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

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Question: 1) How did you choose the winner of the Sveriges Riksbank Prize in Economic Sciences?

Answer: See Nomination and Selection of the Laureates in Economics »

Question: 2) Would the latest financial crisis affect your decision?

Answer: The Prize is for purely scientific contributions. A contribution should of course be relevant in the sense of helping us to understand the real economy and to solve important economic problems. Financial stability is indeed a very important problem. Whether it is topical in a particular year cannot affect the decision of the committee. Further, Paul Krugman is awarded the Prize for his contributions regarding trade and location, which although highly relevant for globalization has little bearing on the issue of financial crises.

Question: 3) Is there any Chinese economist in your consideration or have ever been in your vision?
Thanks! I am a reporter from China Business News (CBN), one of the most prominent business daily newspaper based in Shanghai. Looking forward to your reply.
Regards
Jing Li
China Business News

Answer: I am afraid I cannot comment on that except by pointing out that nationality plays no role in selecting the Prize winner.

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Question: Dear Professor Englund,
I would like to ask a couple of general questions regarding the Prize selection guidelines if I may:
1) Does the committee chose the candidates whose ideas have met with real life success (e.g. when adopted by central banks) or does it select the awardee simply based upon the soundness of his/her theory (e.g. even when the theory has not been implemented in real world situations yet)?

Answer: This is a good question. Clearly real world success is an important criterion. On the one hand, one would like to award relatively recent contributions. On the other hand, it often takes quite some time until a contribution is implemented in practice. Hence, one has to strike a balance between topicality and the desire to know that something really works in practice. A good example of an abstract theoretical contribution which has affected policy is the Prize to Kydland and Prescott for their work on time consistency, which played an important role for institutional reforms concerning central banks.

Question: 2) To be considered as a possible candidate how sophisticated must one's work be mathematically? To elaborate, suppose the proposed theory is completely original and of great practical value, would that still be considered if it contains elementary or no mathematics? In other words, if Adam Smith was alive today, would he win this amazing Prize?
Thank you very much for your help.
Yours Faithfully,
Junran Cao

Answer: More and more of economic theory uses the language of mathematics. But only a few of the Prizes have been based on research using advanced mathematics (e.g. in game theory). On the other hand several recent Prizes (Krugman, Phelps, Kahneman, Smith, Akerlof etc.) use only quite elementary mathematics. An example of a purely "verbal" Laureate, is Ronal Coase. Yes, someone like Adam Smith could certainly win the Prize.

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Question: Prof. Krugman's contribution in International trade theory is indisputable. But, it took long time to recognise prof. Krugman's to a Nobel award. At this juncture, I would like to ask you a few humble questions;
1) Why the committee took a long time to recognise the achievements of prof. Krugman?

Answer: It often takes some time until you have sufficient perspective on a contribution to know if it will stand the test of time, and to sort out who made the most important contribution in a particular field. Further, there is stiff competition between different contributions, and it may take some time to climb to the top of the committee's list. Compared to other recent Prizes, Paul Krugman did not have to wait that long; his contributions to geography were only made in the early 1990's.

Question: 2) Whether aged economists will give more preferences in final selection criteria?

Answer: The committee tries to make its selection without any consideration of age.

Question: 3. Is the present financial crisis played a role for not considering financial economists who got continuously for the past few years?

Answer: No, and I dispute the statement that financial economists got awarded continuously. There have only been to Prizes in financial economics (to Markowitz, Miller and Sharpe) in 1990 and to Merton and Scholes in 1997.

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Question: Dear Prof. Englund,
As an undergraduate Economics student from Brazil, I am deeply concerned about the ideas and concepts Sveriges Riksbank Prize in Economic Sciences Laureates each year. My question is: to what extention the Prize is given on ideological criteria?
Yours, Anderson Rubens.

Answer: Ideology and political values play no role in the selection process. Among the Laureates who take part in the political debate, there is a wide variation in political attitudes.

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Question: Why didn't you share the Prize this year so that some other professors who have also made important contributions to the economic theory of international trade are also honored?

Answer: I am unable to comment on this except by referring you to the scientific background information, where we discuss Professor Krugman's work and relate it to the contributions of other economists.

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Interview with Professor Peter Englund after the announcement of the 2008 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