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Nobel Prize in Economics
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The Nobel Memorial Prize in Economic Sciences, officially named The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel , is an award for outstanding contributions in the field of economics and is generally considered one of the most prestigious awards in that field. It is commonly referred to as the Nobel Prize in Economics and it is identified with the Nobel Prizes, although it is not one of the five Nobel Prizes (in Physics, Chemistry, Physiology or Medicine, Literature, and Peace) which were established by the will of Alfred Nobel in 1895.
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The Nobel Memorial Prize in Economic Sciences, officially named The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel , is an award for outstanding contributions in the field of economics and is generally considered one of the most prestigious awards in that field. It is commonly referred to as the Nobel Prize in Economics and it is identified with the Nobel Prizes, although it is not one of the five Nobel Prizes (in Physics, Chemistry, Physiology or Medicine, Literature, and Peace) which were established by the will of Alfred Nobel in 1895. The Prize in Economics, as it is frequently referred to by the Nobel Foundation, is a prize established and funded by the Bank of Sweden, in memory of Alfred Nobel. It was instituted in 1968 on the 300th anniversary of Sveriges Riksbank (the central bank of Sweden, sometimes called the Bank of Sweden or the Swedish National Bank). It was first awarded in 1969 to the Dutch and Norwegian economists Jan Tinbergen and Ragnar Frisch, "for having developed and applied dynamic models for the analysis of economic processes." Like the Nobel Laureates in Chemistry and Physics, Laureates in Economics are selected by the Royal Swedish Academy of Sciences.
Funding of the Prize
An endowment "in perpetuity" from Sveriges Riksbank covers 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 been 10 million Swedish kronor (in January 2008, approx. US$1.6 million; 1.1 million Euro), equivalent to the amount given for the Nobel Prizes. 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 on the Nobel Foundation's internet museum.
Relation to the Nobel Prize
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is not a Nobel Prize. However, the nomination process, selection criteria, and awards presentation are conducted in a manner similar to the Nobel Prizes. The Prize in Economic Sciences 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 is 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 award that has ever been officially linked to the Nobel Foundation. The next time a similar offer was made - an offer by Jakob von Uexkull, who subsequently established the Right Livelihood Award - the offer was turned down.
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 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 publicly disclosed for 50 years.
With the Nobel Laureates in Physics, Chemistry, Physiology or Medicine, and Literature, each Laureate in Economics receives a diploma, gold medal, and monetary grant award document from the King of Sweden at the annual Nobel Prize Award Ceremony in Stockholm, on December 10—the anniversary of Nobel's death.
On October 15, 2007 the Royal Swedish Academy of Sciences, the Bank of Sweden, and the Nobel Foundation announced the Academy's award of the Prize in Economic Sciences to three Americans, Leonid Hurwicz, Eric Maskin, and Roger Myerson, "for having laid the foundations of mechanism design theory. [Their work] has among other things helped economists identify efficient trading mechanisms, regulation schemes and voting procedures."
Changes to the prize
Sylvia Nasar wrote in her book A Beautiful Mind that in February 1995, after acrimony pertaining to the awarding of the 1994 Prize in Economics to John Forbes Nash, the Prize in Economics was redefined as a prize in social science, opening it to fields such 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.
One should note, however, that Herbert Simon was the first non-economist to win the prize in 1978 (his PhD was in political science, though his influence on economics is well-known).
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 the most vocal critics of the Prize in Economics is the Swedish human rights lawyer Peter Nobel, a great-grandnephew of Alfred Nobel. Swedish economist Gunnar Myrdal and former Swedish minister of finance Kjell-Olof Feldt have also advocated that the Prize in Economics should be abolished. Myrdal's objections were based on his view that the 1976 Prize in Economics to Milton Friedman and the 1974 Prize in Economics shared by Friedrich Hayek (both classical liberal economists) were undeserved, on the argument that Economics did not qualify as a science, which therefore became the topic of Hayek's acceptance speech. If he had been asked about the establishment of the Prize before receiving it, Hayek stated that he would "have decidedly advised against it."
Some critics claim the selection of recipients for the Prize in Economics is biased toward mainstream economics. The Department of Economics at the University of Chicago has garnered nine of these Prizes—more than any other university—leading some critics to opine that such an outcome demonstrates either a bias, or the appearance of one, against candidates with alternative views.
Milton Friedman was awarded the 1976 prize for his work on monetarism. The prize to Friedman caused international protests, primarily in relation to a six-day trip he took to Chile in March 1975 where he gave lectures on inflation and met with many Chilean government officials, including the dictator Augusto Pinochet. Four Nobel Prize laureates George Wald, Linus Pauling, David Baltimore and Salvador Luria wrote letters to the New York Times protesting the award in October 1976.
The 1994 prize to John Forbes Nash caused controversy within the prize's selection committee because of his history of mental illness and alleged anti-semitism. The controversy resulted in a change to the rules governing the committee in 1994. Previously, members of the Economics Prize Committee members had no limit to their term of service; they now serve for three years.
Nassim Taleb has also criticised the Prize for promoting economic theories based on a misunderstanding of risk. He points to the 1990 Prize in Economics, awarded to William Sharpe and Harry Markowitz for theories that, Taleb says, had already been undermined by the stock market crash of 1987; the 1997 Prize, awarded to Robert C. Merton and Myron Scholes for their option pricing formula; and the 2003 Prize, awarded to Robert F. Engle for his "ARCH" method of prediction of volatility, which Taleb says underperforms relative to volatility forecasts made by ordinary traders.
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, 1983 | Prize in Economic Sciences in Memory of Alfred Nobel | | 1978–1981, 1984–1990 | Alfred Nobel Memorial Prize in Economic Sciences | | 1982 | Alfred Nobel Memorial Prize in Economic Science | | 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 |
During the Nobel Banquet, many laureates have referred to the prize as something other than the "Prize in Economics":
| Year: Laureate | Laureate's name for the prize |
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| 1969: Jan Tinbergen | Alfred Nobel Memorial Prize for Economics | | 1970: Paul A. Samuelson | Alfred Nobel Memorial Awards in Economics | 1971: Simon Kuznets,
1994: John C. Harsanyi | Nobel Memorial Prize | | 1974: Friedrich August von Hayek | Nobel Memorial Prize for economic science | | 1975: Tjalling C. Koopmans | award for economics | 1976: Milton Friedman,
1981: James Tobin,
2006: Edmund S. Phelps | Prize in Economic Sciences in Memory of Alfred Nobel | 1979: Theodore W. Schultz,
1995: Robert E. Lucas Jr., | Nobel Prize in Economics | | 1988: Maurice Allais | Prix Nobel d'Economie (French for Nobel Prize in Economics) | | 1981: Lawrence R. Klein | Prize in Economic Science |
While some sources observe that the Prize in Economic Sciences in Memory of Alfred Nobel is commonly referred to informally as the "Nobel Prize in Economics," the press and other agencies have also called it by other names:
- Nobel Memorial Prize in Economic Sciences
- Nobel Memorial Prize in Economic Science
- Nobel Memorial Prize in Economics
- Nobel Memorial Prize
Economics Prize Committee members
Laureates
Demographics of the Economics Prize laureates
Whereas the five Nobel Prizes have all been awarded at some time to women, all Laureates in Economics so far have been men. As of 2008, some 60% of them have been US citizens (by birth or by naturalization), with only three laureates from outside the US or Western Europe (Arthur Lewis, Leonid Kantorovich and Amartya Sen).
See also
External links
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