Nobel economics prize on Monday: Winners usually American, usually pro-austerity
The winner of the Nobel economics prize is notoriously hard to predict, but it’s usually an American male opposed to big government and big spending.world Updated: Oct 11, 2014 13:45 IST
The winner of the Nobel economics prize is notoriously hard to predict, but it’s usually an American male opposed to big government and big spending.
This puts the typical laureate at odds with, for example, large segments of public opinion in Europe, where austerity is anathema, especially in the wake of the crisis.
So one of the big questions is: Will the prize depart from the trend of recent years and go to one or several economists favouring pumped-up demand?
The answer will come Monday when the award — officially Sveriges Riksbank Prize in Econonomic Sciences in Memory of Alfred Nobel — is announced.
Will William Baumol finally get the Nobel in Economics this year? In this age of entrepreneurship there can't be a more deserving theorist.— Gaurav Choudhury (@gauravchoudhury) October 10, 2014
The economics prize will mark the end of the 2014 Nobel season, which has honoured 17-year-old Pakistani Malala Yousafzai with the peace prize, along with India’s Kailash Satyarthi, and French writer Patrick Modiano with the prize for literature.
The economics prize might be the Nobel with the clearest laureate profile: It tends to be an American male aged over 55.
In the last 20 years, most winners have matched that description.
Many of them, working on mathematical models applied to specific issues — such as the evolution of financial markets or the behaviour or priceless markets — do not share their opinions on economic policies.
But among those who do talk about current economics, a majority defend what they usually call “economic stability” and “budgetary discipline”, and their opponents label as “austerity”.
They are “neoclassical” economists, arguing that the state must refrain from any attempt to expand demand, but as a rule they don't maintain a very high profile in the media.
This is in contrast to laureates defending a Keynesian approach of boosting demand, such as best-selling author Joseph Stiglitz or New York Times columnist Paul Krugman.
Despite being publicly less vocal, the neoclassical thinkers are extremely influential in the academic world.
The University of Chicago, temple of neoclassical economics, has received more economic Nobels than any other academic institution in the world.
In 2013, for example, all three laureates were from the University of Chicago -- one upholder of stimulus and, more characteristically, two champions of austerity.
“I’d say I’m fiscally conservative,” said Lars Peter Hansen, one of the laureates, a month after receiving the award.
When asked about what the state could do to boost growth, co-laureate Eugene Fama was blunt.
“How about taking a year off?” he said. “One of the big outcomes of the financial crisis is going to be a massive increase of governement bureaucracy.”
The one 2013 laureate hostile to austerity was Robert Shiller — also widely considered more media-savvy, in the tradition of Stiglitz and Krugman.
Angela Merkel, Europe’s standard-bearer of fiscal displine, had nothing to fear when she held a pro-austerity speech in August in front of 18 Nobel economics laureates in the German town of Lindau.
“Germany’s experience shows that it is absolutely possible to have fiscal consolidation and growth at the same time,” she said. “It’s a big discussion topic: must we always get into debt for growth? We have proved in the last years that we don’t have to.”
'200 to 300 candidates'
The Nobel Foundation rejects any accusations of bias in its choices.
“The work which is awarded is often quite old, so the time scale of research considered by the jury is much longer than that of the political debate,” said Olof Sommell, a specialist in the economics prize at the Nobel Museum in Stockholm.
“The terms of the debate between austerity and stimulus change rapidly. The Committee cannot take it into account.”
“It’s hard to predict if the jury will turn away from the apostles of austerity in 2014, according to Swedish Linnaeus University economics professor Hubert Fromlet, since “there are some 200 to 300 serious candidates”.
The decision is in the hands of a six-member committee appointed by the Royal Swedish Academy of Sciences.
None of the 2014 jury members has openly supported austerity. The only economic policy expert of the group, Mats Persson, is rather cautious when it comes to the benefits of cutting spending.
Former committee member Lars EO Svensson, questioned by AFP on the austerity penchant of the laureate list, said he had not realised it.
“I’m not sure,” said Svensson, a declared stimulus supporter.