Karen Ilse Horn of Institut der deutschen Wirtschaft Köln in Germany has this interesting paper on the topic. Thanks to this interview of Milton Friedman interview I found Mont Pèlerin Society. I researched a bit and got a few papers.
Archive for the ‘Medals and awards’ Category
Esther Duflo has distinguished herself through definitive contributions to the field of Development Economics. Through her research, mentoring of young scholars, and role in helping to direct the Abdul Latif Jameel Poverty Action Lab at MIT, she has played a major role in setting a new agenda for the field of Development Economics, one that focuses on microeconomic issues and relies heavily on large-scale field experiments. Much of her work addresses questions of politics, gender, and education. She has written extensively on India, but has also studied Indonesia, Cote d’Ivoire, South Africa, and Kenya. This bio summarizes some of the highlights of her research.
American Economic Association will present the John Bates Clark medal today (23 April 2010). It is awarded to the most promising US based economist under the age of 40. It was a biennial award so far but last year it was decided that it would be given every year.
WSJ Blog has a probable list -
- Esther Duflo of MIT and Poverty Action lab (doesn’t need an intro)
- Sendhil Mullainathan of Harvard and Poverty Action lab (doesn’t need an intro)
- Jonathan Levin of Stanford does research on market design
- Amy Finkelstein of MIT (was awarded Elaine Bennett Research Prize for 2008 as well; works on insurance and risk)
- Roland Fryer of Harvard (works on racial inequality)
- Raj Chetty of Harvard (works on taxation issues)
Looks like a fight between Harvard and MIT this year. I think it could be Duflo this time as she has been in the list for a long time. But you never know there could just be a surprise.
Check out this list of Clark and Nobel prize Winners
I was just going through Williamson’s slides. It makes a good reading on how he came about his main ideas.
But I prefer to read the Prize lectures in a proper written text format. The Prize Committee first puts up videos and some winners share their ppt slides. It is much later that the text format lecture is added. I just realised Krugman’s lecture has just been added recently. But these do not give the complete flavour. You cannot also imbibe much watching videos or seeing ppt slides. The lectures also serve as a very useful literature survey on the winner’s main papers, ideas, thoughts, synchronisation with previous ideas etc. One keeps referring to these lectures oft and on.
So am waiting for the proper speech text. Till then see whatever is available.
Paul Samuelson passed away on Sunday, 13 Dec 2009. Many tributes paid to the great economist:
- WSJ has a Timeline of his super career
- Financial Times
- Paul Krugman, See his voxeu piece as well
- Avinash Dixit (HT Dani Rodrik Blog)
- Amartya Sen Interview in Business Standard
- Marginal Revolution has couple of links – one, two, three
- David Warsh as usual very different and insightful
- WSJ Blog has many economists
- Finance Clippings Blog
- Telegraph has an article of West Bengal Finance Minister remembering Samuelson
- Mint by Siddharth Singh
- Hindu by TCA Srinivasa has a very funny anecdote in the end
I was the first journalist, he said, come to see him in many years. As were talking, a young student poked his head in through the door, slid a package on to his table, and said, “Hi, Paul, will you give this to Bob?”
The Bob in question was another Nobel winner, Robert Solow, whose room was next to Samuelson’s. “This is what I do these days,” said the Great Man. “You know, young man, you come from a very good country. Unlike here human capital depreciates very slowly there.”
- ET has an article by Badal Mukherjee, TERI’s econ proefessor who was taught by Samuelson
- Google News Search
- Subramanian Swamy, Janta Party President pays a very intereting to read tribute
It is really sad. For anyone who studies economics in Delhi University, Samuelson works’ is a staple diet. Be it anything- microeconomics, macroeconomics, public finance etc, his works act as references everywhere. On studying finance, one realises most financial economics is also because of his ideas. His book ”Economics” was always used to understand the tough topics. If a particular topic was just too difficult to understand, refer Samuelson, get some ideas and then try and write on it in the exam.
Paul Samuelson’s 2 pieces on Nobel Prize website are very interersting read. How he became an economist?
From one point of view my studying economics was the result of accidental blind chance. Prior to graduating from high school I was born again at 8:00 a.m., January 2, 1932, when I first walked into the University of Chicago lecture hall. That day’s lecture was on Malthus’s theory that human populations would reproduce like rabbits until their density per acre of land reduced their wage to a bare subsistence level where an increased death rate came to equal the birth rate. So easy was it to understand all this simple differential equation stuff that I suspected (wrongly) that I was missing out on some mysterious complexity.
Luck? Yes. And all my life I have been at the right place at the right time. Chicago was at that period the top center for old-fashioned neoclassical micro-economic study. But I didn’t know that; my reason for entering there was simply because the University of Chicago was close to my high school and home. Later when I was bribed to leave the Eden of the Chicago womb, choice boiled down to either the Harvard or the Columbia Graduate School. My revered Chicago mentors–Frank Knight, Jacob Viner, Henry Simons, Paul Douglas, …–without exception said, “Pick Columbia.” Never one to blindly accept adult advice, I picked Harvard. I picked it by miscalculation, expecting that it would be a little oasis on rolling green hills.
That is just too modest.
I came across this interesting paper from William Breit and Barry Hirsch which looks at above question:
This paper uses as source material twenty-three autobiographical essays by Nobel economists presented since 1984 at Trinity University (San Antonio, Texas) and published in Lives of the Laureates (MIT Press). A goal of the lecture series is to enhance understanding of the link between biography and the development of modern economic thought. We explore this link and identify common themes in the essays, relying heavily on the words of the laureates. Common themes include the importance of real-world events coupled with a desire for rigor and relevance, the critical influence of teachers, the necessity of scholarly interaction, and the role of luck or happenstance. Most of the laureates view their research program not as one planned in advance but one that evolved via the marketplace for ideas.
In short it tells you why these winners of Nobel economics prize (Economic Prize in the memory of Alfred Nobel is more politically correct) took up economics, what drove them, the key inquiries of economic thought they were looking for etc etc. And all this is basically analysing their autobiographical essays.
Here are a few points:
- Few wanted to become an economist to begin with- James Tobin, Vernon Smith, William Sharpe, James Heckman
- Some took up economics as alternative plans were closed or not worth it – Arthur Lewis, John Harsanyi
- Some dont like calling themselves an economist – Clive Granger, (even Coase says so in his nobel lecture)
- Role of Great Depression in taking up economics- James Tobin, Paul Samuelson, Robert Solow)
- Some looked for current issues – Gary Becker, Edmund Phelps
- Role of Mentors/Teachers (Mentors mentioned in brackets; most cite Milton Friedman as well) -Myron Scholes (Prof McIver), James Buchanan (Frank Knight), Ed Prescott (Robrt Lucas),
- Some got learning mostly from outside classrooms- Tobin
- Importance of Work environment – Stigler, Klein and Sharpe (Klein adds his group was the best ever in economics producing 4 Prize winners)
- Role of luck – Friedman, Becker
- Research evolved in search for ideas – Coase, Buchanan and Samuelson
The authors then point autobios help understand many aspects of these winners which is difficult to understand otherwise. The stories of Heckman, Lucas, Schelling are quite inspiring.
Finally why Milton Friedman took up economics?
Initially, Friedman had planned to choose mathematics because he liked the subject. The Great Depression was under way, though, and Friedman was intrigued by what he called “the paradox of great need on the one hand and unused resources on the other.” Moreover, making the decision process more difficult, he had offers of financial aid from two universities—one for the study of mathematics at Brown, and the other to study economics at Chicago. The final decision came down almost to the toss of a coin. Economics and the puzzle of the Great Depression won out.
In his autobiographical lecture he attempts to explain his choice. To do so he quotes Robert Frost’s famous poem “The Road Less Traveled.”
Two roads diverged in a yellow wood,
And sorry I could not travel both
I took the one less traveled by.
And that has made all the difference.
And yet, reference to the Frost poem does not seem appropriate in his case. During the Great Depression, when Friedman entered college, economics was not the road “less traveled by.” To the contrary, it was among the most popular of majors. He said he chose economics because of its relevance to the issues of the day, as with so many others of his generation. But this leaves us with a mystery. What is the relevance of Frost’s poem? Why did he quote it?
Perhaps the choice of the poem reveals something about Friedman that was hidden from him when he quoted its words. Even if entering economics during the Great Depression was not really taking the road less traveled, nevertheless Friedman’s subsequent career persistently took him along untrampled pathways within economics. Was this a conscious decision?
For in his attempt to answer questions posed by the depression, Friedman stood apart and almost alone. He rejected the Keynesian solutions that the overwhelming majority of the profession had come to accept. Friedman lived long enough to see many of his ideas become the consensus view of a younger generation of economists. Because he was different, he attracted attention; his persuasive powers, style, and charisma did the rest. For Friedman, the road less traveled indeed “made all the difference.”
Only Friedman knows the real answer but all this sounds quite good. This is an interesting Friedman – Frost connection. The impact of Milton Friedman on field of economics and economists was simply amazing.
So the award is finally out. It goes to Oliver Williamson (of UC Berkeley) and Elinor Ostrom (of Indian Univ) for their work on governance. Most predictions I have seen got it wrong. I don’t want to take any credit but had mentioned instituional economics in my predictions post. When I said instiutional economics it was very much Williamson that was on my mind.
What is more amazing is Elinor Ostrom ( of Indiana Univ) becomes the first woman to get Eco Nobel. What is more embarrassing is I haven’t read any of her work. This is like 2007 for me when I woke up to mechanism design theory.
Press Release says:
Indiana University, Bloomington, IN, USA,
“for her analysis of economic governance, especially the commons”
Oliver E. Williamson
University of California, Berkeley, CA, USA,
“for his analysis of economic governance, especially the boundaries of the firm”
There is basic information for the public and advanced information for the budding economists/other interested. Both are usually excellent and something I wait more than the name of the recepient. It teaches you so much.
It would be out with a speed read soon. Speed read is here
I would post more as I find out more about their work. I have read a bit of Williamson. Someone told me when North/Fogel got it in 1993 some people cringed that Williamson didn’t get it. And would have to wait longer. It took 16 years!!
Now get on to some reading.
As expected there is tons of material. And quite a few top econs are not familar with the work of Ostrom. Ostrom has created a storm really.
- Interviews of Ostrom and Williamson (in both media and text files)
- MR has many excellent links (as usual) as of the works/interviews – Ostrom on climate change, Good news for GMU, Cowen on Ostrom, Cowen on Williamson, Tabarrok on Williamson, Tabrrok on Ostrom
- Paul Krugman
- Paul Romer
- Michael Spence (via Greg Mankiw)
- Vernon Smith (has worked closely with Ostrom)
- Edward Glaesar
- John Taylor
- Mark Thoma
- Summary of economists reactions- WSJ Blog, Economix Blog
- Newspapers- WSJ Article, Another WSJ article, NYT, FT
- WSJ Blog – lessons for regulation
This is an amazing piece of news. Nobel Committee has decided to award 2009 Peace Prize to the US President- Barack Obama. The award is for:
The Norwegian Nobel Committee has decided that the Nobel Peace Prize for 2009 is to be awarded to President Barack Obama for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples. The Committee has attached special importance to Obama’s vision of and work for a world without nuclear weapons.
Obama has as President created a new climate in international politics. Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play. Dialogue and negotiations are preferred as instruments for resolving even the most difficult international conflicts. The vision of a world free from nuclear arms has powerfully stimulated disarmament and arms control negotiations. Thanks to Obama’s initiative, the USA is now playing a more constructive role in meeting the great climatic challenges the world is confronting. Democracy and human rights are to be strengthened.
Only very rarely has a person to the same extent as Obama captured the world’s attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world’s population.
For 108 years, the Norwegian Nobel Committee has sought to stimulate precisely that international policy and those attitudes for which Obama is now the world’s leading spokesman. The Committee endorses Obama’s appeal that “Now is the time for all of us to take our share of responsibility for a global response to global challenges.”
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.
- 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 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.
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.
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)
I have updated previous post on Economcis Nobel Prize for 2008 being awarded to Paul Krugman.
Paul Krugman gets the prize for his work on International Trade and Economic Geography.
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
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.
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.
Paul Krugman has been given the prize for 2008. See my post here
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.
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.
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.
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.
This year the poll shows 5 economists in 3 areas:
I. For international trade and economic growth:
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) 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.
MR suggests his names.
Update 2: WSJ Blog posts on the propective winners from various sources.
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.