Arthur Lewis, Leonid Kantorovich
Leonid Kantorovich
Leonid Vitaliyevich Kantorovich was a Soviet mathematician and economist, known for his theory and development of techniques for the optimal allocation of resources...

, Amartya Sen
Amartya Sen
Amartya Sen, CH is an Indian economist who was awarded the 1998 Nobel Prize in Economic Sciences for his contributions to welfare economics and social choice theory, and for his interest in the problems of society's poorest members...

 and Robert Mundell
Robert Mundell
Robert Mundell, CC is a Nobel Prize-winning Canadian economist. Currently, Mundell is a professor of economics at Columbia University and the Chinese University of Hong Kong....

).

External links