This is probably dumb, but I am going to indulge in Nobel speculations. My main forecast is that there are two leading fields of economics that are way ahead of the rest for being the focus of this year's prize. The first is environmental economics because 1) one has never been given for the field, and 2) the Swedes are supportive of the upcoming Copenhagen summit on global warming. The second would be behavioral finance because that continues to be a major global issue, and in the past the committee has given finance-related prizes to neoclassical types whose theories now lie in ruins and discredited. As with last year, this will not be a year for any new classical or rational expectations types like Barro or Sargent or Fama, although all kinds of people out there somehow think they deserve it. More details under the fold (hopefully).
So, if it is for environmental I think it is likely recipients will have some link to the global warming issue. This probably rules out some more radical and heterodox founders like Herman Daly or Allen Kneese or Richard Norgaard whom I would applaud. It also rules out some more mathematical folks like Partha Dasgupta or Richard Starrett or William Brock or Geoffrey Heal, and I would not hold my breath either for local favorite and former Nobel committee member, Karl-Goran Maler either.
Those with global warming cred would include Nicholas Stern and William Nordhaus and Robert Stavins, any of whom might get it. However, the most interesting and deserving combo, requiring not to be too heterodox and also have a global warming link but also more innovative and important in my opinion would be a Graciela Chichilnisky-Hirofumi Uzawa-Martin Weitzman combo. Chichilnisky has been involved in the UN efforts and is the main inventor of the important "green golden rule" idea. Also, she would finally be the first woman to get it. Uzawa is most famous globally for his important neoclassical growth theory papers from the 60s, but in recent years has become a sort of Amartya Sen of Japan, its most revered economist and Wise Old Man, who has become a strong environmentalist and written more philosophical and deep papers on global warming. There is rumbling in Sweden about Fujita of Japan not getting it with Krugman last year, and no Japanese has gotten it. Finally, besides making very insightful points about fat tails in the global warming issue, Weitzman's "Prices and Quantities" paper is enormously influential within the field.
On behavioral finance the obvious person would be Robert Shiller. He could get it alone. Or an obvious addition would be Richard Thaler. Going for three, either Benoit Mandelbrot, the most deserving in my view but may be too odd for the committee, or Kenneth Rogoff.
Here is a list of other possibilities, lower in probability this year in my view but not out of the question: Oliver Williamson with Tirole or somebody else (Geoff Hodgson claims that Williamson is the most cited economist of all time), Gordon Tullock-Anne Kreuger (another woman) possibly with Janos Kornai for rent seeking, Richard Easterlin for happiness, Paul Romer for endogenous growth (lower probability because too close to last year's award), William Baumol or Albert Hirschman for general grand old man wisdom.
14 comments:
Oh, I may have messed this up by not leaving a space after "hidden conclusions." Here is what I said about the environmental candidates, more or less. The recipients are likely not to be too heterodox and likely to have some link to the global warming issue.
So, some possibles not likley: radicals Herman Daly, Allen Kneese, Richard Norgaard; neoclassical mathy types Partha Dasgupta, Richard Starrett, William Brock, Geoffrey Heal, policy type Robert Stavins, good old Swedish boy and former Nobel committee member Karl-Goran Maler.
More likely: Nicholas Stern or William Nordhaus, but most deserving and fitting the criteria: Graciela Chichilnisky ("green golden rule" and would be first woman), Hirofumi Uzawa (grand old economist of Japan and now deep philosophy on global warming with old neoclassical cred due to his 60s growth theory papers), Martin Weitzman (analysis of fat tails on global warming and his influential "Prices and Quantities" paper).
I would love to see the Chichilnisky-Uzawa-Weitzman combo that you listed. Another influential thinker although quite mainstream is V. Kerry Smith, now at Arizona State, who has written from topics of recreation demand models to climate change.
Another influential paper by Weitzman is his "Why the Far-Distant Future Should be Discounted at its Lowest Possible Rate" Journal of Environmental Economics and Management
Somebody who I think is deserving of a prize is Peter Diamond. Didn't Tullock already get the prize with Buchanan for public choice? Tirole is a good choice, too. How about Tirole and Holmstrom?
brian,
The Weitzman argument about lowering longer term discount rates is the "green golden rule" argument of Chichilnisky. It is her argument first, although her ex-husband, Geoffrey Heal, can also claim some credit for it.
Kevin,
I know that there is a big fan club for Peter Diamond out there, and he is a possibility.
Tullock did not get it when Buchanan did, which led to a falling out for a period of time between the two. While a lot of people think that the committee was thinking about Buchanan and Tullock and somehow dropped Tullock, what I have heard is that in fact the alternative was to have it be Buchanan with Musgrave, with the latter being dropped for reasons that remain unclear. As he is now dead, he is out of the running.
If either or both Tirole or Holmstrom get it this year, I forecast that it will be in tandem with Williamson.
Who deserves the prize this year?
You're joking, right? 20 million people unemployed in the US alone - you have to be joking.
Anonymous,
Well, the behavioral finance people are among those who called it to some degree or other, with Shiller in particular calling the crash of the housing bubble that underlies our current high unemployment as much as anything else. Would not such a person deserve it?
The environmental ones would deal with a huge issue that is somewhat separate from the unemployment issue, but arguably far bigger and more important, virtually the survival of many species on this planet. Those I have suggested have been somewhat more heterodox and useful in what they have said about this issue. The recession will end within the next few years, probably sooner, and indeed in a technical sense of declining GDP may already be over. But the global warming issue is getting worse and will so for the next several decades almost for sure.
You do not want to give a prize for someone productively assisting to deal with that?
brian,
I respect V. Kerry Smith's extensive work, but I think he will be dominated by a number of other figures in the field. Would be very surprised if he got it.
"You do not want to give a prize for someone productively assisting to deal with that?"
By any definition of the word, the field of economics revealed it absolute failure.
Self-respect would dictate, at a minimum, that this failure should be recognized by refusing to award the prize to anyone.
This goes well beyond any failure to actually prevent the bursting of the housing bubble, for instance, it goes to heart of understanding why the bubble came into being in the first place; and why the history of the post-war period has been one bubble after another.
My suggestion: Suspend the prize for one year - perhaps, even a decade - as well as the liberal handing out of advice to policy-makers, figure out what is wrong with the assumptions of economists.
The patient is dead on the table, the doctor needs to figure out what went wrong.
I do not no who coined the term "regulatory capture" but surely this years memorial prize belongs to them dead or alive. The other option is to give it to a monkey with Turing machine and call it quits.
Anonymous,
So, we should just assume that the critics of what has been handed out are as gulity as those who handed out bad advice? Seems pretty silly to me. I see no reason to be silenced because Eugene Fama and Robert Barro have made fools of themselves.
Travis,
The rent-seeking candidates would fit this one: Kornai-Krueger-Tullock.
Regulatory capture goes beyond rent seeking. Typical rent seeking behaviour is when those in who formally control regulated enrich themselves through their control of those regulations.
Regulatory Capture is when both the regulator and the regulated get paid-off.
Travis,
Yes, but I would not say that there is an obvious candidate for the Nobel out there associated with that beyond the rent-seeking crowd. Do you have any suggestions?
Oh, and to Anonymous. Let me note that not everybody I have suggested is even an economist. In particular, the person I identified as "the most deserving" is Benoit Mandelbrot. He is a mathematician, always has been. He happens to have written a few papers on economics and financial markets out of hundreds by him. He is the "father of fractal geometry," and out of that was the first to identify "fat tails" in financial markets as far back as 1961. He has long been a deep critic of orthodox financial economic theory. Are we supposed to deny a Nobel to him because he is supposed to be contemplating the sins of economists?
No I do not. I Think I connived of the relationship wrongly. Classic rent seeking is where the regulated gain some material advantage from the regulator: let as call that lobbying. Regulatory Capture is where the regulated fully write the regulations to their general advantage. Has anybody improved on Smith's account in the WON? Inter Alia there is that ate paragraph where he (smith) relates the dangers of monopoly with reference to the plantation owners, who, owing to their. preferential treatment were in an obscene position to use their monopoly profits to intimidate the legislature. Too bad PCT never saw the forest for the. trees.
that is why i say give the prize to stick.
Travis,
Well, actually writing the regs is the ultimate goal of any serious rent seeker. After all, "rents" in this case arise precisely from artificially created monopolies, and Tullock's original paper on it does not use the term (coined by Anne Krueger later), but spoke of monopoly power. It is not an accident that the "rectangle of redistribution" in a standard monopoly vs competition figure is known in some circles as a "Tullock rectangle," just as the welfare losses in the same figure are known as "Harberger triangles," who, in his 90s, is another fairly outside but greater than epsilon possibility for the prize.
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