Will another American win again?
SOTCKHOLM: As the globe grapples with the problem of greenhouse gases and tries to restore the battered economy to health, research into the economics of climate change or the key to what truly makes consumers tick could be contenders for this year’s Nobel prize in economics.
The last of the six Nobel prizes announced this year, the Nobel Memorial Prize in Economic Sciences to be announced tomorrow is not among the original awards and was created in 1968 by the Swedish central bank in Alfred Nobel’s memory.
If history is any guide, being American and male is no hindrance to winning. Since 1980, the prize has gone to American winners 23 times. No woman has won the prize since it was first awarded in 1969.
Though the prize committee most often chooses to reward older research that has stood the test of time, relatively new work on consumer thinking from Austrian Ernst Fehr, a behavioural economist of the University of Zurich, is running high in the speculation debate.
Matthew Rabin, a 45-year-old American at the University of California
at Berkeley with similar interests, is also mentioned frequently.
Fehr’s research backs up the adage that revenge is sweet.
Fehr found that the
part of the human brain
associated with satisfaction was more active when people contemplated getting even.
An elaborate laboratory game was structured so that players would earn the most money if they trusted their partners and parted with their money. Players were offered the option of seeking revenge by fining double-crossers but were warned that doing so would cost them.
“In the end, what we have shown is that reward circuits in the brain are activated when people can punish the other person,” Fehr said. “People don’t gain something in economic terms — they get something in psychological terms.” Rabin has studied the economics of immediate gratification, and the implications of people’s self-control problems for consumer choice, marketing, incentive theory and addiction.
Other favourites include professors Martin Weitzman of Harvard University and Yale University’s William Nordhaus, who have made contributions to the economics of climate change, mainly
shedding light on how
to use cost-benefit analysis to help shape policy
Micro-economist Bengt Holmstrom at the Massachusetts Institute of Technology is also among the favourites for his research into the design of contracts and how that can shape long-term incentives.
Anil Kashyap, professor of economics and finance at the University of Chicago’s Graduate School of Business, said that Holmstrom, along with Stanford University’s Paul Milgrom - known for his contributions to the theory of auctions — have “done path-breaking work on those topics.” But, experts warn about speculating too much about contemporary research. Despite current events, the Nobel economics prize is rarely linked
to recent findings and
contemporary economic swings, said Hubert Fromlet, a professor in International Economics at the Jonkoping International Business School in
“They absolutely don’t, in any way, have to serve as guides,” he said of lists trying to pick the winner.
Fromlet, whose own top choices include Robert Barro of Harvard, one of the founders of new classical macroeconomics, and Paul Romer of Stanford, who studies economic growth, said economic prize laureates usually have put in decades of work so that their findings have had enough time to be tested.
Nobel Prize winners receive 10 million Swedish kronor ($1.4 million), a gold medal and diploma from the Swedish king on December 10, the anniversary of Nobel’s death in 1896.