Your Questions about The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

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Question: I believe that testing theories is as important as inventing theories and developing test methodologies. Why the committee never awards the Economic Prize to economists whose major contribution is an empirical piece? Aren't there any empirical works in economics worth the Prize?

Answer: This is an important and difficult question. Let me start by disputing the generality of your assertion that there is never an award for "an empirical piece". In fact, there are a number of prizes mainly for empirical findings, in particular Kuznets (1971), Friedman (1976), Schultz and Lewis (1979) and Fogel and North (1993). Furthermore, in a large number of cases, the development of new methods were motivated by specific empirical questions and the new methods and theories were successfully applied to answer these questions, e.g. Klein (1980, business cycles), Modigliani (1985, consumption), Heckman (2000, public policy evaluation). McFadden (2000, transport choices), Kahneman (2002, risk behaviour), Kydland and Prescott (2004, business cycles), etc. All this aside, it may be that empirical breakthroughs are not so easy to identify and associate with a limited number of individuals (less than three according to the statutes) in economics, and this may give rise to a bias against empirical prizes. The committee is certainly aware of such risks.

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Question: Why is the committee so interested in game theorists?

Answer: As soon as you leave the perfect market paradigm, strategic interaction is a key aspect of economic behaviour, and game theory provides the natural theory for analyzing such behaviour. Today, it permeates all of microeconomic theory and much of macroeconomics. Remember also that it was first developed by von Neumann and Morgenstern in the 1940s with basic contributions by Nash in the early 1950s, but the first Prize in game theory came only in 1994.

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Question: Sir, Why this Prize is not recognized as Nobel Prize in Economics? Does the Committee treat Economics as a field of basic science as they treat Physics, Chemistry and Medicine?

Answer: The Nobel Prizes are only those that are specifically mentioned in Alfred Nobel's will (Physics, Chemistry, Physiology or Medicine, Literature and Peace). The Economics Prize came much later and is a prize in memory of Alfred Nobel. In all relevant respects the committee understands and treats economics as a field of science.

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Question: Who later decided to establish the Economics Prize? What is the purpose? Based on what to select the best of the best winners?

Answer: It was instituted by Sveriges Riksbank (the central bank of Sweden) in conjunction with its tercentenary celebrations in 1968. The selection process follows the same principles as for the Nobel Prizes.

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Question: How come so many Prizes are in the macroeconomic field?

Answer: Macroeconomics deals with the "big" and "classical" issues in economics like growth and development, unemployment and inflation. It occupies perhaps a third of university curricula in economics. It is therefore natural that many Prizes are awarded in this area. That being said, there are only three Prizes during the last decade in macroeconomics: Mundell (1999), Kydland and Prescott (2004) and Phelps (2006).

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Question: Dear Professor Englund,
I have yet to investigate your selection more thoroughly. My question is perhaps a little off-track, but is there any hope for seeing a quantum artificial intelligence economic advancement. Thank you.
Dean

Answer: My only comment to this is that we try to interpret economic sciences as a broad science, and that we are open to awarding Prizes to contributions outside the core areas of economics.

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Question: Dear Prof. Englund,
Given that this year's Prize was awarded "for having laid the foundations of mechanism design theory", I wondered why Alan Gibbard was not among the Laureates.

Answer: As you can see from the scientific background information about this year's Prize, Alan Gibbard has made very important contributions to mechanism design theory. In particular, he formulated the first version of the so-called "revelation principle". He also showed an important "impossibility result" for dominant-strategy mechanisms. Apart from referring you to this document, I hope you understand that I cannot discuss why he was not included in the Prize. As you know, the maximum number of recipients is three.

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Question: Dear professor,
Is there any chance that professor Shapley will obtain the Prize after the sad news that he was not elected together with prof. R. Aumann and T. Schelling in 2005? Moreover, this year the Laureates belong to the Game Theory field (mechanism design in particular), so it seems that the chances are decreasing along the time if we take into account that economists just live a a finite horizon.
Thank you very much.

Answer: The committee tries not to think in terms of areas, and as this year's Prize shows we do not discriminate based on age.

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Question: Well, actually there are two questions, I'm from Colombia, and I'd like to know if a Colombian economist had ever been nominated? And the second question is why no one Latinamerican have won the Prize in Economics?

Answer: Unfortunately, nominations are confidential and I am prevented from answering your first question. Nor can I say much about your second question except to note the very strong dominance of the United States and Europe. Laureates from outside these regions are, so far, only Amartya Sen (Indian citizen) and Daniel Kahneman and Robert Aumann (both Israeli and U.S. citizens). We invite a broad list of individuals from all over the world to nominate candidates and we look very seriously at candidates from outside Europe and the United States.

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Interview with Professor Tomas Sjöström after the announcement of the 2007 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

Articles about The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

Find out more about nomination and selection of the Economics Laureates