Nobel economists rarely get to influence policy
Updated: 2013-10-14 06:57
By Hugues Honore in Stockholm (China Daily)
Winning the Nobel Memorial Prize in Economic Sciences carries great prestige, but there is no guarantee the recipient will win over policymakers, the real practitioners of the dismal science.
The award, officially the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, will be awarded on Monday in Stockholm.
The economics award is not a Nobel Prize in the same sense as the others, which were established in Alfred Nobel's will. The Central Bank of Sweden established the economics prize in 1968.
Monday's event will close a Nobel season marked by awards in physics to the fathers of the Higgs boson and a peace prize to the UN-backed Organization for the Prohibition of Chemical Weapons.
As usual, US economists dominate the list of favorites, just as they have dominated the roster of laureates over the past 10 years, with 17 out of the 20 recipients, who are often awarded in groups, coming from the US side of the Atlantic.
After the 2012 economics prize acknowledged "game theory", a somewhat ancillary field, it is possible that this year it will return to the core concerns of the economic science.
Favorites include Robert Barro of Harvard University and Paul Romer of New York University, who have both done work on growth.
Also on the list of serious contenders are finance specialists such as the University of Chicago's Eugene Fama and Kenneth French of Dartmouth College.
Behavioral finance, too, would get a nod if the prize were to go to Andrei Shleifer of Harvard, Robert Vishny of the University of Chicago and Robert Shiller of Yale University.
It's all up to six Swedish university professors.
Winners not advisers
"The Nobel Prize in economics is recognized as the pinnacle of intellectual achievement in economics," said Avner Offer, an economics historian at Oxford University.
However, the winners do not necessarily become key advisers to important policymakers. Some do not even aspire to that position.
"Not all of economic research that was awarded the Nobel is applicable by policymakers," said Jan Haeggstroem, chief economist at Swedish lender Handelsbanken.
"Or it is for very specific problems, like the research on the functioning of markets."
He was referring to 2012 laureates Lloyd Shapley of UCLA and Stanford's Alvin Roth, who studied theories of supply and demand in a theoretical marriage market.
While their models can predict the optimal matches among small groups of men and women, they have little to say about creating jobs for millions or keeping inflation down.
Government leaders interested in more conventional issues are more likely to read works by 2010 laureates Peter Diamond of the Massachusetts Institute of Technology, Dale Mortensen of Northwestern University, and Christopher Pissarides of the London School of Economics.
Their work on the labor market is authoritative, but even a Nobel win was not enough to give Diamond a seat at the US Federal Reserve, the country's central bank.
Picked by US President Barack Obama for the Fed's board of governors, Diamond was eventually turned away because of Republican opposition.
"Unquestionably, Nobel is a major honor. Yet being a Nobel recipient does not mean one is qualified for every conceivable position," said US Senator Richard Shelby, one of the main opponents to Diamond's appointment.
Some in Europe may now regret not heeding 2011 laureate Christopher Sims, a macroeconomist from Princeton.
As early as 1999, Sims criticized the eurozone, saying "the European Monetary Union has the appearance of an attempt to create a central bank and a monetary unit that have no corresponding fiscal authority behind them".
The Greek crisis would prove him right 11 years later.
(China Daily 10/14/2013 page10)