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.