New Nobel Laureates in Sweden

Thomas Sargent and Christopher Sims were announced as winners of the Sveriges Riksbank Prize in Economic Sciences in the Memory of Alfred Nobel.  They won for their "empirical research for cause and effect in the macroeconomy."  The announcement was made last October, as usual, but they are being awarded today with the Nobel laureates in Stockholm.

Christopher Sims and Thomas Sargent at the U.S. Embassy in Sweden

Christopher Sims' main contribution is a statistical technique known as vector autoregressions, which he first outlined in his often cited essay, "Macro-economics and Reality".  Thomas Sargent is known as one of the most important monetary economists of his generation and a key figure within the rational expectations movement.  His most often cited article is "Some Unpleasant Monetarist Arithmatic".

They are both top notch economists and deserve to be applauded for their contributions to the field.





(note: image contains two photos of Sargent and Sims, taken by embassy staff)

Thomas Sargent & Christopher Sims win the Nobel Prize

Thomas J. Sargent of New York University and Christopher Sims of Princeton University won the Sveriges Riksbank Prize in Economic Sciences in the Memory of Alfred Nobel.  They won for "rational expectations," but the official reason given was for "their empirical research on cause and effect in the macroeconomy."

Sveriges Riksbank in Stockholm (photo: Björn Sahlberg)

The idea of "rational expectations" first  won the Nobel Prize with Robert Lucas, Jr. in 1995.  Its exciting to see more proponents of it get the award.  One of the earliest and important anthologies of the idea was published in 1981 and edited by Lucas and Sargent, Rational Expectations and Econometric Practices.  It includes most of the important essays on the subject by Sargent, Sims, Lucas, Robert Barro, Bennett McCallum, Lars Hansen, Stanley Fischer, Gregory Chow, and others.  Another book that I own by Sargent is titled Rational Expectations and Inflation.  I think it's also a bit exciting that the Swedish central bank (Sveriges Riksbank) is concerned about expectations and inflation at a time just after they reduced lending rates into negative territory, although I'm not sure how much the prize and the bank actually co-mingle.

I must admit that I am not as familiar with Christopher Sims, although I have seen his name around the citations and speaker lists.  According to Microsoft Academic Search, his most cited article (by far) is "Macro-Economics and Reality" which is about to Vector AutoRegression (VAR) techniques.  This should also be considered a win for the Univeristy of Minnesota economics department.  While neither professor is currently there, both did some of their most crucial work on rational expectations there.

These names were, at first, a bit suprising to me.  They made my short list, albeit the long version of my short list.  They did not attract any interest from my short list when I initiated my poll.  I must admit that I'm very happy that some more rational expectations economists are winning, but I'm a bit shocked that Robert Barro didn't win along with them.  I hope the recent controversy didn't prevent him from being added, although I'd be suprised if that was the deciding factor.

News Conference at Princeton University with Thomas Sargent & Christopher Sims

You can offer the candidates your congratulations via the Nobel website.

William Baumol wins Nobel Poll

William Baumol has won my pool of potential Nobel Prize winners with 17%.



William Baumol (photo: Ville Oksanen)

 Here are the vote getters:

17%    William Baumol
10%    Paul Romer
10%    Robert Shiller
10%    John Taylor
7%      Jagdish Bhagwati
7%      Eugene Fama
7%      Arnold Harberger
7%      Richard Thaler
7%      Gordon Tullock
3%      Oliver Hart
3%      Paul Milgrom








The actual winners of the 2011 Nobel Prize in Economics were Thomas Sargent & Christopher Sims.  You can view the winners of other polls here.

Who Will Win the Nobel Prize?

The highest award in economics, without doubt, is the Nobel Prize.  The Nobel Memorial Prize in Economic Sciences is only a quasi Nobel, in that it was not established by the will of Alfred Nobel, but is recognized by the Nobel Foundation.  It is endowed by Sveriges Riksbank, which is the central bank of Sweden.  It is announced (at the earliest) the 10th of October every year and has been given out since 1969.



Peter Diamond at a press conference announcing his win in 2010.  (Photo: M.I.T.)

  Nomination forms are sent out every September and are due back by the following February.  Official nominations must include supporting evidence (working papers, journal articles, and books).  Nominators include members of the Royal Swedish Academy of Science, past laureates, and invited Professors.  The committee which votes on it, like other Nobel awards is comprised of Swedes and there can be said to be a slight selection bias towards Scandanavian economists, but not a substantial one.  They include: Tore Ellingsen, Robert Erikson, Per Krusell, Timo Teräsvirta.  If there is a tie during a vote, the chairman, Bertil Holmlund will break the tie.

Here is a (long) list of people that I think could win the Nobel Prize in Economics:

Alberto Alesina (Harvard University)
Robert Barro (Harvard University)
William Baumol (New York University)
Jagdish Bhagwati (Columbia University)
Angus Deaton (Princeton University)
Avinash Dixit (Princeton University)
Eugene Fama (University of Chicago)
Ernst Fehr (University of Zurich)
Martin Feldstein (Harvard University)
Franklin Fischer (M.I.T.)
Kenneth French (Dartmouth University)
Gene Grossman (Princeton University)
Sanford Grossman (University of Pennsylvania)
Arnold Harberger (UCLA)
Oliver Hart (Harvard University)
Jerry Hausman (M.I.T.)
Nohubiro Kiyotaki (Princeton University)
David Kreps (Stanford University)
Anne Krueger (Johns Hopkins University)
Paul Milgrom (Stanford University)
John Moore (University of Edinburgh)
Kevin Murphy (Princeton University)
William Nordhaus (Yale University)
Marc Nerlove (University of Maryland)
Sam Peltzman (University of Chicago)
Richard Posner (University of Chicago)
Matthew Rabin (University of California - Berkeley)
Paul Romer (Stanford University)
Thomas Sargent (New York University)
Robert Shiller (Yale University)
Christopher Sims (Princeton University)
Nancy Stokey (University of Chicago)
John Taylor (Stanford University)
Richard Thaler (University of Chicago)
Jean Tirole (Toulouse School of Economics)
Gordon Tullock (George Mason University)
Martin Weitzman (Harvard University)
Robert B. Wilson (Stanford University)


People who do this every year seem to consider Eugene Fama the front runner for the past while, so he probably is again.  Robert Shiller is also a very famous and worthy economist that hasn't won.  Arnold Harberger is 87; I don't know if the committee takes that into consideration.  William Baumol is also very old but has done so much in economics, but I wonder if he was just passed over when James Tobin won in 1981.  Gordon Tullock would also be a good example of someone who has likely been passed over (James Buchanan, 1986).

If I were voting, I think I would give it to William Baumol for his work on the transaction demand for money and a lot of other solid works.

Please add your vote in the comments.  It can be any living economist.  Please list the reason you think that individual should win the Nobel.  I'll include the votes in my next poll.