Nobel Prize for Economics 2009 Predictions

Update: It has been awarded to Oliver Williamson and Elinior Ostrom for their work on institutions and governance. I was just seeing all the predictions and links on this post. Tyler Cowen got one half right (Williamson, Tirole would have to wait longer). Few others have also predicted Williamson.

< p>As I enjoy my vacation, I see a few searches in my blog looking for predictions for Nobel Prize for Economics for 2009 (Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is a more correct award name). This year’s award is to be announced on 12 Oct 2009 . I havent come across any website/link predicting some picks. Usually Thomson Reuters comes out with a list towards the end of the September. It has come out with a list see below.

This year’s award is going to be interesting as world  economy goes through sharpest recession/crisis since Great Depression. The crisis  has seen nearly every modern eco theory/idea coming under severe scanner.  So, any pick will be a challenge for the Commmitee.The last time such a challenge was faced is for 1998. In 1997the nobel prize was given to Scholes and Merton for Option Pricing Theory. The duo were partners st LTCM which collapsed in 1998 leading to much criticism for the award. It was then given in 1998 to Amartya Sen whose candidature was seen as non-controversial and was long-pending.

This time the challenge is much more given the severity of the crisis. Would it be someone from Institutional Economics to stress on their importance? Or someone from  Environmental Economics to push research/thinking in this very important concern? I really don’t know.

Visitors/Readers please comment.

Update:

• Tyler Cowen has his list. I am happy that my suggestion is same as Tyler. He says Williamson/Tirole (for institutional economics and industrial organisation) and William Nordhaus (for environmental economics).
• Mankiw points to a Nobel Prize Pool.

Thomson Reuters has come out with its prediction list for 2009. I received an email from Kathryn McDermott informing me of the same. It has named 7 economists in 3 fields – Behavioral economics, Environment Economics and Monetary Economics. 

Behavioral Economics – (For their contributions to behavioral economics, including issues of preferences, fairness, and cooperation.)

• ERNST FEHR

  Pro fessor and Director of the Institute for Empirical Research in Economics, University of Zurich, Zurich, Switzerland • Winner of the 2004 Cogito Prize of the Cogito Foundation and the 2008 Marcel Benoist Prize (Switzerland)

  ESI Rank: top 1% in Economics, 9 highly cited papers in last decade

• MATTHEW J. RABIN

  Edward G. and Nancy S. Jordan Professor of Economics, Department of Economics, University of California Berkeley, Berkeley, CA, USA • Winner of the 2006 John von Neumann Award and Rajk Laszlo College of Advanced Studies

  ESI Rank: top 1% in Economics, 4 highly cited papers in last decade

Environment Economics – For their contributions to environmental economics, particularly with respect to climate change.

• WILLIAM D. NORDHAUS

  Sterling Professor of Economics, Yale University, New Haven, CT, USA • Winner of the 2005 Distinguished Fellow Award of the American Economic Association • Ranked 108th in output and 49th in citations, according to Coupe rankings.

• MARTIN L. WEITZMAN

  Professor of Economics, Harvard University, Cambridge, MA, USA • Guggenheim Fellow 1970-1971 and in 1986 was elected Fellow of the American Academy of Arts and Sciences. • Ranked 35th in output and 56th in citations, according to Coupe rankings.

Monetary Economics – For their research on monetary policy

• JOHN B. TAYLOR

  Mary and Robert Raymond Professor of Economics, Stanford University, Stanford, CA, USA, and Bowen H. and Mary Arthur McCoy Senior Fellow, Hoover Institution, Stanford, CA, USA • Recipient of the 2005 Alexander Hamilton Award, U.S. Treasury Department and the 2005 George P. Schultz Public Service Award, Stanford University.

  RePEc ranking 54th as of August 2009

• JORDI GALI

  Professor, Department of Economics, and Director of the Center for Research in International Economics, Pompeu Fabra University, Barcelona, Spain • Winner of 2008 Premi Societat Catalana d¹Economia and recipient in 2008 of the First Prize Award for Best Paper presented at the NBER’S International Seminar on Macroeconomics during its first 25 years

• MARK L. GERTLER

  Henry and Lucy Moses Professor of Economics, New York University, New York, NY, USA • 2007-2008 Guggenheim Fellow and 2008 First Prize Award for Best Paper presented at the NBER’S International Seminar on Macroeconomics during its first 25 years

Here are my comments for each of the fields.

• Behavioral Economics- I have read a bit of all the above except Ernst Fehr. The Prize was given in 2002 for behavioral economics and I think giving another one in 2009 will be too early. And not having Thaler in the list for behavioral economics would be like awarding another award for International Trade without having Bhagwati on the list or an award for environemntal economics without having Nordhaus on the list. Moreover Rabin is just about 46 now and as per Nobel Prize winners’ age is too young for the award. But yes whenever behavioral economics is awarded next, Rabin would be a strong contender.
• Environmental Economics- I have read very little about these two guys and environment economics in general. I have to read a lot more on this to comment anything. But yes see some recognition of the importance of the field soon. Till the committee does not award the field, it will always be in the prediction list.
• Monetary Economics- I have read quite a bit of John Taylor and if monetary economics is recognised, he would most likely get the award. His work on getting rules into monetary policy framework is quite a revolution. There are strong critiques of John taylor but this is the case with much of economics. Gertler has written quite a few papers with Bernanke and is a leading proponent with Jordi Gali (see this) on New Keynesian Theory and DSGE Models. Given the current criticism on these models, I don’t think they will be awarded this time.  

So let’s wait for 12 October….

• WSJ Blog also chips in with a long long list

Marcus Brunnermeier gets Bernacer 2008

Marcus Brunnermeier of Princeton gets the Bernacer award for 2009 (see previous winners’ list here). It is the European equivalent of Clark Medal awarded to promising European economists under age 40 (though most are now based in US Univs).

His papers have helped explain the recent crisis closely mimicing the practices of financial markets and its players.

 A useful summary of his research is provided by José Manuel González-Páramo of ECB here. He himself has a summary of his work here  (he calls it outdated though)

Fischer Black Prize – a victim of this crisis?

Today (24 April 2009) AEA would award the John Bates Clark Medal. It is given to the most budding American Economist under age of 40. WSJ Blog has a list of probable candidates (two of them have done most of their research on India). The award has moved from being a biennial event to an annual one. So, now we would have superstar economists every year (see my research on the relation between nobel prize and clark medal here)

On just some surfing, I realised this year Fischer Black award has been given as well. This award is on lines of Clark Medal and is given by American Finance Association to financial economists. The recepient for 2009 is Harrison Hong of Princeton University. The award was given in January 2009 but there was hardly any mention of the same in blogs, newspapers etc. But am sure, blogs etc will be full of details on the Clark Medal winner. Infact, a google search just tells you of the first recipient of the award – Raghuram Rajan. Even Princeton University just points to the link of American Finance Association without mentioning about his line of work etc.

I was just wondering why this treatment to Fischer Black prize? True, Clark Medal has a history but Black Medal just started in 2003. But then not one mention? Financial economics has become a very distinctive field and is the most popular course in any MBA program. Black Prize is the most prestigious for fin eco people but hardly gets any coverage. Why?

Is it because of this crisis? There was some speculation during Nobel 2008 that Fama (and French) was once again the leading candidate but would not get it because of the crisis (though Krugman was also on the list for a long time and fully deserved it).

Actually, I think the problem also lies with financial economists. We also do not really know much about the second Black Medal recepient as well. The research has become just too vague and very little can be applied practiically.  It has become so mathematical and Greek that one can never be sure of the results. I always remember the words of Merton Miller while reading any financial economics research. He in his Nobel Prize lecture said (his lecture is a must read on Leverage and it would have been great to read his views in this crisis, would comment on it later):

Unlike some of the older fields of economics, the focus in finance has not been on issues of public policy. We have emphasized positive economics rather than normative economics, striving for solid empirical research built on foundations of simple, but powerful organizing theories. Now that our field has officially come of age, as it were, perhaps my colleagues in finance can be persuaded to take their noses out of their data bases from time to time and to bring the insights of our field, and especially the public policy insights, to the attention of a wider audience.

This just nails the problems with fin eco research on its head. ( I would also say his advice applies to all eco research). Somehow, his advice has been lost . We just continue to have more and more of jazz with little understanding of its implications.

Elaine Bennett Research Prize for 2008 to Amy Finkelstein

I had pointed about 2 relatively unknown awards for Economists. One of them is Elaine Bennett Research Prize given to women economists.

So far, the winners have been:

• 2002 Esther Duflo (MIT)
• 1998 Judith Chevalier (GSB Chicago….has now moved to Yale)
• 2000 Susan Athey (MIT…. has now moved to Harvard)
• 2004 Marianne Bertrand (GSB Chicago)
• 2006 Monika Piazzesi (GSB Chicago)

For 2008, the award goes to MIT’s economist Amy Finkelstein. Majority of her research work focuses on insurance markets.

Update on Nobel Prize for Economics 2008

I have updated previous post on Economcis Nobel Prize for 2008 being awarded to Paul Krugman.

Nobel Prize Economics 2008 goes to Paul Krugman

Paul Krugman gets the prize for his work on International Trade and Economic Geography.

Here is the press release, information for public and literature review of his work.

Addendum:

It is time I update this post. I have come across a lot of posts on Krugman, his work, criticism etc. Let me add my views and point to loads of interesting stuff.

I took note of  Krugman for his work on Currency Crisis. His work on currency crisis and near perfect diagnosis and prediction of impending crisis in South East Asia was simply superb. I knew he is always in line for “The Prize” for his work on international trade but didn’t know much about it. The Nobel Prize Committee explains his work in this superb short note- information for public.

Reading Krugman is never easy. He doesn’t mince words and is a bit too straight forward. Economists disagree about everything but if you have Krugman not on your side, you have had it. He just rips you apart. If his getting the prize was a question of not whether but when, Krugman getting the criticism was not a question at all.

There are couple of criticisms. One, why did Krugman get the Prize alone (see this for a debate)? As it has been predicted for a long time now, if the Nobel Committee decides to award the prize for international trade it would go to the trio- Jagdish Bhagwati,  Avinash Dixit and Paul Krugman. 

Jagdish Bhagwati has been on the Nobel list for a long time and this has been acknowledged by many economists. He has been the lone crusader for free trade and for a long long time. Both Dixit and Krugman have moved to otehr areas but Bhagwati has stuck to trade. If someone has to get the prize for international trade, Bhagwati is at tops. Moreover, Bhagwati has been Krugman’s adviser and even published Krugman’s landmark 1979 paper – Increasing Returns, Monopolistic Competition, and International Trade. Krugamn’s model in this paper was largely based on Avinash Dixit and Joseph Stiglitz paper written in 1977 – Monopolistic Competition and Optimum Product Diversity.

Though both Bhagwati and Dixit have praised Krugman umpteen times (See this for Bhagwati’s praise and this for Dixit), I am sure they and others would be disappointed as well. Though, Rodrik in his post says he knew Krugman was the only one.

Actually, Bhagwati and Dixit should just ignore the Nobel Committee and carry on with their work (they have actually been doing the same). The selection for the prize is highly unknown. Sometimes, it is given to Economists for work done long long ago (On reading David Warsh’s Economic Principals one realises that 1989 winner Trygve Haavelmo had taken more keenly to fishing than economics, similarly work by Nash and Mundell was done in their early 20′s ). Sometimes it is given to economists who are too old (William Vickrey, Leonid Hurwicz) and the prize money is useless for them. Sometimes the award is given too late and one of the main founder of the area of work is no more. It is ridiculous to imagine no Fisher Black in the prize for option pricing model, no Amos Tversky for his work on behavioral economics etc).

Another criticism is that people feel Krugman as an economist is dead (thanks to Neeraj for the pointer; see this as well; this as well). They say Krugman is no more an economist but a political columnist and has done little in past 10 years. Samuelson in a light humor before the prize, saidhe was more disappointed with Pulitzer committee than Nobel Committee for not honoring Krugman. Quite a few Economists write a column in newspapers and magazines but they don’t give up economic research. Krugman did the opposite and hence the treatment. Dixit in his recent piece in Voxeu.org, defends Krugman and says the prize is for economics not polemics . Actually, I don’t understand this criticism at all.  Though, Nobel Committee recognises Krugman’s columns and his blog, the prize is above all for his work in economics.

Some material worth reading:

• Krugman explains his work (it doesn’t get simpler than this) 
• Krugman’s great papers – 1980 paper (on international trade) and 1991 paper (on Economic Geography); I haven’t come across any public copy of his most famous 1979 paper. (Update: Here is his 1979 paper on international trade and increasing returns)
• Krugman’s MIT page
• Krugman’s unofficial website
• Tyler Cowen (lots of stuff in this post)
• Alex Tabarrok
• Princeton University Press Release
• NY Times article
• Ed Glaesar
• Dani Rodrik

Predictions for Nobel Prize for Economics 2008

Come October 13, 2008 and we will get to know who will get the Nobel Prize in Economics for 2008. One can see the process of nomination and the nominators here. The picking for a particular year begins as early as September i.e. for 2008 the process began in Sept 2007.

Usually by September of the award year economists and media start discussing the probable candidates. Thomson Scientific, quite successful in its predictions usually  starts off the list of probables but so far it has not taken out its list (It has released its 2008 predictions; see below in Addendum) . My previous post tells me it took out its list around Sept 27, 2008. So, the list must be anytime soon. In 2007, the award was given on 15 Oct 2007.

However, some predictions have started. Rediff has a neat presentation saying this time an Indian-born is expected to win the Prize. (pity we can only expect an Indian born economist to win a Nobel Prize as we hardly do any quality research in India) .

The list of probable Indian born economists is well-known and has been there for a long time – Jagdish Bhagwati, Avinash Dixit and Partha Das Gupta (Joseph Stigilitz’s favorite candidate).

It also points economists like Paul Romer, Robert Barro, Paul Krugman, Eugene Fama, Gene Grossman etc are also in the fray.

My pick: Jagdish Bhagwati as he has been on the waiting list for a long time and it might just get the Trade Agenda going.

Also Gene Fama/Kenneth French as most people who have contributed to development of financial economics have been awarded but their name is missing . Two kinds of people have contributed to finance. One who have worked majorly in the field like – Miller, Sharpe, Markowitz, Scholes, Merton and all have been awarded. And there is the second list who have contributed to finance either as a seperate work or indirectly- Samuelson, Tobin, Modgiliani, Akerlof, Stigilitz, Kahneman (his insihghts led to development of behavioral finance) etc. And again they all have been awarded.

However, Fama/French the persons who led to the development of Efficient MArkets Hypothesis, on which most of finance is based is still missing from the list. High time they are rewarded.

But again, I think Fama/French will be given a miss looking at the developments in fin markets. This way they might miss it every time as the financial markets keep collapsing now and then. Though I think it is the right time to award the duo and pass on the message that one can’t make money from financial markets forever, which is what the financial firms keep trying to do.

Markets are efficient and soon find their correct levels. Most markets may not be in the strong EMH category but are surely somewhere in the semi-strong category.  Fancy models etc may help you get some returns initially but not always. The problem is all the firms start doing the same thing after seeing returns made by someone and they all end up in a mess.

Most of the people get these basic lessons in their B-Schools but forget the fundamental lesson while in practice.

I will keep you posted on the other predictions.

Addendum:

1. I have a post analysing the Clark Medal and Nobel Prizes. Interested readers can take a look

2. Thomson Scientific has released is predictions for the year 2008. See the list here. This is a very different list from the rediff one. I only have read Martin Feldstein from the list. I have read a bit of Thomas Sargent and Chris Sims as well, but they are just too technical for me.

Martin Feldstein’s nomination is for his contribution in variety of fields where as others are for specific contributions.

Update:

Paul Krugman has been given the prize for 2008. See my post here

Stock Broker tips can lead to a Nobel Prize

You often come across people who crib about bad the stock-broker tips are. Despite this people often look forward to any tip from their/other’s brokers on which particular stock would rise or fall and make their decisions accordingly.

Though, there is one man who surely cashed on the stock-broker’s tip- Harry Markowitz, the 1990 Nobe Prize Laureate. I came across this fantastic weblink where all the who’s who of finance have discussed history of finance and their contribution to the field.

I was going through this Markowitz transcriptand here is the discussion in brief:(Buser is the interviewer)

BUSER:Tell us a little bit more about how you got this idea for your dissertation topic.You were a graduate student at the time?

MARKOWITZ:         Right.            I was at the stage where I had to pick a dissertation topic.

So I went to my advisor, Professor Jacob Marschak.  He was busy when I got there, so I waited in his ante room.  There was another fellow in the ante room who turned out to be a broker waiting for Marschak.  We chatted while we were there, and he suggested that I should maybe do a dissertation on the stock market.  So I went in.

BUSER:A stockbroker gave you the idea?

MARKOWITZ:         That’s right, a stockbroker.

BUSER:A tip that paid off.

MARKOWITZ:         Yeah.  Some biographer of mine said this was the best advice a stockbroker has ever given.  And I agree…….

This is simply fantastic. I had read this long back in Peter Bernstein’s book- Capital Ideas and thrilling to read Harry confirming this. A stock-broker’s tip that led to development of portfolio theory and subsequently the Nobel Prize!!

Well, actually the stock-broker ideas can really lead to some good research ideas. They can point to some event studies, why certain group of stock moves up/down, etc. This has indeed been the case as we have a lot of research in financial markets which can only shape up witht he help of brokers. Many papers even give the credit to certain stock-broking firm, stock-broker etc. But then the public only seeks them for stock prices, something which is highly random.

Bernacer Prize 2007 to Pierre-Olivier Gourinchas

Thugh the focus is either on Clark Medal or Nobel Prize, Bernacer Prize is equally distinguished.

Like Clarke medal which is given to American Economists under 40, Bernacer Prize is given to promising European economists under the age of 40. The list of previous winners is here.

The award for this year goes to Pierre-Olivier Gourinchas of University of California, Berkeley. He has done some exceptional work in the field of international economics. I have reviewed his paper on Allocation Puzzle here.

Mechanism Design Theory and recent crisis

This post is almost a month old. The Economics prize in memory of Alfred Nobel (wrongly called as Nobel Prize for Economics, read Taleb’s criticism for the same here) was given to 3 economists who have (ofcourse) pioneered the field of Mechanism Design Theory.

Nobel Committee has done some explaining of the same here (basic version) and here (advanced version). Sicne then, there are a lot of links explaining the same and most can be found doing a simple google search. In particular see this superb post by Alex Tabarrok of Marginal Revolution.

To me it is an extension of 2 basic ideas to which Nobel committee has already rewarded earlier- importance of institutions (in 1993to North and Fogel) and information asymmetry (in 2001 to Akerlof, Spence and Stigilitz). There are many roles of institutions but one very important role is that they help reduce information asymmetry in markets. Now the next question is how do you design these institutions, in other words how do you make these institutions function?This is what MDT helps in answering. The field is highly abstract but has a lot of applications in real life. (Read Tabarrok article).

Jeff Lacker of Richmond Fed has given a nice speech linking MDT and the recent crisis.

Mechanism design theory provides an approach for addressing precisely these questions about how institutions arise and adapt in response to incentive and information problems. This approach then allows us to study and compare the diverse institutions that exist in an economy and play a role in the allocation of resources — markets, firms, banks, clearing houses, and even central banks and governments. More precisely, these contractual and institutional arrangements all constitute alternative mechanisms for allocating resources, and the approach is to study the properties of the best possible resource allocations that any mechanism is capable of achieving. For example, how well does it do at funding appropriate investments and allocating the attendant risk? One can then compare how close alternative mechanisms come to achieving those allocations. If one set of arrangements can achieve superior allocations, but others cannot, then one has a candidate explanation for why such an intermediary might exist.

Read the whole speech to get another perspective on MDT and recent crisis.

Nobel Prize 2007 predictions

It is that time of the year when the prospective Nobel Prize winners are going to be  discussed. The website informs first prize would be announced on 8 October, 2007 and it would be for medicine.

The Prize for economics is going to be announced on October 15 and we would see a lot of blogging on the deserving candidates in coming years.

Scientific Thomson runs a poll for all the prizes and the one on economics is here. The selection process is here and the successful candidates predicted are here.

This year the poll shows 5 economists in 3 areas:

I. For international trade and economic growth: 

a) Elhanan Helpman: Galen L. Stone Professor of International Trade, Harvard University, Cambridge, MA, USA; Emeritus Professor, Department of Economics, Tel Aviv University, Israel.

b) Gene M. Grossman:Jacob Viner Professor of International Economics, Princeton University, Princeton, NJ, USA; Professor, Department of Economics, Woodrow Wilson School of Public and International Affairs, Princeton, NJ, USA.

II. For Industrial organisation and regulation:

a) Jean Tirole: Scientific Director, IDEI (Institute of Industrial Economics), University of Social Sciences, Toulouse, France; Affiliated researchmember of CERAS, Paris, France

III. For their work on auctions

a) Robert B. Wilson:Adams Distinguished Professor of Management Emeritus, Stanford Graduate School of Business, Stanford University, Stanford, CA, USA

b) Paul R. Milgrom: Shirley and Leonard Ely Professor of Humanities, Department of Economics, Stanford University, Stanford, CA, USA

So far, results are:

41% -  Tirole
35% -  Helpman, Grossman
24% -  Wilson, Milgrom

No Fama & French this time in the list.

Anyways,. it is just a poll. Let us see what happens on Oct 15, 2007.

Keep posted for developments. 

Update 1: Greg Mankiw asks his blog readers to suggest who would win Nobel this year. Here are the comments. Mankiw also shares his predictions.

MR suggests his names.

Update 2: WSJ Blog posts on the propective winners from various sources.

Avinash Dixit: an economist with a sense of humour

For the uninitiated this Mumbai born economist teaches at Princeton University and every year is a leading contender for the Nobel. His earlier work was on International trade but now has focused on the most controversial topic- How does development happen.

To be honest, I never read his work. Thanks to RBI, which invited him this year for the Second P. R. Brahmananda Memorial Lecture where he gave a wonderful speech on Institutions and Development. He has an amazing sense of humor. See this for a sample:

During my visits to many government offices to get various documents and permissions to travel, entry to almost any office required me to give an authorization signature from C. D. Deshmukh to the chaprasi guarding the door. Mr. Deshmukh had been the Governor of the Reserve Bank and Union Finance Minister, and in one of these capacities, his signature appeared on the ten-rupee note. I am sure this practice continues even now in many government offices. The denomination of the required note has surely risen many times, and the chaprasis are probably now called the Site Security Officers.

It deserves a LOL!! The speech is a highly rated one and has some super ideas and instances on property rights and institutions. He covers areas like contract enforcement and looks at both informal and formal mechanisms of contract enforcement. I can go on and cover his speech but what I wish to cover is something slightly different. So please read it.

I just did some research and discovered a write-up on the economist in HT Mint from where I got to know of a speech he had given in World Bank which got me interested as it says what I have been wondering all along- which path should one take for development?

The speech is here and is a must read for all the people wanting to understand most of the recent the perspectives on “What drives development” in just 29 pages of humor and wit. Let me begin with where he ends to interest the reader:

Faced with all these contradictions and shifts, I can identify only one consistently valid policy prescription. It is the quality Napoleon valued most in his generals, namely luck. Researchers want to identify causes, and practitioners want to know what they can choose and change; therefore both sides may have neglected the important role that luck has played in many countries’ development successes or failures. Easterly (2001, chapter 10) is rare among economists in giving luck a substantial role and discussing it in considerable detail.

He presents a challenge to the dev eco people:

I am deliberately going to be provocative and critical, but will try to be evenhandedly so. I hope that my remarks will give everyone some incentive to think further and harder. I also hope to help scholarly researchers better see their own work in the context of the bigger picture, and help practitioners better appreciate the difficulties of drawing implications for action from an ongoing process of academic exchange

.…….Even within these confines, the literature is huge, and I cannot hope to include even a substantial fraction of it in the space and time available. However, those left out should be relieved, not upset: the policy recipes that emerge from this iterature are almost invariably unsatisfactory, so being omitted from the list and the implied criticism, however friendly and constructive, may perhaps be regarded as a good thing.

He adds that development literature falls short as:

1. Some of the work finds that development success depends upon historic or geographic preconditions that most countries may not have. So all one can do is curse itself.

2. A wide amount of literature is available on what leads to development from very well-known/well-endowed economists but each policy prescription has a contrasting view from equally well-known/well-endowed economists.

3. As and when countries grow, its model is studied and prescribed. It was Japan first, then East Asian Tigers, now Brics. What is next?

4. The prescriptions (he calls them recipes) that look good in theory fall short when practiced, e.g. build institutions, build democracy etc. How to build them?

He uses a lot of humour. He calls the recipes as:

1. Irish recipe or the infeasible ones: For instance research shows that what matters is which kind of colonialism the country was under. Those under British learnt English, had common law system and thus had better capital markets. So what can be done? In AD’s words:

Interpreted literally as recipes or policy recommendations, these require a less developed country to use plate tectonics to move itself to a more favorable location, or to turn the clock back and invite British colonizers, of course cleaning up the local disease environment and getting rid of mineral resources beforehand.

2. Dr. Dolittle Recipes: Those that have contradictions. For instance what works- Democracy or Authoritarianism? Formal or Informal governance institutions? Comprehensive and rapid or sequential and gradual reforms? AD points out many a popularly cited literature to show that there are contradictions everywhere.

Finally you are confused and he also asks the question which I often ask: If I were a minister/policy maker where do I begin?

Suppose you are the Minister for the Economy in an authoritarian regime. You read the writings of Rodrik and others about the virtues of democracy, and are thrilled by the thought of having this “meta-institution” that harnesses “local knowledge” in your country. What do you do? Of course, if you are the Minister for the Army in a democracy and are convinced by the pro-authoritarianism arguments, your may find it a little bit easier to implement your favored institutional reform!

However, the Napoleon Prescription (explained above) takes the cake.

Read this final humour piece where he is looking at importance of property rights and cites from De Soto’s famous book:

As I strolled through rice fields [in Bali], I had no idea where the property boundaries were. But the dogs knew. Every time I crossed from one farm to another, a different dog barked. Those Indonesian dogs may have been ignorant of the formal law, but they were positive about which assets their masters controlled.” So officials who wanted to set up a formal property system could “by traveling their citystreets and countryside and listening to the barking dogs, … gradually work upward.

In the end he offers a different recipe for development, which looks at a schematic table that lists all the causes and effects of various policy measures along with prior probabilities of the event happening. However, it is just a concept and needs to be expanded. I need to look at other papers of his/others who have worked out his schema.

Highly Recommended!!

Two more prominent awards for Economics

Univ of Chicago has given 9 Nobel Prize Winners as per Nobel Prize Committee list (They basically see what Univ is one at at the time of award, so someone who gets an award when he is at MIT but has taught earlier at Univ of Chicago, The committee would cite MIT in its award). This press release from Univ of Chicago tells me till 2004, out of 55 Nobel laureates 23 were associated with Univ of Chicago either as students, associate professors etc. This is quite a number.

Thanks to Economic Principals, I just came to know about 2 more awards:1. Bernácer Prize : awarded by Observatory of the European Central Bank given to European Economist under 40 (similar to Clark Medal). Given every year and is named in honour of Germán Bernácer (1883-1965), the first Spanish economist who made significant contributions to the development of macroeconomic research, the BERNÁCER PRIZE was established in 2001 to recognise the work of young economists from the European Union and to stimulate research on European macroeconomics and financial issues.

There have been 7 winners so far:

• 2001 Philip Lane (Trinity College Dublin),
• 2002 José Manuel Campa (Graduate School of Business New York University and University of Navarra)
• 2003 Luigi Zingales (GSB Chicago),
• 2004 Stephanie Schmitt-Grohe (Duke),
• 2005 Monika Piazzesi (GSB Chicago) and
• 2006 Hélène Rey (Princeton)
• 2007 Pierre Olivier Gourinchas (UC, Berkeley)
• 2008 Marcus Brunnermeier (Princeton)

Again 3 out of 7 are from Univ of Chicago!! Another thing to note is that where as we have only one woman who has won the Clark Medal. here it pretty Even-Stevens.

2. The Elaine Bennett Research Prize : Awarded by American Economic Association (the one that also gives the Clark Medal) and is awarded every other year to recognize, support, and encourage outstanding contributions by young women in the economics profession. Elaine Bennett, made significant contributions in economic theory and experimental economics and encouraged the work of young women in all areas of economics.

The winners:

• 1998 Judith Chevalier (GSB Chicago….has now moved to Yale)
• 2000 Susan Athey (MIT…. has now moved to Harvard)
• 2002 Esther Duflo (MIT)
• 2004 Marianne Bertrand (GSB Chicago)
• 2006 Monika Piazzesi (GSB Chicago)
• 2008 Amy Finkelstein (MIT)

Out of the two lists I have only read Esther Duflo( just a bit though) and Luigi Zingales (a little more) . Duflo focuses on development research and Zingales on Financial Economics.

Zingales is a star and his research work on financial markets is quite extraordinary and always provides a lot of food for thought. He has written extensively with Raghuram Rajan and together have written some landmark papers on capital structure, impact of finance on growth, underdevelopment ( I mentioned about their work here and here). His/Their work is a must read for all looking at finance as their careers.

Some facts about Clark Medal and Nobel Prize

Just carrying on with the Clark Medal, I thought I would share some trivia and facts. As Clark Medal is supposed to be for economists under 40, one of the things to see is how many get Nobel finally. Here is a factfile:

• There are 58 nobel winners so far
• There are 29 clark medal winners
• Out of 29 clark medal winners only 11 have got a nobel so far…(38% conversion rate… pretty impressive)
• Clark started in 1947 and Nobel in 1969….so a gap of 22 years… the fact is that till 1969 Clarkies had already produced 7 future nobel winners!!!
• Infact in that gap of 22 years, there were 10 clarkies (none was awarded in 1953) and seven went on to win a nobel !!! 70% success ratio
• Post 1967, the number of clarkies winnining a nobel has been just 4 out of a total of 19 winners a ratio of just 21%
• Out of 58 winners so far, 42 were associated with US Univs at the time Nobel was awarded….72.4%!!So to say Nobel is panglobal is not really working.. well what can nobel committee do… all top guys and thinkers seem to be in US…
• It shows nothing but their productive Univs 9 from Uchicago, 4 from UCB, 4 Harvard, 4 columbia, 3 Cambridge (last in 1995)
• Average & mode age -67, median age-66
• It takes roughly 22 years of waiting between clark and nobel
  Arrow took the least time between clark and nobel (15) and Tobin and Solow 26…
  Arrow is the youngest (but obvious) to have won a nobel (just 51) .. he still holds the recors… and nobel committee is widely cricticised for giving him a nobel alongwith Hicks… he deserved it all alone…!!!!
• Merton 2nd youngest at 53, His mentor Samuelson at 55, Scholes at 55…One can imagine the impact Black Scholes Merton model had on fin markets….
• 3 guys in 80′s gto the Nobel- Schelling (game theory) , Wickfrey (famous for his work on auctions), and Coase (never calls himself an economist.. but what impact…)
• all fin eco guys were either 66 or below (Both Modgillani and Miller were 67…the oldest of the lot.. funny the guys who contributed the most recognised at last)
• And plotting the ages gives a somewhat normal disitribution…..!!!!

Here is the full list of Clark Medal Winners who got the nobel as well. The year ahead of name is Year when Clark is given. If the nobel is given, the year is followed after the name..

1947 Paul A. Samuelson 1970
1949 Kenneth E. Boulding
1951 Milton Friedman 1976
1955 James Tobin 1981
1957 Kenneth J. Arrow 1972
1959 Lawrence R. Klein 1980
1961 Robert M. Solow 1987
1963 Hendrik S. Houthakker
1965 Zvi Griliches
1967 Gary S. Becker 1992
1969 Marc Leon Nerlove
1971 Dale W. Jorgenson
1973 Franklin M. Fisher
1975 Daniel McFadden 2000
1977 Martin S. Feldstein
1979 Joseph E. Stiglitz 2001
1981 A. Michael Spence 2001
1983 James J. Heckman 2000
1985 Jerry A. Hausman
1987 Sanford J. Grossman
1989 David M. Kreps
1991 Paul R. Krugman 2008
1993 Lawrence H. Summers
1995 David Card
1997 Kevin M. Murphy
1999 Andrei Shleifer
2001 Matthew Rabin
2003 Steven Levitt
2005 Daron Acemoglu
2007 Susan Athey
2009 Emmanuel Saez

Clark Medal for 2007 goes to Susan Athey

The John Bates Clark Medal ( given to most promising American Economist under 40; read more about the medal here; read about John Bates Clark here) for 2007 (is given every alternate year) goes to Susan Athey.

Susan Athey is a very popular economist and teaches at Harvard. Her webpage is here and summary of her work is here. She is the first woman to have won the award.

To be honest I do not recall reading any work by her and her name adds one more to the ever growing reading list.