Lawrence R. Klein’s speech at the Nobel Banquet, December 10, 1980

Your Majesty, Your Royal Highnesses, Ladies and Gentlemen,

The apparent wish of Alfred Nobel that the prize sums awarded under the terms of his will should enable the winners to pursue creative work without concern for personal economic affairs has been set back by the ravages of inflation, despite the astute investment guidance provided for the endowment funds.

The tax code of the United States has been interpreted to exempt certain awards from the personal income tax. This exemption is for awards for which the recipient undertakes no designated tasks, and the Nobel prizes are specifically cited as examples of awards that qualify for this exemption. This is an unusual citation, to say the least, for which we all may be grateful.

Fortunately this interpretation of the tax code has benefitted the honorands more than has the collective wisdom of economists in dealing with the worldwide problem of stagflation, an economic situation of high unemployment and high inflation. In fact, it has been remarked that the Prize in Economic Science should be given to that person who shows how to deal effectively with the problem of stagflation. I cannot claim to have made such an achievement, but I can only hope that my own researches, for which you have so greatly honored me, have gone some small distance toward the goal of improving economic aspects of life.