« G-20 Global Governance: better than their National Governance? | Main | Corrupción en el mundo de hoy según Transparencia Internacional »
Nobel Prize in Economics: illusions from Tinbergen to Keynes
By Kaufmann | October 13, 2009 3 Comments »
Almost everything we know about the Nobel Prize may be wrong. High time to address illusions. And indulge on another.
1. Was Tinbergen awarded the first Nobel Prize in Economics? No, strictly speaking. Because there is no such thing as a Nobel Prize in Economics. Alfred Nobel did not envisage it, or endow any. Instead, well over seventy years after Alfred Nobel passed away, a financial institution in Stockholm steps in, inaugurating the Bank of Sweden Prize in Economic Sciences (in memory of Alfred Nobel). In 1969, Jan Tinbergen, at age 66, becomes the first recipient of the Bank of Sweden Prize in Economic Sciences, shared with Ragnar Frish.
2. Consequently, neither Tinbergen (at age 66, nor Frish), were jointly awarded a real Nobel Prize? Actually, believe it or not, Tinbergen and Frish did end up being jointly awarded a real Nobel Prize (with a twist): Nico Tinbergen, Jan’s younger brother, was awarded the (bona fide) Nobel Prize for Medicine four years later, when he was also 66. He shared his Nobel in medicine with Karl von Frish, who was not Ragnar Frish brother (and with Konrad Lorenz)…
3. When an economist has been awarded alone the Bank of Sweden Prize in Economic Sciences in Memory of Nobel, then such economist has always received the full award without having to share a cent? No, again. When University of Chicago professor Robert Lucas won the Nobel in economics in 1995, he had to give half of his $1 million prize money to his ex-wife because of a clause in their divorce settlement.
As CNN.com states now: ‘If there were a Nobel Prize for Foresight or Timing, she should be nominated, based on a clause in their divorce settlement from seven years earlier: “Wife shall receive 50 percent of any Nobel Prize.” The clause expired on October 31, 1995. Had Lucas won any year after, he would have kept the whole million.’
Clearly, Lucas first wife had aptly applied his path-breaking theory of Rational Expectations.
Lucas was in good company. Albert Einstein’s Nobel Prize money went to his ex-wife as part of their (ex-post) divorce settlement.
4. Yesterday we heard that for the first time a woman economist won the Prize in Economics. Wrong. One of the 2009 Economics Prize recipient is Elinor Ostrom, who is actually a political scientist. She is one of the pioneers in Public Choice theory, in introducing economic tools in political science, and in addressing the tragedy of the commons and the wonders of collective action.
5. A dead person cannot receive a Nobel Prize. Mistaken, again. The alleged coiner of the notion of the ‘planned economy’, and co-drafter of legislation that paved the way of the so-called “welfare state”, actually received a bona fide Nobel Prize (not the Economics Prize), after his death. I am talking about the former U.N. Secretary-General Dag Hammerskjold, who received the Nobel Prize for Peace in 1961 after he was killed in a plane crash in Africa. The Nobel Prize rules were amended in 1974 to ban posthumous prizes.
6. So where does this leave us all in Economics today? Is it out of the question then that Lord John Maynard Keynes could have received the Economics Prize this year? Traditionalists, who go according to strict rules, say ‘No way’ — because Keynes has been long dead in the long run. Or in any run.
Wrong again? Stockholm may not have realized that in essence Keynes today is more alive than ever. The unprecedented mega-trillion stimulus plans in many countries, the social welfare, housing and infrastructure investments, the growing role of the State in the economy, both by owning formerly private assets as well as regulating, have revived Keynes in ways that were regarded unthinkable two years ago.
Ending on a serious note, as I have been arguing, this new overarching role of government poses fresh governance challenges around the world. They have been largely ignored so far. If today we could only speak to Lord Keynes, contradicting some of his interpreting disciples and critics, he would remind us of the importance of sound and reformed public finances, of removing many market distortions, of sound governance.
As the global economy is stabilizing, and the recession is virtually over, so are the excuses of inaction on the governance front.
Topics: Transparency, financial crisis | | 3 Comments
October 15th, 2009 at 6:19 pm
I have gotten nice feedback on Facebook on this blog entry on Nobels…
An avid and incisive Facebooker, Sulaiman Wasty, writes me: … ‘ And, Economics “fits all”. [In 1978, the Committee could'nt find any other field when honoring Herbert Simon...for his cross-disciplinary achievements.] ‘
I agreed with him, yet pointed out that the Economics Prize has no monopoly stiff competition on the “fits all” camp…: witness Peace Nobels…
http://www.facebook.com/home.php?ref=home#/Dani.Kaufmann?ref=name
October 15th, 2009 at 11:52 pm
For her work, she shared the 1995 Nobel Prize in physiology or medicine with two American researchers, Edward B. Black Economic Empowerment
October 15th, 2009 at 11:59 pm
Perhaps only Sylvia Nasar, an economist and journalist, could have written this book. Moakler Economics