Bites on Nobel Prize in Economics 2010

Bibek writes on Noblesse does not always oblige:

• Certainly, Peter Nobel, a human rights lawyer and Alfred Nobel’s great-grand-nephew argues against such a prize in Economics. Even more significant is the case of the two 1974 awardees—Gunnar Myrdal and Friedrich Hayek. Myrdal thought such a Prize was a bad idea because it was given to a reactionary like Hayek, a view reinforced by a later award to Friedman. Hayek’s reservation was more profound and deserves to be quoted. “The Nobel Prize confers on an individual an authority which in economics no man ought to possess ... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.”

• Splice that with the Keynes’ observation that practical men are usually slaves of some defunct economist. Economics isn’t an exact science. It is more like a bag of tools or an approach. While economists are aware of this, they don’t usually project themselves to the rest of the world in that fashion. The run-of-the-mill economist may compete with lawyers as the butt of several jokes. But once invested with the nobility of the Nobel Prize, they become founts of all wisdom and venture into terrain where they don’t necessarily possess expertise. That doesn’t occur in physical sciences, or even in Literature. A Nobel Prize to Peace isn’t that dangerous either.

• Alfred Nobel contemplated awards to those who were young, so that prize money could be used to pursue research. It hasn’t worked that way. Thus, benefits of such a Prize are questionable. However, costs can be significant. Think of the now-forgotten hedge fund known as Long-Term Capital Management. Now that giants have been recognised, it is a good idea to abolish the Prize in Economics.

Vanitha Srinivasan on ‘For the Nobel, we focus only on the discovery'

• It was just two hours to go on Monday, October 4, before the winner of the 2010 Nobel Prize in Physiology or Medicine was to be announced. And there I was at the Karolinska Institutet in Stockholm, which was entrusted, by no less than Alfred Nobel himself, with the responsibility of awarding the Nobel Prize in Physiology or Medicine. The person I was interviewing, Ms Harriet Wallberg-Henriksson, 54, the first woman President of Karolinska Institutet, was privy to the name of the winner but her lips were sealed till the official announcement.

From BS Editorial:

• Search theory had its origins in the 1960s motivated by the need to provide an explanation for discrepancies between neoclassical theory with its emphasis on markets with perfect information and zero search costs, with empirical findings emerging from studies of the labour and housing markets in the United States. Buyers and sellers of goods and services do not immediately find what they are looking for and even when they do, are likely to reject the outcome as sub-optimal. Consequently, the processes of searching and finding inherently involve “friction”, which raises costs for both buyers and sellers.

From ToI Editorial:

• Plus, most Indians depend on rural livelihoods but it's non-rural jobs that mostly demand better human capital. Nor does higher education prioritise quality as much as quantity. While our firms hiring again is good news, India needs to think long-term. The labour market's search frictions can be managed only if action's taken on various fronts chiefly labour reform and education starting now.