Nobel Memorial Prize In Economic Sciences - Nobel Prize In Economics

The Nobel Memorial Prize in Economic Sciences (officially Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne, or the Swedish National Bank's Prize in Economic Sciences in Memory of Alfred Nobel), commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field.

The prize was established in 1968 by a donation from Sweden's central bank, the Sveriges Riksbank, on the bank's 300th anniversary. Although it is not one of the prizes that Alfred Nobel established in his will in 1895, it is referred to along with the other Nobel Prizes by the Nobel Foundation. Laureates are announced with the other Nobel Prize laureates, and receive the award at the same ceremony.

Laureates in the Memorial Prize in Economics are selected by the Royal Swedish Academy of Sciences. It was first awarded in 1969 to the Dutch and Norwegian economists Jan Tinbergen and Ragnar Frisch, "for having developed and applied dynamic models for the analysis of economic processes."

Creation and funding

An endowment "in perpetuity" from Sveriges Riksbank pays the Nobel Foundation's administrative expenses associated with the prize and funds the monetary component of the award.

Since 2012, the monetary portion of the Prize in Economics has totalled 8 million Swedish kronor. This is equivalent to the amount given for the original Nobel Prizes. Since 2006, Sveriges Riksbank has given the Nobel Foundation an annual grant of 6.5 million Swedish kronor (in January 2008, approx. US$1 million; 0.7 million Euro) for its administrative expenses associated with the prize as well as 1 million Swedish kronor (until the end of 2008) to include information about the prize in the Nobel Foundation's internet webpage.

Relation to the Nobel Prizes

The Prize in Economics is not one of the original Nobel Prizes created by Alfred Nobel's will. However, the nomination process, selection criteria, and awards presentation of the Prize in Economic Sciences are performed in a manner similar to that of the Nobel Prizes.

Laureates are announced with the Nobel Prize laureates, and receive the award at the same ceremony. The Royal Swedish Academy of Sciences awards the prize "in accordance with the rules governing the award of the Nobel Prizes instituted through his [Alfred Nobel's] will," which stipulate that the prize be awarded annually to "those who ... shall have conferred the greatest benefit on mankind."

Award nomination and selection process

According to its official website, the Royal Swedish Academy of Sciences "administers a researcher exchange with academies in other countries and publishes six scientific journals. Every year the Academy awards the Nobel Prizes in Physics and Chemistry, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, the Crafoord Prize and a number of other large prizes".

Each September the Academy's Economics Prize Committee, which consists of five elected members, "sends invitations to thousands of scientists, members of academies and university professors in numerous countries, asking them to nominate candidates for the Prize in Economics for the coming year. Members of the Academy and former laureates are also authorised to nominate candidates." All proposals and their supporting evidence must be received before February 1. The proposals are reviewed by the Prize Committee and specially appointed experts. Before the end of September, the committee chooses potential laureates. If there is a tie, the chairman of the committee casts the deciding vote. Next, the potential laureates must be approved by the Royal Swedish Academy of Sciences. Members of the Ninth Class (the social sciences division) of the Academy vote in mid-October to determine the next laureate or laureates of the Prize in Economics. As with the Nobel Prizes, no more than three peo ple can share the prize for a given year; they must still be living at the time of the Prize announcement in October; and information about Prize nominations cannot be disclosed publicly for 50 years.

Like the Nobel laureates in physics, chemistry, physiology or medicine, and literature, each laureate in Economics receives a diploma, gold medal, and monetary grant award document from the King of Sweden at the annual Nobel Prize Award Ceremony in Stockholm, on the anniversary of Nobel's death (December 10).

Laureates

The first prize in economics was awarded in 1969 to Ragnar Frisch and Jan Tinbergen "for having developed and applied dynamic models for the analysis of economic processes". In 2009, Elinor Ostrom became the first woman awarded the prize.

Awards to non-economists

Sylvia Nasar wrote in her book A Beautiful Mind that in February 1995, after acrimony pertaining to the awarding of the 1994 Prize in Economics to John Forbes Nash, the Prize in Economics was redefined as a prize in social sciences. This makes it available to researchers in such topics as political science, psychology, and sociology. Moreover, the composition of the Economics Prize Committee changed to include two non-economists. This has not been confirmed by the Economics Prize Committee. The members of the 2007 Economics Prize Committee are still dominated by economists, as the secretary and four of the five members are professors of economics. In 1978, Herbert A. Simon, whose PhD was in political science, became the first non-economist to win the prize, while Daniel Kahneman, a professor of psychology and international relations at Princeton University is the first non-economist by profession to win the prize.

Controversies and criticisms

Some critics argue that the prestige of the Prize in Economics derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandson of Ludvig Nobel. Nobel criticizes the awarding institution of misusing his family's name, and states that no member of the Nobel family has ever had the intention of establishing a prize in economics.

According to Samuel Brittan of the Financial Times, both of the former Swedish ministers of finance, Kjell-Olof Feldt and Gunnar Myrdal, wanted the prize abolished, saying, "Myrdal rather less graciously wanted the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman)."

In his speech at the 1974 Nobel Prize banquet, Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would "have decidedly advised against it" primarily because, "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."

Critics cite the apparent snub of Joan Robinson as evidence of the committee's bias towards mainstream economics, though heterodox economists like Friedrich Hayek (Austrian School) and Ronald Coase (associated with new institutional economics) have won.

Milton Friedman was awarded the 1976 prize in part for his work on monetarism. Awarding the prize to Friedman caused international protests. Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip he took to Chile during March 1975 (less than two years after the coup that deposed President Salvador Allende). Friedman himself answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation and met with officials, including Augusto Pinochet, in Chile.

Four Nobel Prize laureates â€" George Wald, Linus Pauling, David Baltimore and Salvador Luria â€" wrote letters in October 1976 to the New York Times protesting Friedman's award.

The 1994 prize to John Forbes Nash caused controversy within the selection committee because of Nash's history of mental illness and alleged anti-Semitism. The controversy resulted in a change to the rules governing the committee during 1994: Prize Committee members are now limited to serve for three years.

The 2005 prize to Robert Aumann was criticized by European press for his alleged use of game theory to justify his stance against the dismantling of Israeli settlements in occupied territories.

Avner Offer’s and Gabriel Söderberg’s The Nobel factor: the prize in economics, social democracy, and the market turn (Princeton University Press 2016) argues that there has been a dramatic shift in the dominant macroeconomic theories among the academia, and that the creation of the Nobel in 1969 was the cause of this, as it enhanced the prestige of free market ideology and conferred upon it the status of science.

Alternative names

The official Swedish name of the Prize is Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne. The Nobel Foundation's translations of the Swedish name into English have varied since 1969: