What I’ve been reading
New: A couple of books on the Bank of Sweden Prize in Economics in memory of Alfred Nobel (more familiarly the Nobel prize in Economics). My review, posted over the page, drew on discussions here – thanks, everyone.
Old: Northanger Abbey I’d forgotten how much fun this was.
Nobel Prizes review
The award of the Bank of Sweden Prize in Economics in memory of Alfred Nobel (more familiarly the Nobel prize in Economics) every October, is a matter of intense personal concern to a few dozen likely contenders, and of lively professional interest to the much larger group of economists who are never likely to win, or even to be considered. Itâ€™s not surprising therefore, that publishers have seen the appeal in producing books on the prize. The Nobel Memorial Laureates in Economics, by Howard Vane and Chris Mulhearn provide a complete list of winners, along with a summary of their main achievements, typically running to five or six pages each.
As well as these individual entries, which are hard to summarise, Vane and Mulhearn give a summary of the kinds of characteristics aspirants should acquire if possible. Not surprisingly, it pays to be male, American and to be appointed to the faculty of the University of Chicago.
This discussion leaves out the question, more interesting perhaps to the great majority of us, of non-winners. Among economists who were alive when the prize was inaugurated, but have passed on without receiving it, perhaps the best-known plausible candidate was Joan Robinson. Her case shows that the absence of female laureates cannot be explained by the absence of worthy contenders, though admittedly the number of plausible female candidates is not large.
There can be little doubt about Robinsonâ€™s eligibility. The ultimate significance of the Cambridge capital controversy, and of her work on post-Keynesian macroeconomics might be debatable, but The Economics of Imperfect Competition surely justified a prize. (EH Chamberlin, who independently discovered the concept of monopolistic competition died in 1967, too early for a hypothetical joint award).
Given the secrecy that surrounds the awards process, we will never know why Robinson didnâ€™t make it.
As regards other group memberships contraindicated for would-be Nobel laureates, readers of this journal will naturally notice the absence of Australians and a fortiori of Queenslanders. Again we might ask whether this is due to the lack of suitable candidates or to less creditable aspects of the workings of the economics profession and the prizegiving process.
The most obviously deserving Australian not to win the prize has undoubtedly been Trevor Swan, who shared in two discoveries that earned prizes for others, and made many other substantial contributions. The Solow-Swan growth model, independently discovered by Swan and Robert Solow, still forms the basis of the neoclassical theory of economic growth, but Solow got the credit and the prize. The Swan diagram, illustrating the relationship between internal and external balance was a fundamental contribution to open economy macroeconomics, anticipating many of the ideas for which Robert Mundell got his prize. It can hardly be doubted that if Swan had been working in the United States, instead of Australia, he would have been among the early recipients of the prize.
Swanâ€™s case is clear cut, but it is not the only one where Australian economists were hard done by. Queenslandâ€™s leading contender was Colin Clark, who pioneered the development of national accounts, along with American Simon Kuznets and Clarkâ€™s Cambridge student Richard Stone. Kuznets won the prize in 1971 and Stone in 1984, but Clark missed out.
Another question of interest is whether prizes are awarded for a particular discovery or for a career of achievement. The criteria as for the other Nobel categories refer to a particular discovery, Vane and Mulhearn treat this as settling the question, but a look at the awards suggests otherwise.
In many cases, the description of the achievement is so general that even a well-read professional economist would find it hard to know who was intended. Another test arises by looking at joint discoverers of a famous idea, like the Arrow-Debreu theory of general equilibrium or the Modigliani-Miller theorem. In each of these cases, the result in question is the biggest single contribution made by either author, but the first-named has a wider array of additional achievements. The â€˜discoveryâ€™ model would suggest shared prizes, while the â€˜achievement modelâ€™ would suggest that the more eminent economist was more likely to win first. The results give strong support to the achievement model. Arrow won in 1972 while Debreu had to wait until 1983, and similarly with Modigliani (1985) and Miller (1990).
Regardless of the resolution of such issues, Vane and Mulhearn have produced a useful reference work. Those looking for a more personal, but less comprehensive, approach might consider Lives of the Laureates, edited by William Breit and Barry Hirsch, which consists of autobiographical accounts from eighteen winners, all based in the United States, who have accepted invitations to present their accounts at Trinity University in San Antonio, Texas.
Vane, H. and Mulhearn, C. (2005),The Nobel Memorial Laureates in Economics, Edward Elgar, London
Breit, W. and Hirsch, B. (eds) (2004), Lives of the Laureates (4th edition), MIT Press, Cambridge Massachusetts.